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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

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

For the fiscal year ended December 31, ~~2018~~2019

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

For the transition period from __________ to __________

Commission File Number: 0-24796

CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.

(Exact name of registrant as specified in its charter)

BERMUDA		98-0438382
Bermuda			98-0438382
State or other jurisdiction of incorporation or organization		(I.R.S. Employer Identification No.)
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)
O'Hara House, 3 Bermudiana Road, Hamilton, Bermuda		HM 08
O'Hara House,
(Address of principal executive offices)		(Zip Code)
3 Bermudiana Road,			HM 08
Hamilton,	Bermuda		(Zip Code)
(Address of principal executive offices)

Registrant's telephone number, including area code: (441) 296-1431

Title of each class		Name of each exchange on which registered
Securities registered pursuant to Section 12(b) of the Act:
CLASS A COMMON STOCK, $0.08 PAR VALUE		NASDAQ Global Select Market, Prague Stock Exchange
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Securities registered pursuant to Section 12(g) of the Act:
CLASS A COMMON STOCK, $0.08 PAR VALUE	CETV	NASDAQ Global Select Market
UNIT WARRANTS TO PURCHASE SHARES OF CLASS A COMMON STOCK		None.

Indicate by check mark if the registrant is a well -known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether 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 each 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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405) is not contained herein, and will not be contained, to the best of the registrants 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. ☒

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “accelerated filer”, “large accelerated filer” or “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated ~~filer~~Filer ☐ Accelerated ~~filer~~Filer ☒ Non-accelerated ~~filer~~Filer ☐ Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act) Yes £☐ No T☒

The aggregate market value of the voting stock held by non-affiliates of the registrant as of June 30, ~~2018~~2019 (based on the closing price of US$ 4.1536 of the registrant's Class A Common Stock, as reported by the NASDAQ Global Select Market on June 30, ~~2018~~2019) was US$ ~~363~~383.6 million.

Number of shares of Class A Common Stock outstanding as of February 14, ~~2019~~2020: ~~252~~253,~~853~~607,~~554~~026

DOCUMENTS INCORPORATED BY REFERENCE

Document		Location in 10-K in Which Document is Incorporated
Registrant's Proxy Statement for the 2019 Annual General Meeting of Shareholders		Part III
Registrant's Proxy Statement for the 2020 Annual General Meeting of Shareholders		Part III

Index

CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.

FORM 10-K

For the year ended December 31, ~~2018~~2019

TABLE OF CONTENTS			Page
PART I
	Item 1	Business	2
	Item 1A	Risk Factors	78
	Item 1B	Unresolved Staff Comments	1213
	Item 2	Properties	1214
	Item 3	Legal Proceedings	1314
	Item 4	Mine Safety Disclosures	1314
PART II
	Item 5	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	1415
	Item 6	Selected Financial Data	1516
	Item 7	Management's Discussion and Analysis of Financial Condition and Results of Operations	1617
	Item 7A	Quantitative and Qualitative Disclosures About Market Risk	3837
	Item 8	Financial Statements and Supplementary Data	3938
	Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	7368
	Item 9A	Controls and Procedures	7368
	Item 9B	Other Information	7570
PART III
	Item 10	Directors, Executive Officers and Corporate Governance	7570
	Item 11	Executive Compensation	7570
	Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	7570
	Item 13	Certain Relationships and Related Transactions, and Director Independence	7570
	Item 14	Principal Accountant Fees and Services	7570
PART IV
	Item 15	Exhibits and Financial Statement Schedules	7671
SIGNATURES			8376

Index

I. Forward-looking Statements

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 22E of the Securities Exchange Act of 1934 (the "Exchange Act"), including those relating to our capital needs, business strategy, expectations and intentions. Statements that use the terms “believe”, “anticipate”, “trend”, “expect”, “plan”, “estimate”, “forecast”, “should”, “intend” and similar expressions of a future or forward-looking nature identify forward-looking statements for purposes of the U.S. federal securities laws or otherwise. In particular, information appearing under the sections entitled "Business," "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" includes forward looking-statements. For these statements and all other forward-looking statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

Forward-looking statements are inherently subject to risks and uncertainties, many of which cannot be predicted with accuracy or are otherwise beyond our control and some of which might not even be anticipated. Forward-looking statements reflect our current views with respect to future events and because our business is subject to such risks and uncertainties, actual results, our strategic plan, our financial position, results of operations and cash flows could differ materially from those described in or contemplated by the forward-looking statements contained in this report.

Important factors that contribute to such risks include, but are not limited to, those factors set forth under "Risk Factors” as well as the following: the effect of the proposed Merger on our business; the risks that the closing conditions to the proposed Merger may not be satisfied or that necessary governmental approvals are not obtained or are obtained with conditions; the impact of any failure to complete the proposed Merger on our business; the effect of changes in global and regional economic conditions including as a result of the quantitative easing program implemented by the European Central Bank; the economic, political and monetary impacts of Brexit; levels of television advertising spending and the rate of development of the advertising markets in the countries in which we operate; our ability to refinance our existing indebtedness; the extent to which our debt service obligations and covenants may restrict our business; our exposure to additional tax liabilities as well as liabilities resulting from regulatory or legal proceedings initiated against us; our success in continuing our initiatives to diversify and enhance our revenue streams; our ability to make cost-effective investments in our television businesses, including investments in programming; our ability to develop and acquire necessary programming and attract audiences; and changes in the political and regulatory environments where we operate and in the application of relevant laws and regulations. The foregoing review of important factors should not be construed as exhaustive and should be read in conjunction with other cautionary statements that are included in this report. All forward-looking statements speak only as of the date of this report. We undertake no obligation to publicly update or review any forward-looking statements, whether as a result of new information, future developments or otherwise, except as required by law.

Defined Terms

Unless the context otherwise requires, references in this report to the "Company", "CME", "we", "us" or "our" refer to Central European Media Enterprises Ltd. ("CME Ltd.") or CME Ltd. and its consolidated subsidiaries listed in Exhibit 21.01 hereto. Unless otherwise noted, all statistical and financial information presented in this report has been converted into U.S. dollars using period-end exchange rates or average rates where applicable. All references in this report to "US$" or "dollars" are to U.S. dollars, all references to "BGN" are to Bulgarian leva, all references to "CZK" are to Czech koruna, all references to "RON" are to the New Romanian lei and all references to "Euro" or "EUR" are to the European Union Euro. The exchange rates as at December 31, ~~2018~~2019 used in this report are US$/BGN 1.7174; US$/CZK 22.4762; US$/RON 4.0726; and US$/EUR 0.8789.

The following defined terms are used in this Annual Report on Form 10-K:

• "2017 PIK Notes" refers to our 15.0% senior secured notes due 2017, redeemed in April 2016;

• "2017 Term Loan" refers to our 15.0% term loan facility due 2017, repaid in April 2016;


•	"2019 Euro Loan" refers to our floating rate senior unsecured term credit facility guaranteed by Warner Media (as defined below), dated as of November 14, 2014, as amended on March 9, 2015, February 19, 2016, June 22, 2017 and February 5, 2018 which was repaid in full on July 31, 2018;


•	"2021 Euro Loan" refers to our floating rate senior unsecured term credit facility due November 1, 2021, guaranteed by Warner Media, dated as of September 30, 2015, as amended on February 19, 2016, June 22, 2017 and April 25, 2018;


•	"2023 Euro Loan" refers to our floating rate senior unsecured term credit facility due April 26, 2023, entered into by CME BV (as defined below), guaranteed by Warner Media and CME Ltd., dated as of February 19, 2016, as amended on June 22, 2017 and April 25, 2018;


•	"Euro Loans" refers collectively to the 2019 Euro Loan (when outstanding), 2021 Euro Loan and 2023 Euro Loan;


•	"2023 Revolving Credit Facility" refers to our revolving credit facility due April 26, 2023, dated as of May 2, 2014, as amended and restated as of February 19, 2016, and as further amended and restated on April 25, 2018;


•	"Guarantee Fees" refers to amounts accrued and payable to Warner Media as consideration for Warner Media's guarantees of the Euro Loans;


•	"Reimbursement Agreement" refers to our reimbursement agreement with Warner Media which provides that we will reimburse Warner Media for any amounts paid by them under any guarantee or through any loan purchase right exercised by Warner Media, dated as of November 14, 2014, as amended and restated on February 19, 2016, and as further amended and restated on April 25, 2018;


•	"CME BV" refers to CME Media Enterprises B.V., our 100% owned subsidiary;

• "CME NV" refers to Central European Media Enterprises N.V., our 100% owned subsidiary;


•	"AT&T" refers to AT&T, Inc.

• "~~Warner~~TW ~~Media~~Investor" refers to Time Warner Media, ~~LLC.~~Holdings ~~(formerly Time Warner, Inc~~B.)V., a wholly owned subsidiary of ~~AT&T;~~Warner ~~and~~Media;

• "TWWarner ~~Investor~~Media" refers to ~~Time~~ Warner Media, ~~Holdings~~LLC. B(formerly Time Warner, Inc.V.), a wholly owned subsidiary of ~~Warner Media~~AT&T.


•	"Merger" refers to the merger of Merger Sub (as defined below) with and into the Company pursuant to the Merger Agreement (as defined below);


•	"Merger Agreement" refers to the agreement and plan of merger dated October 27, 2019 by and among the Company, Parent (as defined below) and Merger Sub (as defined below);

Index


•	"Merger Sub" refers TV Bermuda Ltd., a Bermuda exempted company limited by shares and a wholly-owned subsidiary of Parent (as defined below);


•	"Parent" refers TV Bidco B.V., a Netherlands private limited liability company; and


•	"PPF" refers PPF Group N.V., a Netherlands public limited liability company.

PART I

ITEM 1. BUSINESS

On July 9, 2017, we entered into a framework agreement with Slovenia Broadband S.à r.l., a wholly owned subsidiary of United Group B.V., relating to the sale of our Croatian and Slovenian operations (the "Divestment Transaction"). Following an amendment and restatement of that agreement on July 5, 2018 to permit the sale of each operation independently, the sale of our Croatian operations was completed on July 31, 2018. Accordingly, the Croatian operations are presented as discontinued operations for all periods in this report. The agreement to sell our operations in Slovenia was terminated on January 18, 2019. As a result, the Slovenian operations are not presented as held for sale or discontinued operations, and the discussion below relates to our continuing operations in the five operating segments. See Part II, Item 8, Note 3, "Discontinued Operations and Assets Held for Sale" for further information.

Our main operating countries are members of the European Union (the "EU"). However, as emerging economies, they have adopted Western-style democratic forms of government and have economic structures, political and legal systems, and corporate governance and business practices that continue to evolve. As the economies of our operating countries converge with more developed nations and their economic and commercial infrastructures continue to mature, we believe the business risks of operating in these countries will continue to decline.

Merger

On October 27, 2019, the Company entered into the Merger Agreement with Parent and Merger Sub. Parent and Merger Sub are affiliates of PPF. Pursuant to the Merger Agreement, Merger Sub will merge with and into the Company, with the Company continuing as the surviving company in the Merger as a wholly-owned subsidiary of Parent.

The closing of the proposed Merger is subject to several conditions, including, but not limited to, the requisite vote of the Company’s shareholders in favor of the Merger Agreement and the proposed Merger, the receipt of certain competition and other regulatory approvals, compliance with covenants and agreements in the Merger Agreement (subject to certain materiality qualifications), and the absence of any governmental order prohibiting completion of the proposed Merger. A special general meeting of shareholders of the Company will be held on February 27, 2020, where shareholders will be asked to vote on a proposal to approve the Merger Agreement, the related statutory merger agreement and the Merger contemplated under such agreements.

Under the Merger Agreement, at the effective time of the Merger (the “Effective Time”), without any action required by the Company, Parent, Merger Sub or any shareholder of the Company or any other person, each Class A Share issued and outstanding immediately prior to the Effective Time will be canceled and cease to exist automatically and each such Class A Share (other than shares owned by the Company, Parent, Merger Sub or any of their respective direct or indirect wholly-owned subsidiaries, in each case not held on behalf of third parties) will be converted into the right to receive $4.58 in cash.

Under the Merger Agreement, at the Effective Time, without any action required by the Company, Parent, Merger Sub or any shareholder of the Company or any other person, the Series A Preferred Share issued and outstanding immediately prior to the Effective Time will be canceled and cease to exist automatically and will be converted into the right to receive the $32,900,000 in cash, without interest, and each Series B Preferred Share issued and outstanding immediately prior to the Effective Time will be canceled and cease to exist automatically and will be converted into the right to receive the $1,630.875 in cash, without interest; provided that, among other things, any conversion of the Series A Preferred Share or any Series B Preferred Shares into Class A Shares on or after October 27, 2019 will be deemed to be null and void.

For further details on the proposed Merger, refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”.

Operating Strategy

We operate market leading television networks in ~~each of these~~ five countries, broadcasting a total of 3130 television channels to approximately 45 million people living in the region. Each segment also develops and produces content for their television channels and digital properties. We generate advertising revenues in our country operations from agreements with advertisers, advertising agencies and sponsors to place advertising on the television channels and websites that we operate. We generate additional revenues by collecting fees from cable, direct-to-home ("DTH") and internet protocol television ("IPTV") operators for carriage of our channels.

Our strategy is to maintain or increase our audience leadership in each of our operating countries and to pursue sales strategies designed to maximize our revenues in order to provide additional financial resources to invest in popular local content. We have built our audience leadership in each of our markets by operating a multi-channel business model with a diversified portfolio of television channels which appeal to a broad audience.

Content that consistently generates high audience shares is crucial to maintaining the success of each of our country operations. While content acquired from the Hollywood studios remains popular, our audiences increasingly demand content that is produced in their local language and reflects their society, attitudes and culture. We believe developing and producing local content is key to being successful and supporting market-leading television channels, particularly in prime time, and that maintaining a regular stream of popular local content at the lowest possible cost is a key strength over the long term.

As the distribution platforms in our region develop and become more diversified, our television channels and digital content will increasingly reach viewers through new distribution offerings and on mobile devices. We offer viewers the choice of watching our television content through a variety of platforms, including Voyo, our subscription video-on-demand service, and advertising supported catch-up services on our websites. Additionally, we operate a portfolio of digital media products that complement our news programming and other television station-related brands.

Sales

We generate advertising revenues primarily through entering into agreements with advertisers, advertising agencies and sponsors to place advertising on our television channels.

Our main unit of inventory is the commercial gross rating point ("GRP"), a measure of the number of people watching television when an advertisement is aired. We generally contract with a client to provide an agreed number of GRPs for an agreed price (“cost per point” or "CPP"). The CPP varies depending on the season and time of day the advertisement is aired, the volume of GRPs purchased, requests for special positioning of the advertisement, the demographic group that the advertisement is targeting and other factors. Much less frequently, and usually only for small niche channels, we may sell on a fixed spot basis where an advertisement is placed at an agreed time for a negotiated price that is independent of the number of viewers. Our larger advertising customers generally commit to specified amounts of advertising on an annual basis, which sets the pricing for a minimum volume of GRPs.2

Index

Our main unit of inventory is the commercial gross rating point ("GRP"), a measure of the number of people watching television when an advertisement is aired. We generally contract with a client to provide an agreed number of GRPs for an agreed price (“cost per point” or "CPP"). The CPP varies depending on the season and time of day during which the advertisement is aired, the volume of GRPs purchased, requests for special positioning of the advertisement, the demographic group that the advertisement is targeting and other factors. Much less frequently, and usually only for small niche channels, we may sell on a fixed spot basis where an advertisement is placed at an agreed time for a negotiated price that is independent of the number of viewers. Our larger advertising customers generally commit to specified amounts of advertising on an annual basis, which sets the pricing for a minimum volume of GRPs.

We operate our television networks based on a business model of audience leadership, brand strength and popular local content. Our sales strategy is to maximize the monetization of our advertising time by leveraging our high brand power and applying an optimal mix of pricing and sell-out rate. The effectiveness of our sales strategy is measured by our share of the television advertising market, which represents the proportion of our television advertising revenues compared to the total television advertising market.

We also generate a growing proportion of revenues by collecting carriage fees from cable, satellite and IPTV operators for broadcasting our television channels. This fee revenue is generally based on the number of subscribers to offerings from these operators that include our channels.

Programming

Our programming strategy in each country is tailored to match the expectations of key audience demographics by scheduling and marketing an optimal mix of programs in a cost effective manner. The programming that we provide drives our audience shares and ratings (see "Audience Share, Ratings and Competition" below)and consists of locally-produced news, current affairs, fiction, and reality and entertainment shows as well as acquired foreign movies, series and sports programming.

We focus our programming investments on securing leading audience share positions during prime time, where the majority of advertising revenues are derived, and improving our cost efficiency through optimizing the programming mix and limiting the cost of programming scheduled off-prime time while maintaining all day audience shares.

Index

Audience Share, Ratings and Competition

Audience share represents the viewers watching a channel as a proportion of the total audience watching television at that time. Ratings represent the number of people watching a channel in proportion to the total population. Audience share and ratings information are measured in each market by independent agencies using peoplemeters, which measure audiences for different demographics and subgeographies of the population throughout the day. Our channels schedule programming intended to attract audiences within specific target demographics that we believe will be attractive to advertisers and television distributors. The tables below provide a comparison of all day and prime time audience shares for ~~2018~~2019 in the target demographic of each of our leading channels to the primary channels of our main competitors.

Bulgaria

We operate one general entertainment channel, BTV, and five other channels, BTV CINEMA, BTV COMEDY, BTV ACTION, BTV LADY and RING.

Target Demographic	Channel	Ownership	All day audience share		Prime time audience share
			2018	2017	2018	2017
			2019	2018	2019	2018
18-49	BTV	CME	2927.73%	3129.87%	3231.46%	3432.84%
	NOVA TV	~~MTG~~Advance Media Group	1720.78%	1617.7%	1922.37%	1819.53%
	BNT 1	Public television	65.67%	6.06%	87.91%	78.49%

Source: GARB

The combined all day and prime time audience shares of our Bulgaria operations in ~~2018~~2019 were 4038.10% and 4341.19%, respectively.

Czech Republic

We operate one general entertainment channel, TV NOVA, and seven other channels, NOVA 2, NOVA CINEMA, NOVA SPORT 1, NOVA SPORT 2, NOVA ACTION, NOVA GOLD and NOVA INTERNATIONAL, a general entertainment channel broadcasting in the Slovak Republic.

Target Demographic	Channel	Ownership	All day audience share		Prime time audience share
			2018	2017	2018	2017
			2019	2018	2019	2018
15-54	TV NOVA	CME	2223.40%	2322.74%	2527.80%	2725.98%
	Prima	GME	1011.81%	10.78%	13.13%	13.51%
	CT 1	Public television	1213.83%	12.28%	15.58%	1415.15%

Source: ATO - Nielsen Admosphere; Mediaresearch

The combined all day and prime time audience shares of our Czech Republic operations in ~~2018~~2019, excluding NOVA SPORT 1, NOVA SPORT 2 and NOVA INTERNATIONAL, were 3534.38% and 36.79%, respectively.

Romania

We operate one general entertainment channel, PRO TV, and seven other channels, PRO 2, PRO X, PRO GOLD, PRO CINEMA, PRO TV INTERNATIONAL, MTV ROMANIA, as well as PRO TV CHISINAU, a general entertainment channel broadcasting in Moldova.

Target Demographic	Channel	Ownership	All day audience share		Prime time audience share
			2018	2017	2018	2017
18-49 Urban	PRO TV	CME	22.5%	23.3%	24.7%	27.0%
	Antena 1	Intact group	14.5%	14.9%	15.6%	15.9%
	TVR 1	Public television	2.2%	1.4%	2.7%	1.5%

Source: Kantar Media

The combined all day and prime time audience shares of our Romania operations in 2018, excluding PRO TV INTERNATIONAL, and PRO TV CHISINAU were 26.7% and 28.8%, respectively.

Index

Romania

We operate one general entertainment channel, PRO TV, and six other channels, PRO 2, PRO X, PRO GOLD, PRO CINEMA, PRO TV INTERNATIONAL, as well as PRO TV CHISINAU, a general entertainment channel broadcasting in Moldova.



Target Demographic	Channel	Ownership	All day audience share		Prime time audience share
			2019	2018	2019	2018
18-49 Urban	PRO TV	CME	22.5%	22.5%	25.5%	24.7%
	Antena 1	Intact group	14.6%	14.5%	15.9%	15.6%
	TVR 1	Public television	1.3%	2.2%	1.3%	2.7%

Source: Kantar Media

The combined all day and prime time audience shares of our Romania operations in 2019, excluding PRO TV INTERNATIONAL and PRO TV CHISINAU, were 26.3% and 29.5%, respectively.

Slovak Republic

We operate one general entertainment channel, TV MARKIZA, and three other channels, DOMA, DAJTO and MARKIZA INTERNATIONAL, a general entertainment channel broadcasting in the Czech Republic.

Target Demographic	Channel	Ownership	All day audience share		Prime time audience share
			2018	2017	2018	2017
			2019	2018	2019	2018
12-54	TV MARKIZA	CME	21.32%	1921.53%	2122.83%	2021.38%
	TV JOJ	J&T Media Enterprises	1314.95%	1613.59%	1718.73%	2017.27%
	Jednotka	Public Television	8.42%	8.64%	10.21%	10.82%

Source: PMT/ TNS SK

The combined all day and prime time audience shares of our Slovak Republic operations in ~~2018~~2019, excluding MARKIZA INTERNATIONAL, were 28.54% and 29.57%, respectively.

Slovenia

We operate two general entertainment channels, POP TV and KANAL A, and three other channels, KINO, BRIO and OTO.

Target Demographic	Channel	Ownership	All day audience share		Prime time audience share
			2018	2017	2018	2017
			2019	2018	2019	2018
18-54	POP TV	CME	2120.06%	21.60%	3231.86%	32.68%
	Planet TV	~~Antenna Group /~~ TSmedia	5.42%	75.14%	6.83%	96.58%
	SLO 1	Public Television	9.12%	9.91%	910.91%	109.59%

Source: AGB Nielsen Media Research

The combined all day and prime time audience shares of our Slovenia operations in ~~2018~~2019 were 3839.80% and 49.69%, respectively.

Seasonality

We experience seasonality, with advertising sales tending to be highest during the fourth quarter of each calendar year due to the holiday season, and lowest during the third quarter of each calendar year due to the summer vacation period (typically July and August). Our non-advertising sales are not affected by seasonality.

Index

Regulation of Television Broadcasting

Television broadcasting in each of the countries in which we operate is regulated by a governmental authority or agency. In this report, we refer to such agencies individually as a "Media Council" and collectively as "Media Councils". Media Councils generally supervise broadcasters and their compliance with national broadcasting legislation, as well as control access to the available frequencies through licensing regimes.

Programming and Advertising Regulation

Our main operating countries are member states of the EU, and our broadcast operations in such countries are subject to relevant EU legislation relating to media.

The EU Audiovisual Media Services Directive (the "AVMS Directive"), which came into force in March 2010, provides the legal framework for audiovisual media services generally in the EU. On November 6, 2018, the European Council adopted amendments to the AVMS Directive, which formally entered into force on December 18, 2018. European Member States, including the territories in which CME operates, ~~will~~ have until September 19, 2020, to transpose the amendments to the AVMS Directive into national legislation. The original AVMS Directive ~~shall~~remains ~~remain~~ in force until new legislation incorporating the amendments to the AVMS Directive (described below) are implemented in the countries in which we operate. The AVMS Directive covers both linear (i.e., broadcasting) and non-linear (e.g., video-on-demand and catch-up) transmissions of audiovisual media services, with the latter subject to less stringent regulation. Among other things, the AVMS Directive requires broadcasters to comply with rules related to, but not limited to, program content, advertising content and quotas, product placement, sponsorship, teleshopping, the protection of minors, accessibility by persons with a visual or hearing disability, and minimum quotas with respect to "European works" (defined as originating from an EU member state or a signatory to the Council of Europe's Convention on Transfrontier Television as well as being written and produced mainly by residents of the EU or Council of Europe member states or pursuant to co-production agreements between such states and other countries). In addition, the AVMS Directive requires that at least 10% of either broadcast time or programming budget is dedicated to programs made by European producers who are independent of broadcasters. News, sports, games, advertising, teletext services and teleshopping are excluded from the calculation of these quotas. In respect of advertising, the AVMS Directive currently provides that the proportion of television advertising spots and teleshopping spots within any hour of broadcasting shall not exceed 20%. The current AVMS Directive does not otherwise restrict when programming may be interrupted by advertising in linear broadcasting, except in the case of films and news programming (where programming may be interrupted once every thirty minutes or more) and children’s programming (where the same restriction applies providing that the program is greater than thirty minutes) and religious programming (where no advertising or teleshopping shall be inserted). Under the current AVMS Directive, there is also a general prohibition on product placement, subject to certain exceptions (for example it is permitted in films and series, sports programs and light entertainment programs) and providing that the use of product placement is not ‘unduly’ prominent, is not promotional and is appropriately identified to viewers.

The amendments to the AVMS Directive ~~will~~ liberalize some of the AVMS Directive requirements and extend some rules that currently apply to broadcasters to video-on-demand services (such as program content, advertising content, and quotas and prominence requirements for European works). The amendments also introduce more stringent rules related to the protection of minors as well as bringing video-sharing platforms that target audiences in the EU (such as ~~Youtube~~YouTube, Facebook, Instagram) within its the scope.

4In respect of advertising, the amendments to the AVMS Directive provide greater flexibility to linear broadcasters on the timing of advertising so that the share of television commercials and teleshopping spots between 6am and 6pm and between 6pm and midnight may not exceed 20% of the total broadcasting time in each respective time slot (rather than the 20% hourly limit that currently exists). This means that broadcasters are able to allocate up to 144 minutes of advertising in total during the period between 6am and 6pm, and 72 minutes in total between 6pm and midnight, with no specific restrictions on the amount of advertising between midnight and 6am. The amendments to the AVMS Directive permit product placement in all audiovisual media services except in news and current affairs programs, consumer affairs programs, religious programs and children’s programs while maintaining the requirements that the use of product placement is not unduly prominent, is not promotional and is appropriately identified to viewers and imposing restrictions on the type of products which may be placed (e.g., no cigarettes or alcohol). In addition, the amended AVMS Directive imposes a ban on advertising, sponsorship and product placement of electronic cigarettes in any audiovisual service.

~~Index~~In respect of the protection of minors, the amended AVMS Directive imposes a ban on teleshopping during the broadcast of children’s programs, provides Member States with the option of banning the sponsorship of children’s programs, and limits the uses of personal data of children.

InUnder ~~respect of advertising,~~ the amendments to the AVMS Directive, ~~will~~Member ~~provide~~States ~~greater~~also ~~flexibility~~have ~~to linear broadcasters on~~ the ~~timing~~option of ~~advertising~~imposing soon ~~that~~their ~~the~~audiovisual ~~share~~service ofproviders ~~television~~(including ~~commercials~~broadcasters and ~~teleshopping~~video-on-demand ~~spots~~services ~~between~~providers ~~6am~~whose ~~and~~operations ~~6pm~~target ~~and~~their ~~between~~service ~~6pm~~to ~~and~~an ~~midnight~~audience ~~may~~within ~~not~~a ~~exceed~~different ~~20%~~Member ofState) ~~the~~a ~~total~~financial ~~broadcasting~~contribution ~~time~~towards ~~in each respective time slot (rather than~~ the ~~20%~~European ~~hourly~~production ~~limit~~of ~~that~~Europeans ~~currently exists~~works). ~~This~~There ~~means~~is ~~that~~also ~~broadcasters~~a ~~will~~requirement bethat ~~able~~broadcasters ~~to allocate up to 144 minutes of advertising in total during the period between 6am~~ and ~~6pm,~~other and 72 minutes in total between 6pm and midnight, with no specific restrictions on the amount of advertising between midnight and 6am. The amendments to the AVMS Directive will permit product placement in all audiovisual ~~media~~service ~~services~~providers ~~except~~ensure ~~in news and current affairs programs, consumer affairs programs, religious programs and children’s programs while maintaining the requirements~~ that ~~the~~at ~~use~~least 30% of ~~product~~their ~~placement~~video-on-demand isservice ~~not~~catalog ~~unduly prominent,~~ is ~~not~~dedicated ~~promotional and is appropriately identified~~ to ~~viewers~~European ~~and~~works ~~imposing restrictions on the type of products which may be placed (e.g., no cigarettes or alcohol). In addition, the amended AVMS Directive will impose a ban on advertising, sponsorship~~ and ~~product~~that ~~placement~~such ofworks ~~electronic~~are ~~cigarettes~~given indue ~~any audiovisual service~~prominence.

In respect of the protection of minors, the amended AVMS Directive will impose a ban on teleshopping during the broadcast of children’s programs, will provide Member States with the option of banning the sponsorship of children’s programs, and will limit the uses of personal data of children.

Under the amendments to the AVMS Directive, Member States will also have the option of imposing on their audiovisual service providers (including broadcasters and video-on-demand services providers whose operations target their service to an audience within a different Member State) a financial contribution towards the European production of Europeans works). There will also be a requirement that broadcasters and other audiovisual service providers ensure that at least 30% of their video-on-demand service catalog is dedicated to European works and that such works are given due prominence.

Please see below for more detailed information on programming and advertising regulations that impact our channels.

Bulgaria: In Bulgaria, privately owned broadcasters are permitted to broadcast advertising for up to 12 minutes per hour. The public broadcaster, BNT, which is financed through a compulsory television license fee and by the government, is restricted to broadcasting advertising for four minutes per hour and no more than 15 minutes per day, of which only five minutes may be in prime time. There are also restrictions on the frequency of advertising breaks (for example, news and children's programs shorter than 30 minutes cannot be interrupted). These restrictions apply to both publicly and privately -owned broadcasters. Further restrictions relate to advertising content, including a ban on tobacco advertising and restrictions on alcohol advertising, regulations on medical products advertising and regulations on advertising targeted at children or during children's programming. In addition, members of the news department of our channels are prohibited from appearing in advertisements. Our channels in Bulgaria are required to comply with several restrictions on programming, including regulations on the origin of programming. These channels must ensure that 50% of a channel's total annual broadcast time consists of EU- or locally-produced programming and 12% of such broadcast time consists of programming produced by independent producers in the EU. News, sports, games and teleshopping programs, as well as advertising and teletext services, are excluded from these restrictions.

Index

Czech Republic: Privately owned broadcasters in the Czech Republic are permitted to broadcast advertising for up to 12 minutes per hour. In September 2011, legislation was implemented in the Czech Republic which restricts the amount of advertising that may be shown on channels of the public broadcaster, CT. Pursuant to the regulation, channels CT 2 and CT 4 may show a limited amount of advertising up to 0.5% of the total daily broadcasting time on each channel, of which only 6 minutes per hour may be in prime time. No advertising may be shown on the other public TV channels, except where broadcasting an advertisement is a necessary condition for the acquisition of rights to broadcast cultural or sport events on such public channels. Where such broadcasting advertisement conditions apply, the same limitations on advertising time applicable to CT 2 and CT 4 shall apply to any advertising on the other public TV channels. Also included in the legislation is the requirement that national private broadcasters must contribute annually to a Czech cinematography fund in an amount equal to 2% of their net advertising revenues. We are entitled to apply for financing from the fund. In the Czech Republic, all broadcasters are restricted with respect to the frequency of advertising breaks during and between programs, as well as being subject to restrictions that relate to advertising content, including a ban on tobacco advertising and limitations on advertisements of alcoholic beverages, pharmaceuticals, firearms and munitions.

Romania: Privately owned broadcasters in Romania are permitted to broadcast advertising and direct sales advertising for up to 12 minutes per hour. There are also restrictions on the frequency of advertising breaks (for example, news and children's programs shorter than 30 minutes cannot be interrupted). Broadcasters are also required that from the total broadcasting time (except for the time allocated to news, sports events, games, advertising and teleshopping) (a) at least 50% must be European-origin audio-visual works and (b) at least 10% (or, alternatively, at least 10% of their programming budget) must be European audio-visual works produced by independent producers. The public broadcaster, TVR, is restricted to broadcasting advertising for eight minutes per hour and only between programs. Further restrictions relate to advertising content, including a ban on tobacco advertising and restrictions on alcohol advertising, and regulations on advertising targeted at children or during children's programming. In addition, news anchors of all channels are prohibited from appearing in advertisements and teleshopping programming.

Slovak Republic: Privately owned broadcasters in the Slovak Republic are permitted to broadcast advertising for up to 12 minutes per hour but not for more than 20% of their total daily broadcast time. Since January ~~2013~~2020, the public broadcaster ~~RTVS, which is financed through a compulsory license fee,~~ can broadcast advertising for up to 0.5% of its total broadcast time on a given calendar day (up to 2.5% of total broadcast time including teleshopping programming), but between 7:00 p.m. and 10:00 p.m. may broadcast only eight minutes of advertising per hour. The restriction regarding total broadcast advertising time does not apply to the broadcasting of advertising in direct connection with the broadcasting of a sporting or cultural event, in which the broadcasting of advertising is a necessary condition for the acquisition of rights to broadcast such event. The broadcasting of advertising in direct connection with the broadcasting of a sporting or cultural event cannot exceed 15% of the daily total broadcast time. There are also restrictions on the frequency of advertising breaks during and between programs. ~~RTVS~~The public broadcaster is not permitted to broadcast advertising breaks during programs. There are also restrictions that relate to advertising content, including a ban on tobacco, pharmaceuticals, firearms and munitions advertising and a ban on advertisements of alcoholic beverages (excluding beer and wine) between 6:00 a.m. and 10:00 p.m. Our operations in the Slovak Republic are also required to comply with several restrictions on programming, including regulations on the origin of programming. These include the requirement that 50% of the station's monthly broadcast time must be European-origin audio-visual works and at least 10% of a station's monthly broadcast time must be European audio-visual works produced by independent producers, at least 10% of which must be broadcast within five years of production. National private broadcasters must also contribute annually to an audiovisual fund in the amount equal to 2% of their net advertising revenues and public broadcasters must contribute annually to the audiovisual fund in the amount equal to 5% of its net advertising revenue. Both public and private broadcasters are entitled to apply for financing from the fund.

Slovenia: Privately owned broadcasters in Slovenia are allowed to broadcast advertising for up to 12 minutes in any hour. The public broadcaster, SLO, which is financed through a compulsory television license fee and commercial activities, is allowed to broadcast advertising for up to 10 minutes per hour, but is only permitted up to seven minutes per hour between the hours of 6:00 p.m. and 11:00 p.m. There are also restrictions on the frequency of advertising breaks during programs and restrictions that relate to advertising content, including restrictions on food advertising during children's programming and a ban on tobacco advertising and a prohibition on the advertising of any alcoholic beverages from 7:00 a.m. to 9:30 p.m. and generally for alcoholic beverages with an alcoholic content of more than 15%. Our Slovenian operations are required to comply with several restrictions on programming, including regulations on the origin of programming. These include the requirement that 20% of a station's daily programming consist of locally produced programming, of which at least 60 minutes must be broadcast between 6:00 p.m. and 10:00 p.m. In addition, 50% of our niche channels' annual broadcast time must be European-origin audio-visual works and at least 10% of such stations' annual broadcast time must be European audio-visual works produced by independent producers.

Index

Licensing Regulation

The license granting and renewal process in our operating countries varies by jurisdiction and by type of broadcast permitted by the license (i.e., terrestrial, cable, satellite). Depending on the country, terrestrial licenses may be valid for an unlimited time period, may be renewed automatically upon application or may require a more lengthy renewal procedure, such as a tender process. Generally cable and satellite licenses are granted or renewed upon application. We expect all of our licenses will continue to be renewed or new licenses to be granted as required to continue to operate our business. All of the countries in which we operate have transitioned from analog to digital terrestrial broadcasting and we have obtained digital licenses where requested. In January 2017, we ceased terrestrial distribution of our channels in the Slovak Republic and Slovenia, and channels are now available exclusively on cable, satellite and IPTV platforms. We will apply for additional digital licenses where such applications are prudent and permissible. Please see below for more detailed information on licenses for our channels.

Bulgaria: BTV operates pursuant to a national digital terrestrial license issued by the Council for Electronic Media, the Bulgarian Media Council, that expires in July 2024. BTV ACTION broadcasts pursuant to a national cable and satellite registration that is valid for an indefinite time period and also has a digital terrestrial license that expires in January 2025 which is not currently in use. BTV CINEMA, BTV COMEDY, RING and BTV LADY, as well as BTV, each broadcast pursuant to a national cable and satellite registration that is valid for an indefinite time period.

Czech Republic: Our channels in the Czech Republic operate under a variety of licenses granted by the Czech Republic Media Council, The Council for Radio and Television Broadcasting. TV NOVA broadcasts under a national terrestrial license that expires in January 2025. TV NOVA may also broadcast pursuant to a satellite license that expires in December 2020. NOVA CINEMA broadcasts pursuant to a national terrestrial digital license that expires in September 2023. NOVA CINEMA also broadcasts via satellite pursuant to a license that is valid until ~~November~~October ~~2019~~2031. NOVA SPORT 1 broadcasts pursuant to a license that allows for both satellite and cable transmission that expires in October 2020. NOVA SPORT 2 broadcasts pursuant to a satellite license that expires in August 2027. NOVA ACTION broadcasts pursuant to a satellite license that expires in July 2024, a national terrestrial license that expires in September 2023. NOVA 2 broadcasts pursuant to a national terrestrial license that expires in December 2024, and a satellite license that expires in February 2025. NOVA GOLD broadcasts pursuant to a national terrestrial license and a satellite license that each expire in February 2025. In addition, each channel has a license that permits internet transmission that expires in June 2030, other than NOVA SPORT 1 and NOVA SPORT2 which expires in August 2027. NOVA INTERNATIONAL broadcasts pursuant to a license that permits internet transmission which expires in January 2028.

Romania: PRO TV broadcasts pursuant to a national satellite license granted by the Romanian Media Council, the National Audio-Visual Council, that expires in May 2023. PRO 2 broadcasts pursuant to a national satellite license that expires in January 2025. PRO GOLD broadcasts pursuant to a national satellite license that expires in April 2021. PRO CINEMA broadcasts pursuant to a national satellite license that expires in April 2022. PRO X broadcasts pursuant to a national satellite license that expires in July 2021. PRO TV INTERNATIONAL broadcasts pursuant to a national satellite license that expires in May 2027 and MTV ROMANIA broadcasts pursuant to a national satellite license which terminates in February 2019. PRO 2 also broadcasts in high-definition pursuant to a written consent from the Media Council. PRO TV CHISINAU broadcasts pursuant to a cable license granted by the Audio-Visual Coordinating Council of the Republic of Moldova (the "AVCC") that expires in November 2023.6

Index

Romania: PRO TV broadcasts pursuant to a national satellite license granted by the Romanian Media Council, the National Audio-Visual Council, that expires in May 2023. PRO 2 broadcasts pursuant to a national satellite license that expires in January 2025. PRO GOLD broadcasts pursuant to a national satellite license that expires in April 2021. PRO CINEMA broadcasts pursuant to a national satellite license that expires in April 2022. PRO X broadcasts pursuant to a national satellite license that expires in July 2021. PRO TV INTERNATIONAL broadcasts pursuant to a national satellite license that expires in May 2027. PRO TV also broadcasts in high-definition pursuant to a national cable license that expires in September 2024. PRO 2 also broadcasts in high-definition pursuant to a national cable license that expires in October 2028. PRO X also broadcasts in high-definition pursuant to a national cable license that expires in October 2028. PRO TV CHISINAU broadcasts pursuant to a cable license granted by the Audio-Visual Coordinating Council of the Republic of Moldova (the "AVCC") that expires in November 2023.

Slovak Republic: TV MARKIZA, DOMA and DAJTO each broadcast pursuant to a national license for digital broadcasting granted by the Council for Broadcasting and Retransmission, the Media Council of the Slovak Republic, which is valid for an indefinite period. MARKIZA INTERNATIONAL is broadcast pursuant to the license granted to TV MARKIZA.

Slovenia: Our Slovenian channels POP TV, KANAL A, KINO, BRIO and OTO each have licenses granted by the Agency for Communication Networks and Services of the Republic of Slovenia and the Ministry of Culture, that allow for broadcasting on any platform, including digital, cable and satellite. These licenses are valid for an indefinite time period.

OTHER INFORMATION

Employees

As of December 31, ~~2018~~2019, we had a total of approximately 2,~~600~~550 employees (including contractors).

Corporate Information

CME Ltd. was incorporated in 1994 under the laws of Bermuda. Our registered offices are located at O'Hara House, 3 Bermudiana Road, Hamilton HM 08, Bermuda, and our telephone number is +1-441-296-1431. Communications can also be sent c/o CME Media Services Ltd. at Krizeneckeho nam. 1078/5, 152 00 Praha 5, Czech Republic, telephone number +420-242-465-605. CME's Class A common stock is listed on the NASDAQ Global Select Market and the Prague Stock Exchange under the ticker symbol “CETV”.

Available Information

Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Sections 13(a) or 15(d) of the Exchange Act are available on our website, free of charge, as soon as reasonably practicable after the reports are electronically filed with or furnished to the SEC. These reports together with press releases, public conference calls, webcasts and posts to the "Investors" section of our website are available at www.cme.net and we encourage investors to use our website. The information contained on our website is not included as a part of, or incorporated by reference into, this Report.

Financial Information by Operating Segment and by Geographical Area

For financial information by operating segment and geographic area, see Part II, Item 8, Note 20, "Segment Data".

Index

ITEM 1A Risk Factors

This report and the following discussion of risk factors contain forward-looking statements as discussed on page 1 of this report. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the risks and uncertainties described below and elsewhere in this report. These risks and uncertainties are not the only ones we may face. Additional risks and uncertainties of which we are not aware, or that we currently deem immaterial, may also become important factors that affect our financial condition, results of operations and cash flows.

Risks Relating to Our Financial Position

Changes in global or regional economic conditions may adversely affect our financial position and results of operations.

The results of our operations depend heavily on advertising revenue, and demand for advertising is affected by general economic conditions in the region and globally. Our markets have experienced overall growth in real GDP (as adjusted for inflation) and advertising spending ~~since~~over ~~2014~~the last several years; however, we cannot predict if the current growth trends will continue in the future. ~~Growth~~Analyst ofestimates ~~the~~for ~~German~~2020 ~~economy~~of ~~decelerated~~real ~~during~~GDP in the ~~final~~countries ~~quarter~~in ofwhich ~~2018~~we ~~leading~~operate toforecast ~~lower~~a ~~forecasts~~slower ~~for~~rate ~~future~~of growth, ~~and~~overall ~~Italy~~compared ~~slipped~~to ~~into recession fueling concerns that its government will not meet its budget deficit target in~~ 2019. Recessions or periods of low or negative growth in the region or globally in the future may cause a deterioration of general economic conditions in one or more of our markets, which would have an adverse economic impact on our advertising revenues. The United States has imposed tariffs on certain products from many of its trading partners, including Europe and China., ~~If trade tensions between the United States~~ and ~~Europe~~has ~~escalate,~~previously ~~this~~threatened ~~may~~to ~~result~~impose inadditional ~~the imposition of~~ tariffs on cars and auto part exports from Europe. Such tariffs could have a significant adverse impact on the economies of our countries of operation. Additionally, a slowdown in China resulting from existing ~~or increased~~ tariffs on Chinese products may have an adverse impact on the global economy, which may ultimately reduce demand for European exports and the rate of GDP growth in the countries in which we operate. Other factors that may affect general economic conditions in our markets include defaults by sovereigns or systemically important companies, austerity programs, natural disasters, acts of terrorism, civil or military conflicts or general political instability and responses to it, any of which may also reduce advertising spending. In addition, although we believe the advertising spend per capita of the countries in which we operate and advertising intensity (the ratio of total advertising spend per capita to nominal GDP per capita) will eventually converge with developed markets in Europe, such convergence may not occur in the time frame we expect, or at all. Any of these developments would have a significant negative effect on our financial position, results of operations and cash flows.

Changes to the quantitative easing program implemented by the European Central Bank ("ECB") ~~and the impact on the region of the United Kingdom’s exit from the European Union ("EU")~~ may adversely affect our financial position and results of operations.

The ECB embarked upon quantitative easing in 2015 to address economic softness and a slowdown in growth of consumer prices in the Eurozone. The ECB also created funding and stability mechanisms to provide liquidity and financial assistance to Eurozone member states and financial institutions. Economic growth in recent years in the Eurozone, ~~including strong growth in 2017,~~ has been helped by the ECB’s quantitative easing program which was recalibrated in January 2018. ~~Citing~~Although the ECB, citing improved economic conditions, ~~the ECB~~ ended its original quantitative easing program at the end of December 2018, it resumed its quantitative easing program in November 2019. While ~~The~~the duration of the current quantitative easing program is not known, the cessation of quantitative easing in the future may adversely impact ~~future~~ growth in Eurozone countries, including the countries in which we operate, inand ~~which~~ would negatively impact our business.

OnOur ~~March~~financial ~~29,~~position ~~2019, the two-year period during which the United Kingdom is to finalize the terms~~ and ~~process~~results for leaving the EU, commonly referred to as "Brexit", will expire. There is significant uncertainty regarding the terms on which the United Kingdom will leave the EU, and it is expected that economic conditions in the EU will be impacted by Brexit. Given the ongoing uncertainty over the final terms of ~~Brexit,~~operations ~~the~~may ~~overall economic impact of Brexit on the EU and the Euro continues to~~ be ~~difficult~~adversely toaffected ~~estimate~~ as ~~decisions to conserve cash and reduce spending by consumers and businesses in the United Kingdom would have~~ a ~~negative~~result ~~impact~~of ~~on economic growth rates in~~ the United Kingdom’s ~~and,~~decision to aend ~~lesser~~its ~~extent,~~membership in the ~~EU,~~European ~~in particular those countries that are significant exporters to the United Kingdom~~Union. Furthermore, the departure of the United Kingdom from the EU may further affect the budgetary contributions and allocations among the EU member states in the medium term, including the countries in which we operate, which have historically been net recipients of EU funding. Economic uncertainty caused by Brexit or other instability in the EU resulting from Brexit could cause significant volatility in EU markets and reduce economic growth rates in the countries in which we operate, which would negatively impact the demand for advertising and consequently our financial position, results of operation and cash flows.

The United Kingdom is in the process of negotiating its exit from the European Union (generally referred to as “Brexit”). On January 31, 2020, the United Kingdom formally left the European Union; however, it will remain in the single market and be subject to the EU’s rules and regulations during a transition period ending December 31, 2020. It is expected that economic conditions in the EU will be impacted by Brexit. The impact on our business from a result of Brexit will depend, in part, on the outcome of tariff, trade, regulatory and other negotiations during this transition period and on the ultimate manner and terms of the U.K.’s withdrawal from the EU. Given the ongoing uncertainty over the final terms of Brexit to be negotiated during the transition period, the overall economic impact of Brexit on the EU and the Euro continues to be difficult to estimate as decisions to conserve cash and reduce spending by consumers and businesses in the United Kingdom would have a negative impact on economic growth rates in the United Kingdom and, to a lesser extent, in the EU, in particular those countries that are significant exporters to the United Kingdom. Furthermore, the departure of the United Kingdom from the EU may further affect the budgetary contributions and allocations among the EU member states in the medium term, including the countries in which we operate, which have historically been net recipients of EU funding. Economic uncertainty caused by Brexit or other instability in the EU resulting from Brexit could cause significant volatility in EU markets and reduce economic growth rates in the countries in which we operate, which would negatively impact the demand for advertising and consequently our financial position, results of operations and cash flows.

Our operating results will be adversely affected if we cannot generate strong advertising sales.

We generate the majority of our revenues from the sale of advertising airtime on our television channels. While we have implemented pricing strategies to increase sales and television advertising spending, the success of these strategies has varied from market to market and continues to be challenged by pressure from advertisers and discounting by competitors. In addition to advertising pricing, other factors that may affect our advertising sales include general economic conditions (described above), competition from other broadcasters and operators of other distribution platforms, changes in programming strategy, changes in distribution strategy, our ability to secure distribution on cable, satellite or IPTV operators, our channels’ technical reach, technological developments relating to media and broadcasting, seasonal trends in the advertising market, changing audience preferences and in how and when people view content and the accompanying advertising, increased competition for the leisure time of audiences and shifts in population and other demographics. Our advertising revenues also depend on our ability to maintain audience ratings and to generate GRPs. This requires us to have a distribution strategy that reaches a significant audience as well as to maintain investments in programming at a sufficient level to continue to attract audiences. Changes in the distribution of our channels, such as our decision to cease broadcasting on digital terrestrial television ("DTT") in the Slovak Republic and Slovenia in 2017, may reduce the number of people who can view our channels, which may negatively impact our audience share and GRPs generated. Furthermore, significant or sustained reductions in investments in programming or other operating costs in response to reduced advertising revenues had and, if repeated, may have an adverse impact on our television viewing levels. Reductions in advertising spending in our markets and resistance to price increases as well as competition for ratings from broadcasters seeking to attract similar audiences may have an adverse impact on our ability to maintain our advertising sales. A failure to maintain ~~and increase~~ advertising sales could have a material adverse effect on our financial position, results of operations and cash flows.

Index

We may be unable to repay or refinance our existing indebtedness and may not be able to obtain favorable refinancing terms.

We have a substantial amount of indebtedness. ~~Following~~In the ~~termination~~event ~~on January 18, 2019 of~~ the ~~agreement~~proposed weMerger ~~originally~~is ~~entered into on July 9, 2017 with Slovenia Broadband S.à r.l., a wholly owned subsidiary of United Group B.V., for the sale of our Slovenian operations, we have~~ not ~~repaid the indebtedness we planned to repay with the proceeds we had expected to receive from that sale. Under the Reimbursement Agreement and the 2023 Revolving Credit Facility (when drawn)~~completed, we can incur only limited amounts of additional indebtedness, other than indebtedness incurred to refinance existing indebtedness. In addition, all commitments under the 2023 Revolving Credit Facility also terminate on the refinancing of any Euro Loan. We face the risk that we will not be able to renew, repay or refinance our indebtedness when due, or that the terms of any renewal or refinancing will not be on better terms than those of such indebtedness being refinanced. Furthermore, pursuant to the Reimbursement Agreement, the all-in rates on each of the Euro Loans increase to a maximum of 10.0% (or 3.5% above the then-current all-in rate, if lower), on the date that is 365 days following a change of control of CME Ltd. (as defined therein); and pursuant to the 2023 Revolving Credit Facility, all commitments terminate following a change of control (as defined therein) and the interest rate on amounts outstanding increases to 10% plus LIBOR or 9% plus the alternate base rate on the date that is 365 days following such change of control. In the event we are not able to refinance our indebtedness, we might be forced to dispose of assets on disadvantageous terms or reduce or suspend operations, any of which would materially and adversely affect our financial condition, results of operations and cash flows.

Our debt service obligations and covenants may restrict our ability to conduct our operations.

We have ~~significant~~ debt service obligations under the Euro Loans as well as the 2023 Revolving Credit Facility (when drawn), including the Guarantee Fees to Warner Media as consideration for its guarantees of the Euro Loans (collectively, the "WM Guarantees"). In addition, if ~~cash~~our ~~flows~~financial ~~from~~performance ~~operations~~does do not meet our forecasts, we ~~would~~may ~~not be able to reduce our indebtedness as planned and would continue to~~ bear higher average borrowing costs on our senior debt and pay more interest and Guarantee Fees. As a result of our debt service obligations and covenants contained in the related loan agreements, we are restricted under the Reimbursement Agreement and the 2023 Revolving Credit Facility (when drawn) in the manner in which our business is conducted, including but not limited to our ability to obtain additional debt financing to refinance existing indebtedness or to fund future working capital, capital expenditures, business opportunities or other corporate requirements~~. We may have a proportionally higher level of debt and debt service obligations than our competitors~~, which may ~~put~~limit ~~us at a competitive disadvantage by limiting~~ our flexibility in planning for, or reacting to, changes in our business, economic conditions or our industry. For additional information regarding the Reimbursement Agreement, the 2023 Revolving Credit Facility and the WM Guarantees, see Part II, Item 8, Note 54, "Long-term Debt and Other Financing Arrangements".

We may be subject to changes in tax rates and exposure to additional tax liabilities.

We are subject to taxes in a number of foreign jurisdictions, including in respect of our operations as well as capital transactions undertaken by us. We are subject to regular review and audit by tax authorities, and in the ordinary course of our business there are transactions and calculations where the ultimate tax determination is unknown. Significant judgment is required in determining our provision for taxes. The final determination of our tax liabilities resulting from tax audits, related proceedings or otherwise could be materially different from our tax provisions. Economic and political pressures to increase receipts in various jurisdictions may make taxation and tax rates subject to significant change and the satisfactory resolution of any tax disputes more difficult. The occurrence of any of these events could have a material adverse effect on our financial position, results of operations and cash flows.

A default by us in connection with our obligations under our outstanding indebtedness could result in our inability to continue to conduct our business.

Pursuant to the Reimbursement Agreement and the 2023 Revolving Credit Facility, we pledged all of the shares of CME ~~NV and of CME~~ BV, which ~~together~~owns ~~own~~ all of our interests in our operating subsidiaries, in favor of Warner Media as security for this indebtedness. If we or ~~these~~CME ~~subsidiaries~~BV were to default under the terms of any of the relevant agreements, Warner Media would have the ability to sell all or a portion of the assets pledged to it in order to pay amounts outstanding under such debt instruments. This could result in our inability to conduct our business.

Fluctuations in exchange rates may continue to adversely affect our results of operations.

Our reporting currency is the dollar and CME Ltd.'s functional currency is the Euro. Our consolidated revenues and costs are divided across a range of European currencies. Any strengthening of the dollar will have a negative impact on our reported revenues. Furthermore, fluctuations in exchange rates may negatively impact programming costs. While local programming is generally purchased in local currencies, a significant portion of our content costs relates to foreign programming purchased pursuant to dollar-denominated agreements. If the dollar appreciates against the functional currencies of our operating segments, the cost of acquiring such content would be adversely affected, which could have a material adverse effect on our results of operations and cash flows.

Our strategies to enhance our carriage fees and diversify our revenues may not be successful.

We are focused on creating additional revenue streams from our broadcast operations as well as increasing revenues generated from television advertising, which is how we generate most of our revenues. Our main efforts with respect to this strategy are on increasing carriage fees from cable, satellite and IPTV operators for carriage of our channels as well as continuing to seek improvements in advertising pricing. Agreements with operators generally have a term of one or more years, at which time agreements must be renewed. There can be no assurance that we will be successful in renewing carriage fee agreements on similar or better terms. During negotiations to implement our carriage fees strategy in prior years, some cable and satellite operators suspended the broadcast of our channels, which negatively affected the reach and audience shares of those operations and, as a result, advertising revenues. There is a risk that operators may refuse to carry our channels while carriage fee negotiations are ongoing, which would temporarily reduce the reach of those channels and may result in clients withdrawing advertising from our channels. The occurrence of any of these events may have an adverse impact on our financial position, results of operations and cash flows. If we are ineffective in negotiations with carriers or in achieving further carriage fee increases, our profitability will continue to be dependent primarily on television advertising revenues, which increases the importance placed on our ability to improve advertising pricing and generate advertising revenues. In addition to carriage fees, we are also working to build-out our offerings of advertising video-on-demand products and other opportunities for advertising online. There can be no assurances that our revenue diversification initiatives will ultimately be successful, and if unsuccessful, this may have an adverse impact on our financial position, results of operations and cash flows.

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A downgrading of our corporate credit ratings may adversely affect our ability to raise additional financing.

Moody’s Investors Service rates our corporate credit as B1 with a positive outlook. Standard & Poor’s rates our corporate credit B+ (on watch with anegative ~~positive~~implications ~~outlook~~due to the proposed Merger). Our ratings show each agency's opinion of our financial strength, operating performance and ability to meet our debt obligations as they become due, as well as the proposed Merger. These ratings take into account the particular emphasis the ratings agencies place on metrics such as leverage ratio and cash flow, which they use as measurements of a company's liquidity and financial strength. They also reflect an emphasis placed by the ratings agencies on athe ~~track~~historically ~~record of~~ strong financial support from Warner Media. We may be subject to downgrades if our operating performance deteriorates or we fail to maintain adequate levels of liquidity. In ~~addition, our ratings may be downgraded if~~ the ~~agencies form a view that material support from Warner Media is not as strong, or the strategic importance of CME to Warner Media is not as significant as it has been in the past. In the~~ event our corporate credit ratings are lowered by the rating agencies, we may not be able to refinance our existing indebtedness or raise new indebtedness that may be permitted under the Reimbursement Agreement and the 2023 Revolving Credit Facility (when drawn), and we will have to pay higher interest rates, all of which would have an adverse effect on our financial position, results of operations and cash flows.

If our goodwill, other intangible assets and long-lived assets become impaired, we may be required to record significant charges to earnings.

We review our long-lived assets for impairment when events or changes in circumstances indicate the carrying amount may not be recoverable. Goodwill and indefinite-lived intangible assets are required to be assessed for impairment at least annually. Factors that may be considered a change in circumstances indicating that the carrying amount of our goodwill, indefinite-lived intangible assets or long-lived assets may not be recoverable include slower growth rates in our markets, reduced expected future cash flows, increased country risk premium as a result of political uncertainty and a decline in stock price and market capitalization. We consider available current information when calculating our impairment charge. If there are indicators of impairment, our long-term cash flow forecasts for our operations deteriorate or discount rates increase, we may be required to recognize additional impairment charges in later periods. See Part II, Item 8, Note 43, "Goodwill and Intangible Assets" for the carrying amounts of goodwill in each of our reporting units.

Risks Relating to Our Operations

Our operations are vulnerable to significant changes in viewing habits and technology that could adversely affect us.

The television broadcasting industry is affected by rapid innovations in technology. The implementation of these new technologies and the introduction of non-traditional content distribution systems have increased competition for audiences and advertisers. Platforms such as direct-to-home cable and satellite distribution systems, the internet, subscription and advertising video-on-demand, user-generated content sites and the availability of content on portable digital devices have changed consumer behavior by increasing the number of entertainment choices available to audiences and the methods for the distribution, storage and consumption of content. This development has fragmented television audiences in more developed markets and could adversely affect our ability to retain audience share and attract advertisers as such technologies penetrate our markets. As we adapt to changing viewing patterns, it may be necessary to expend substantial financial and managerial resources to ensure necessary access to new technologies or distribution systems. Such initiatives may not develop into profitable business models. Furthermore, technologies that enable viewers to choose when, how, where and what content to watch, as well as to fast-forward or skip advertisements, may cause changes in consumer behavior that could have a negative impact on our advertising revenues. In addition, compression techniques and other technological developments allow for an increase in the number of channels that may be broadcast in our markets and expanded programming offerings that may be offered to highly targeted audiences. Reductions in the cost of launching new channels could lower entry barriers and encourage the development of increasingly targeted niche programming on various distribution platforms. This could increase the competitive demand for popular programming, resulting in an increase in content costs as we compete for audiences and advertising revenues. A failure to successfully adapt to changes in our industry as a result of technological advances may have an adverse effect on our financial position, results of operations and cash flows.

Content may become more expensive to produce or acquire or we may not be able to develop or acquire content that is attractive to our audiences.

Television programming is one of the most significant components of our operating costs. The ability of our programming to generate advertising revenues depends substantially on our ability to develop, produce or acquire programming that matches audience tastes and attracts high audience shares, which is difficult to predict. The commercial success of a program depends on several tangible and intangible factors, including the impact of competing programs, the availability of alternate forms of entertainment and leisure time activities, our ability to anticipate and adapt to changes in consumer tastes and behavior, and general economic conditions. The cost of acquiring content attractive to our viewers, such as feature films and popular television series and formats, is likely to increase in the future. Our expenditures in respect of locally produced programming may also increase due to competition for talent and other resources, wage inflation, changes in audience tastes in our markets or from the implementation of any new laws and regulations mandating the broadcast of a greater number of locally produced programs. In addition, we typically acquire syndicated programming rights under multi-year commitments before knowing how such programming will perform in our markets. In the event any such programming does not attract adequate audience share, it may be necessary to increase our expenditures by investing in additional programming, subject to the availability of adequate financial resources, as well as to write down the value of any underperforming programming. Any material increase in content costs could have a material adverse effect on our financial condition, results of operations or cash flows.

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

We generate most of our revenues from the sale of our advertising airtime on television channels in our markets. Television competes with various other media, such as print, radio, the internet and outdoor advertising, for advertising spending. In all of the countries in which we operate, television constitutes the single largest component of all advertising spending. There can be no assurance that the television advertising market will maintain its current position among advertising media in our markets. Furthermore, there can be no assurances that changes in the regulatory environment or improvements in technology will not favor other advertising media or other television broadcasters. Increases in competition among advertising media arising from the development of new forms of advertising media and distribution could result in a decline in the appeal of television as an advertising medium generally or of our channels specifically. A decline in television advertising spending as a component of total advertising spending in any period or in specific markets would have an adverse effect on our financial position, results of operations and cash flows.

910

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We are subject to legal compliance risks and the risk of legal or regulatory proceedings being initiated against us.

We are required to comply with a wide variety of laws and other regulatory obligations in the jurisdictions in which we operate and compliance by our businesses is subject to scrutiny by regulators and other government authorities in these jurisdictions. Compliance with foreign as well as applicable U.S. laws and regulations related to our businesses, such as broadcasting content and advertising regulations, competition regulations, tax laws (including the ~~recently enacted~~ Economic Substance Act in Bermuda which came into force in July 2019), employment laws, data protection requirements including the ~~new~~ EU General Data Protection Regulation, and anti-corruption laws, increases the costs and risks of doing business in these jurisdictions. We believe we have implemented appropriate risk management and compliance policies and procedures that are designed to ensure our employees, contractors and agents comply with these laws and regulations; however, a violation of such laws and regulations or the Company’s policies and procedures could occur. A failure or alleged failure to comply with applicable laws and regulations, whether inadvertent or otherwise, may result in legal or regulatory proceedings being initiated against us and fines or other penalties being levied against us.

We have become aware of provisions in the tax regulations of one of our markets that shift the liability for taxes on gains resulting from certain capital transactions from the seller to the buyer. This provision may have been applicable to an acquisition made by us, although we do not believe we have any liability connected to this transaction. In addition, in 2016, the prosecuting authorities in Romania requested information in respect of an investigation into certain transactions entered into by Pro TV in 2014 primarily with certain related parties. We believe that the transactions under review are fully supported and have cooperated with the authorities in responding to the information request. In Slovenia, the competition law authorities launched an investigation in 2017 into whether our Slovenia subsidiary is dominant and abused its dominant position when concluding carriage fee agreements with platform operators in connection with its decision to cease broadcasting on DTT there. To date there has been no determination that a breach of competition law has occurred. If these or other contingencies result in legal or regulatory proceedings being initiated against us, or if developments occur in respect of our compliance with existing laws or regulations, or there are changes in the interpretation or application of such laws or regulations, we may incur substantial costs, be required to change our business practices (including on what terms and conditions we offer our channels under carriage agreements), our reputation may be damaged or we may be exposed to unanticipated civil or criminal liability, including fines and other penalties that may be substantial. This could have a material adverse effect on our business, financial position, results of operations and cash flows.

Our operations are in developing markets where there are additional risks related to political and economic uncertainty, biased treatment and compliance with evolving legal and regulatory systems.

Our revenue-generating operations are located in Central and Eastern Europe and we may be significantly affected by risks that may be different to those posed by investments in more developed markets. These risks include, but are not limited to, social and political instability, changes in local regulatory requirements including restrictions on foreign ownership, inconsistent regulatory or judicial practice, corruption and increased taxes and other costs. The economic and political systems, legal and tax regimes, regulatory practices, standards of corporate governance and business practices of countries in this region continue to develop. Policies and practices may be subject to significant adjustments, including following changes in political leadership, as well as to the influence of commercial and governmental actors. This may result in inconsistent application of tax and legal regulations, arbitrary or biased treatment, and other general business risks as well as social or political instability or disruptions and the potential for political influence on the media. The relative level of development of our markets, the risk of corruption, and the influence of local commercial and governmental actors also present a potential for biased or unfair treatment of us before regulators or courts in the event of disputes. If such a dispute occurs, those regulators or courts may not act with integrity or may favor local interests over our interests. Other potential risks inherent in markets with evolving economic and political environments include exchange controls, higher taxes, tariffs and other levies as well as longer payment cycles. Ultimately, the occurrence of any of these could have a material adverse impact on our business, financial position, results of operations and cash flows.

Piracy of our content may decrease revenues we can earn from our content and adversely impact our business and profitability.

Piracy of our content poses significant challenges in our markets. Technological developments, including digital copying, file compressing, the use of international proxies and the growing penetration of high bandwidth internet connections, have made it easier to create, transmit and distribute high quality unauthorized copies of content in unprotected digital formats. Furthermore, there are a growing number of video streaming sites, increasing the risk of online transmission of our content without consent. The proliferation of such sites broadcasting content pirated from us could result in a reduction of revenues that we receive from the legitimate distribution of our content, including through video-on-demand and other services. Protection of our intellectual property is in large part dependent on the manner in which applicable intellectual property laws in the countries in which we operate are construed and enforced. We seek to limit the threat of content piracy. However, detecting and policing the unauthorized use of our intellectual property is often difficult and remedies may be limited under applicable law. Steps we take may not prevent the infringement by third parties. There can be no assurance that our efforts to enforce our rights and protect our intellectual property will be successful in preventing piracy, which limits our ability to generate revenues from our content.

We rely on network and information systems and other technology that may be subject to disruption, security breaches or misuse, which could harm our business or our reputation.

We make extensive use of network and information systems and other technologies, including those related to our internal network management as well as our broadcasting operations. These systems are central to many of our business activities. Network and information systems-related events, such as computer hackings, computer viruses, worms or other destructive or disruptive software, process breakdowns, malicious activities or other security breaches could result in a disruption or degradation of our services, the loss of information or the improper disclosure of personal data. The occurrence of any of these events could negatively impact our business if we are required to expend resources to remedy such a security breach or if they result in legal claims or proceedings or our reputation is harmed. In addition, improper disclosure of personal data could subject us to liability under laws, including the ~~new~~ EU General Data Protection Regulation, that protect personal data in the countries in which we operate. The development and maintenance of systems to prevent these events from occurring requires ongoing monitoring and updating as efforts to overcome security measures become more sophisticated. As technologies evolve, we will need to expend additional resources to protect our technology and information systems, which could have an adverse impact on our results of operations and cash flows.

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

We require broadcasting and, in some cases, other operating licenses as well as other authorizations from national regulatory authorities in our markets in order to conduct our broadcasting business. While our broadcasting licenses for our operations in the Slovak Republic and Slovenia are valid for indefinite time periods, our other broadcasting licenses expire at various times from ~~2019~~October 2020 through 2028. While we expect that our material licenses and authorizations will continue to be renewed or extended as required ~~to continue to operate our business~~, we cannot guarantee that this will occur or that they will not be subject to revocation, particularly in markets where there is relatively greater political risk as a result of less developed political and legal institutions. The failure to comply in all material respects with the terms of broadcasting licenses or other authorizations or with applications filed in respect thereto may result in such licenses or other authorizations not being renewed or otherwise being terminated. Furthermore, no assurances can be given that renewals or extensions of existing licenses will be issued on the same terms as existing licenses or that further restrictions or conditions will not be imposed in the future. Any non-renewal or termination of any other broadcasting or operating licenses or other authorizations or material modification of the terms of any renewed licenses may have a material adverse effect on our financial position, results of operations and cash flows.

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Our success depends on attracting and retaining key personnel.

Our success depends partly upon the efforts and abilities of our key personnel and our ability to attract and retain key personnel. Our management teams have significant experience in the media industry and have made important contributions to our growth and success. Although we have been successful in attracting and retaining such people in the past, competition for highly skilled individuals is intense. There can be no assurance that we will continue to be successful in attracting and retaining such individuals in the future. In particular, the proposed Merger may adversely impact our ability to attract and retain such individuals. The loss of the services of any of these individuals could have an adverse effect on our businesses, results of operations and cash flows.

Risks Relating to Enforcement Rights

We are a Bermuda company and enforcement of civil liabilities and judgments may be difficult.

We are a Bermuda company. Substantially all of our assets and all of our operations are located, and all of our revenues are derived, outside the United States. In addition, several of our directors and officers are non-residents of the United States, and all or a substantial portion of the assets of such persons are or may be located outside the United States. As a result, investors may be unable to effect service of process within the United States upon such persons, or to enforce against them judgments obtained in the United States courts, including judgments predicated upon the civil liability provisions of the United States federal and state securities laws. There is uncertainty as to whether the courts of Bermuda and the countries in which we operate would enforce (a) judgments of United States courts obtained against us or such persons predicated upon the civil liability provisions of the United States federal and state securities laws or (b) in original actions brought in such countries, liabilities against us or such persons predicated upon the United States federal and state securities laws.

Our Bye-laws restrict shareholders from bringing legal action against our officers and directors.

Our Bye-laws contain a broad waiver by our shareholders of any claim or right of action in Bermuda, both individually and on our behalf, against any of our officers or directors. The waiver applies to any action taken or concurred in by an officer or director, or the failure of an officer or director to take any action, in the performance of his or her duties, except with respect to any matter involving any fraud or dishonesty on the part of the officer or director. This waiver limits the right of shareholders to assert claims against our officers and directors unless the act or failure to act involves fraud or dishonesty.

Risks Relating to our Common Stock

Our share price may be adversely affected by sales of unregistered shares or future issuances of our shares.

Following the completion of the AT&T and Time Warner, Inc. merger on June 14, 2018, AT&T, through its wholly owned subsidiaries Warner Media and TW Investor, is the largest beneficial owner of shares of our Class A common stock, holding 162,334,771 unregistered shares of Class A common stock, one share of Series A preferred stock ("Series A Preferred Share"), 200,000 shares of Series B preferred stock ("Series B Preferred Shares") and on April 25, 2018, Warner Media (formerly Time Warner, Inc. at date of exercise) exercised warrants to acquire 100,926,996 shares of our Class A common stock. The share of Series A Preferred Shares is convertible into 11,211,449 shares of Class A common stock and the Series B Preferred Shares are convertible into approximately 111.1 million shares of Class A common stock at the option of Warner Media (subject to certain exceptions). Warner Media has registration rights with respect to all its shares of Class A common stock now held or hereafter acquired. For additional information on the Series A Preferred Shares, Series B Preferred Shares and warrants, see Part II, Item 8, Note 12, "Convertible Redeemable Preferred Shares" and Note 13, "Equity".

We cannot predict what effect, if any, the entry into trading of previously issued unregistered shares of Class A common stock will have on the market price of our shares. We may also issue additional shares of Class A common stock or securities convertible into our equity in the future. If more shares of our Class A common stock (or securities convertible into or exchangeable for shares of our Class A common stock) are issued to Warner Media, the economic interests of current shareholders may be diluted and the price of our shares may be adversely affected.

The interests of AT&T may conflict with the interests of other investors.

Through its wholly owned subsidiaries Warner Media and TW Investor, the aggregate beneficial ownership interest of AT&T in the Company is approximately 75.97%. In connection with the exercise of the warrants by Warner Media and TW Investor in April 2018, each of them issued standing proxies to the independent directors of the Company, pursuant to which it granted the independent directors the right to vote the 100,926,996 shares received on the exercise of those warrants (the “Warrant Shares”) on all matters other than at any meeting where the agenda includes a change in control transaction. In accordance with these proxies, the Warrant Shares will be voted in proportion to votes cast at such a ~~general~~ meeting of the Company, excluding such Warrant Shares. Warner Media and TW Investor have undertaken to maintain this proxy arrangement until April 2020 and may extend it for an additional year at their option. InAfter ~~addition~~giving effect to ~~the~~its ~~Warrant~~ownership ~~Shares~~of ~~subject~~the toSeries ~~the~~A ~~standing~~Preferred ~~proxies~~Share, AT&T ~~beneficially~~has ~~owns~~a ~~61,407,775~~44.3% ~~shares~~voting ofinterest ~~Class~~in Athe ~~common~~Company ~~stock~~at ~~and~~any ~~one~~meeting ~~share~~where of the ~~Series~~Warrant AShares ~~Preferred~~are ~~Stock,~~voted ~~which~~pursuant ~~is entitled~~ to ~~one vote for each of~~ the ~~11,211,449~~standing ~~shares of Class A common stock underlying it~~proxies. Furthermore, AT&T has the right to appoint one less than the number required to constitute a majority of our board of directors, provided that AT&T continues to own not less than 40% of the voting power of the Company. As such, AT&T is in a position to exercise significant influence over the outcome of corporate actions requiring shareholder approval, such as the proposed Merger, the election of directors, amendments to our Bye-laws, or certain transactions, including transactions resulting in a change of control.

11We are also party to an amended investor rights agreement with Warner Media and the other parties thereto under which, among other things, Warner Media was granted a contractual pre-emptive right (subject to certain exclusions) with respect to issuances of the Company’s equity securities, which permits it to maintain its pro rata economic interest as well as a right to top any offer that would result in a change of control of the Company. Under Bermuda law, there is no takeover code or similar legislation requiring an acquirer of a certain percentage of our Class A common stock to tender for the remaining publicly held shares. Warner Media is also our largest secured creditor, as it guarantees 100% of our outstanding senior indebtedness and is the lender under the 2023 Revolving Credit Facility. The 2023 Revolving Credit Facility (when drawn) and the Reimbursement Agreement contain maintenance covenants in respect of interest cover and total leverage ratios and includes covenants in respect of the incurrence of indebtedness (including refinancing indebtedness), the provision of guarantees, acquisitions and disposal and granting security. As such, Warner Media may be in a position to determine whether to permit transactions, waive defaults or accelerate such indebtedness or take other steps in its capacity as a secured creditor in a manner that might not be consistent with the interests of the holders of our Class A common stock. Furthermore, in certain circumstances, the interests of AT&T as our largest beneficial owner could be in conflict with the interests of minority shareholders.

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We are also party to an amended investor rights agreement with Warner Media and the other parties thereto under which, among other things, Warner Media was granted a contractual preemptive right (subject to certain exclusions) with respect to issuances of the Company’s equity securities, which permits it to maintain its pro rata economic interest as well as a right to top any offer that would result in a change of control of the Company. Under Bermuda law, there is no takeover code or similar legislation requiring an acquirer of a certain percentage of our Class A common stock to tender for the remaining publically held shares. Warner Media is also our largest secured creditor, as it guarantees 100% of our outstanding senior indebtedness and is the lender under the 2023 Revolving Credit Facility. The 2023 Revolving Credit Facility (when drawn) and the Reimbursement Agreement contain maintenance covenants in respect of interest cover and total leverage ratios and includes covenants in respect of the incurrence of indebtedness (including refinancing indebtedness), the provision of guarantees, acquisitions and disposal and granting security. As such, Warner Media may be in a position to determine whether to permit transactions, waive defaults or accelerate such indebtedness or take other steps in its capacity as a secured creditor in a manner that might not be consistent with the interests of the holders of our Class A common stock. Furthermore, in certain circumstances, the interests of AT&T as our largest beneficial owner could be in conflict with the interests of minority shareholders.

The price of our Class A common stock may be volatile.

The market price of shares of our Class A common stock may be influenced by many factors, some of which are beyond our control, including but not limited to those described ~~above~~ under "Risks Relating to Our Operations" and “Risks Relating to the Proposed Merger - The failure to complete the proposed Merger within the expected time frame or at all could adversely affect our business, financial condition, results of operations, liquidity and the price of our Class A common stock” as well as the following: general economic and business trends, variations in quarterly operating results, license renewals, regulatory developments in our operating countries and the European Union, the condition of the media industry in our operating countries, the volume of trading in shares of our Class A common stock, future issuances of shares of our Class A common stock and investors’ and securities analysts’ perception of us and other companies that investors or securities analysts deem comparable in the television broadcasting industry. In addition, stock markets in general have experienced extreme price and volume fluctuations that have often been unrelated to and disproportionate to the operating performance of broadcasting companies. These broad market and industry factors may materially impact the market price of shares of our Class A common stock, regardless of our operating performance.

~~Our~~Risks ~~business~~Relating ~~could~~to bethe ~~negatively~~Proposed ~~impacted as a result of shareholder activism.~~Merger

InThe ~~recent~~proposed ~~years,~~Merger shareholder activists have become involved in numerous public companies. Shareholder activists frequently propose to involve themselves in the governance, strategic direction and operations of the Company, as occurred when TCS Capital Management, LLC ("TCS Capital"), filed an amendment to its Schedule 13D in January 2017 in which it disclosed its opinions on the Company’s governance and strategic direction. Such proposals may disrupt our business and divert the attention of our management and employees, and any perceived uncertainties as to our future direction resulting from such a situation could result in the loss of potential business opportunities, be exploited by our competitors, cause ~~concern~~disruption to our ~~current or potential customers, and make it more difficult to attract and retain qualified personnel and~~ business ~~partners, all of which could adversely affect our business~~. In addition, actions of activist shareholders may cause significant fluctuations in our stock price based on temporary or speculative market perceptions or other factors that do not necessarily reflect the underlying fundamentals and prospects of our business.

The Merger Agreement generally requires CME to operate its business in the ordinary course during the pendency of the proposed Merger and contains customary covenants which restrict CME, without Parent’s consent, from taking certain specified actions until the proposed Merger closes or the Merger Agreement terminates. These restrictions may prevent us from taking actions or making changes with respect to the Company that we may otherwise consider to be advantageous and could result in our inability to respond effectively to competitive pressures, industry developments and future opportunities, which may adversely affect our business, financial condition, results of operations and cash flows.

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The proposed Merger could cause disruptions to our business or business relationships. Uncertainty associated with the proposed Merger may cause business partners, customers and other counterparties to delay or defer decisions concerning our business or seek alternative relationships with third parties. Any delay or deferral of those decisions or changes to our business relationships could adversely affect our financial conditions, results of operations and cash flows, regardless of whether the proposed Merger is ultimately completed.

We have allocated, and expect to continue to allocate, significant management and financial resources towards the proposed Merger and its completion. The diversion of management’s attention away from day-to-day operations and other opportunities could adversely affect our business and results of operations. In addition, employee retention, recruitment and motivation may be challenging before the completion of the proposed Merger, as employees may experience uncertainty about their future roles following the proposed Merger. If, despite our retention and recruiting efforts, key employees depart because of issues relating to the uncertainty and potential outcome of the proposed Merger or a desire not to remain following the proposed Merger, our business and results of operations could be adversely affected.

Completion of the proposed Merger is subject to conditions, including the receipt of certain competition and other regulatory approvals, and if these conditions are not satisfied or waived or if the required approvals are not granted or are subject to conditions, completion of the proposed Merger may not occur.

Completion of the proposed Merger is subject to several conditions, including, but not limited to, the receipt of certain competition and other regulatory approvals, the requisite vote of the Company's shareholders, compliance with covenants and agreements in the Merger Agreement (subject to certain materiality qualifications), and the absence of any governmental order prohibiting completion of the proposed Merger, some of which are beyond our control. We cannot predict with certainty whether and when any of these conditions will be satisfied or waived, which may prevent, delay or otherwise adversely affect the completion of the proposed Merger in a material way. In addition, Parent’s obligation to complete the proposed Merger is subject to the receipt of certain governmental approvals without the requirement that Parent agree to take any action or commit to any condition or restriction necessary to secure such approval that would constitute a “burdensome condition” as defined in the Merger Agreement. There can be no assurance that regulators will not seek to impose conditions, terms, obligations or restrictions that would constitute burdensome conditions or that such conditions, terms, obligations or restrictions would not result in the termination of the Merger Agreement.

The failure to complete the proposed Merger within the expected time frame or at all could adversely affect our business, financial condition, results of operations, liquidity and the price of our Class A common stock.

If the proposed Merger is not completed by October 27, 2020, which date may be extended under certain circumstances to January 27, 2021, CME or Parent may choose not to proceed with the proposed Merger. Each of CME and Parent may also elect to terminate the Merger Agreement in certain other circumstances. If the Merger Agreement is terminated, CME may be required to pay to Parent a termination fee of $50 million. The termination of the Merger Agreement may also result in the share price of our Class A common stock declining. Additionally, we have already incurred, and we expect to continue to incur, significant costs in connection with the proposed Merger for which we will receive little or no benefit if the completion of the proposed Merger does not occur. In the event the proposed Merger is not completed, CME could also be subject to litigation related to any failure to complete the proposed Merger.

Therefore, if the proposed Merger is not completed, our business, financial condition, results of operations and cash flows may be adversely affected, and the share price of our Class A common stock may decline. Moreover, if the Merger Agreement is terminated and we decide to seek another business combination, we may not be able to negotiate or consummate a transaction with another party on terms comparable to, or better than, the terms of the Merger Agreement.

The Merger Agreement contains provisions that could discourage a potential competing acquirer.

The Merger Agreement contains certain provisions that restrict our ability to, among other things, solicit, knowingly encourage, knowingly facilitate, knowingly induce or initiate the submission of, enter into, or participate in any discussions or any negotiations regarding any "competing proposal" as defined in the Merger Agreement or the announcement of a competing proposal. The Merger Agreement also provides that the Board of Directors (or any committee thereof, including the Special Committee) will not make a "change of recommendation" as defined in the Merger Agreement except as permitted by the terms of the Merger Agreement. In addition, CME may be required to pay a termination fee of $50 million to Parent if the proposed Merger is not consummated under specified circumstances.

CME believes these provisions are reasonable, customary and not preclusive of other offers. Nevertheless, these provisions might discourage a third party that has an interest in acquiring all or a significant part of CME from considering or proposing such acquisition, even if such party were prepared to pay consideration with a higher value than the currently proposed aggregate merger consideration. Furthermore, the requirement that CME pay a termination fee under certain circumstances may result in a third party proposing to pay a lower per-share price to acquire CME, than it might otherwise have proposed to pay because of the added expense of the termination fee that may become payable by CME in certain circumstances.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

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ITEM 2. PROPERTIES

We own and lease properties in the countries in which we operate. These facilities are fully utilized for current ongoing operations, are in good condition and are adequately equipped for purposes of conducting broadcasting, content production or such other operations as we require. We believe that suitable additional space is available on acceptable terms in the event of an expansion of our businesses. The table below provides a brief description of our significant properties.



Location	Property	Use
Hamilton, Bermuda	Leased office	Registered office, Corporate
Amsterdam, The Netherlands	Leased office	Corporate office, Corporate
Sofia, Bulgaria	Leased buildings	Office and studio space (Bulgaria segment)
Prague, Czech Republic	Owned and leased buildings	Administrative center, Corporate; Office and studio space (Czech Republic segment)
Bucharest, Romania	Owned and leased buildings	Office and studio space (Romania segment)
Bratislava, Slovak Republic	Owned buildings	Office and studio space (Slovak Republic segment)
Ljubljana, Slovenia	Owned and leased buildings	Office and studio space (Slovenia segment)
London, United Kingdom	Leased office	Administrative center, Corporate

For further information on the cash resources that fund these facility-related costs, see Part II, Item 7, III, "Liquidity and Capital Resources".

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ITEM 3. LEGAL PROCEEDINGS

~~General~~See Part II, Item 8, Note 21, "Commitments and Contingencies" for a discussion of ongoing litigation.

Litigation

We are from time to time party to legal proceedings, arbitrations and regulatory proceedings arising in the normal course of our business operations, including the proceeding described below. We evaluate, on a quarterly basis, developments in such matters and provide accruals for such matters, as appropriate. In making such decisions, we consider the degree of probability of an unfavorable outcome and our ability to make a reasonable estimate of the amount of a loss. An unfavorable outcome in any such proceedings, if material, could have an adverse effect on our business or consolidated financial statements.

In the fourth quarter of 2016, our Slovak subsidiary MARKIZA-SLOVAKIA, spol. s.r.o. ("Markiza") was notified of claims that were filed in June 2016 in a court of first instance in Bratislava, the Slovak Republic to collect amounts allegedly owing under four promissory notes that have a collective face value of approximately EUR 69.0 million. These four promissory notes were purportedly issued in June 2000 by Pavol Rusko in his personal capacity and were purportedly guaranteed by Markiza under the signature of Mr. Rusko, who was an executive director of Markiza at that time as well as one of its shareholders. Two of the notes purport to be issued in favor of Marian Kocner, a controversial Slovak businessman, and the other two to a long-time associate of Mr. Kocner. All four notes were supposedly assigned several times, ultimately to Sprava a inkaso zmeniek, s.r.o., a company owned by Mr. Kocner that is the plaintiff in these proceedings.

Two of the notes, each of which purportedly has a face value of approximately EUR 8.3 million, allegedly matured in 2015; and the other two, each of which purportedly has a face value of approximately EUR 26.2 million, allegedly matured in 2016. The four notes accrue interest from their purported maturity dates. Although Mr. Rusko has asserted, both in written responses to active claims filed in respect of three of the promissory notes as well as in subsequent oral testimony, that he signed the notes in June 2000, we do not believe that the notes were signed in June 2000 or that any of the notes are authentic.

Despite a random case assignment system in the Slovak Republic, claims in respect of three of the notes were initially assigned to the same judge. One of those claims, concerning one of the promissory notes having a face value of approximately EUR 8.3 million (the "First PN Case"), was subsequently reassigned. Proceedings on the claim in respect of the fourth promissory note (in the amount of approximately EUR 26.2 million) were terminated in January 2017 by the presiding judge because the plaintiff failed to pay court fees and were terminated a second time by a different presiding judge in September 2017 after the plaintiff refiled but failed to pay court fees a second time.

During the first quarter of 2018, the court of first instance began to schedule hearings in respect of the First PN Case as well in respect of the claims relating to the second promissory note having a face value of approximately EUR 8.3 million (the “Second PN Case”) and one of the promissory notes having a face value of approximately EUR 26.2 million (the "Third PN Case").

On April 26, 2018, the judge in the First PN Case ruled in favor of the plaintiff. Markiza appealed that decision.

On May 14, 2018, Markiza filed a criminal complaint with the Special Prosecutor's Office of the Slovak Republic (the "Special Prosecutor’s Office") alleging that Mr. Kocner and Mr. Rusko committed the offenses of (1) counterfeiting, falsification, and illegal production of money and securities and (2) obstruction or perversion of justice. The Special Prosecutor’s Office opened criminal proceedings in the matter at that time.

On June 20, 2018, the Special Prosecutor’s Office issued a decision to formally charge Mr. Kocner and Mr. Rusko with counterfeiting, falsification, and illegal production of money and securities and with obstruction or perversion of justice. Following this decision, Mr. Kocner has been taken into pre-trial custody by the Slovak authorities. Subsequently, the Special Prosecutor’s Office has charged Mr. Kocner’s long-time associate, who signed two of the alleged promissory notes as the original beneficial owner and purported to endorse those notes to a company controlled by Mr. Kocner, with counterfeiting, falsification, and illegal production of money and securities.

On October 12, 2018, the court of first instance terminated proceedings in respect of the Second PN Case because the plaintiff failed to pursue the claim, which the plaintiff appealed.

On December 14, 2018, the appellate court suspended proceedings in respect of the First PN Case until a final and enforceable decision has been rendered in the criminal proceedings.

On December 21, 2018, the appellate court reversed the decision of the court of first instance to terminate the Second PN Case and directed the case be tried on the merits. No hearings have been held or scheduled in respect of this claim subsequent to that decision.

There have been no hearings held in respect of the Third PN Case since the initiation of the criminal proceedings.

Markiza is seeking to have the civil proceedings in respect of this claim either suspended until the conclusion of the criminal proceedings or dismissed. In the event any of the civil proceedings are not suspended or dismissed, Markiza will continue to vigorously defend the claims.

Based on the facts and circumstances of these cases, we have not accrued any amounts in respect of these claims.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

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PART II


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

Shares of Class A common stock of Central European Media Enterprises Ltd. began trading on the NASDAQ National Market (since renamed the NASDAQ Global Select Market) on October 13, 1994 and began trading on the Prague Stock Exchange on June 27, 2005. On each market, the shares are traded under the ticker symbol "CETV".

On February 14, ~~2019~~2020, the last reported sales price for shares of our Class A common stock was US$ 34.0850 and there were approximately 4946 holders of record ~~(including brokerage firms and other nominees)~~.

Under our 2015 Stock Incentive Plan (the "2015 Plan"), 616,000,000 shares of Class A are authorized for issuance in respect of equity awards. In addition, any shares available under our Amended and Restated Stock Incentive Plan (which expired on June 1, 2015), including in respect of any awards that expire, terminate or are forfeited, will be available for awards under the 2015 Plan (see Item 8, Note 17, "Stock-based Compensation"). See Part III, Item 12, "Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters" for further information.

DIVIDEND POLICY

We have not declared or paid and have no present intention to declare or pay in the foreseeable future any cash dividends in respect to any class of our shares of common stock.

PURCHASE OF OWN STOCK

We did not purchase any of our own stock in ~~2018~~2019.

RECENT SALES OF UNREGISTERED SECURITIES

We did not make any sales of any unregistered securities in ~~2018~~2019.

PERFORMANCE GRAPH

The following performance graph is a line graph comparing the change in the cumulative total shareholder return of the Class A common stock against the cumulative total return of the NASDAQ Composite Index and the Dow Jones Europe Stock Index between December 31, ~~2013~~2014 and December 31, ~~2018~~2019. The graph below assumes the investment of US$ 100 on December 31, ~~2013~~2014 in our Class A common stock, the NASDAQ Composite and the Dow Jones Europe Stock Index, assuming dividends, if any, are reinvested.

Value of US$ 100 invested at December 31, ~~2013~~2014 as of December 31, ~~2018~~2019:

Central European Media Enterprises Ltd.	$	72141.4012
NASDAQ Composite Total Return Index	$	~~168~~200.3049
Dow Jones Europe Stock Index	$	86113.8276

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ITEM 6. SELECTED FINANCIAL DATA

Our selected consolidated financial data should be read together with our consolidated financial statements and related notes included in Item 8, "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.

The following tables set forth the selected consolidated financial data for each of the years in the five-year period ended December 31, ~~2018~~2019. The selected consolidated financial data is qualified in its entirety and should be read in conjunction with Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Item 8, "Financial Statements and Supplementary Data". We have derived the consolidated statements of operations and comprehensive income / loss data for the years ended December 31, ~~2018~~2019, ~~2017~~2018 and ~~2016~~2017 and the consolidated balance sheet data as of December 31, ~~2018~~2019 and ~~2017~~2018 from the audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K. The consolidated statements of operations and comprehensive income / loss data for the years ended December 31, ~~2015~~2016 and ~~2014~~2015 and the balance sheet data as of December 31, ~~2016~~2017, ~~2015~~2016 and ~~2014~~2015 were derived from consolidated financial statements that are not included in this Annual Report on Form 10-K. The selected financial data for all periods presented has been recast to present our Slovenian operations as held and used and continuing operations (see Item 8, Note 3, "Discontinued Operations and Assets Held for Sale").

	For The Year Ended December 31,
	(US$ 000's, except per share data)
	2018		2017			2016			2015			2014
	2019		2018			2017			2016			2015
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME / LOSS DATA:
Net revenues	$	~~703~~694,~~906~~804	$	~~642~~703,~~868~~906		$	~~583~~642,~~006~~868		$	~~550~~583,~~337~~006		$	~~618~~550,~~605~~337
Operating income	~~177~~187,~~587~~336		~~139~~177,~~914~~587			~~105~~139,~~748~~914			89105,~~645~~748			3289,~~950~~645
Income / (loss) from continuing operations	97119,~~065~~208		5197,~~063~~065			~~(179~~51,~~679~~063		)	(83179,~~501~~679		)	(~~152~~83,~~171~~501		)
Income / (loss) from discontinued operations, net of tax	~~60,548~~—		(160,~~636~~548		)	(~~918~~1,636		)	(~~32,071~~918		)	(7932,~~722~~071		)
Net income / (loss) attributable to CME Ltd.	$	~~157~~119,~~692~~134	$	49157,~~768~~692		$	~~(180~~49,~~291~~768	)	$	(~~114~~180,~~901~~291	)	$	(~~227~~114,~~428~~901	)
PER SHARE DATA:
Net income / (loss) per common share from:
Continuing operations — basic	$	0.2732	$	0.1627		$	(10.2816	)	$	(01.6828	)	$	(10.1268	)
Continuing operations — diluted	0.2532		0.1225			(10.2812		)	(01.6828		)	(10.1268		)
Discontinued operations — basic	~~0.18~~—		(0.0118		)	(0.0001		)	(0.2200		)	(0.5422		)
Discontinued operations — diluted	~~0.17~~—		0.0017			0.00			(0.2200		)	(0.5422		)
Attributable to CME Ltd. — basic	0.4532		0.1545			(10.2815		)	(01.9028		)	(10.6690		)
Attributable to CME Ltd. — diluted	$0.32	~~0.42~~	$0.42	~~0.12~~		$0.12	~~(1.28~~	)	$(1.28	~~(0.90~~	)	$(0.90	~~(1.66~~	)
Weighted average common shares used in computing per share amounts (000’s):
Basic	~~230~~264,~~562~~611		~~155~~230,~~846~~562			~~151~~155,~~017~~846			~~146~~151,~~866~~017			146,~~509~~866
Diluted	~~257~~266,~~694~~198		~~236~~257,~~404~~694			~~151~~236,~~017~~404			~~146~~151,~~866~~017			146,~~509~~866
	As at December 31,
	(US$ 000's)
	2018		2017			2016			2015			2014
	2019		2018			2017			2016			2015
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents	$	6236,~~031~~621	$	5862,~~748~~031		$	4058,~~954~~748		$	5940,~~441~~954		$	3159,~~109~~441
Other current assets (1)	~~312~~313,~~062~~359		~~362~~312,~~491~~062			~~299~~362,~~466~~491			~~298~~299,~~843~~466			~~343~~298,~~519~~843
Non-current assets	1,~~114~~097,~~268~~882		1,~~206~~114,~~816~~268			1,~~050~~206,~~297~~816			1,~~082~~050,~~133~~297			1,~~230~~082,~~200~~133
Total assets	$	1,~~488~~447,~~361~~862	$	1,~~628~~488,~~055~~361		$	1,~~390~~628,~~717~~055		$	1,~~440~~390,~~417~~717		$	1,~~604~~440,~~828~~417
Current liabilities (1)	$	~~139~~156,~~692~~001	$	~~186~~139,~~946~~692		$	~~171~~186,~~564~~946		$	~~146~~171,~~308~~564		$	~~450~~146,~~286~~308
Non-current liabilities	~~849~~680,~~978~~273		1849,~~182,286~~978			1,~~070~~182,~~786~~286			~~974~~1,~~270~~070,786			~~653~~974,~~434~~270
Temporary equity	269,370		~~264~~269,~~593~~370			~~254~~264,~~899~~593			~~241~~254,~~198~~899			~~223~~241,~~926~~198
CME Ltd. shareholders' equity / (deficit)	~~229~~341,~~020~~705		(5229,~~788~~020		)	(~~107~~5,~~804~~788		)	77(107,~~260~~804		)	~~279~~77,~~794~~260
Noncontrolling interests	~~301~~513		18301			~~1,272~~18			1,~~381~~272			(21,~~612~~381		)
Total liabilities and equity	$	1,~~488~~447,~~361~~862	$	1,~~628~~488,~~055~~361		$	1,~~390~~628,~~717~~055		$	1,~~440~~390,~~417~~717		$	1,~~604~~440,~~828~~417

(1) Other current assets and current liabilities as at December 31, 2017 ~~and 2014~~ include total assets held for sale and total liabilities held for sale of our Croatian operations ~~and certain non-core Romanian operations, respectively~~.

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

Please refer to page 21 of this Annual Report on Form 10-K for a list of defined terms used herein.

The following discussion and analysis should be read in conjunction with the other sections in this Annual Report, including Part I, Item 1. Business, Part II, Item 6. Selected Financial Data, and Part II, Item 8. Financial Statements and Supplementary Data. The exchange rates used in this report are as at December 31, ~~2018~~2019, unless otherwise indicated.

I. Overview

Our operations comprise a ~~unique~~ collection of television networks across Central and Eastern Europe, each of which enjoys a strong competitive position due to audience share leadership, brand strength, popular local content, and the depth and experience of country management. The reach and affinity we provide advertisers supports our model of pricing inventory at a premium to our competition, and we seek to maximize our revenues in order to provide additional financial resources to invest in original local content. We believe these competitive advantages position us to benefit if forecast economic growth leads to continued growth of the television advertising markets in the countries in which we operate.

We are focused on enhancing the performance of our television networks in each country, which we expect will continue improving ~~operating~~profitability ~~margins~~ and cash generation ~~over the short- and medium-term~~. Our operating and financial priorities are as follows:


•	leveraging content popular with our target demographics to maintain or increase our television audience share leadership and advertising market shares;


•	increasing carriage fees and subscription revenues as well as expanding our online content offerings to provide more diversified and predictable income;


•	maintaining a strict cost discipline while safeguarding our brands and competitive strengths to increase profitability; and

• ~~optimizing~~completing ~~our~~the ~~capital~~previously ~~structure~~announced ~~and~~Merger ~~evaluating~~with ~~capital allocation alternatives to improve shareholder returns~~PPF.

As market leaders with experienced management teams in each country, we believe we are well positioned to identify new challenges in a timely manner and adjust our strategy as new opportunities or threats arise.

We manage our business on a geographical basis with five operating segments: Bulgaria, the Czech Republic, Romania, the Slovak Republic and Slovenia. These operating segments, which are also our reportable segments, reflect how our operating performance is evaluated by our chief operating decision makers, who we have identified as our co-Chief Executive Officers; how our operations are managed by segment managers; and the structure of our internal financial reporting.

On ~~July~~October 927, ~~2017~~2019, wethe Company entered into athe ~~framework~~Merger ~~agreement~~Agreement with ~~Slovenia~~Parent ~~Broadband~~and ~~S.à r.l.~~Merger Sub, apursuant ~~wholly~~to ~~owned~~which ~~subsidiary~~Merger ofSub ~~United~~will ~~Group~~merge ~~B.V.,~~with ~~relating~~and tointo the ~~sale~~Company, ofwith ~~our~~the ~~Croatian~~Company ~~and~~continuing ~~Slovenian~~as ~~operations.~~the ~~Following~~surviving ancompany ~~amendment~~in ~~and~~the ~~restatement~~proposed Merger as a wholly-owned subsidiary of ~~that~~Parent. ~~agreement~~The onclosing ~~July~~of 5,the ~~2018~~proposed Merger is subject to ~~permit~~several ~~the~~conditions, ~~sale~~including, ofbut ~~each~~not ~~operation~~limited ~~independently~~to, the ~~sale~~requisite vote of ~~our~~the ~~Croatian~~Company’s ~~operations~~shareholders ~~was~~in ~~completed~~favor onof ~~July~~the ~~31,~~Merger ~~2018.~~Agreement ~~Accordingly,~~and the ~~Croatian~~proposed ~~operations~~Merger, ~~are~~the ~~presented~~receipt asof ~~discontinued~~certain ~~operations~~competition ~~for~~and ~~all~~other ~~periods~~regulatory inapprovals, ~~this~~compliance ~~report.~~with ~~The~~covenants ~~agreement~~and toagreements ~~sell~~in ~~our~~the ~~operations~~Merger inAgreement ~~Slovenia~~(subject ~~was~~to ~~terminated~~certain onmateriality ~~January 18~~qualifications), ~~2019.~~and Asthe aabsence ~~result,~~of ~~the~~any ~~Slovenian~~governmental ~~operations~~order ~~are~~prohibiting ~~not~~completion ~~presented~~of asthe ~~held~~proposed ~~for~~Merger. ~~sale,~~We ~~and~~expect the ~~discussion~~proposed ~~below~~Merger ~~relates~~ to ~~our~~be ~~continuing~~completed ~~operations~~ in the ~~five~~middle ~~operating~~of ~~segments~~2020.

Non-GAAP Financial Measures

In this report we refer to several non-GAAP financial measures, including OIBDA, OIBDA margin, free cash flow and unlevered free cash flow. We believe that each of these metrics is useful to investors for the reasons outlined below. Non-GAAP financial measures may not be comparable to similar measures reported by other companies. Non-GAAP financial measures should be evaluated in conjunction with, and are not a substitute for, US GAAP financial measures.

We evaluate our consolidated results and the performance of our segments based on net revenues and OIBDA. We believe OIBDA is useful to investors because it provides a meaningful representation of our performance, as it excludes certain items that do not impact either our cash flows or the operating results of our operations. OIBDA and unlevered free cash flow are also used as components in determining management bonuses.

OIBDA includes amortization and impairment of program rights and is calculated as operating income / loss before depreciation, amortization of intangible assets and impairments of assets and certain unusual or infrequent items that are not considered by our co-Chief Executive Officers when evaluating our performance. From January 1, 2018, stock-based compensation and certain operating costs incurred on behalf of our segments at the corporate level have been allocated to our segments for purposes of evaluating their performance. Prior period information has been recast to conform to the current period presentation. Our key performance measure of the efficiency of our consolidated operations and our segments is OIBDA margin. We define OIBDA margin as the ratio of OIBDA to net revenues.

Following a repricing of our Guarantee Fees in March 2017 and April 2018, we pay interest and related Guarantee Fees on our outstanding indebtedness in cash. In addition to this obligation to pay Guarantee Fees in cash, we expect to use cash generated by the business to pay certain Guarantee Fees that were previously paid in kind. These cash payments are all reflected in free cash flow; accordingly, we believe unlevered free cash flow, defined as free cash flow before cash payments for interest and Guarantee Fees, best illustrates the cash generated by our operations when comparing periods. We define free cash flow as net cash generated from continuing operating activities less purchases of property, plant and equipment, net of disposals of property, plant and equipment and excluding the cash impact of certain unusual or infrequent items that are not included in costs charged in arriving at OIBDA because they are not considered by our co-Chief Executive Officers when evaluating performance.

For additional information regarding our business segments, including a reconciliation of OIBDA to US GAAP financial measures, see Item 8, Note 20, "Segment Data". For a reconciliation of free cash flow and unlevered free cash flow to a US GAAP financial measure, see "Free Cash Flow and Unlevered Free Cash Flow" below.

While our reporting currency is the dollar, our consolidated revenues and costs are divided across a range of European currencies and CME Ltd.’s functional currency is the Euro. Given the significant movement of the currencies in the markets in which we operate against the dollar, we believe that it is useful to provide percentage movements based on actual (“% Act”) percentage movements, which includes the effect of foreign exchange, as well as like-for-like percentage movements (“% Lfl”). The like-for-like percentage movement references reflect the impact of applying the current period average exchange rates to the prior period revenues and costs. Since the difference between like-for-like and actual percentage movements is solely the impact of movements in foreign exchange rates, our discussion in the following analysis is focused on constant currency percentage movements in order to highlight those factors influencing operational performance. The incremental impact of foreign exchange rates is presented in the tables preceding such analysis.

Index

Executive Summary

The following tables provide a summary of our consolidated results for the years ended December 31, 2018, 2017 and 2016:

	For The Year Ended December 31, (US$ 000's)
							Movement										Movement
	2018			2017			% Act		% Lfl		2017			2016			% Act		% Lfl
Net revenues	$	703,906		$	642,868		9.5	%	5.3	%	$	642,868		$	583,006		10.3	%	6.6	%
Operating income	177,587			139,914			26.9	%	25.1	%	139,914			105,748			32.3	%	27.3	%
Operating margin	25.2		%	21.8		%	3.4 p.p.		4.0 p.p.		21.8		%	18.1		%	3.7 p.p.		3.6 p.p.
OIBDA	$	222,674		$	179,767		23.9	%	20.9	%	$	179,767		$	141,547		27.0	%	22.2	%
OIBDA margin	31.6		%	28.0		%	3.6 p.p.		4.0 p.p.		28.0		%	24.3		%	3.7 p.p.		3.6 p.p.

Our consolidated net revenues increased 10% at actual exchange rates and 5% at constant rates in 2018 compared to 2017 due to an increase in both television advertising revenues and carriage fee and subscription revenues. Television advertising spending in the countries in which we operate grew an estimated 3% at constant rates in 2018 compared to 2017. Our consolidated television advertising revenues grew 7% at actual rates and 3% at constant rates due to increases in advertising spending in our four largest markets. Carriage fees and subscription revenues increased 19% at actual rates and 15% at constant rates primarily due to additional carriage fees from higher prices in contracts with cable, satellite and internet protocol television ("IPTV") operators in Slovenia since those operations ceased broadcasting on digital terrestrial transmission ("DTT") in January 2017.

Costs charged in arriving at OIBDA increased 4% at actual rates but decreased 1% at constant rates in 2018 compared to 2017. Content costs were broadly flat at constant rates, as higher spending for more original local content in certain markets was mostly offset by savings in foreign acquired content. The decrease in costs overall was driven primarily by savings from personnel and related expenses, as well as lower bad debt charges and transmission fees.

Our focus on controlling costs while improving revenues led to another year of OIBDA margin expansion, which increased to 32% in 2018 from 28% in 2017. This dynamic also drove an increase in operating income, with a similar improvement in operating margin. We expect the trend of revenues growing at a faster pace than costs will continue in 2019 and for the next several years, leading to further margin expansion year on year although trends may vary from quarter to quarter.

The fall season concluded during the fourth quarter and we remained audience share leaders during 2018 in all of the countries in which we operate, making us the best partner for advertisers in those territories. We believe television continues to provide the most efficient medium to reach consumers in our markets.

We repaid US$ 312.0 million of debt and related payables in 2018 using cash generated by the business as well as proceeds from warrant exercises and the sale of our operations in Croatia. Together with the increased profitability of our operations, this resulted in a net leverage ratio of 3.5x at the end of 2018 compared to 5.4x at the end of 2017. Following the refinancing transaction in April 2018, our weighted average cost of borrowing is now 3.5% compared to 6.0% at the end of 2017.

On January 31, 2019, we utilized cash generated by the business to repay an additional EUR 60.0 million (approximately US$ 68.9 million at January 31, 2019 rates) of the outstanding principal balance of the 2021 Euro Loan. There is now EUR 150.3 million outstanding principal on our nearest debt maturity in November 2021. Unlevered free cash flow was US$ 156.0 million in 2018, and the annual run-rate of our cash debt service obligations subsequent to the debt repayment in January 2019 is approximately US$ 26.5 million. As profitability of the operations continues to increase, the resulting uplift in free cash flow generation is expected to provide alternatives for capital allocation beyond deleveraging.

Looking ahead, while analysts forecast that GDP growth will be lower in 2019 than it was in 2018, the consensus estimate for average growth of 3.4% in the countries in which we operate again exceeds the rate of growth forecast for Western Europe and developed markets. We believe the growth in real private consumption forecast for 2019 will sustain growth in the television advertising markets.

Television continues to be the strongest medium for advertising in our operating countries, and the positive economic outlook remains the primary driver of advertiser demand. We have introduced higher list prices in our sales policies for all of our operating countries for 2019. Average realized prices for the year will ultimately depend on a number of factors, including the timing of commitments made for spending in 2019, the portion of those commitments that is prepaid, the volume of those commitments relative to the previous year, as well as the daypart and seasonality of advertisements actually placed.

We anticipate the expected improvement in our television advertising revenues will be supplemented by a higher proportion of income from other sources. Carriage fees and subscription revenues should continue to increase from higher prices, as well as increases in the number of subscribers to cable, satellite and IPTV platforms. The relaunch of our advertising based video on demand ("AVOD") platforms with improved content and technology during 2018 is also expected to increase revenue from online advertising in future periods.

There is increased competition for audience share in all markets, so the production of original local content remains a key pillar of our strategy, as it is an important factor in attracting large audiences from television and other non-linear sources of entertainment. We believe increased investments in local content will be partially offset by cost savings on foreign content, as well as savings in other programming costs. Inflationary pressures are also expected to drive a modest increase in other operating costs.

Index

~~Improved~~Executive ~~Capital Structure~~Summary

OnThe ~~February~~following 5,tables ~~2018,~~provide wea ~~entered~~summary ~~into~~of anour ~~amendment~~consolidated toresults ~~extend~~for the ~~maturity~~years ~~date~~ended ~~of the 2019 Euro Loan from November~~December 131, ~~2018~~ ~~to May 1,~~ 2019, ~~and subsequently repaid EUR 50.0 million (approximately US$ 61.6 million at February 6,~~ 2018 ~~rates)~~and ~~of the outstanding principal balance of that loan.~~ 2017:

On April 25, 2018, we entered into a series of amendments which modified certain terms of the 2021 Euro Loan, the 2023 Euro Loan, the 2023 Revolving Credit Facility and the Reimbursement Agreement (collectively, the "Financing Transactions"), which were effective on April 26, 2018. The Financing Transactions reduced the rates under the pricing grid in the Reimbursement Agreement used to calculate the Guarantee Fees payable, and extended the maturity dates of each of the 2021 Euro Loan, the 2023 Euro Loan and the 2023 Revolving Credit Facility.



	For The Year Ended December 31, (US$ 000's)
							Movement										Movement
	2019			2018			% Act		% Lfl		2018			2017			% Act		% Lfl
Net revenues	$	694,804		$	703,906		(1.3	)%	4.5	%	$	703,906		$	642,868		9.5	%	5.3	%
Operating income	187,336			177,587			5.5	%	11.4	%	177,587			139,914			26.9	%	25.1	%
Operating margin	27.0		%	25.2		%	1.8 p.p.		1.7 p.p.		25.2		%	21.8		%	3.4 p.p.		4.0 p.p.
OIBDA	$	247,924		$	222,674		11.3	%	17.6	%	$	222,674		$	179,767		23.9	%	20.9	%
OIBDA margin	35.7		%	31.6		%	4.1 p.p.		4.0 p.p.		31.6		%	28.0		%	3.6 p.p.		4.0 p.p.

OnOur ~~April~~consolidated ~~25,~~net ~~2018,~~revenues ~~Warner~~decreased ~~Media~~1% ~~exercised~~at ~~100,926,996~~actual ~~warrants~~exchange ~~resulting~~rates in ~~proceeds~~2019 ofcompared ~~US$~~to ~~100~~2018.9 ~~million~~At constant rates, ~~and~~net anrevenues ~~additional~~increased ~~2.4~~5% ~~million~~due ~~warrants~~to ~~were~~an ~~exercised~~increase byin ~~other~~both ~~shareholders~~television ~~during~~advertising ~~the~~revenues ~~second~~and ~~quarter~~carriage ~~prior~~fee toand ~~their~~subscription ~~expiration~~revenues. onTelevision ~~May~~advertising 2,spending ~~2018.~~in Onthe ~~May~~countries 3,in ~~2018,~~which we ~~used~~operate ~~proceeds~~grew ~~from~~an ~~the~~estimated ~~warrant~~3% ~~exercises,~~at ~~together~~constant ~~with~~rates ~~excess~~in ~~cash~~2019 oncompared ~~hand,~~ to ~~repay~~2018. ~~EUR~~Our ~~110.0~~consolidated ~~million~~television ~~(approximately~~advertising ~~US$~~revenues ~~132.0~~declined ~~million~~by 3% at ~~May~~actual rates but increased 3,% ~~2018~~at constant rates) due to growth in four of ~~the~~our ~~outstanding~~operating ~~principal~~segments ~~balance~~and higher average prices in each of the ~~2019~~countries ~~Euro~~in ~~Loan~~which we operate. Carriage fees and subscription revenues increased 3% at actual rates and 10% at constant rates primarily due to additional carriage fees from overall higher prices in contracts with cable, satellite and internet protocol television ("IPTV") operators as well as higher subscribers overall.

~~Divestment~~Costs ~~Transaction~~charged in arriving at OIBDA decreased 7% at actual rates and 2% at constant rates in 2019 compared to ~~Accelerate~~2018. ~~Deleveraging~~Content costs decreased 2% at constant rates due to broadcasting fewer hours and more cost effective foreign content, as well as a planned reduction in the volume of sports rights. There was also a decrease in other costs resulting from lower legal and professional fees as well as lower bad debt charges, which were partially offset by higher personnel costs.

OnOur ~~July~~focus 9,on ~~2017,~~controlling wecosts ~~agreed~~while toimproving ~~sell~~revenues ~~our~~led ~~operations in Croatia and Slovenia~~ to ~~Slovenia~~another ~~Broadband~~year ~~S.à~~of ~~r.l.~~OIBDA ~~(the~~margin ~~"Purchaser")~~expansion, awhich ~~subsidiary~~increased ofto ~~United~~36% ~~Group~~in ~~B.V.~~2019 ~~(the~~from ~~"United~~32% ~~Group"),~~in ~~subject~~2018. toThis ~~obtaining~~dynamic ~~regulatory~~also ~~approvals~~drove ~~and~~an ~~other~~increase ~~customary~~in ~~closing~~operating ~~conditions. On July 5~~income, ~~2018~~although the ~~Divestment~~operating ~~Transaction~~margin expansion was ~~amended~~lower tothan ~~allow~~for ~~the~~OIBDA ~~closing~~because ofcosts ~~the~~incurred ~~sale~~related ofto ~~the~~our ~~Croatian~~strategic ~~operations~~review ~~(the~~announced ~~"Croatian~~on ~~Transaction")~~March 25, 2019 and the ~~Slovenian~~resulting ~~operations~~proposed ~~(the~~Merger ~~"Slovenian~~are ~~Transaction")~~not ~~separately~~included within OIBDA.

~~The~~We ~~Croatian~~remained ~~Transaction~~audience ~~was~~share ~~completed~~leaders onduring ~~July~~2019 ~~31,~~in ~~2018~~all ~~and we received cash consideration~~ of ~~EUR~~the ~~86.4~~countries ~~million~~in ~~(approximately~~which ~~US$~~we ~~101.4 million at July 31~~operate, ~~2018~~with ~~rates),~~higher ~~inclusive~~full ofyear aprime ~~EUR~~time ~~1.4~~audience ~~million~~shares ~~(approximately~~compared ~~US$~~to ~~1.6 million at July 31,~~ 2018 ~~rates)~~in ~~net~~four ~~working~~operating ~~capital adjustment~~segments. ~~The~~We ~~proceeds~~believe ~~from~~television ~~the~~continues ~~Croatian Transaction, supplemented by cash flow from continuing operations, were used~~ to ~~repay~~provide the ~~outstanding~~most ~~principal~~efficient ~~amount~~medium ofto ~~EUR~~reach ~~40.8~~consumers ~~million~~in ~~(approximately~~our ~~US$ 47.9 million at July 31~~markets, ~~2018 rates) of the 2019 Euro Loan~~ and ~~accrued interest thereon, and to repay EUR 25.0 million (approximately US$ 29.3 million at July 31, 2018 rates) of the 2021 Euro Loan plus accrued interest thereon. In addition,~~ we ~~paid~~believe ~~US$~~our ~~41.2~~audience ~~million~~share tomakes ~~Warner~~us ~~Media, to repay (1) all Guarantee Fees payable to Warner Media as of~~ the ~~date~~best ofpartner ~~repayment~~for ~~under~~advertisers ~~the 2019 Euro Loan and (2) all outstanding Guarantee Fees and the Commitment Fee, together with accrued interest thereon, previously paid~~ in ~~kind~~those ~~that were payable to Warner Media prior to repayment of the portion of the 2021 Euro Loan~~territories.

~~Following~~Using ~~these~~cash ~~repayments~~generated by the business, ~~our~~we ~~nearest~~paid ~~debt~~a ~~maturity~~total isof ~~November~~EUR ~~2021,~~150.0 ~~and~~million ~~together~~(approximately ~~with~~US$ ~~the~~168.9 ~~continued~~million ~~improvement~~at intransaction ~~our~~date ~~operations,~~rates) ~~our~~of ~~net~~the ~~leverage~~2021 ~~ratio~~Euro ~~improved~~Loan toin 32019.5x atFollowing ~~the~~these ~~end~~payments, ofthere ~~2018.~~is ~~With~~now ~~the~~EUR ~~pricing~~60.3 ~~grids~~million ~~applicable~~(approximately toUS$ ~~the~~67.8 ~~Euro~~million) ~~Loans,~~outstanding on our ~~weighted~~nearest ~~average~~debt ~~cost~~maturity ofin ~~borrowing~~November ~~was 3~~2021.5% atUnlevered ~~the~~free ~~end~~cash offlow ~~2018,~~was ~~down~~US$ ~~from approximately 6~~188.0% atmillion ~~the~~in ~~start~~2019, an increase of 21% compared to 2018.

AsTogether with the ~~requisite~~increased ~~regulatory~~profitability ~~approval~~of ~~from~~our ~~the~~operations, ~~Competition~~our ~~Protection~~net ~~Agency~~leverage inratio ~~Slovenia~~ was ~~not~~2.4x ~~received~~at asthe end of 2019 compared to 3.5x at the ~~most~~end ~~recent~~of ~~extension~~2018. Our weighted average cost of borrowing applicable to the ~~long-stop~~Euro ~~date,~~Loans weand ~~terminated~~Guarantee ~~the~~Fees ~~Slovenian~~was ~~Transaction~~approximately on3.4% ~~January~~at ~~18,~~the end of 2019, ~~(see~~down ~~Part~~10 ~~II,~~basis ~~Item~~points 8during the year, ~~Note~~and 3the annual run-rate of our cash debt service obligations at December 31, ~~"Discontinued~~2019 ~~Operations~~was ~~and~~approximately ~~Assets~~US$ ~~Held~~21.3 ~~for~~million, ~~Sale"~~a ~~for~~decrease ~~further~~of ~~information)~~approximately 26% compared to 2018.

Free Cash Flow and Unlevered Free Cash Flow

	For The Year Ended December 31, (US$ 000's)
	2018			2017			Movement		2017			2016			Movement
	2019			2018			Movement		2018			2017			Movement
Net cash generated from / (used in) continuing operating activities	$	109,024		$	93,301		16.9	%	$	93,301		$	(77,239	)	NM (1)
Net cash generated from continuing operating activities	$	179,652		$	109,024		64.8	%	$	109,024		$	93,301		16.9	%
Capital expenditures, net	(24,~~540~~375		)	(2724,~~947~~540		)	120.27	%	(2724,~~947~~540		)	(2627,~~525~~947		)	(512.42	)%
Free cash flow	84,484			65,354			29.3	%	65,354			(103,764		)	NM (1)
Other items (1)	6,092			—			NM (2)		—			—			—	%
Cash paid for interest (including mandatory cash-pay Guarantee Fees)	43,350			47,197			(8.2	)%	47,197			53,977			(12.6	)%
Free cash flow	161,369			84,484			91.0	%	84,484			65,354			29.3	%
Cash paid for Guarantee Fees previously paid in kind	27,328			—			NM (1)		—			22,358			(100.0	)%
Cash paid for interest (including Guarantee Fees)	26,651			43,350			(38.5	)%	43,350			47,197			(8.2	)%
Cash paid for Guarantee Fees that may be paid in kind	812			8,343			(90.3	)%	8,343			8,349			(0.1	)%
Cash paid for Guarantee Fees previously paid in kind	—			27,328			(100.0	)%	27,328			—			NM (2)
Other (2)	—			—			—	%	—			110,699			(100.0	)%
Cash paid for Guarantee Fees that previously could be paid in kind	—			812			(100.0	)%	812			8,343			(90.3	)%
Unlevered free cash flow	$	~~155~~188,~~974~~020		$	~~120~~155,~~894~~974		2920.05	%	$	~~120~~155,~~894~~974		$	91120,~~619~~894		3129.90	%

(1) ~~Number~~Other isitems ~~not~~during ~~meaningful~~the year ended December 31, 2019 reflects costs relating to the strategic review and resulting proposed Merger.

(2) ~~Relates~~Number tois ~~cash~~not payments upon settlement of the 2017 PIK Notes and 2017 Term Loan for interest that was previously paid in kind (see Item 8, Note 2, "Basis of Presentation and Summary of Significant Accounting Policies")meaningful.

	December 31, 2018		December 31, 2017		Movement
	December 31, 2019		December 31, 2018		Movement
Cash and cash equivalents	$	6236,~~031~~621	$	5862,~~748~~031	5(41.60	)%

~~Our~~The increase in unlevered free cash flow ~~increased~~at actual rates during ~~2018~~2019 ~~compared~~was todue ~~2017~~primarily ~~reflecting~~to ~~higher~~lower cash ~~collections~~payments ~~from~~for ~~revenue~~acquired ~~growth,~~programming asand ~~well~~production ascosts, ~~lower~~which ~~capital expenditures. This~~ was partially offset by higher ~~cash~~payments ~~paid~~ for income taxes. WeNet ~~ended~~cash ~~2018~~generated ~~with~~from ~~cash~~continuing ofoperating ~~US$~~activities ~~62.0~~also ~~million~~benefited ~~and~~from welower ~~have~~cash ~~access~~paid tofor ~~another~~interest ~~US$~~and ~~75.0~~Guarantee ~~million~~Fees, ofwhich ~~liquidity~~was ~~provided~~partially offset by ~~the~~payments ~~2023~~related ~~Revolving~~to ~~Credit~~the ~~Facility,~~strategic ~~which remains undrawn~~review.

~~Although~~We ~~our~~ended ~~interest~~2019 ~~expense~~with ~~decreased~~cash ~~significantly during 2018 compared to 2017, the proportion~~ of ~~interest~~US$ ~~expense required to be paid in cash increased~~36.6 Inmillion ~~addition~~and ~~to this,~~ we ~~used~~have ~~proceeds~~access ~~from the Croatian Transaction as well as cash generated by the business~~ to ~~repay~~another ~~debt and related payables during the third quarter, which included the repayment of~~ US$ 2775.30 million of ~~accrued~~liquidity ~~Guarantee~~provided ~~Fees~~by ~~that~~the ~~were~~2023 ~~paid~~Revolving inCredit ~~kind~~Facility, inwhich ~~prior~~remains ~~years~~undrawn. ~~The cash paid for Guarantee Fees previously paid in kind was reflected in both free cash flow and net cash generated from continuing operating activities.~~

Due to the significant increase in cash generated by the business, on January 31, 2019, we elected to repay an additional EUR 60.0 million (approximately US$ 68.9 million at January 31, 2019 rates) of outstanding principal balance of the 2021 Euro Loan. There is now EUR 150.3 million outstanding principal on our nearest debt maturity in November 2021.

Index

Market Information

After adjusting for inflation, we estimate that during ~~2018~~2019 GDP grew in each of the countries in which we operate at a rate that exceeded the average growth rate for Western Europe. Overall GDP growth in 2019 was lower than in 2018, as exports weakened slightly in certain countries, which is reported to be connected to a slowdown in the German economy, and ~~marks~~uncertainty around the ~~fourth~~impact ~~consecutive~~of ~~year~~tariffs ~~that~~on ~~growth~~global intrade ~~these~~as ~~territories~~well ~~has~~as ~~outpaced~~the ~~more~~final ~~developed~~terms ~~markets.~~under Inwhich ~~this~~the ~~respect~~UK will exit the EU (see Part I, Item 1A, "~~developed~~Risk ~~markets~~Factors"). ~~refers~~Analyst toestimates afor ~~combined~~2020 ~~group~~ of 11GDP in the countries ~~from~~in ~~within~~which ~~the~~we ~~European~~operate ~~Union~~forecast a slower rate of growth overall compared to 2019. However, ~~predominantly~~domestic ~~from~~private ~~Western~~consumption ~~Europe~~remains generally robust, supported by historically low unemployment and ~~the~~higher ~~United~~average ~~States~~wages. We believe the growth in real private consumption forecast for 2020 in the countries where we operate will sustain growth in the television advertising markets.

Higher average wages in our operating countries continued to support domestic demand and significant growth in private consumption. The average wage in the Czech Republic increased by more than 8% in 2018, which was the fastest annual growth rate in the last 15 years. The public sector wage in Romania increased in 2018, and is set to continue increasing in 2019. Unemployment has fallen to historically low rates in all countries in which we operate, with the Czech Republic seeing the lowest unemployment rate in the European Union. It has been reported that an expansion of consumer credit in Bulgaria is also contributing to growth in private consumption in the country.

While analysts forecast that GDP growth will be slightly lower in 2019 than it was in 2018, the consensus estimate for average growth of 3.4% in the countries in which we operate again exceeds the rate of growth forecast for developed markets. GDP growth in the Czech Republic during the final months of 2018 was impacted by lower automobile sales, and the Czech National Bank expects this to be a temporary drag on economic growth in the country. We believe the growth in real private consumption forecast for 2019 in the Czech Republic and the rest of the countries where we operate will sustain growth in the television advertising markets.

In Romania, the government has introduced sector taxes for 2019 that include a levy on telecommunications operators. This tax would not apply to our Romanian operations, however it is possible that the burden of these taxes could negatively impact spending for advertising from clients in the affected sectors, and negatively impact our success in increasing carriage fees when contracts are renewed.

On March 29, 2019, the two-year period during which the United Kingdom is to finalize the terms and process for leaving the European Union, commonly referred to as “Brexit” , will expire. There is significant uncertainty regarding the terms on which the United Kingdom will leave the EU, and it is expected that economic conditions in the EU will be impacted by Brexit in 2019. However, we have not seen an appreciable impact on the behavior of advertisers in the countries in which we operate since the UK electorate voted in favor of Brexit in June 2016.

Over the long-term, we believe that there is an opportunity for GDP per capita in our markets to continue converging with that of the developed markets if sustained periods of higher growth continue. In our markets, total advertising spending and the ratio of total advertising spend per capita to nominal GDP per capita, also known as advertising intensity, both remain significantly below levels of developed markets. This is due in part to the fact that basic products such as food, beverages and household cleaning supplies comprise the main source of advertising revenues, whereas in the developed markets, the marketing of premium products, including finance, automotive, entertainment and travel products, makes up the majority of current television advertising spending. As a result, higher rates of economic growth in our markets should also result in higher rates of growth in advertising spending.

Since television was commercialized in our markets at the same time as other forms of media, television advertising generally accounts for a higher proportion of total advertising spend than in the developed markets, where newspapers, magazines and radio were established as advertising media well before the advent of television. And contrary to trends in developed markets, television advertising spend as a percentage of total advertising spend has grown in our markets during recent years.

We believe that television advertising will continue to hold its share of total advertising spend in our markets because of its greater reach and effective measurement, which makes this medium more appealing to advertisers. Television is especially attractive to advertisers because it delivers high reach at low cost compared to other forms of media. More recently, internet advertising has grown at the expense of print and outdoor advertising, and we offer additional advertising opportunities when clients seek to complement their television campaigns with campaigns online. While spending for digital advertising has overtaken spending on television in the developed markets, this is not the case in our markets and we believe the strength of television as an advertising medium will continue for the foreseeable future.

The following table sets out our estimates of television advertising spending, net of discounts, by country (in US$ millions) for the years set forth below:

Country	~~2018~~2019			~~2017~~2018			~~2016~~2017
Bulgaria	$	~~115~~109		$	109		$	~~105~~104
Czech Republic	~~342~~340			~~332~~325			~~321~~315
Romania*	~~259~~241			~~249~~241			~~222~~232
Slovak Republic	~~154~~157			~~149~~147			~~143~~142
Slovenia	7169			7167			6968
Total CME Markets	$	~~941~~916		$	~~910~~889		$	~~860~~861
Growth rate	3		%	63		%	76		%

* Romania market excludes Moldova.

Source: CME estimates, using the ~~2018~~2019 average exchange rate for all periods presented above.

On a constant currency basis, we estimate television advertising spending overall in our markets increased an estimated 3% in ~~2018~~2019 compared to the previous year. In Bulgaria, the market ~~increased~~was 5%estimated to be broadly flat as ~~the~~an ~~volume~~increase ofin GRPs sold ~~increased~~offset ~~significantly,~~a ~~which~~decline ~~was~~in ~~partially~~average ~~offset~~market byprices, ~~lower~~even though our average prices increased. InMarket growth in the Czech Republic, ~~market~~the ~~growth~~Slovak ofRepublic 3%and ~~was~~Slovenia ~~driven~~all byresulted ~~selling~~from ~~more~~higher ~~GRPs,~~average ~~with~~prices that more ~~spending~~than ~~placed~~offset ~~outside~~lower ~~peak~~demand ~~seasons~~for asGRPs. ~~well~~The asmarket ~~additional~~in ~~inventory~~the ~~available~~Slovak onRepublic ~~competing~~also ~~channels~~benefited from higher sponsorship. In Romania, the market ~~grew~~was 4%broadly ~~due~~flat toas ~~higher~~ average market prices. Inincreased, ~~the~~but ~~Slovak~~this ~~Republic,~~was ~~the~~more ~~market~~than ~~grew~~offset 4%by ~~due~~selling tofewer ~~higher~~GRPs ~~average~~as ~~prices,~~there ~~which~~ was ~~partially~~less ~~offset~~inventory byavailable ~~fewer~~to ~~GRPs~~sell. ~~sold~~It also reflected reduced spending by advertisers, primarily byin the ~~competition.~~first Inquarter ~~Slovenia~~of 2019, ~~the~~who ~~market~~were ~~was~~directly ~~broadly~~impacted ~~flat~~by ~~due~~new toincremental ataxes ~~significant~~imposed ~~decline~~early in ~~GRPs~~2019 ~~sold~~on certain sectors of the economy, ~~which~~including ~~was~~telecommunications ~~mostly~~and ~~offset~~banking. byEven ~~higher~~though ~~prices~~spending from these clients recovered during the course of 2019, overall spending from the affected sectors was lower than in 2018.

In the short-term, we believe that television advertising will continue to hold its share of total advertising spend in our markets because of its greater reach and effective measurement, which makes this medium more appealing to advertisers. We believe television is especially attractive to advertisers because it delivers high reach at lower cost than other forms of media. More recently, internet advertising has grown at the expense of print and outdoor advertising, and we offer additional advertising opportunities when clients seek to complement their television campaigns with campaigns online. While spending for digital advertising has overtaken spending on television in more developed markets, this is not the case in our markets and we believe the strength of television as an advertising medium will continue for the foreseeable future.

There is increased competition for audience share in all our markets. The production of original local content remains a key pillar of our strategy, as it is an important factor in attracting large audiences to both television as well as other non-linear sources of entertainment. While subscription video-on-demand ("SVOD") platforms do not compete with television for spending on advertising, they do compete in terms of the amount of time that viewers spend consuming content, which can negatively impact our ratings. Netflix launched an English-language platform across Central and Eastern Europe in early 2016, primarily with foreign titles in its library. The service was offered with a user interface in local language in Romania in the middle of 2017, along with Romanian subtitles and dubbing of content. In the fourth quarter of 2019 it similarly introduced local language in its user interface in the Czech Republic, which is also available in the Slovak Republic, and expanded its offering to include significantly more local content. We have not yet seen an appreciable impact on viewer behavior resulting from this; however, if this trend of SVOD platforms in local language with local content spreads further and viewership habits change over the medium-term, this could reduce the amount of television advertising inventory we have to sell.

Index

Segment Performance

	NET REVENUES
	For The Year Ended December 31, (US$ 000's)
							Movement										Movement
	2018			2017			% Act		% Lfl		2017			2016			% Act		% Lfl
	2019			2018			% Act		% Lfl		2018			2017			% Act		% Lfl
Bulgaria	$	8483,~~593~~406		$	7784,~~341~~593		9(1.4	)%	5.3.9	%	$	7784,~~341~~593		$	7277,~~651~~341		69.54	%	35.73	%
Czech Republic	~~233~~237,~~991~~320			~~209~~233,~~041~~991			111.94	%	5.6.8	%	~~209~~233,~~041~~991			~~190~~209,~~372~~041			911.89	%	3.5.6	%
Romania	~~201~~188,~~505~~251			~~191~~201,~~244~~505			5(6.46	)%	30.23	%	~~191~~201,~~244~~505			~~172~~191,~~951~~244			105.64	%	93.52	%
Slovak Republic	~~106~~108,~~834~~003			97106,~~721~~834			91.31	%	56.54	%	97106,~~721~~834			9097,~~549~~721			7.9.3	%	45.75	%
Slovenia	7980,~~587~~809			6879,~~696~~587			151.95	%	126.09	%	6879,~~696~~587			5668,~~912~~696			2015.79	%	1712.20	%
Intersegment revenues	(2,~~604~~985		)	(12,~~175~~604		)	NM (1)		NM (1)		(12,~~175~~604		)	(~~429~~1,175		)	NM (1)		NM (1)
Total Net Revenues	$	~~703~~694,~~906~~804		$	~~642~~703,~~868~~906		9(1.53	)%	54.35	%	$	~~642~~703,~~868~~906		$	~~583~~642,~~006~~868		109.35	%	65.63	%

⁽¹⁾Number is not meaningful.

	OIBDA
	For The Year Ended December 31, (US$ 000's)
							Movement										Movement
	2018			2017			% Act		% Lfl		2017			2016			% Act		% Lfl
	2019			2018			% Act		% Lfl		2018			2017			% Act		% Lfl
Bulgaria	$	2125,~~620~~720		$	1621,~~241~~620		3319.10	%	3324.03	%	$	1621,~~241~~620		$	1216,~~004~~241		3533.31	%	3233.40	%
Czech Republic	94101,~~576~~617			8294,~~652~~576			147.4	%	912.28	%	8294,~~652~~576			7682,~~466~~652			814.14	%	09.82	%
Romania	8587,~~737~~727			7385,~~418~~737			162.83	%	149.08	%	7385,~~418~~737			6173,~~394~~418			1916.68	%	1914.0	%
Slovak Republic	2735,~~941~~350			2327,~~845~~941			1726.25	%	1631.25	%	2327,~~845~~941			1523,~~598~~845			5217.92	%	4416.32	%
Slovenia	2226,~~516~~395			1422,~~263~~516			5717.92	%	5722.9	%	1422,~~263~~516			414,~~674~~263			~~205~~57.29	%	~~168~~57.49	%
Eliminations	3415			(334		)	NM (1)		NM (1)		(334		)	25(3		)	NM (1)		NM (1)
Total operating segments	~~252~~276,~~424~~824			~~210~~252,~~416~~424			209.07	%	1615.78	%	~~210~~252,~~416~~424			~~170~~210,~~161~~416			2320.70	%	1816.47	%
Corporate	(2928,~~750~~900		)	(3029,~~649~~750		)	2.9	%	7(2.84	)%	(3029,~~649~~750		)	(2830,~~614~~649		)	(72.19	)%	(07.18	)%
Total OIBDA	$	~~222~~247,~~674~~924		$	~~179~~222,~~767~~674		2311.93	%	2017.96	%	$	~~179~~222,~~767~~674		$	~~141~~179,~~547~~767		2723.09	%	2220.29	%

⁽¹⁾Number is not meaningful.

Index

Bulgaria

	For the Year Ended December 31, (US$ 000's)
							Movement										Movement
	2018			2017			% Act		% Lfl		2017			2016			% Act		% Lfl
	2019			2018			% Act		% Lfl		2018			2017			% Act		% Lfl
Television advertising	$	5856,~~350~~276		$	5358,~~446~~350		9(3.26	)%	51.46	%	$	5358,~~446~~350		$	4953,~~111~~446		89.82	%	65.04	%
Carriage fees and subscriptions	2021,~~989~~404			1920,~~462~~989			72.80	%	37.15	%	1920,~~462~~989			1819,~~703~~462			47.18	%	13.51	%
Other	5,~~254~~726			45,~~433~~254			189.50	%	1314.85	%	45,~~433~~254			4,~~837~~433			(818.45	)%	~~(10~~13.8	)%
Net revenues	8483,~~593~~406			7784,~~341~~593			9(1.4	)%	5.3.9	%	7784,~~341~~593			7277,~~651~~341			69.54	%	35.73	%
Costs charged in arriving at OIBDA	6257,~~973~~686			6162,~~100~~973			3(8.14	)%	(13.73	)%	6162,~~100~~973			6061,~~647~~100			03.71	%	(1.97	)%
OIBDA	$	2125,~~620~~720		$	1621,~~241~~620		3319.10	%	3324.03	%	$	1621,~~241~~620		$	1216,~~004~~241		3533.31	%	3233.40	%
OIBDA margin	2530.68		%	2125.06		%	45.62 p.p.		5.40 p.p.		2125.06		%	1621.50		%	4.56 p.p.		4.5.4 p.p.

The television advertising market in Bulgaria ~~increased~~was an estimated 5%to be broadly flat at constant rates in ~~2018~~2019, ~~and~~after 4having increased an estimated 5% in ~~2017~~2018.

Our television advertising revenues increased at constant rates in ~~2018 due to higher average prices and selling more GRPs~~2019, as ~~significant~~an ~~growth~~increase in ~~private~~our ~~consumption~~average ~~encouraged~~prices ~~advertisers~~more tothan ~~increase~~offset ~~their~~selling ~~spending.~~fewer ~~There was also an increase in revenue from sponsorship and product placement~~GRPs. Carriage fees and subscription revenues increased inprimarily ~~2018~~ due to anprice inflation in existing contracts, as well as a slight increase in the ~~average~~overall ~~cost~~number ~~per~~of ~~subscriber~~subscribers.

~~Our~~In 2018, our television advertising revenues increased at constant rates ~~in 2017~~ due to selling more GRPs at higher average prices, ~~for~~as ~~the~~significant ~~year.~~growth ~~Carriage~~in ~~fees~~private ~~and~~consumption ~~subscription~~encouraged ~~revenues~~advertisers ~~increased~~to ~~slightly~~increase attheir ~~constant~~spending. ~~rates~~There ~~due~~was toalso ~~continued~~an ~~efforts~~increase toin ~~secure~~revenue ~~new~~from ~~contracts~~sponsorship ~~with~~and ~~cable,~~product ~~satellite~~placement. Carriage fees and ~~IPTV~~subscription ~~operators~~revenues ~~with~~increased ~~improved~~in ~~pricing~~2018 due to an increase in the average cost per subscriber.

On a constant currency basis, costs charged in arriving at OIBDA decreased in ~~2018~~2019 due to lower bad debt charges asand ~~well~~a asdecrease ~~decreases~~ in ~~professional~~content ~~fees and personnel~~ costs. ~~These~~We ~~were~~generated ~~partially~~savings ~~offset~~in bylocal anproduction ~~increase~~from inreplacing ~~content~~last ~~costs~~year's ~~related~~successful tolocally aproduced ~~new~~ telenovela onwith ~~our~~entertainment ~~main~~formats, ~~channel~~and inalso ~~the~~implemented ~~access-prime~~a ~~time~~reduction ~~slot~~ in ~~both~~ the ~~spring~~volume ~~and~~of ~~fall~~sports ~~seasons~~rights in our schedule.

Costs charged in arriving at OIBDA decreased at constant rates in ~~2017~~2018 due ~~primarily~~ to alower ~~US$ 3.4 million~~ bad debt ~~charge~~charges ~~related~~as towell ~~our~~as ~~decision~~decreases toin ~~cease~~professional ~~cooperation~~fees ~~with~~and ~~one~~personnel ~~agency~~costs. ~~during~~These ~~the~~were ~~fourth~~partially ~~quarter~~offset ofby ~~2016~~an ~~and~~increase ~~instead~~in ~~started~~content ~~working~~costs ~~directly~~related ~~with~~to ~~the~~a ~~clients~~new ~~that~~telenovela ~~agency~~on ~~represented.~~our ~~Content~~main ~~costs~~channel ~~were~~in ~~flat,~~the asaccess-prime ~~higher~~time ~~spending~~slot onin ~~popular~~both ~~programming~~the ~~was~~spring ~~offset~~and byfall ~~savings in sports rights~~seasons.

Index

Czech Republic

	For the Year Ended December 31, (US$ 000's)
							Movement										Movement
	2018			2017			% Act		% Lfl		2017			2016			% Act		% Lfl
	2019			2018			% Act		% Lfl		2018			2017			% Act		% Lfl
Television advertising	$	206,~~203~~335		$	~~188~~206,~~373~~203		90.51	%	35.34	%	$	~~188~~206,~~373~~203		$	~~172~~188,~~392~~373		9.35	%	3.03	%
Carriage fees and subscriptions	1517,~~962~~580			1215,~~141~~962			3110.51	%	2316.02	%	1215,~~141~~962			1012,~~325~~141			1731.65	%	1123.60	%
Other	1113,~~826~~405			811,~~527~~826			3813.74	%	3118.78	%	811,~~527~~826			78,~~655~~527			1138.47	%	331.17	%
Net revenues	~~233~~237,~~991~~320			~~209~~233,~~041~~991			111.94	%	5.6.8	%	~~209~~233,~~041~~991			~~190~~209,~~372~~041			911.89	%	3.5.6	%
Costs charged in arriving at OIBDA	~~139~~135,~~415~~703			~~126~~139,~~389~~415			10(2.37	)%	32.37	%	~~126~~139,~~389~~415			~~113~~126,~~906~~389			1110.03	%	53.3	%
OIBDA	$	94101,~~576~~617		$	8294,~~652~~576		147.4	%	912.28	%	$	8294,~~652~~576		$	7682,~~466~~652		814.14	%	09.82	%
OIBDA margin	4042.48		%	3940.54		%	02.94 p.p.		12.3 p.p.		3940.54		%	4039.25		%	(0.7)9 p.p.		(1.1)3 p.p.

The television advertising market in the Czech Republic increased an estimated 35% at constant rates in ~~2018~~2019, ~~and~~after 4having grown an estimated 3% in ~~2017~~2018.

Our television advertising revenues increased at constant rates in ~~2018~~2019 ~~from selling more GRPs, reflecting overall increased demand for advertising in the market, particularly~~ due to ~~more~~significantly ~~spending~~higher ~~being~~average ~~placed when list~~ prices, ~~are~~which ~~lower~~more ~~outside~~than ~~the~~offset ~~peak~~selling ~~seasons~~fewer ~~of spring and fall~~GRPs. Carriage fees and subscription revenues increased on a constant currency basis due to anprice ~~increase~~increases in ~~the~~existing ~~number~~contracts ~~of subscribers~~ as well as ~~contracts~~an ~~with~~increase ~~higher~~in ~~prices~~the number of subscribers.

~~Our~~In 2018, our television advertising revenues increased at constant rates from selling more GRPs, reflecting overall increased demand for advertising in ~~2017~~the market, particularly due to ~~higher~~more ~~average~~spending being placed when list prices, ~~which~~are ~~more~~lower ~~than~~outside ~~offset~~the apeak ~~slight~~seasons ~~decrease~~of inspring ~~GRPs~~and ~~sold~~fall. Carriage fees and subscription revenues increased due ~~primarily~~ to ~~additional~~an ~~contracts~~increase ~~for~~in ~~Nova~~the ~~International~~number ~~that~~of ~~became~~subscribers ~~effective~~as ~~late~~well inas ~~2016~~contracts with higher prices.

Costs charged in arriving at OIBDA ~~in 2018~~ increased onat a constant ~~currency~~rates ~~basis~~in 2019 due to ~~investments~~increased instaff-related ~~additional~~costs, ~~local~~higher ~~content~~licensing ~~during~~costs, ~~the spring~~ and ~~fall~~marketing ~~seasons~~activities onin the ~~main~~first ~~channel,~~quarter ~~with~~to ~~more~~celebrate ~~episodes~~the of25th ~~returning~~anniversary ~~series~~of asTV ~~well~~Nova asbroadcasting ~~an additional local title~~ in the ~~fall~~Czech ~~season~~Republic. ~~There were also higher salary and staff costs, including additional personnel to further our digital initiatives.~~

On a constant currency basis, costs ~~increased~~charged in ~~2017~~arriving ~~due~~at ~~primarily~~OIBDA ~~to an increase~~ in ~~content~~2018 ~~costs,~~increased asdue ~~higher~~to ~~quality~~investments ~~productions~~in ~~and~~ additional local ~~fiction~~content induring the ~~schedule~~spring ~~compared~~and tofall ~~2016~~seasons ~~was~~on ~~partially~~the ~~offset~~main bychannel, ~~less~~with ~~expensive~~more ~~acquired~~episodes ~~content~~of returning series as well as ~~lower~~an ~~transmission~~additional local title in the fall season. There were also higher salary and ~~consultancy~~staff costs.

Index

Romania

	For the Year Ended December 31, (US$ 000's)
							Movement										Movement
	2018			2017			% Act		% Lfl		2017			2016			% Act		% Lfl
	2019			2018			% Act		% Lfl		2018			2017			% Act		% Lfl
Television advertising	$	~~150~~139,~~084~~300		$	~~143~~150,~~693~~084		4(7.42	)%	2(0.4	)%	$	~~143~~150,~~693~~084		$	~~128~~143,~~814~~693		114.64	%	102.34	%
Carriage fees and subscriptions	4644,~~704~~243			4446,~~032~~704			6(5.13	)%	31.48	%	4446,~~032~~704			4044,~~202~~032			96.51	%	83.84	%
Other	4,~~717~~708			34,~~519~~717			~~34.~~(0.2	)%	306.85	%	34,~~519~~717			3,~~935~~519			~~(10~~34.60	)%	~~(12~~30.08	)%
Net revenues	~~201~~188,~~505~~251			~~191~~201,~~244~~505			5(6.46	)%	30.23	%	~~191~~201,~~244~~505			~~172~~191,~~951~~244			105.64	%	93.52	%
Costs charged in arriving at OIBDA	~~115~~100,~~768~~524			~~117~~115,~~826~~768			(113.72	)%	(3.6.7	)%	~~117~~115,~~826~~768			~~111~~117,~~557~~826			5(1.67	)%	4.(3.6	)%
OIBDA	$	8587,~~737~~727		$	7385,~~418~~737		162.83	%	149.08	%	$	7385,~~418~~737		$	6173,~~394~~418		1916.68	%	1914.0	%
OIBDA margin	4246.56		%	3842.45		%	4.1 p.p.		4.0 p.p.		3842.45		%	3538.54		%	24.91 p.p.		34.10 p.p.

The television advertising market in Romania ~~increased~~was an estimated 4%to be broadly flat at constant rates in2019, ~~2018~~after ~~and~~having 12increased an estimated 4% in ~~2017~~2018.

Our television advertising revenues ~~increased~~were broadly flat at constant rates in ~~2018~~2019 ~~from~~as ~~higher~~a ~~prices,~~significant ~~which~~increase ~~were~~in ~~partially~~our average prices was offset by selling fewer GRPs ~~due to lower ratings~~. ~~During~~There ~~the~~was ~~spring~~also ~~season~~reduced ~~there~~spending, ~~was~~primarily ain ~~shift~~the infirst ~~some~~quarter ~~spending~~of to2019, ~~the~~by ~~lower~~advertisers ~~priced~~who ~~competition,~~were ~~which~~directly ~~generated~~impacted ~~more~~by ~~inventory~~new toincremental ~~sell,~~taxes ~~but~~imposed weearly ~~grew~~in ~~faster~~2019 ~~than~~on ~~the~~certain ~~market~~sectors inof the ~~fourth~~economy, ~~quarter.~~including ~~Carriage~~telecommunications ~~fees~~ and ~~subscription~~banking. ~~revenues~~Even ~~increased~~though ~~due~~spending tofrom anthese ~~increase~~clients inrecovered during the ~~number~~course of ~~subscribers.~~2019, Weoverall ~~will~~spending ~~cease~~from ~~broadcasting~~the ~~MTV~~affected ~~ROMANIA~~sectors onwas ~~March~~lower 1,than ~~2019~~in 2018. AsCarriage afees ~~result,~~and wesubscription ~~expect~~revenues ~~carriage~~increased ~~fees~~on ~~and~~a ~~subscription~~constant ~~revenues~~currency ~~will~~basis ~~decrease~~due ~~during~~to ~~2019,~~an ~~however~~increase wein dothe ~~not~~average ~~expect~~number ~~this~~of tosubscribers, ~~impact~~even ~~profitability~~though ~~due~~we toceased ~~the~~broadcasting ~~associated~~MTV ~~cost~~ROMANIA ~~savings~~on March 1, 2019.

~~Our~~In 2018, our television advertising revenues increased at constant rates infrom ~~2017 due to~~ higher prices~~. The market continued to be largely sold out in 2017~~, ~~reflecting~~which ~~sustained~~were ~~strong~~partially ~~demand~~offset ~~for~~by ~~advertising~~selling asfewer ~~clients~~GRPs ~~invested~~due ~~more in campaigns~~ to ~~improve~~lower ~~their competitive positions~~ratings. Carriage fees and subscription revenues ~~grew~~increased ~~on a constant currency basis during 2017~~ due to an increase in the number of ~~reported~~ subscribers.

Costs charged in arriving at OIBDA ~~in 2018~~ decreased atin ~~constant~~2019 ~~rates~~primarily due to ~~savings~~a ondecrease ~~production~~in content costs ~~for~~as ~~locally~~we ~~produced~~utilized ~~formats~~fewer inhours ~~the~~and ~~spring~~more ~~season~~cost-effective ~~when~~foreign ~~compared~~content. We also had decreased costs due to ~~the~~fewer ~~schedule~~sport rights in ~~2017.~~the ~~There~~first ~~was~~half ~~also~~of athe ~~reversal~~year ofsince awe ~~legal~~no ~~accrual~~longer ~~and~~broadcast UEFA Champions League matches. We also recorded lower ~~professional~~bad ~~fees~~debt charges stemming from changes in local VAT legislation.

On a constant currency basis, costs ~~increased~~charged in ~~2017~~arriving ~~from~~at ~~higher~~OIBDA ~~content~~in ~~costs,~~2018 asdecreased weat ~~invested~~constant ~~more~~rates indue ~~local~~to ~~productions~~savings ofin ~~entertainment~~production ~~formats~~costs asfor ~~well~~locally asproduced ~~local~~formats ~~fiction,~~in ~~which~~the ~~more~~spring ~~than~~season ~~offset~~when ~~savings~~compared ~~from~~to ~~sports~~the ~~rights~~schedule in 2017. ~~Non-programming~~Costs ~~costs~~were also ~~increased,~~lower ~~primarily~~due asto a ~~result~~reversal of ~~higher~~a ~~staff~~legal ~~costs~~accrual and ~~professional fees, which more than offset~~ lower ~~transmission~~professional ~~costs~~fees.

Index

Slovak Republic

	For the Year Ended December 31, (US$ 000's)
							Movement										Movement
	2018			2017			% Act		% Lfl		2017			2016			% Act		% Lfl
	2019			2018			% Act		% Lfl		2018			2017			% Act		% Lfl
Television advertising	$	94,~~030~~091		$	8594,~~715~~030		90.71	%	65.03	%	$	8594,~~715~~030		$	8485,~~779~~715		19.17	%	(16.90	)%
Carriage fees and subscriptions	8,~~550~~923			78,~~597~~550			124.54	%	810.1	%	78,~~597~~550			27,~~101~~597			~~NM (1)~~12.5	%	~~NM (~~8.1)	%
Other	4,~~254~~989			4,~~409~~254			(317.53	)%	(823.54	)%	4,~~409~~254			34,~~669~~409			20(3.25	)%	16(8.15	)%
Net revenues	~~106~~108,~~834~~003			97106,~~721~~834			91.31	%	56.54	%	97106,~~721~~834			9097,~~549~~721			7.9.3	%	45.75	%
Costs charged in arriving at OIBDA	7872,~~893~~653			7378,~~876~~893			6(7.89	)%	(2.27	)%	7378,~~876~~893			7473,~~951~~876			(16.48	)%	(32.82	)%
OIBDA	$	2735,~~941~~350		$	2327,~~845~~941		1726.25	%	1631.25	%	$	2327,~~845~~941		$	1523,~~598~~845		5217.92	%	4416.32	%
OIBDA margin	2632.27		%	2426.42		%	16.85 p.p.		26.42 p.p.		2426.42		%	1724.24		%	71.28 p.p.		62.74 p.p.

⁽¹⁾Number is not meaningful.

The television advertising market in the Slovak Republic increased an estimated 47% at constant rates in ~~2018~~2019, ~~and~~after having grown an estimated 4% in ~~2017~~2018.

Our television advertising revenues increased on a constant currency basis in ~~2018~~2019 ~~due~~as toan ~~higher~~increase in our average prices, ~~and~~more wethan ~~regained~~offset ~~market~~selling ~~share~~fewer GRPs. There was also a higher ~~spending~~level onof sponsorship ~~compared~~reflecting toadditional ~~last~~spending ~~year,~~on asgovernment ~~sellout~~informational ~~rates remain elevated~~campaigns. ~~Following~~Carriage ~~our exit from digital terrestrial transmission of our channels at the beginning of 2017, carriage~~ fees and ~~subscription~~subscriptions ~~revenues~~revenue increased ~~significantly~~ in ~~2018~~2019 asfrom ~~certain~~higher ~~contracts~~prices ~~were~~in ~~signed~~new contracts in ~~the~~effect ~~first~~from ~~half~~the start of ~~2017~~2019.

~~Our~~In 2018, our television advertising revenues ~~decreased~~increased on a constant currency basis ~~during~~due ~~2017~~to ~~from~~higher ~~selling~~average ~~fewer GRPs as our audience share was affected by the lower reach for our channels~~prices, ~~which have been distributed exclusively on cable, satellite~~ and ~~IPTV~~we ~~platforms~~regained ~~since~~market ~~the~~share ~~start~~lost ofin 2017. ~~Demand~~There ~~for GRPs~~ was also ~~lower~~higher inspending ~~2017~~on sponsorship compared to ~~2016~~2017, ~~due~~as tosell-out ~~spending~~rates onremained ~~informational~~elevated. ~~and~~Following ~~political~~our ~~campaigns~~exit infrom ~~the~~digital ~~first~~terrestrial ~~half~~transmission of ~~2016~~our ~~that~~channels ~~was~~at ~~not~~the ~~repeated~~beginning inof 2017., ~~The~~carriage ~~change~~fees inand ~~the~~subscription ~~way~~revenues ~~our~~increased ~~channels~~significantly ~~are distributed resulted~~ in a2018 ~~significant increase in carriage fees and subscriptions revenue,~~ as ~~well~~certain ascontracts awere ~~cost~~signed ~~reduction~~in ~~from~~the ~~significantly~~first ~~lower~~half ~~transmission~~of ~~costs~~2017.

Costs charged in arriving at OIBDA indecreased ~~2018~~at ~~increased~~constant ~~due~~rates ~~primarily~~in to2019 andue ~~increase~~to insavings from legal and professional fees ~~(see Item 8, Note 21 Commitments~~ and ~~Contingencies), which were mostly offset by~~ lower ~~personnel costs and~~ transmission ~~fees. Content~~ costs ~~were broadly flat, as higher costs of local productions in the spring season were offset by savings in the fall season as well as lower expense from foreign content during the year~~.

On a constant currency basis, costs ~~decreased~~charged in ~~2017~~arriving ~~due~~at toOIBDA ~~lower~~in ~~transmission~~2018 ~~costs,~~increased ~~which~~due ~~were~~primarily ~~partially~~to ~~offset by~~ an increase in ~~content~~legal ~~costs~~and asprofessional wefees, ~~made~~which ~~targeted~~were ~~adjustments~~mostly inoffset ~~the~~by ~~programming~~lower ~~line-up~~personnel ~~since~~costs weand ~~changed~~transmission ~~the way our channels are distributed~~fees.

Index

Slovenia

	For the Year Ended December 31, (US$ 000's)
							Movement										Movement
	2018			2017			% Act		% Lfl		2017			2016			% Act		% Lfl
	2019			2018			% Act		% Lfl		2018			2017			% Act		% Lfl
Television advertising	$	5351,~~783~~522		$	5253,~~289~~783		2(4.92	)%	(0.8	)%	$	5253,~~289~~783		$	4852,~~408~~289		82.09	%	4(0.98	)%
Carriage fees and subscriptions	2125,~~541~~502			1221,~~591~~541			7118.14	%	6624.8	%	1221,~~591~~541			412,~~714~~591			~~167~~71.1	%	~~161~~66.18	%
Other	43,~~263~~785			34,~~816~~263			(11.72	)%	8(6.38	)%	34,~~816~~263			3,~~790~~816			011.7	%	(28.93	)%
Net revenues	7980,~~587~~809			6879,~~696~~587			151.95	%	126.09	%	6879,~~696~~587			5668,~~912~~696			2015.79	%	1712.20	%
Costs charged in arriving at OIBDA	5754,~~071~~414			5457,~~433~~071			(4.87	)%	0.5	%	5457,~~433~~071			5254,~~238~~433			4.28	%	20.25	%
OIBDA	$	2226,~~516~~395		$	1422,~~263~~516		5717.92	%	5722.9	%	$	1422,~~263~~516		$	414,~~674~~263		~~205~~57.29	%	~~168~~57.49	%
OIBDA margin	2832.37		%	2028.83		%	74.54 p.p.		84.23 p.p.		2028.83		%	820.28		%	127.65 p.p.		118.72 p.p.

The television advertising market in Slovenia ~~was~~increased ~~broadly~~an ~~flat~~estimated 3% at constant rates in ~~2018~~2019, ~~and~~after ~~increased~~having 4decreased an estimated 1% in ~~2017~~2018.

Our television advertising revenues ~~were~~increased ~~broadly flat~~ on a constant currency basis in ~~2018~~2019 ~~due~~as tohigher average prices were mostly offset by selling fewer GRPs. The lower spending from larger multinationals and telecommunications operators, which ~~was~~we ~~mostly~~saw ~~offset~~in bythe first half of 2019, reversed in the second half of the year so spending in certain sectors was higher ~~prices~~overall than in 2018. Carriage fees and subscription revenues increased ~~following~~due ~~our~~to ~~exit~~price ~~from~~inflation ~~DTT,~~in ~~since~~existing ~~prices~~agreements ~~increased~~as ~~and~~well ~~certain~~as ~~contracts~~growth ~~took effect~~ in ~~the second quarter of 2017~~subscribers.

~~Our~~In 2018, our television advertising revenues ~~increased~~decreased on a constant currency basis indue ~~2017~~to ~~reflecting~~selling ~~higher~~fewer ~~prices~~GRPs, ~~from~~which ~~strong~~was ~~demand~~mostly ~~while~~offset ~~economic~~by ~~growth~~higher ~~was significant~~prices. Carriage fees and subscription revenues increased ~~significantly~~following ~~due~~our toexit ~~new~~from ~~agreements~~DTT, ~~with~~since ~~cable,~~prices ~~satellite~~increased and ~~IPTV~~certain ~~operators~~contracts ~~because~~took ~~our~~effect ~~channels~~ in the ~~country~~second ~~were~~quarter ~~distributed exclusively on those platforms starting at the beginning~~ of 2017.

Costs charged in arriving at OIBDA ~~in 2018~~ were broadly flat at constant rates in 2019 as ~~content~~savings ~~costs~~from ~~decreased~~fewer ~~slightly~~hours ~~due~~of tolocal ~~savings~~fiction ~~from~~in ~~fewer~~the ~~sports~~fall ~~rights,~~schedule ~~which~~compared to 2018 was offset ~~primarily~~ by higher personnel costs.

On a constant currency basis, costs ~~increased~~charged in ~~2017~~arriving ~~due~~at toOIBDA anin ~~increase~~2018 inwere broadly flat at constant rates as content costs asdecreased weslightly ~~made~~due ~~targeted~~to ~~adjustments~~savings infrom ~~the~~fewer ~~programming~~sports ~~line-up~~rights, ~~following~~which ~~the~~was ~~DTT~~offset ~~exit~~primarily by higher personnel costs.

Index

II. Analysis of the Results of Operations and Financial Position

	For The Year Ended December 31, (US$ 000's)
					Movement								Movement
	2018		2017		% Act		% Lfl		2017		2016		% Act		% Lfl
	2019		2018		% Act		% Lfl		2018		2017		% Act		% Lfl
Revenue:
Television advertising	$	~~562~~547,~~450~~524	$	~~523~~562,~~516~~450	7(2.47	)%	3.30	%	$	~~523~~562,~~516~~450	$	~~483~~523,~~504~~516	87.34	%	43.53	%
Carriage fees and subscriptions	~~113~~117,~~746~~652		95113,~~823~~746		183.74	%	149.59	%	95113,~~823~~746		7695,~~045~~823		2618.07	%	2314.65	%
Other revenue	2729,~~710~~628		2327,~~529~~710		176.89	%	1312.14	%	2327,~~529~~710		23,~~457~~529		017.38	%	(413.01	)%
Net Revenues	~~703~~694,~~906~~804		~~642~~703,~~868~~906		9(1.53	)%	54.35	%	~~642~~703,~~868~~906		~~583~~642,~~006~~868		109.35	%	65.63	%
Operating expenses:
Content costs	~~309~~284,~~439~~715		~~293~~309,~~728~~439		5(8.30	)%	0(2.84	)%	~~293~~309,~~728~~439		~~275~~293,~~746~~728		6.5.3	%	30.78	%
Other operating costs	5654,~~731~~826		5556,~~924~~731		1(3.4	)%	(32.52	)%	5556,~~924~~731		6055,~~935~~924		(81.24	)%	(113.15	)%
Depreciation of property, plant and equipment	3233,~~933~~536		3132,~~261~~933		51.38	%	07.29	%	3132,~~261~~933		2731,~~529~~261		135.63	%	90.62	%
Amortization of intangibles	98,~~002~~457		89,~~592~~002		4(6.81	)%	(20.58	)%	89,~~592~~002		8,~~270~~592		34.98	%	(12.05	)%
Cost of revenues	~~408~~381,~~105~~534		~~389~~408,~~505~~105		4(6.85	)%	(0.19	)%	~~389~~408,~~505~~105		~~372~~389,~~480~~505		4.68	%	10.61	%
Selling, general and administrative expenses	~~118~~125,~~214~~934		~~113~~118,~~449~~214		46.25	%	(012.15	)%	~~113~~118,~~449~~214		~~104~~113,~~778~~449		84.32	%	3(0.61	)%
Operating income	$	~~177~~187,~~587~~336	$	~~139~~177,~~914~~587	265.95	%	2511.14	%	$	~~139~~177,~~914~~587	$	~~105~~139,~~748~~914	3226.39	%	2725.31	%

Revenue:

Television advertising revenues: On a constant currency basis, television advertising revenues increased by 3% in both 2019 and 2018, in line with the increase in television advertising spending in our markets. ~~On a constant currency basis, television advertising revenues increased by 5% in 2017, while television advertising spending in our markets is estimated to have increased by 6%.~~

Carriage fees and subscriptions: Carriage fees and subscription revenues increased ~~during~~in ~~2018~~2019, primarily in Slovenia, the Czech Republic and ~~Romania~~Bulgaria due to ~~new contracts with~~ higher prices and increases in the number of subscribers. Carriage fees and subscription revenues increased in ~~2017~~2018, primarily in Slovenia, ~~and~~ the ~~Slovak~~Czech Republic ~~where~~and ~~our~~Romania ~~channels~~due ~~have~~to ~~been~~new ~~exclusively~~contracts ~~available~~with onhigher ~~cable,~~prices ~~satellite~~ and ~~IPTV platforms since January 2017 and in Romania due to~~ higher subscriber counts.

Other revenues: Other revenues include primarily internet advertising revenues and revenues generated through the licensing of our own productions. Other revenues increased ~~during~~in ~~2018~~2019 due to higher online revenues ~~in the Czech Republic and Romania~~, ~~partly~~primarily ~~offset by lower production services revenue~~ in the ~~Slovak~~Czech Republic. OnOther ~~a constant currency basis, other~~ revenues ~~decreased~~increased induring ~~2017~~2018 due to ~~lower~~higher ~~internet~~online revenues in ~~Bulgaria~~the Czech Republic and Romania, ~~and~~partly offset by lower ~~radio~~production ~~advertising~~services revenue in ~~Bulgaria~~the Slovak Republic.

See "Segment Performance" above for additional information on trends in revenues.

Operating Expenses:

Content costs: Content costs (including production costs and amortization of programming rights) ~~increased~~decreased ~~slightly~~in at2019 ~~constant rates during 2018~~ primarily due to the ~~inclusion~~use of more ~~hours~~cost-effective ofacquired ~~local~~programming ~~fiction~~and infewer ~~our~~sporting ~~broadcast~~rights ~~schedules~~in Romania. Content costs increased inslightly ~~2017~~at ~~primarily~~constant ~~due~~rates toduring ~~inclusion~~2018 inprimarily ~~our~~due ~~broadcast~~to ~~schedules~~the inclusion of ~~both~~ more hours of local ~~productions~~fiction ~~and~~in ~~higher~~our ~~quality~~broadcast ~~acquired~~schedules ~~programming~~in all segments.

Other operating costs: On a constant currency basis, other operating costs ~~decreased~~increased during ~~2018~~2019 primarily due to ~~payroll~~higher salaries and staff related ~~cost~~costs, ~~savings~~licenses ~~in the Slovak Republic~~ and ~~Bulgaria~~rights ~~and reductions in transmission~~ costs in the ~~Slovak~~Czech Republic, ~~which~~and ~~were~~software ~~partly~~licenses ~~offset~~and byrelated ~~higher~~support ~~amounts~~costs ~~paid~~in ~~for~~Bulgaria. ~~author's~~On ~~rights~~a inconstant ~~Romania.~~currency ~~Other~~basis, other operating costs decreased during ~~2017~~2018 primarily due to payroll and related cost savings in the Slovak Republic ~~following~~and ~~our~~Bulgaria ~~decision~~and ~~not~~reductions toin ~~renew~~transmission ~~our~~costs ~~contract~~in ~~for~~ the ~~terrestrial~~Slovak ~~distribution~~Republic, ofwhich ~~our~~were ~~channels~~partly ~~there~~offset by higher fees for author's rights in Romania.

Depreciation of property, plant and equipment: Depreciation of property, plant and equipment increased in 2019 due to depreciation of studio facilities and related equipment placed in service during 2018 and ~~2017~~2019 primarily in Romania and Bulgaria, respectively. Depreciation of property, plant and equipment increased in 2018 primarily due to depreciation of machinery and equipment placed in service during 2017 ~~and 2016~~.

Amortization of intangibles: On a constant currency basis, total amortization of broadcast licenses and other intangibles decreased ~~during~~slightly ~~2018~~in 2019 primarily due to certain of our ~~trademarks~~customer relationships in the Czech Republic ~~and customer relationships in Romania~~ becoming fully amortized in ~~2017~~2019. On a constant currency basis, total amortization of broadcast licenses and other intangibles decreased during ~~2017~~2018 primarily due to certain of our trademarks in the Czech Republic and customer relationships in Romania becoming fully amortized in ~~2016,~~2017. ~~partly~~For ~~offset~~additional byinformation, ansee ~~increase~~Item in8, ~~amortization~~Note of3, ~~certain~~"Goodwill ofand ~~our~~Intangible ~~trademarks in the Czech Republic~~Assets".

Selling, general and administrative expenses: ~~On a constant currency basis~~Selling, ~~selling,~~ general and administrative expenses ~~decreased~~increased ~~slightly~~ during ~~2018~~2019 primarily due to ~~lower~~costs ~~bad~~related ~~debt~~to ~~charges~~the strategic review and the resulting proposed Merger as well as higher salaries and staff-related costs in ~~Bulgaria~~the Slovak Republic and the ~~revision~~Czech ofRepublic. aThe ~~legal~~increase ~~provision~~was partly offset by a decrease in ~~Romania~~professional ~~due~~fees related to athe ~~change~~promissory notes litigation in ~~our~~the ~~estimated~~Slovak ~~exposure~~Republic (see Item 8, ~~partly~~Note ~~offset~~21, by"Commitments ~~higher~~and Contingencies") and the release of bed debt charges in ~~respect~~Bulgaria ofdue ~~non-cash~~to ~~stock-based~~the ~~compensation~~collection of overdue amounts and ~~higher~~in ~~legal~~Romania ~~fees~~due to changes in ~~the~~local ~~Slovak~~VAT ~~Republic~~legislation.

~~Selling~~On a constant currency basis, selling, general and administrative expenses ~~increased~~decreased slightly during ~~2017~~2018 primarily due to ~~increased~~lower ~~levels~~bad debt charges in Bulgaria and the revision of ~~staff,~~a ~~particularly~~legal provision in Romania due to a change in our estimated exposure, partly offset by ~~decreased~~higher ~~bad~~charges ~~debt~~in ~~expense~~respect of non-cash stock-based compensation and higher legal fees in ~~Bulgaria~~the Slovak Republic.

Non-cash stock-based compensation charges for the years ended December 31, ~~2018~~2019, ~~2017~~2018 and ~~2016~~2017 were US$ 74.12 million, US$ 47.41 million and US$ 34.54 million, respectively. ~~The increase in non~~Stock-~~cash stock-~~based compensation ~~charges~~expense ~~during~~recognized during 2018 includes isUS$ ~~mainly~~2.9 ~~due~~million related to anthe accelerated vesting of RSUs with performance conditions ~~on July 31, 2018~~ in accordance with the terms of the corresponding award agreement following the completion of ~~the~~ sale of the Company's Croatian operations on ~~such~~July ~~date. See Item 8~~31, ~~Note 17, "Stock-based Compensation"~~2018.

Index

Operating income: Operating income increased from ~~2016~~2017 through ~~2018~~2019 ~~because~~due weto increased television advertising and carriage fee revenues ~~while~~and ~~maintaining~~ effective cost control efforts. Our operating margin, which is determined as operating income divided by net revenues, was 2527.20% in ~~2018~~2019, compared to 2125.82% in ~~2017~~2018 and 1821.18% in ~~2016~~2017.

Other income / expense items for the years ended December 31, ~~2018~~2019, ~~2017~~2018 and ~~2016~~2017:

	For The Year Ended December 31, (US$ 000's)
	2018			2017			% Act		2017			2016			% Act
	2019			2018			% Act		2018			2017			% Act
Interest expense	$	(4930,~~106~~694	)	$	(8349,~~188~~106	)	4137.05	%	$	(8349,~~188~~106	)	$	(~~126~~83,~~378~~188	)	3441.20	%
Loss on extinguishment of debt	(415		)	(101		)	NM (1)		(101		)	(150,158		)	99.9	%
Other non-operating income / (expense), net:
Interest income	~~725~~467			~~536~~725			(35.36	)%	~~536~~725			~~590~~536			(935.23	)%
Foreign currency exchange (loss) / gain, net	(2,~~691~~376		)	17(2,~~761~~691		)	~~NM (1)~~11.7	%	17(2,~~761~~691		)	617,~~929~~761			~~156.3~~NM (1)	%
Change in fair value of derivatives	(~~1,715~~201		)	(1,~~783~~715		)	388.83	%	(1,~~783~~715		)	(101,~~213~~783		)	823.58	%
Other income, net	508			428			18.7	%	428			442			(3.2	)%
Loss on extinguishment of debt	(340		)	(415		)	18.1	%	(415		)	(101		)	(310.9	)%
Provision for income taxes	(27,828		)	(22,504		)	(23.7	)%	(22,504		)	(6,639		)	NM (1)
Other income, net	242			508			(52.4	)%	508			428			18.7	%
Income / (loss) from discontinued operations, net of tax	60,548			(1,636		)	NM (1)		(1,636		)	(918		)	(78.2	)%
Provision for income taxes	(35,226		)	(27,828		)	(26.6	)%	(27,828		)	(22,504		)	(23.7	)%
Net loss attributable to noncontrolling interests	79			341			(76.8	)%	341			306			11.4	%
Income / (loss) from discontinued operations, net of tax	—			60,548			NM (1)		60,548			(1,636		)	NM (1)
Net (income) / loss attributable to noncontrolling interests	(74		)	79			(193.7	)%	79			341			(76.8	)%


⁽¹⁾	Number is not meaningful.

Interest expense: Interest expense decreased in 2018 and 2019. This reflects the repricing of our Guarantee Fees in April 2018, the repayment of ~~outstanding amounts of~~ the 2019 Euro Loan, and the partial repayment of the 2021 Euro Loan, ~~and~~as well as reduced borrowing costs following areductions ~~reduction~~ in our net leverage ratio as defined within the Reimbursement Agreement. See Item 8, Note 4, "Long-term Debt and Other Financing Arrangements" and Note 15, "Interest Expense".

~~The~~Interest ~~decrease~~income: inInterest ~~interest~~income ~~expense in 2017 was~~ primarily ~~due~~reflects toearnings ~~lower amortization of debt discount and issuance costs following the extinguishment of the 2017 PIK Notes and 2017 Term Loan in April 2016 and due to a lower effective interest rate~~ on ~~the replacement facility. Additional reductions to interest expense in 2017 were due to the repricing of~~ our ~~Guarantee~~cash ~~Fees~~balances ~~in March 2017~~ and ~~improvements~~was tonot ~~our~~material ~~net~~in ~~leverage~~any ~~(see~~year ~~Item 8, Note 5, "Long-term Debt and Other Financing Arrangements" and Note 15, "Interest Expense")~~presented.

Loss on extinguishment of debt: In 2018, we recognized losses on extinguishment of debt related to our full repayment of the 2019 Euro Loan and partial repayment of the 2021 Euro Loan. In 2017, we recognized a loss on extinguishment of debt related to our repayment of EUR 50.0 million (approximately US$ 59.1 million at August 1, 2017 rates) of the 2019 Euro Loan. In 2016, we recognized a loss on extinguishment of debt related to the redemption and discharge of the 2017 PIK Notes, repayment of the 2017 Term Loan and modifications of the 2019 Euro Loan and the 2021 Euro Loan, which were accounted for in a similar manner as a debt extinguishment.

Interest income: Interest income primarily reflects earnings on our cash balances and was not material.

Foreign currency exchange (loss) / gain, net: We are exposed to fluctuations in foreign exchange rates on the revaluation of monetary assets and liabilities denominated in currencies other than the local functional currency of the relevant subsidiary. This includes third party receivables and payables, as well as certain of our intercompany loans which are not considered to be of a long-term investment nature. Our subsidiaries generally receive funding via loans that are denominated in currencies other than the functional currency of the lender, therefore any change in the relevant exchange rate will require us to recognize a transaction gain or loss on revaluation. Certain of our intercompany loans are classified as long-term in nature, and therefore gains or losses on revaluation of those loans are not recorded through the statement of operations and comprehensive income / loss. See the discussion under "Currency translation adjustment, net" below.

In 2019, we recognized a net loss of US$ 2.4 million, comprised of transaction gains of US$ 0.8 million relating to the revaluation of intercompany loans, transaction losses of approximately US$ 0.8 million on our long-term debt and other financing arrangements and transaction losses of US$ 2.4 million relating to the revaluation of monetary assets and liabilities denominated in currencies other than the local functional currency of the relevant subsidiary.

In 2018, we recognized a net loss of US$ 2.7 million, comprised of transaction losses of US$ 0.3 million relating to the revaluation of intercompany loans, transaction losses of approximately US$ 3.2 million on our long-term debt and other financing arrangements and transaction gains of US$ 0.8 million relating to the revaluation of monetary assets and liabilities denominated in currencies other than the local functional currency of the relevant subsidiary.

In 2017, we recognized a net gain of US$ 17.8 million, comprised of transaction gains of US$ 3.5 million relating to the revaluation of intercompany loans, transaction gains of approximately US$ 8.8 million on our long-term debt and other financing arrangements and transaction gains of US$ 5.5 million relating to the revaluation of monetary assets and liabilities denominated in currencies other than the local functional currency of the relevant subsidiary.

InChange ~~2016,~~in wefair ~~recognized~~value ~~a net gain~~ of ~~US$~~derivatives: ~~6.9~~During ~~million~~2019, ~~comprised~~we ofrecognized ~~transaction~~losses ~~gains~~as ofa ~~US$~~result ~~38.1~~of ~~million relating to~~ the ~~revaluation~~partial ofsettlement ~~intercompany loans, transaction losses~~ of ~~approximately US$ 28.4 million on~~ our ~~long-term~~interest ~~debt~~rate ~~and~~swaps ~~other~~in ~~financing~~connection ~~arrangements~~with ~~and~~the ~~transaction~~repayment ~~losses~~ of ~~US$ 2~~debt.8 ~~million~~See ~~relating~~Item to8, ~~the~~Note ~~revaluation~~12, of"Financial ~~monetary~~Instruments ~~assets~~ and ~~liabilities~~Fair ~~denominated~~Value ~~in currencies other than the local functional currency of the relevant subsidiary~~Measurements".

~~Change in fair value of derivatives:~~ During 2018, we recognized a loss as a result of the change in the fair value of our interest rate swaps that ~~are~~were not designated as hedging instruments.

During 2017, we recognized losses as a result of the change in fair value of our USD/EUR foreign currency forward contracts entered into on January 31, 2017, May 16, 2017 and July 21, 2017 as well as the interest rate swaps we use as hedging instruments for interest payments on the 2019 Euro Loan.

~~During~~Loss ~~2016~~on extinguishment of debt: In 2019, we recognized alosses ~~net~~on ~~loss~~extinguishment ~~primarily~~of ~~due~~debt related to aour ~~loss~~partial onrepayments ~~USD/EUR~~of ~~foreign~~the ~~currency~~2021 ~~forward~~Euro ~~contracts~~Loan. ~~entered~~In ~~into~~2018, inwe ~~connection~~recognized ~~with~~losses ~~the~~on ~~refinancing~~extinguishment of ~~the~~debt ~~2017~~related ~~PIK~~to ~~Notes~~our ~~and~~full ~~2017~~repayment ~~Term~~of ~~Loan.~~the ~~See~~2019 ~~Item~~Euro 8,Loan ~~Note~~and ~~14,~~partial ~~"Financial~~repayment ~~Instruments~~of ~~and~~the ~~Fair~~2021 ~~Value~~Euro ~~Measurements"~~Loan.

Other income, net: Our other income / expense, net was not material in any year presented.

27Provision for income taxes: The provision for income taxes during 2019 reflects income tax charges on profits in each of our operating segments and the impact of losses on which no tax benefit has been received.

~~Index~~The provision for income taxes during 2018 reflects income tax charges on profits in the Czech Republic, Romania and the Slovak Republic and the impact of tax losses on which no tax benefit has been recognized offset by the release of a valuation allowance in Slovenia.

Provision for income taxes: The provision for income taxes during 2018 reflects income tax charges on profits in the Czech Republic, Romania and the Slovak Republic and the impact of tax losses on which no tax benefit has been recognized offset by the release of a valuation allowance in Slovenia.

The provision for income taxes during 2017 is principally comprised of tax charges on profits in the Czech Republic, Romania and the Slovak Republic.

The provision for income taxes during 2016 reflects tax charges on profits in the Czech Republic and Romania offset by the release of the valuation allowances in Bulgaria and the Slovak Republic.

Our operating subsidiaries are subject to income taxes at statutory rates of 10% in Bulgaria, 16% in Romania, 19% in the Czech Republic and Slovenia and 21% in the Slovak Republic (see Item 8, Note 18, "Income Taxes").

Income / (loss) from discontinued operations, net of tax: Income from discontinued operations, net of tax for 2018 is comprised of the gain on sale of our Croatian operations, the results of the Croatian operations through the date of sale and the allocation of interest expense and Guarantee Fees and transaction costs. Loss from discontinued operations, net of tax for 2017 and 2016 is primarily comprised of the operational results of the Croatia segment including the allocation of interest expense and Guarantee Fees from the 2019 Euro Loan and transaction costs. See Item 8, Note 3, "Discontinued Operations and Assets Held for Sale".27

Net loss attributable to noncontrolling interests: The results attributable to noncontrolling interests relate to the noncontrolling interest share of the comprehensive profits and losses in our Bulgaria operations.Index

Income / (loss) from discontinued operations, net of tax: Income from discontinued operations, net of tax for 2018 is comprised of the gain on sale of our Croatian operations, the results of the Croatian operations through the date of sale and the allocation of interest expense and Guarantee Fees and transaction costs. Loss from discontinued operations, net of tax for 2017 is primarily comprised of the results of the Croatia segment including the allocation of interest expense and Guarantee Fees from the 2019 Euro Loan and transaction costs.

Net (income) / loss attributable to noncontrolling interests: The results attributable to noncontrolling interests relate to the noncontrolling interest share of the comprehensive profits and losses in our Bulgaria operations.

Other comprehensive income / loss:

	For The Year Ended December 31, (US$ 000's)
	2018			2017			% Act		2017				2016			% Act
	2019			2018			% Act			2018				2017			% Act
Currency translation adjustment, net	$	(236,~~050~~149	)	$	54(23,~~368~~050	)	~~NM (1)~~73.3	%	$	~~54,368~~$	(23,050	)	$	~~1,649~~$	54,368	~~NM (1)~~	NM (1)
Unrealized (loss) / gain on derivative instruments	(53,~~800~~979		)	1(5,~~269~~800		)	~~NM (1)~~31.4	%	~~1,269~~	(5,800		)	~~(3,031~~	1,269	)	~~NM (1)~~	NM (1)


⁽¹⁾	Number is not meaningful.

Currency translation adjustment, net: The underlying equity value of our investments (which are denominated in the functional currency of the relevant entity) are converted into dollars at each balance sheet date, with any change in value of the underlying assets and liabilities being recorded as a currency translation adjustment to the balance sheet rather than net income / loss. Certain of our intercompany loans are denominated in currencies other than the functional currency of the lender and are considered to be of a long-term investment nature as the repayment of these loans is neither planned nor anticipated for the foreseeable future. The foreign exchange (loss) / gain on the remeasurement of these intercompany loans to the lender's functional currency are treated in the same manner as currency translation adjustments. Other comprehensive income / loss due to currency translation adjustment, net comprised the following for the years ended December 31, ~~2018~~2019, ~~2017~~2018 and ~~2016~~2017:

	For The Year Ended December 31, (US$ 000's)
	2018			2017			% Act		2017				2016			% Act
	2019			2018			% Act			2018				2017			% Act
Foreign exchange (loss) / gain on intercompany transactions	$	(1,061	)	$	11,326		NM (1)		$	11,326			$	8,848		28.0	%
Foreign exchange gain / (loss) on intercompany transactions	$	2,519		$	(1,061	)	NM (1)			$	(1,061	)		$	11,326		NM (1)
Foreign exchange (loss) / gain on the Series B Preferred Shares	(125,~~527~~129		)	33(12,~~444~~527		)	~~NM (~~59.1)	%	~~33,444~~	(12,527		)	~~(19,412~~	33,444	)	~~NM (1)~~	NM (1)
Currency translation adjustment	(93,~~462~~539		)	(9,~~598~~462		)	~~NM (1)~~62.6	%	~~9,598~~	(9,462		)	~~12,213~~	9,598		~~(21.4~~	NM (1)%
Currency translation adjustment, net	$	(236,~~050~~149	)	$	54(23,~~368~~050	)	~~NM (1)~~73.3	%	$	~~54,368~~$	(23,050	)	$	~~1,649~~$	54,368	~~NM (1)~~	NM (1)


⁽¹⁾	Number is not meaningful.

The following charts depict the movement of the dollar versus the functional currencies of our operations, based on monthly closing rates, during 2019, 2018 and 2017.

Percent Change During the Year Ended December 31, 2019

Index

The following charts depict the movement of the dollar versus the functional currencies of our operations, based on monthly closing rates, during 2018, 2017 and 2016.

Percent Change During the Year Ended December 31, 2018

Percent Change During the Year Ended December 31, 2017

Unrealized (loss) / gain on derivative instruments: The unrealized (loss) / gain on derivatives is due to the portion of changes in the fair value of our interest rate swaps designated as cash flow hedges and recognized in accumulated other comprehensive income / loss. See Item 8, Note 12, "Financial Instruments and Fair Value Measurements".

Index

~~Percent~~Summarized ~~Change~~consolidated ~~During~~balance ~~the~~sheets ~~Year~~as ~~Ended~~at December 31, ~~2016~~2019 and December 31, 2018:

Unrealized (loss) / gain on derivative instruments: The unrealized (loss) / gain on derivatives is due to the portion of changes in the fair value of our interest rate swaps designated as cash flow hedges and recognized in accumulated other comprehensive income / loss. See Item 8, Note 14, "Financial Instruments and Fair Value Measurements".



	December 31, 2019		December 31, 2018		% Act		% Lfl
Current assets	$	349,980	$	374,093	(6.4	)%	(4.2	)%
Non-current assets	1,097,882		1,114,268		(1.5	)%	0.1	%
Current liabilities	156,001		139,692		11.7	%	14.0	%
Non-current liabilities	680,273		849,978		(20.0	)%	(18.5	)%
Temporary equity	269,370		269,370		—	%	—	%
CME Ltd. shareholders’ equity	341,705		229,020		NM ⁽¹⁾		NM ⁽¹⁾
Noncontrolling interests in consolidated subsidiaries	513		301		NM ⁽¹⁾		(16.9	)%

Index

Summarized consolidated balance sheets as at December 31, 2018 and December 31, 2017:

	December 31, 2018		December 31, 2017			% Act		% Lfl
Current assets	$	374,093	$	421,239		(11.2	)%	(7.1	)%
Non-current assets	1,114,268		1,206,816			(7.7	)%	(2.9	)%
Current liabilities	139,692		186,946			(25.3	)%	(21.7	)%
Non-current liabilities	849,978		1,182,286			(28.1	)%	(25.0	)%
Temporary equity	269,370		264,593			1.8	%	1.8	%
CME Ltd. shareholders’ equity / (deficit)	229,020		(5,788		)	NM (1)		NM (1)
Noncontrolling interests in consolidated subsidiaries	301		18			NM (1)		(16.9	)%


⁽¹⁾	Number is not meaningful.

Note: The analysis below is intended to highlight the key factors that led to the movements from December 31, ~~2017~~2018, excluding the impact of foreign currency translation.

Current assets: ~~Excluding~~Current ~~the~~assets ~~impact~~decreased ofprimarily ~~assets~~due ~~held~~to ~~for~~the ~~sale,~~use ~~current~~of ~~assets~~cash atgenerated ~~December 31,~~by ~~2018~~our ~~increased~~operations ~~due~~ to ~~higher~~pay ~~cash~~down ~~and~~amounts ~~receivables~~owed ~~generated~~in ~~from~~respect ~~operations~~of ~~and~~the ~~higher~~2021 ~~prepaid~~Euro ~~production expenses~~Loan.

Non-current assets: Non-current assets atremained ~~December 31,~~in ~~2018~~line ~~decreased~~with 2018, ~~due~~as toa reduction in ~~both~~ acquired ~~and local~~ program rights, and the amortization of ~~debt~~our ~~issuance~~broadcast ~~costs~~license ~~related~~in to the ~~2023~~Czech ~~Revolving~~Republic ~~Credit~~was ~~Facility~~partly ~~and~~offset ~~amortization~~by ofincreased ~~our~~production ~~finite-lived~~of ~~intangible~~local ~~assets,~~content ~~partly~~and ~~offset~~the byrecognition anof ~~increase~~operating inlease right-of-use assets ~~acquired~~following ~~under~~the ~~finance~~adoption ~~leases~~of a new accounting standard.

Current liabilities: ~~Excluding~~Current ~~the impact of~~ liabilities ~~held for sale~~increased, ~~current~~primarily ~~liabilities~~due atto ~~December 31,~~accruals ~~2018~~for ~~decreased,~~the ~~primarily~~costs asrelated ato ~~result~~the ofproposed ~~lower~~Merger ~~accrued~~and ~~interest~~the ~~(including~~recognition ~~Guarantee~~of ~~Fees)~~operating ~~payable~~lease ~~and~~liabilities ~~programming~~following ~~payables,~~the ~~partly~~adoption ~~offset~~of bya ~~increased~~new ~~deferred~~accounting ~~income~~standard.

Non-current liabilities: Non-current liabilities ~~at December 31, 2018~~ decreased, primarily due to the partial repayment of amounts outstanding under the ~~2019~~2021 Euro Loan, ~~and~~partly ~~the~~offset ~~partial~~by ~~repayment of~~ the ~~2021~~recognition ~~Euro~~of ~~Loan~~operating ~~together~~lease ~~with~~liabilities ~~related~~following ~~Guarantee Fees and~~ the ~~Commitment~~adoption ~~Fee.~~of ~~See~~a ~~Item 8,~~new ~~Note~~accounting ~~5, "Long-term Debt and Other Financing Arrangements")~~standard.

Temporary equity: Temporary equity at December 31, ~~2018~~2019 and ~~2017~~2018 represents the accreted value of the Series B Preferred Shares.

CME Ltd. shareholders’ equity ~~/ (deficit)~~: The increase in shareholders’ equity ~~primarily~~ reflects ~~the exercise of warrants and~~ net income attributable to CME Ltd. ~~for the year ended December 31~~, ~~2018,~~ partially offset by the impact of currency translation ~~adjustment~~adjustments recognized in accumulated other comprehensive loss.

Noncontrolling interests in consolidated subsidiaries: The noncontrolling interests in consolidated subsidiaries represent the noncontrolling interest in our Bulgaria operations.

3130

Index

III. Liquidity and Capital Resources

III(a) Summary of Cash Flows

Cash and cash equivalents ~~increased~~decreased by US$ 325.34 million during ~~2018~~2019. The change in cash and cash equivalents for the periods presented below is summarized as follows:

	For The Year Ended December 31, (US$ 000's)
	2018			2017			2016
	2019			2018			2017
Net cash generated from / (used in) continuing operating activities	$	109,024		$	93,301		$	(77,239	)
Net cash generated from continuing operating activities	$	179,652		$	109,024		$	93,301
Net cash used in continuing investing activities	(24,~~540~~375		)	(2724,~~947~~540		)	(2627,~~525~~947		)
Net cash (used in) / provided by continuing financing activities	(182,362		)	(58,439		)	87,926
Net cash used in continuing financing activities	(178,089		)	(182,362		)	(58,439		)
Net cash provided by / (used in) discontinued operations	~~102,566~~—			~~(141~~102,566		)	(~~1,787~~141		)
Impact of exchange rate fluctuations on cash	(12,~~405~~598		)	11(1,~~020~~405		)	~~(862~~11,020		)
Net increase / (decrease) in cash and cash equivalents	$	3,283		$	17,794		$	(18,487	)
Net (decrease) / increase in cash and cash equivalents	$	(25,410	)	$	3,283		$	17,794

Operating Activities

The ~~increase~~increases in cash generated from continuing operations during ~~2018~~2019 ~~reflects~~was ~~higher~~due ~~cash~~primarily ~~collections~~to ~~from~~lower ~~revenue growth and a decrease in~~ cash ~~paid~~payments for ~~interest,~~acquired ~~offset~~programming byand anproduction ~~increase~~costs inand ~~cash paid~~ for ~~accrued~~interest and Guarantee Fees, which were ~~previously~~partially ~~paid~~offset ~~in-kind~~by ashigher ~~well~~payments asfor ~~taxes~~income ~~paid as a direct result of our improved operating performance~~taxes.

The increase in cash generated from continuing operations during ~~2017~~2018 ~~was~~reflected ~~primarily~~higher ~~the~~cash ~~result~~collections offrom ~~approximately~~revenue ~~US$~~growth ~~110.7~~and ~~million~~a ofdecrease in cash paid infor ~~2016~~interest, ~~for~~offset ~~accrued~~by ~~interest~~an ~~upon~~increase ~~the~~in ~~settlement~~cash ofpaid ~~our~~for ~~2017~~accrued ~~PIK~~Guarantee ~~Notes.~~Fees ~~The~~which ~~increase~~were inpreviously ~~2017~~paid ~~further~~in-kind ~~reflected~~as ~~improved~~well ~~operating~~as ~~performance~~taxes ~~partly~~paid ~~offset~~as bya ~~higher~~direct ~~cash~~result ~~paid~~of ~~for~~our ~~programming~~improved ~~and~~operating ~~taxes~~performance.

We paid cash interest and Guarantee Fees ~~(including~~of ~~Guarantee~~US$ ~~Fees~~26.7 ~~previously~~million, ~~paid in kind) of~~ US$ 71.5 million, (including US$ 5527.53 million that was previously paid in kind) and US$ 84 55.75 million on our long-term debt and credit facilities in ~~2018~~2019, ~~2017~~2018 and ~~2016~~2017, respectively. The decreases in cash paid for interest and Guarantee Fees are due to the repricing of our Guarantee Fees, payments on the 2019 Euro Loan and 2021 Euro Loan, and reductions in our net leverage ratio due to improved performance.

We paid cash for taxes of US$ 2836.40 million, US$ 1528.14 million and US$ 015.31 million in ~~2018~~2019, ~~2017~~2018 and ~~2016~~2017, respectively.

Investing Activities

Net cash used in continuing investing activities consists ~~primarily~~ of capital expenditures for property, plant and equipment, primarily in the Czech Republic and Bulgaria.

Financing Activities

The net cash used in continuing financing activities in 2019, 2018 and 2017, primarily reflects principal repayments made on our obligations under the 2019 and 2021 Euro Loans, offset by ~~the~~ proceeds from the issuance of warrants in 2018.

The net cash provided by continuing financing activities in 2016 primarily reflected the receipt of proceeds from the 2021 Euro Loan offset by the use of the proceeds to repay our obligations under the 2017 PIK Notes and the 2017 Term Loan, including payments for transaction fees and settlement of a foreign currency forward contract we entered into in connection with the refinancing. We also received proceeds of US$ 7.0 million from the exercise of common stock warrants.

Discontinued Operations

The net cash provided by discontinued operations during 2018 primarily ~~reflects~~reflected the cash received from the sale of our Croatian operations, offset by the payment of Guarantee Fees and interest related to the 2019 Euro Loan. The net cash used in discontinued operations during 2017 ~~and 2016~~ primarily reflected the results of our Croatian operations, including the payment of Guarantee Fees and interest related to the 2019 Euro Loan. ~~See Item 8, Note 3, "Discontinued Operations and Assets Held for Sale".~~

III(b) Sources and Uses of Cash

Our ongoing source of cash is primarily the receipt of payments from advertisers, advertising agencies and distributors of our television channels. As at December 31, ~~2018~~2019, we also had available the aggregate principal amount under the 2023 Revolving Credit Facility of US$ 75.0 million (see Item 8, Note 54, "Long-term Debt and Other Financing Arrangements"). Surplus cash, after funding ongoing operations, may be remitted to us, where appropriate, by our subsidiaries in the form of debt interest payments, principal repayments, dividends, and other distributions and loans from our subsidiaries.

Corporate law in the Central and Eastern European countries in which we operate stipulates generally that dividends may be declared by the partners or shareholders out of yearly profits subject to the maintenance of registered capital, required reserves (if applicable) and after the recovery of accumulated losses. The reserve requirement restriction generally provides that before dividends may be distributed, a portion of annual net profits (typically at least 5%) be allocated to a reserve, which is capped at a proportion of the registered capital of a company (ranging from 5% to 20%). There are no third-party restrictions that limit our subsidiaries' ability to transfer amounts to us in the form of loans or advances.

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

Our future contractual obligations as at December 31, ~~2018~~2019 were as follows:

Payments due by period (US$ 000’s)

Total

Less than 1 year

1-3 years

3-5 years

More than 5 years

Long-term debt – principal

~~777~~594,~~610~~431

—

~~240~~67,~~834~~781

~~536~~526,~~776~~650

—

Long-term debt – interest

~~152~~105,~~302~~418

2921,~~331~~899

5740,~~939~~412

6543,~~032~~107

—

Unconditional purchase obligations

63103,~~277~~506

2436,~~077~~932

3147,~~804~~993

517,~~716~~129

1,~~680~~452

Operating leases

1213,~~478~~136

23,~~732~~659

45,~~502~~263

2,~~493~~355

21,~~751~~859

Capital lease obligations

16,416

5,824

9,104

1,488

—

Finance lease obligations

16,805

7,109

8,559

1,137

—

Other long-term obligations

2930,~~452~~120

12,~~614~~740

1011,~~994~~480

5,~~844~~900

—

Total contractual obligations

1863,~~051,535~~416

7482,~~578~~339

~~355~~181,~~177~~488

~~617~~596,~~349~~278

43,~~431~~311

Long-Term Debt

For more information on our long-term debt, see Item 8, Note 54, "Long-term Debt and Other Financing Arrangements". Interest payable on our long-term debt is calculated using interest rates and exchange rates as at December 31, ~~2018. On January 31,~~ 2019~~, we paid EUR 60~~.0 million (approximately US$ 68.9 million at January 31, 2019 rates) of the outstanding principal balance of the 2021 Euro Loan. There is now EUR 150.3 million outstanding principal on the 2021 Euro Loan.

Unconditional Purchase Obligations

Unconditional purchase obligations primarily comprise future programming commitments. At December 31, ~~2018~~2019, we had commitments in respect of future programming of US$ 62103.85 million. This includes contracts signed with license periods starting after December 31, ~~2018~~2019.

Operating and Finance Leases

For more information on our operating and finance lease commitments see Item 8, Note 2111, "~~Commitments and Contingencies~~Leases".

Other Long-Term Obligations

Other long-term obligations are primarily comprised of digital transmission commitments.

Other

Top Tone Media Holdings Limited has exercised its right to acquire additional equity in CME Bulgaria B.V. However, the closing of this transaction has not yet occurred because purchaser financing is still pending. If consummated, we would own 90.0% of our Bulgaria broadcast operations. The option strike price is the fair value of the equity in CME Bulgaria, as determined by an independent valuation.

III(d) Cash Outlook

Because cash flows from operating activities were negative from 2012 to 2014, we relied on equity and debt financings to ensure adequate funding for our operations. Since 2015, our cash flow from operating activities has been positive and our cost of borrowing has consistently decreased. For the year ending December 31, ~~2018~~2019, net cash generated from continuing operations and unlevered free cash flow were US$ ~~109~~179.07 million and US$ ~~156~~188.0 million, respectively, compared to US$ 93109.30 million and US$ ~~120~~156.90 million for the year ended December 31, ~~2017~~2018 (see Section I, "Overview"). As at December 31, ~~2018~~2019, we had US$ 6236.06 million in cash and cash equivalents and our nearest debt maturity is November 1, 2021.

In ~~2018~~2019, we repaid ~~approximately~~ US$ ~~312~~168.09 million of debt ~~and~~exclusively ~~related payables with proceeds~~ from ~~the~~cash ~~exercise~~generated ofby ~~warrants, the proceeds from the sale of~~ our ~~Croatian~~ operations ~~and cash flow from operations~~. ~~Our~~Following ~~net~~these ~~leverage as at December 31~~payments, ~~2018, improved to 3.5x from 5.4x as of December 31, 2017. As a result, as at December 31, 2018,~~ the ~~weighted~~principal ~~average~~amount ~~all-in rate (comprising interest and Guarantee Fees) applicable to the Euro Loans was approximately 3.5% (approximately 6.0% as~~ of ~~December 31, 2017). On January 31, 2019, we paid~~ EUR 60.03 million (~~approximately~~ US$ 6867.98 million ~~at January 31, 2019 rates~~) ofis ~~the~~ outstanding ~~principal~~on ~~balance~~our ofnearest ~~the~~debt ~~2021~~maturity ~~Euro~~in ~~Loan~~November ~~with cash generated by our operations~~2021. We expect cash paid for interest and Guarantee Fees to decline in ~~2019~~2020 compared to ~~2018~~2019 due to the reduction in our overall indebtedness and a lower weighted average all-in rate.

We expect our unlevered free cash flow to grow due to ~~continuous~~further improvement in our operating results. We anticipate the amounts of cash paid for income taxes to continue to increase in ~~2019~~2020 and to further converge with local statutory tax rates as our operating companies in each jurisdiction have returned to generating profits and previous tax losses were utilized.

As at December 31, 2019, the weighted average all-in rate applicable to the Euro Loans and Guarantee Fees was approximately 3.4%. As at December 31, 2019, our net leverage ratio improved to 2.4x from 3.5x at December 31, 2018.

Credit ratings and future debt issuances

Our corporate credit is rated B1 by Moody's Investors Service with a positive outlook and B+ by Standard & Poor's, (on watch with anegative ~~positive~~implications ~~outlook)~~due to the proposed Merger. Our ratings show each agency's opinion of our financial strength, operating performance and ability to meet our debt obligations as they become due, as well as the proposed Merger. These ratings take into account the particular emphasis the ratings agencies place on metrics such as leverage ratio and cash flow, which they use as measurements of a company's liquidity and financial strength. They also reflect an emphasis by the ratings agencies on the track record of strong financial support from Warner Media. We may be subject to downgrades if our operating performance deteriorates or we fail to maintain adequate levels of liquidity. In addition, our ratings may be downgraded if the agencies form a view that material support from Warner Media is not as strong, or the strategic importance of CME to Warner Media is not as significant as it has been in the past.

Credit risk of financial counterparties

We have entered into a number of significant contracts with financial counterparties as follows:

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Interest Rate Swap

We are party to interest rate swap agreements to mitigate our exposure to interest rate fluctuations on our Euro Loans. These interest rate swaps, certain of which are designated as cash flow hedges, provide the Company with variable-rate cash receipts in exchange for fixed-rate payments over the lives of the agreements, with no exchange of the underlying notional amount.

Foreign Exchange Forwards

We are exposed to movements in the USD to EUR exchange rates related to contractual payments under dollar-denominated agreements. To reduce this exposure, from time to time we may enter into pay-Euro receive-dollar forward foreign exchange contracts. We had no such agreements outstanding at December 31, ~~2018~~2019.

Cash Deposits

We may deposit cash in the global money markets with a range of bank counterparties and review the counterparties we choose regularly. The maximum period of deposit is three months but we have more recently held amounts on deposit for shorter periods, mainly overnight. The credit rating of a bank is a critical factor in determining the size of cash deposits and we will only deposit cash with banks of investment grade rating. In addition, we also closely monitor the credit default swap spreads and other market information for each of the banks with which we consider depositing or have deposited funds.

III(e) Off-Balance Sheet Arrangements

None.

IV. Critical Accounting Policies and Estimates

Our accounting policies affecting our financial condition and results of operations are more fully described in Item 8, Note 2, "Basis of Presentation and Summary of Significant Accounting Policies". The preparation of these financial statements requires us to make judgments in selecting appropriate assumptions for calculating financial estimates, which inherently contain some degree of uncertainty. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable. Using these estimates we make judgments about the carrying amounts of assets and liabilities and the reported amounts of revenues and expenses that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements.

Program Rights

Program rights consist of programming (film and television) acquired from third parties and produced locally, which together form an important component of our station broadcasting schedules. Acquired program rights and the related liabilities are recorded at their gross value when the license period begins and the programs are available for use. Where the initial airing of content allowed by a license is expected to provide more value than subsequent airings, program rights are amortized over their expected useful lives in a manner which reflects the pattern we expect to use and benefit from the programming. These films and series are amortized with the amortization charged in respect of each airing calculated in accordance with a schedule that reflects our estimate of the relative economic value of each run. We review our programming amortization policy when events occur or circumstances change that would so require.

The program library is evaluated at least quarterly to determine if expected revenues are sufficient to cover the unamortized portion of each program. To the extent that the revenues we expect to earn from broadcasting a program are lower than the book value, the program rights are written down to their net realizable value by recording an impairment charge. Accordingly, our estimates of future advertising and other revenues, and our future broadcasting schedules have a significant impact on the value of our program rights on the consolidated balance sheet and the annual programming amortization charge recorded in the consolidated statements of operations and comprehensive income / loss.

Produced Program Rights

We also produce and license a variety of filmed content. The majority of this is television series and movies which are predominantly expected to be utilized by transmission on our broadcast stations. Produced program rights, which include direct costs, production overhead and development costs, are stated at the lower of cost, net of accumulated amortization, or net realizable value.

When we recognize revenue on a title, we also recognize a proportion of the capitalized film costs in the respective statements of operations using the individual film forecast model. The proportion of costs recognized is equal to the proportion of the revenue recognized compared to the total revenue expected to be generated throughout the title's life cycle (the "ultimate revenues").

The process of evaluating a title's ultimate revenues requires management judgment and is inherently subjective. The calculation of ultimate revenue can be a complex one, however, the level of complexity and subjectivity is correlated to the number of revenue streams that management believes will be earned. Our process for evaluating ultimate revenues is tailored to the potential we believe a title has for generating multiple types of revenues. As already mentioned, the majority of our production is intended primarily for exploitation by our own broadcasters and we have few supportable expectations of generating revenue from other sources. In such cases, we consider mainly the free television window in our calculation of the ultimate revenue. Changes in estimates of ultimate revenues from period to period affect the amount of film costs amortized in a given period and, therefore, could have an impact on our results for that period.

When the estimated ultimate revenues, less additional costs to be incurred (including exploitation costs), are less than the carrying amount of the film costs, the value of a film is deemed to be not recoverable and thus, an immediate write-off of unrecoverable film costs is recorded in the consolidated statements of operations and comprehensive income / loss.

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Impairment of goodwill, indefinite-lived intangible assets and long-lived assets

We assess the carrying amount of goodwill and other intangible assets with indefinite lives on an annual basis, or more frequently if events or changes in circumstances indicate that such carrying amount may not be recoverable. Other than our annual review, factors we consider important which could trigger an impairment review include: under-performance of reporting units or changes in projected results, changes in the manner of utilization of the asset, a severe and sustained decline in the price of our shares that is not attributable to factors other than the underlying value of our assets, negative market conditions or economic trends or specific events such as new legislation, new market entrants, changes in technology, as well as adverse legal judgments that we believe could have a negative impact on our business. Therefore, our judgment as to the future prospects of each business has a significant impact on our results and financial condition. We believe that our assumptions are appropriate. If future cash flows do not materialize as expected or there is a future adverse change in market conditions, we may be unable to recover the carrying amount of an asset, resulting in future impairment losses.

Impairment tests of our goodwill are performed at the reporting unit level. The fair value of the reporting unit is compared to its carrying value, including goodwill. An impairment loss is recognized for any excess of the carrying amount of the reporting unit over its fair value. If goodwill and another asset or asset group are tested for impairment at the same time, the other assets are tested for impairment before goodwill. If the other asset or asset group is impaired, this impairment loss is recognized prior to goodwill being tested for impairment. Impairment tests of other intangible assets with indefinite lives are performed at the asset level. An impairment loss is recognized for any excess of the carrying amount of the intangible asset over the fair value.

The fair value of each reporting unit is determined using an income methodology estimating projected future cash flows related to each reporting unit. These projected future cash flows are discounted back to the valuation date. Significant assumptions inherent in the methodology used include estimates of discount rates, future revenue growth rates, operating margins and a number of other factors, all of which are based on our assessment of the future prospects and the risks inherent at the respective reporting units. We have identified five reporting units which consist of our five geographic operating segments: Bulgaria, the Czech Republic, Romania, the Slovak Republic and Slovenia.

Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the respective asset. The same estimates are also used in planning for our long- and short-range business planning and forecasting. We assess the reasonableness of the inputs and outcomes of our undiscounted cash flow analysis against available comparable market data. If the carrying amount of an asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized for the amount by which the carrying amount exceeds the fair value of the respective asset.

The table below shows the key measurements involved and the valuation methods applied:



Measurement		Valuation Method
Recoverability of carrying amounts		Undiscounted future cash flows
Fair value of broadcast licenses		Build-out method
Fair value of indefinite-lived trademarks		Relief from royalty method
Fair value of reporting units		Discounted cash flow model

Our estimate of the cash flows our operations will generate in future periods forms the basis for most of the significant assumptions inherent in our impairment reviews. Our expectations of these cash flows are developed during our long- and short-range business planning processes, which are designed to address the uncertainties inherent in the forecasting process by capturing a range of possible views about key trends which govern future cash flow growth.

Each method noted above involves a number of significant assumptions over an extended period of time which could materially change our decision as to whether assets are impaired. The most significant of these assumptions include: the discount rate applied, the total advertising market size, achievable levels of market share, forecast OIBDA and capital expenditure and the rate of growth into perpetuity, each described in more detail below:

• Cost of capital: The cost of capital reflects the return a hypothetical market participant would require for a long-term investment in an asset and can be viewed as a proxy for the risk of that asset. We calculate the cost of capital according to the Capital Asset Pricing Model using a number of assumptions, the most significant of which is a Country Risk Premium ("CRP"). The CRP reflects the excess risk to an investor of investing in markets other than the United States and generally fluctuates with expectations of changes in a country's macro-economic environment. The costs of capital that we have applied to cash flows for our ~~2018~~2019 annual impairment test are generally lower than those we had used in the ~~2017~~2018 impairment test due to a decrease in ~~country~~long ~~specific~~term ~~risk~~yields ~~factors~~of US government bonds.

• Total advertising market: The size of the television advertising market effectively places an upper limit on the advertising revenue we can expect to earn in each country. Our estimate of the total advertising market is developed from a number of external sources, in combination with a process of on-going consultation with our segment management teams. In our ~~2018~~2019 annual impairment review, we ~~increased or slightly~~ decreased our medium- and long-term view of the size of most of our individual television advertising markets compared to the estimates used in the ~~2017~~2018 annual impairment review based on our estimate of the macro-economic outlook of each of our operating markets.

• Market share: This is a function of the audience share we expect our stations to generate, and the relative price at which we can sell advertising. Our estimate of the total advertising market is developed from a number of external sources, in combination with a process of on-going consultation with our segment management teams. Our estimates for our market share in our ~~2018~~2019 annual impairment review remained consistent when compared with those in our ~~2017~~2018 impairment review.

• Forecast OIBDA: The level of cash flow generated by each operation is ultimately governed by the extent to which we manage the relationship between revenues and costs. We forecast the level of operating costs by reference to (a) the historical absolute and relative levels of costs we have incurred in generating revenue in each reporting unit, (b) the operating strategy of each business and (c) specific forecast costs to be incurred. Our annual impairment review includes assumptions to reflect benefits of cost control measures taken to date, and anticipated future cost control efforts.

•

Forecast capital expenditure: The size and phasing of capital expenditure, both recurring expenditure to replace retired assets and investments in new projects, has a significant impact on cash flows. We forecast the level of future capital expenditure based on current strategies and specific forecast costs to be incurred. The absolute levels of capital expenditure forecast for our segments have either increased or decreased since the prior year impairment review due to shifting strategies for the replacement of end of life production equipment.

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•

Growth rate into perpetuity: This reflects the level of economic growth in each of our markets from the final year in our discrete forecast period into perpetuity and is the sum of an estimated real growth rate, which reflects our belief that macro-economic growth in our markets will ultimately converge to Western European markets, and long-term expectations for inflation. Our estimates of these rates are based on observable market data and, in most operating countries, have slightly decreased since the prior year impairment review due to stabilizing economic outlooks.

Assessing goodwill and indefinite-lived intangible assets for impairment is a complex process that requires significant judgment and involves a great deal of detailed quantitative and qualitative business-specific analysis and many individual assumptions which fluctuate with the passage of time. We have observed over many years a strong positive correlation between the macro-economic performance of our markets and the size of the television advertising market and the cash flows we generate. With this in mind, we have considered macro-economic trends in determining our cash flow forecasts. If our cash flow forecasts for our operations deteriorate, or if costs of capital increase, we may be required to recognize impairment charges in later periods.

Upon conclusion of our ~~2018~~2019 annual review, we determined that the fair values of our reporting units and indefinite-lived intangible assets were substantially in excess of their respective carrying values. We concluded that the total estimated fair values used for purposes of the test are reasonable by comparing our market capitalization to the results of the discounted cash flow analysis of our reporting units, as adjusted for unallocated corporate assets and liabilities. Upon announcement of the Merger Agreement, we assessed the impact by allocating the Merger Agreement consideration to each reporting unit in proportion to the value determined in the discounted cash flow analysis in the annual review. Under these assumptions, the fair values of our reporting units were substantially in excess of their respective carrying values. The balance of goodwill allocated to each reporting unit is presented in Item 8, Note 43, "Goodwill and Intangible Assets".

Revenue Recognition

Net revenues predominantly comprise revenues from the sale of advertising time less discounts and agency commissions, and fees charged to cable and satellite operators for carriage of our channels. Revenues are recognized ~~when~~upon ~~control~~satisfaction of ~~the~~our ~~promised~~performance ~~goods~~obligations ~~or services is transferred~~ to our customers, in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services, net of taxes assessed by a government authority that are both imposed on and concurrent with the specific revenue-producing transaction and collected from the customer.

We defer the recognition of revenues when cash payments are received or due in advance of our performance, including amounts which are refundable. We record a receivable when revenue is recognized prior to invoicing, or deferred revenue when revenue is recognized subsequent to invoicing. Invoicing typically occurs on a monthly basis and customers are obliged to pay within 30 to 60 days of issuance. For certain services and customer types, we require payment before the services are provided.

In instances where the timing of revenue recognition differs from the timing of invoicing, we have determined our contracts do not include a significant financing component. The primary purpose of our invoicing terms is to provide customers with simplified and predictable ways of purchasing our products and services, not to receive financing from our customers or to provide customers with financing.

We maintain a bad debt provision for estimated losses resulting from the inability of our customers to make required payments. If the financial condition of our customers were to deteriorate, additional allowances may be required in future periods. We review the accounts receivable balances periodically and our historical bad debt, customer concentrations and customer creditworthiness when evaluating the adequacy of our provision. In the event we recover amounts previously written off, we release the specific allowance to bad debt expense.

Income Taxes

The provision for income taxes includes local and foreign taxes. Deferred tax assets and liabilities are recognized for the estimated future tax consequences of temporary differences between the financial statement carrying amounts and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which the temporary differences are expected to be recovered or settled. We evaluate the realizability of our deferred tax assets and establish a valuation allowance when it is more likely than not that all or a portion of a deferred tax asset will not be realized.

In evaluating the realizability of our deferred tax assets, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. Any reduction in estimated forecasted results may require that we record additional valuation allowances against our deferred tax assets. Once a valuation allowance has been established, it will be maintained until there is sufficient positive evidence to conclude that it is more likely than not that such assets will be realized. An ongoing pattern of sustained profitability will generally be considered as sufficient positive evidence. If the allowance is reversed in a future period, our income tax provision will be reduced to the extent of the reversal. Accordingly, the establishment and reversal of valuation allowances has had and could continue to have a significant negative or positive impact on our future earnings.

We measure deferred tax assets and liabilities using enacted tax rates that, if changed, would result in either an increase or decrease in the provision for income taxes in the period of change except where the deferred tax assets are covered by a valuation allowance which gives rise to an offsetting adjustment.

From time to time, we engage in transactions, such as business combinations and dispositions, in which the tax consequences may be subject to uncertainty. Significant judgment is required in assessing and estimating the tax consequences of these transactions. We prepare and file tax returns based on the interpretation of tax laws and regulations. In the normal course of business, our tax returns are subject to examination by various taxing authorities. Such examinations may result in future tax and interest assessments by these taxing authorities. We only recognize tax benefits taken on tax returns when we believe they are "more likely than not" of being sustained upon examination based on their technical merits. There is considerable judgment involved in determining whether positions taken on the tax return are "more likely than not" of being sustained.

We recognize, when applicable, both accrued interest and penalties related to unrecognized benefits in income tax expense in the accompanying consolidated statements of operations and comprehensive income / loss.

Foreign exchange

Our reporting currency is the dollar but a significant portion of our consolidated revenues and costs are in other currencies, including programming rights expenses and interest on all of our long-term debt. CME Ltd.'s income, expenses and cash flows are primarily denominated in Euro. Our other operations have functional currencies other than the dollar.

We record assets and liabilities denominated in a currency other than our functional currency using the exchange rate prevailing at each balance sheet date, with any change in value between reporting periods being recognized as a transaction gain or loss in our consolidated statements of operations and comprehensive income / loss. We are exposed to foreign currency on the revaluation of monetary assets and liabilities denominated in currencies other than the local functional currency of the relevant subsidiary. This includes third party receivables and payables, as well as certain intercompany loans, which are generally provided in currencies other than the dollar.35

Index

~~Certain~~We ofrecord ~~our~~assets ~~intercompany~~and ~~loans~~liabilities ~~are~~denominated ~~considered~~in toa becurrency ofother athan ~~long-term~~our ~~investment~~functional ~~nature~~currency asusing the ~~repayment~~exchange ofrate ~~these~~prevailing ~~loans~~at iseach ~~neither~~balance ~~planned~~sheet ~~nor~~date, ~~anticipated~~with ~~for~~any ~~the~~change ~~foreseeable~~in ~~future.~~value ~~For~~between ~~the~~reporting ~~years~~periods ~~ended~~being ~~December 31,~~recognized ~~2018,~~as ~~2017~~a ~~and~~transaction ~~2016,~~gain weor ~~recorded~~loss ain ~~loss~~our consolidated statements of ~~US$~~operations 1and comprehensive income / loss.~~1 million~~ ~~and~~We ~~gains~~are exposed to foreign currency on the revaluation of ~~US$~~monetary ~~11.3 million~~assets and ~~US$~~liabilities ~~8.8~~denominated ~~million,~~in ~~respectively,~~currencies onother than the ~~retranslation~~local functional currency of ~~these~~the ~~intercompany~~relevant ~~loans~~subsidiary. asThis anincludes ~~adjustment~~third toparty ~~accumulated~~receivables ~~other~~and ~~comprehensive~~payables, ~~income~~as /well ~~loss~~as certain intercompany loans, awhich ~~component~~are ofgenerally ~~shareholders'~~provided ~~equity~~in currencies other than the dollar.

Certain of our intercompany loans are considered to be of a long-term investment nature as the repayment of these loans is neither planned nor anticipated for the foreseeable future. For the years ended December 31, 2019, 2018 and 2017, we recorded a gain of US$ 2.5 million, a loss of US$ 1.1 million and a gain of US$ 11.3 million, respectively, on the retranslation of these intercompany loans as an adjustment to accumulated other comprehensive income / loss, a component of shareholders' equity.

The financial statements of our operations are translated to dollars at the exchange rates in effect at the balance sheet date for assets and liabilities, and at weighted average rates for the period for revenues and expenses, including gains and losses. Translational gains and losses are charged or credited to accumulated other comprehensive income / loss.

Determination of the functional currency of an entity requires considerable management judgment. This includes our assessment of a series of indicators, such as the currency in which a majority of sales transactions are negotiated, expense incurred or financing secured. If the nature of our business operations changes, such as by changing the currency in which sales transactions are denominated or by incurring significantly more expenditure in a different currency, we may be required to change the functional currency of some of our operations, potentially changing the amounts we report as transaction gains and losses in the consolidated statements of operations and comprehensive income / loss as well as the translational gains and losses charged or credited to accumulated other comprehensive income / loss. In establishing functional currency, specific facts and circumstances are considered carefully, and judgment is exercised as to what types of information might be most useful to investors.

Contingencies

We are, from time to time, involved in certain legal proceedings and, as required, accrue our estimate of the probable costs for the resolution for these claims. These estimates are developed in consultation with legal counsel and are based upon an analysis of potential results, assuming a combination of litigation and settlement strategies. It is possible, however, that future results of operations for any particular period could be materially affected by changes in our assumptions or the effectiveness of our strategies related to these proceedings. See Item 8, Note 21, "Commitments and Contingencies" for more detailed information on our litigation and other contingencies.

Recent Accounting Pronouncements

See Item 8, Note 2, "Basis of Presentation and Summary of Significant Accounting Policies" for a discussion of accounting standards adopted and recently issued accounting standards not yet adopted.

V. Related Party Matters

We consider our related parties to be our officers, directors and shareholders who have direct control and/or influence over the Company as well as other parties that can significantly influence management. As stated in Financial Accounting Standards Board Accounting Standards Codification Topic 850, "Related Party Disclosures", transactions involving related parties cannot necessarily be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, free-market dealings may not exist. We have entered into related party transactions in all of our markets, mainly for the purchase of program rights. In addition, Warner Media guarantees 100% of our outstanding senior indebtedness and is the lender under the 2023 Revolving Credit Facility. For a detailed discussion of all such transactions, see Item 8, Note 22, "Related Party Transactions" and Part III, Item 13, "Certain Relationships and Related Transactions, and Director Independence".

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We engage in activities that expose us to various market risks, including the effect of changes in foreign currency exchange rates and interest rates. We do not engage in speculative transactions, nor do we hold or issue financial instruments for trading purposes. The table below sets forth our market risk sensitive instruments as at the following dates:

December 31, 2019:



Expected Maturity Dates	2020	2021		2022	2023			2024	Thereafter
Long-term Debt (000's):
Variable rate (EUR)	—	60,335		—	468,800			—	—
Average interest rate ⁽¹⁾	—	1.28	%	—	1.28	%		—	—

Interest Rate Swaps (000's):
Variable to fixed (EUR)	—	529,135		—	468,800		⁽²⁾	—	—
Average pay rate	—	0.30	%	—	0.97	%		—	—
Average receive rate	—	—	%	—	—	%		—	—

⁽¹⁾

As discussed in Item 8, Note 4, "Long-term Debt and Other Financing Arrangements", as consideration for Warner Media's guarantee of the Euro Loans, we pay Guarantee Fees to Warner Media based on the amounts outstanding on the Euro Loans, each calculated such that the all-in borrowing rate on the 2021 Euro Loan was 3.25% per annum and the all-in borrowing rate on the 2023 Euro Loan was 3.50% per annum as of December 31, 2019.


⁽²⁾	The interest rate swaps related to the 2023 Euro Loan maturing in 2023 are forward starting to coincide with the maturity date of the interest rate swaps maturing in 2021. See Item 8, Note 12, "Financial Instruments and Fair Value Measurements".

December 31, 2018:



Expected Maturity Dates	2019		2020	2021			2022	2023			Thereafter
Long-term Debt (000's):
Variable rate (EUR)	—		—	210,335			—	468,800			—
Average interest rate ⁽¹⁾	—		—	1.28	%		—	1.28	%		—

Interest Rate Swaps (000's):
Variable to fixed (EUR)	210,335		—	679,135		⁽²⁾	—	468,800		⁽³⁾	—
Average pay rate	0.31	%	—	0.33	%		—	0.97	%		—
Average receive rate	—	%	—	—	%		—	—	%		—

(1) As discussed in Item 8, Note 54, "Long-term Debt and Other Financing Arrangements", as consideration for Warner Media's guarantee of the Euro Loans, we pay Guarantee Fees to Warner Media based on the amounts outstanding on the Euro Loans, each calculated such that the all-in borrowing rate on the 2021 Euro Loan was 3.25% per annum and the all-in borrowing rate on the 2023 Euro Loan was 3.75% per annum as of December 31, 2018.

(2) The interest rate swaps related to the 2021 Euro Loan maturing in 2021 ~~are~~were forward starting to coincide with the maturity date of the interest rate swaps ~~maturing~~which matured in 2019. See Item 8, Note 1412, "Financial Instruments and Fair Value Measurements".

(3) The interest rate swaps related to the 2023 Euro Loan maturing in 2023 are forward starting to coincide with the maturity date of the interest rate swaps maturing in 2021. See Item 8, Note 1412, "Financial Instruments and Fair Value Measurements".

December 31, 2017:

Expected Maturity Dates	2018		2019		2020	2021		2022	Thereafter
Long-term Debt (000's):
Variable rate (EUR)	200,800		235,335		—	468,800		—	—
Average interest rate (1)	1.50	%	1.50	%	—	1.50	%	—	—
Interest Rate Swaps (000's):
Variable to fixed (EUR)	200,800		235,335		—	468,800		—	—
Average pay rate	0.14	%	0.31	%	—	0.28	%	—	—
Average receive rate	—	%	—	%	—	—	%	—	—

(1) As discussed in Item 8, Note 5, "Long-term Debt and Other Financing Arrangements", as consideration for Warner Media's guarantee of the Euro Loans, we pay Guarantee Fees to Warner Media based on the amounts outstanding on the Euro Loans. As of December 31, 2017, the all-in borrowing rate on each of the Euro Loans was 6.0% per annum.

Foreign Currency Exchange Risk Management

We conduct business in a number of currencies other than our functional currencies. As a result, we are subject to foreign currency exchange rate risk due to the effects that foreign exchange rate movements of these currencies have on our costs and on the cash flows we receive from our subsidiaries. In limited instances, we enter into forward foreign exchange contracts to minimize foreign currency exchange rate risk (see Item 8, Note 1412, "Financial Instruments and Fair Value Measurements").

Interest Rate Risk Management

The Euro Loans each bear interest at a variable rate based on EURIBOR plus an applicable margin. We are party to a number of interest rate swap agreements intended to reduce our exposure to interest rate movements (see Item 8, Note 1412, "Financial Instruments and Fair Value Measurements").

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Financial Statements and Supplementary data begin on the following page and end on the page immediately preceding Item 9.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and the Shareholders of Central European Media Enterprises Ltd.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Central European Media Enterprises Ltd. (the Company) as of December 31, ~~2018~~2019 and ~~2017~~2018, the related consolidated statements of operations and comprehensive income / loss, equity and cash flows for each of the three years in the period ended December 31, ~~2018~~2019, and the related notes and the financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the consolidated financial position of the Company at December 31, ~~2018~~2019 and ~~2017~~2018, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, ~~2018~~2019, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, ~~2018~~2019, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 6, ~~2019~~2020 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2016.

London, United Kingdom

February 6, ~~2019~~2020

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CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.

CONSOLIDATED BALANCE SHEETS

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

	December 31, 2018		December 31, 2017
	December 31, 2019		December 31, 2018
ASSETS
Current assets
Cash and cash equivalents	$	6236,~~031~~621	$	5862,~~748~~031
Accounts receivable, net (Note 7)	193,371		184,170
Accounts receivable, net (Note 6)	188,618		193,371
Program rights, net (Note 6)	77,624		81,412
Program rights, net (Note 5)	75,909		77,624
Other current assets (Note 8)	41,067		37,216
Other current assets (Note 7)	48,832		41,067
Assets held for sale (Note 3)	—		59,693
Total current assets	349,980		374,093
Total current assets	374,093		421,239
Non-current assets
Property, plant and equipment, net (Note 9)	117,604		119,349
Property, plant and equipment, net (Note 8)	113,901		117,604
Program rights, net (Note 6)	171,871		206,227
Program rights, net (Note 5)	166,237		171,871
Goodwill (Note 4)	676,333		712,359
Goodwill (Note 3)	667,988		676,333
Other intangible assets, net (Note 4)	136,052		151,977
Other intangible assets, net (Note 3)	127,589		136,052
Other non-current assets (Note 8)	12,408		16,904
Other non-current assets (Note 7)	22,167		12,408
Total non-current assets	1,~~114~~097,~~268~~882		1,~~206~~114,~~816~~268
Total assets	$	1,~~488~~447,~~361~~862	$	1,~~628~~488,~~055~~361

LIABILITIES AND EQUITY
Current liabilities
Accounts payable and accrued liabilities (Note 10)	$	120,468		$	160,072
Accounts payable and accrued liabilities (Note 9)	$	135,650		$	120,468
Current portion of long-term debt and other financing arrangements (Note 5)	5,545			3,269
Current portion of long-term debt and other financing arrangements (Note 4)	6,836			5,545
Other current liabilities (Note 11)	13,679			9,349
Other current liabilities (Note 10)	13,515			13,679
Liabilities held for sale (Note 3)	—			14,256
Total current liabilities	156,001			139,692
Total current liabilities	139,692			186,946
Non-current liabilities
Long-term debt and other financing arrangements (Note 5)	782,685			1,086,111
Long-term debt and other financing arrangements (Note 4)	600,273			782,685
Other non-current liabilities (Note 11)	67,293			96,175
Other non-current liabilities (Note 10)	80,000			67,293
Total non-current liabilities	~~849~~680,~~978~~273			1849,~~182,286~~978
Commitments and contingencies (Note 21)
TEMPORARY EQUITY
200,000 shares of Series B Convertible Redeemable Preferred Stock of $0.08 each (December 31, 2017 - 200,000) (Note 12)	269,370			264,593
200,000 shares of Series B Convertible Redeemable Preferred Stock of $0.08 each (December 31, 2018 - 200,000) (Note 13)	269,370			269,370
EQUITY
CME Ltd. shareholders’ equity (Note 13):
CME Ltd. shareholders’ equity (Note 14):
One share of Series A Convertible Preferred Stock of $0.08 each (December 31, 2017 – one)	—			—
One share of Series A Convertible Preferred Stock of $0.08 each (December 31, 2018 – one)	—			—
252,853,554 shares of Class A Common Stock of $0.08 each (December 31, 2017 – 145,486,497)	20,228			11,639
253,607,026 shares of Class A Common Stock of $0.08 each (December 31, 2018 – 252,853,554)	20,288			20,228
Nil shares of Class B Common Stock of $0.08 each (December 31, 2017 – nil)	—			—
Nil shares of Class B Common Stock of $0.08 each (December 31, 2018 – nil)	—			—
Additional paid-in capital	2,~~003~~007,~~518~~275			12,~~905~~003,~~779~~518
Accumulated deficit	(1,~~578~~458,~~076~~942		)	(1,~~735~~578,~~768~~076		)
Accumulated other comprehensive loss	(~~216~~226,~~650~~916		)	(~~187~~216,~~438~~650		)
Total CME Ltd. shareholders’ equity / (deficit)	229,020			(5,788		)
Total CME Ltd. shareholders’ equity	341,705			229,020
Noncontrolling interests	~~301~~513			18301
Total equity / (deficit)	229,321			(5,770		)
Total equity	342,218			229,321
Total liabilities and equity	$	1,~~488~~447,~~361~~862		$	1,~~628~~488,~~055~~361

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

4039

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CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME / LOSS

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

	For The Year Ended December 31,
	2018			2017			2016
	2019			2018			2017
Net revenues	$	~~703~~694,~~906~~804		$	~~642~~703,~~868~~906		$	~~583~~642,~~006~~868
Operating expenses:
Content costs	~~309~~284,~~439~~715			~~293~~309,~~728~~439			~~275~~293,~~746~~728
Other operating costs	5654,~~731~~826			5556,~~924~~731			6055,~~935~~924
Depreciation of property, plant and equipment	3233,~~933~~536			3132,~~261~~933			2731,~~529~~261
Amortization of intangibles	98,~~002~~457			89,~~592~~002			8,~~270~~592
Cost of revenues	~~408~~381,~~105~~534			~~389~~408,~~505~~105			~~372~~389,~~480~~505
Selling, general and administrative expenses	~~118~~125,~~214~~934			~~113~~118,~~449~~214			~~104~~113,~~778~~449
Operating income	~~177~~187,~~587~~336			~~139~~177,~~914~~587			~~105~~139,~~748~~914
Interest expense (Note 15)	(4930,~~106~~694		)	(8349,~~188~~106		)	(~~126~~83,~~378~~188		)
Loss on extinguishment of debt	(415		)	(101		)	(150,158		)
Other non-operating (expense) / income, net (Note 16)	(2,208		)	(3,588		)	16,841
Other non-operating (expense) / income, net (Note 16)	(3,173		)	16,942			(2,252		)
Income before tax	154,434			124,893			73,567
Income / (loss) before tax	124,893			73,567			(173,040		)
Provision for income taxes	(35,226		)	(27,828		)	(22,504		)
Provision for income taxes	(27,828		)	(22,504		)	(6,639		)
Income from continuing operations	119,208			97,065			51,063
Income / (loss) from continuing operations	97,065			51,063			(179,679		)
Income / (loss) from discontinued operations, net of tax	—			60,548			(1,636		)
Income / (loss) from discontinued operations, net of tax (Note 3)	60,548			(1,636		)	(918		)
Net income	119,208			157,613			49,427
Net income / (loss)	157,613			49,427			(180,597		)
Net (income) / loss attributable to noncontrolling interests	(74		)	79			341
Net loss attributable to noncontrolling interests	79			341			306
Net income attributable to CME Ltd.	$	119,134		$	157,692		$	49,768
Net income / (loss) attributable to CME Ltd.	$	157,692		$	49,768		$	(180,291	)
Net income	$	119,208		$	157,613		$	49,427
Net income / (loss)	$	157,613		$	49,427		$	(180,597	)
Other comprehensive (loss) / income
Currency translation adjustment (Note 13)	(23,050		)	54,368			1,649
Currency translation adjustment (Note 14)	(6,149		)	(23,050		)	54,368
Unrealized (loss) / gain on derivative instruments (Note 14)	(53,~~800~~979		)	1(5,~~269~~800		)	(31,~~031~~269		)
Total other comprehensive (loss) / income	(2810,~~850~~128		)	55(28,~~637~~850		)	(155,~~382~~637		)
Comprehensive income / (loss)	128,763			105,064			(181,979		)
Comprehensive income	109,080			128,763			105,064
Comprehensive (income) / loss attributable to noncontrolling interests	(~~283~~212		)	~~1,254~~(283		)	~~109~~1,254
Comprehensive income / (loss) attributable to CME Ltd.	$	128,480		$	106,318		$	(181,870	)
Comprehensive income attributable to CME Ltd.	$	108,868		$	128,480		$	106,318

PER SHARE DATA (Note 19):
Net income / (loss) per share:
Continuing operations — basic	$	0.2732	$	0.1627		$	(10.2816	)
Continuing operations — diluted	0.2532		0.1225			(10.2812		)
Discontinued operations — basic	~~0.18~~—		(0.0118		)	(0.0001		)
Discontinued operations — diluted	~~0.17~~—		0.0017			0.00
Attributable to CME Ltd. — basic	0.4532		0.1545			(10.2815		)
Attributable to CME Ltd. — diluted	$0.32	~~0.42~~	$0.42	~~0.12~~		$0.12	~~(1.28~~	)
Weighted average common shares used in computing per share amounts (000’s):
Basic	~~230~~264,~~562~~611		~~155~~230,~~846~~562			~~151~~155,~~017~~846
Diluted	~~257~~266,~~694~~198		~~236~~257,~~404~~694			~~151~~236,~~017~~404

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

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CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.

CONSOLIDATED STATEMENTS OF EQUITY

(US$ 000’s, except share data)

	CME Ltd.
	Series A Convertible Preferred Stock			Class ACommon Stock			Class BCommon Stock
	Number of shares	Par value		Number of shares	Par value		Number of shares	Par value		Additional Paid-In Capital			Accumulated Deficit			Accumulated Other Comprehensive Loss			Noncontrolling Interest			Total ~~Equity /~~ (Deficit) / Equity
BALANCE December 31, 2015	1	$	—	135,804,221	$	10,864	—	$	—	$	1,914,050		$	(1,605,245	)	$	(242,409	)	$	1,381		$	78,641
Stock-based compensation	—	—		—	—		—	—		3,510			—			—			—			3,510
Exercise of warrants (Note 13)	—	—		6,996,955	560		—	—		6,437			—			—			—			6,997
Share issuance, stock based compensation	—	—		648,737	52		—	—		(52		)	—			—			—			—
Preferred dividend paid in kind	—	—		—	—		—	—		(13,701		)	—			—			—			(13,701		)
Net loss	—	—		—	—		—	—		—			(180,291		)	—			(306		)	(180,597		)
Unrealized loss on derivative instruments	—	—		—	—		—	—		—			—			(3,031		)	—			(3,031		)
Currency translation adjustment	—	—		—	—		—	—		—			—			1,452			197			1,649
BALANCE December 31, 2016	1	$	—	143,449,913	$	11,476	—	$	—	$	1,910,244		$	(1,785,536	)	$	(243,988	)	$	1,272		$	(106,532	)
Stock-based compensation	—	—		—	—		—	—		4,412			—			—			—			4,412
Exercise of warrants (Note 13)	—	—		1,148,469	92		—	—		1,056			—			—			—			1,148
Exercise of warrants	—	—		1,148,469	92		—	—		1,056			—			—			—			1,148
Share issuance, stock based compensation	—	—		888,115	71		—	—		(71		)	—			—			—			—
Withholding tax on net share settlement of stock-based compensation	—	—		—	—		—	—		(168		)	—			—			—			(168		)
Preferred dividend paid in kind	—	—		—	—		—	—		(9,694		)	—			—			—			(9,694		)
Net income / (loss)	—	—		—	—		—	—		—			49,768			—			(341		)	49,427
Unrealized gain on derivative instruments	—	—		—	—		—	—		—			—			1,269			—			1,269
Currency translation adjustment	—	—		—	—		—	—		—			—			55,281			(913		)	54,368
BALANCE December 31, 2017	1	$	—	145,486,497	$	11,639	—	$	—	$	1,905,779		$	(1,735,768	)	$	(187,438	)	$	18		$	(5,770	)
Stock-based compensation	—	—		—	—		—	—		7,083			—			—			—			7,083
Exercise of warrants (Note 13)	—	—		105,652,401	8,452		—	—		97,200			—			—			—			105,652
Exercise of warrants	—	—		105,652,401	8,452		—	—		97,200			—			—			—			105,652
Share issuance, stock-based compensation	—	—		1,714,656	137		—	—		(137		)	—			—			—			—
Share issuance, stock based compensation	—	—		1,714,656	137		—	—		(137		)	—			—			—			—
Withholding tax on net share settlement of stock-based compensation	—	—		—	—		—	—		(1,630		)	—			—			—			(1,630		)
Preferred dividend paid in kind	—	—		—	—		—	—		(4,777		)	—			—			—			(4,777		)
Net income / (loss)	—	—		—	—		—	—		—			157,692			—			(79		)	157,613
Unrealized loss on derivative instruments	—	—		—	—		—	—		—			—			(5,800		)	—			(5,800		)
Currency translation adjustment	—	—		—	—		—	—		—			—			(23,412		)	362			(23,050		)
BALANCE December 31, 2018	1	$	—	252,853,554	$	20,228	—	$	—	$	2,003,518		$	(1,578,076	)	$	(216,650	)	$	301		$	229,321
Stock-based compensation	—	—		—	—		—	—		4,184			—			—			—			4,184
Share issuance, stock-based compensation	—	—		753,472	60		—	—		(60		)	—			—			—			—
Withholding tax on net share settlement of stock-based compensation	—	—		—	—		—	—		(367		)	—			—			—			(367		)
Net income	—	—		—	—		—	—		—			119,134			—			74			119,208
Unrealized loss on derivative instruments	—	—		—	—		—	—		—			—			(3,979		)	—			(3,979		)
Currency translation adjustment	—	—		—	—		—	—		—			—			(6,287		)	138			(6,149		)
BALANCE December 31, 2019	1	$	—	253,607,026	$	20,288	—	$	—	$	2,007,275		$	(1,458,942	)	$	(226,916	)	$	513		$	342,218

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

4241

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CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(US$ 000’s)

	For The Year Ended December 31,
	2018			2017			2016
	2019			2018			2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income / (loss)	$	157,613		$	49,427		$	(180,597	)
Net income	$	119,208		$	157,613		$	49,427
Adjustments to reconcile net income / (loss) to net cash generated from continuing operating activities:
Adjustments to reconcile net income to net cash generated from continuing operating activities:
(Income) / loss from discontinued operations, net of tax	~~(60,548~~—		)	1(60,~~636~~548		)	~~918~~1,636
Amortization of program rights	~~309~~284,~~439~~715			~~293~~309,~~728~~439			~~275~~293,~~746~~728
Depreciation and other amortization	4645,~~437~~379			4546,~~871~~437			5745,~~817~~871
Interest and related Guarantee Fees paid in kind	~~3,783~~—			233,~~331~~783			4223,~~074~~331
Loss on extinguishment of debt	~~415~~340			~~101~~415			~~150,158~~101
Gain on disposal of fixed assets	(9084		)	(~~108~~90		)	(~~299~~108		)
Deferred income taxes	~~2,734~~(742		)	~~(483~~2,734		)	~~1,424~~(483		)
Stock-based compensation (Note 17)	74,~~083~~184			47,~~412~~083			34,~~510~~412
Change in fair value of derivatives	~~1,322~~201			~~231~~1,322			~~11,473~~231
Foreign currency exchange loss / (gain), net	~~2,376~~661			~~(13~~2,~~773~~376		)	(813,~~891~~773		)
Changes in assets and liabilities:
Accounts receivable, net	~~(16~~2,~~461~~356		)	(~~325~~16,461		)	(~~18,972~~325		)
Accounts payable and accrued liabilities	(811,~~597~~892		)	(18,~~588~~597		)	3(1,~~881~~588		)
Program rights	(~~307~~278,~~490~~453		)	(~~310~~307,~~798~~490		)	(~~287~~310,~~357~~798		)
Other assets and liabilities	~~587~~(4,107		)	~~3,385~~587			~~261~~3,385
Accrued interest	(~~31,338~~768		)	(331,~~727~~338		)	(~~133~~3,~~723~~727		)
Income taxes payable	(~~2,878~~7		)	7(2,~~554~~878		)	57,~~162~~554
Deferred revenue	~~6,293~~476			(26,~~272~~293		)	(~~852~~2,272		)
VAT and other taxes payable	(15,~~656~~599		)	(31,~~301~~656		)	1(3,~~028~~301		)
Net cash generated from / (used in) continuing operating activities	$	109,024		$	93,301		$	(77,239	)
Net cash generated from continuing operating activities	$	179,652		$	109,024		$	93,301
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment	$	(24,~~583~~423	)	$	(2824,~~115~~583	)	$	(2628,~~736~~115	)
Proceeds from disposal of property, plant and equipment	4348			~~168~~43			~~211~~168
Net cash used in continuing investing activities	$	(24,~~540~~375	)	$	(2724,~~947~~540	)	$	(2627,~~525~~947	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debt	$	—		$	—		$	533,963
Repayments of debt	$	(168,913	)	$	(270,780	)	$	(59,060	)
Repayments of debt	(270,780		)	(59,060		)	(430,030		)
Debt transactions costs	—			(10,746		)	(106		)
Debt transactions costs	(10,746		)	(106		)	(9,541		)
Settlement of derivative instruments	(1,712		)	—			—
Payment of credit facilities and capital leases	(47,~~858~~097		)	(24,~~999~~858		)	(12,~~357~~999		)
Settlement of forward currency swaps	—			—			(12,106		)
Proceeds from exercise of warrants	—			105,652			1,148
Proceeds from exercise of warrants	105,652			1,148			6,997
Proceeds from sale-leaseback transactions	—			—			2,746
Proceeds from sale-leaseback transactions	—			2,746			—
Payments of withholding tax on net share settlement of stock-based compensation	(367		)	(1,630		)	(168		)
Payments of withholding tax on net share settlement of stock-based compensation	(1,630		)	(168		)	—
Net cash used in continuing financing activities	$	(178,089	)	$	(182,362	)	$	(58,439	)
Net cash (used in) / provided by continuing financing activities	$	(182,362	)	$	(58,439	)	$	87,926
Net cash provided by discontinued operations - operating activities	—			1,842			736
Net cash provided by / (used in) discontinued operations - operating activities	1,842			736			(149		)
Net cash provided by / (used in) discontinued operations - investing activities	—			100,724			(877		)
Net cash provided by / (used in) discontinued operations - investing activities	100,724			(877		)	(1,638		)
Impact of exchange rate fluctuations on cash	(2,598		)	(1,405		)	11,020
Net cash used in discontinued operations - financing activities	—			—			—
Net (decrease) / increase in cash and cash equivalents	$	(25,410	)	$	3,283		$	17,794
Impact of exchange rate fluctuations on cash	(1,405		)	11,020			(862		)
CASH AND CASH EQUIVALENTS, beginning of year	62,031			58,748			40,954
Net increase / (decrease) in cash and cash equivalents	$	3,283		$	17,794		$	(18,487	)
CASH AND CASH EQUIVALENTS, end of year	$	36,621		$	62,031		$	58,748
CASH AND CASH EQUIVALENTS, beginning of year	58,748			40,954			59,441
CASH AND CASH EQUIVALENTS, end of year	$	62,031		$	58,748		$	40,954

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

4342

Index

CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(US$ 000’s)

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest (including mandatory cash-pay Guarantee Fees)	$	43,350	$	47,197	$	53,977
Cash paid for interest (including Guarantee Fees)	$	26,651	$	43,350	$	47,197
Cash paid for Guarantee Fees previously paid in kind	~~27,328~~—		—27,328		~~22,358~~—
Cash paid for Guarantee Fees that may be paid in kind	812		8,343		8,349
Cash paid for Guarantee Fees that previously could be paid in kind	—		812		8,343
Cash paid for income taxes, net of refunds	2835,~~365~~998		1528,~~143~~365		~~290~~15,143
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING AND INVESTING ACTIVITIES:
Accretion on Series B Convertible Redeemable Preferred Stock	$	~~4,777~~—	$	94,~~694~~777	$	139,~~701~~694
Acquisition of property, plant and equipment under capital lease	13,419		8,811		1,193
Acquisition of property, plant and equipment under finance lease	5,753		13,419		8,811

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

4443

Index

CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

1. ORGANIZATION AND BUSINESS

Central European Media Enterprises Ltd., a Bermuda company limited by shares, is a media and entertainment company operating in Central and Eastern Europe. Our assets are held through a ~~series of~~ Dutch ~~and Curaçao~~ holding ~~companies~~company. We manage our business on a geographical basis, with five operating segments; Bulgaria, the Czech Republic, Romania, the Slovak Republic and Slovenia, which are also our reportable segments and our main operating countries. See Note 20, "Segment Data" for financial information by segment. Our ~~Slovenian~~previously held Croatian operations, which were ~~previously~~sold during 2018, are classified as ~~held~~discontinued ~~for~~operations ~~sale~~in ~~and~~our ~~discontinued~~consolidated ~~operations~~statements ~~(see~~of ~~Note~~operations 3,for ~~"Discontinued~~the ~~Operations~~years ~~and~~ended ~~Assets~~December 31, ~~Held~~2018 ~~for~~and ~~Sale")~~December 31, 2017.

We are the market-leading broadcasters in each of our five operating countries with a combined portfolio of 3130 television channels. Each country ~~also~~ develops and produces content for their television channels. We generate advertising revenues ~~in our country operations~~ primarily through entering into agreements with advertisers, advertising agencies and sponsors to place advertising on the television channels that we operate. We generate additional revenues by collecting fees from cable, ~~DTH~~direct-to-home and internet protocol television ("IPTV") operators for carriage of our channels as well as from advertising related to our digital initiatives. Unless otherwise indicated, we own 100% of our broadcast operating and license companies in each country.

Bulgaria

We operate one general entertainment channel, BTV, and five other channels, BTV CINEMA, BTV COMEDY, BTV ACTION, BTV LADY and RING. We own 94% of CME Bulgaria B.V., the subsidiary that owns our Bulgaria operations.

Czech Republic

Romania

We operate one general entertainment channel, PRO TV, and ~~seven~~six other channels, PRO 2, PRO X, PRO GOLD, PRO CINEMA, PRO TV INTERNATIONAL, ~~MTV ROMANIA,~~ as well as PRO TV CHISINAU, a general entertainment channel broadcasting in Moldova.

Slovak Republic

We operate one general entertainment channel, TV MARKIZA, and three other channels, DOMA, DAJTO, and MARKIZA INTERNATIONAL, a general entertainment channel broadcasting in the Czech Republic.

Slovenia

We operate two general entertainment channels, POP TV and KANAL A, and three other channels, KINO, BRIO and OTO.

Merger

On October 27, 2019, the Company entered into an Agreement and Plan of Merger (the "Merger Agreement") with TV Bidco B.V. ("Parent") and TV Bermuda Ltd. ("Merger Sub"). Parent and Merger Sub are affiliates of PPF Group N.V. Pursuant to the Merger Agreement, Merger Sub will merge with and into the Company (the "Merger"), with the Company continuing as the surviving company in the proposed Merger as a wholly-owned subsidiary of Parent.

Under the Merger Agreement, at the effective time of the proposed Merger (the “Effective Time”), without any action required by the Company, Parent, Merger Sub or any shareholder of the Company or any other person, each Class A Share issued and outstanding immediately prior to the Effective Time will be canceled and cease to exist automatically and each such Class A Share (other than shares owned by the Company, Parent, Merger Sub or any of their respective direct or indirect wholly-owned subsidiaries, in each case not held on behalf of third parties) will be converted into the right to receive $4.58 in cash.

Under the Merger Agreement, at the Effective Time, without any action required by the Company, Parent, Merger Sub or any shareholder of the Company or any other person, the Series A Preferred Share issued and outstanding immediately prior to the Effective Time will be canceled and cease to exist automatically and will be converted into the right to receive the $32,900,000 in cash, without interest and each Series B Preferred Share issued and outstanding immediately prior to the Effective Time will be canceled and cease to exist automatically and will be converted into the right to receive the $1,630.875 in cash, without interest; provided that, among other things, any conversion of the Series A Preferred Share or any Series B Preferred Shares into Class A Shares on or after October 27, 2019 will be deemed to be null and void.

2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The terms the "Company", "we", "us", and "our" are used in this Form 10-K to refer collectively to the parent company, Central European Media Enterprises Ltd. ("CME Ltd."), and the subsidiaries through which our various businesses are conducted. Unless otherwise noted, all statistical and financial information presented in this report has been converted into U.S. dollars using period-end exchange rates. All references to "US$", "USD" or "dollars" are to U.S. dollars, all references to "BGN" are to the Bulgarian leva, all references to "CZK" are to the Czech koruna, all references to "RON" are to the New Romanian lei, and all references to "Euro" or "EUR" are to the European Union Euro. Where applicable, prior period presentation has been modified to conform to current year presentation.

Basis of Consolidation

The consolidated financial statements include the accounts of CME Ltd. and our subsidiaries, after the elimination of intercompany accounts and transactions. Entities in which we hold less than a majority voting interest but over which we have the ability to exercise significant influence are accounted for using the equity method. Other investments are accounted for using the cost method.

Index

CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Use of Estimates

The preparation of financial statements in conformity with US Generally Accepted Accounting Principles ("US GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates and assumptions.

Summary of Critical and Significant Accounting Policies

The following is a discussion of each of the Company’s critical accounting policies, including information and analysis of estimates and assumptions involved in their application, and other significant accounting policies.

Revenue Recognition

Revenues are recognized upon satisfaction of our performance obligations to our customers, in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services, net of taxes assessed by a government authority that are both imposed on and concurrent with the specific revenue-producing transaction and collected from the customer.

The timing of revenue recognition may differ from the timing of invoicing to customers. We defer the recognition of revenues when cash payments are received or due in advance of our performance, including amounts which are refundable. We record a receivable when revenue is recognized prior to invoicing, or deferred revenue when revenue is recognized subsequent to invoicing. Invoicing typically occurs on a monthly basis and customers are obliged to pay within 30 to 60 days of issuance. For certain services and customer types, we require payment before the services are provided.

45We maintain a bad debt provision for estimated losses resulting from the inability of our customers to make required payments. If the financial condition of our customers were to deteriorate, additional allowances may be required in future periods. We review the accounts receivable balances periodically and our historical bad debt, customer concentrations and customer creditworthiness when evaluating the adequacy of our provision. In the event we recover amounts previously written off, we release the specific allowance to bad debt expense.

Index

CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Our principal revenue streams and their respective accounting treatments are discussed below:

Television advertising revenues primarily result from the sale of advertising time. Television advertising revenues are earned as the commercials are aired. In many countries, we commit to provide advertisers with certain rating levels in connection with their advertising. Revenue is recorded based on a charge per Gross Rating Point ("GRP") ordered during the month, net of estimated shortfalls. Discounts and agency commissions on television advertising revenue are recognized on a monthly basis and are reflected as a reduction to gross revenue.

Carriage fees and subscription revenues include revenues from cable operators and direct-to-home broadcasters and fees from subscriptions to our streaming services. Revenues from cable operators and direct-to-home broadcasters are recognized as revenue over the period for which the channels are provided and to which the fees relate. This fee revenue is generally based on the number of subscribers to offerings from these operators and broadcasters that include our channels. The impacts of future changes in subscriber levels are recognized when they occur as estimates of future subscribers are constrained. Revenues from subscriptions to our streaming services are recognized over the period of the subscription.

Other revenues primarily include revenues from our internet display advertising, as well as revenues from the licensing of our content. Internet display advertising revenues are recognized on a cost-per-impression basis based on the number of times a customer's advertisement is displayed on our websites. Revenues from the licensing of our content are recognized upon delivery or reasonable access to the content.

Our revenue streams involve significant judgment with respect to the discounts and agency commissions we provide to certain customers based on the amount of advertising purchased. Such discounts are based on estimates of the total amount expected to be earned and reduce revenue based on a systematic and rational allocation of the cost of honoring the discounts earned and claimed to each of the underlying revenue transactions that result in progress by the customer towards earning the discount. Due to the timing of the information provided by the rating agencies, significant judgment may be necessary to estimate the total volume of GRPs delivered within the contract period.

See below "Recent Accounting Pronouncements" for information on the adoption of Financial Accounting Standards Board ("FASB") Accounting Standards Codification Topic 606, "Revenue from Contracts with Customers" ("ASC 606") as at January 1, 2018.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash on hand and marketable securities, if applicable, with original maturities of three months or less. Cash that is subject to restrictions is classified as restricted cash, if applicable.

Program Rights

Purchased program rights

Purchased program rights and the related liabilities are recorded at their gross value when the license period begins and the programs are available for broadcast.

Purchased program rights are classified as current or non-current assets based on anticipated usage, while the related program rights liability is classified as current or non-current according to the payment terms of the license agreement.

Program rights are evaluated to determine if expected revenues are sufficient to cover the unamortized portion of the program. To the extent that expected revenues are insufficient, the program rights are written down to their expected net realizable value. These programming impairment charges, along with programming impairment charges related to own-produced content, are presented as a component of content costs in our consolidated statements of operations and comprehensive income / loss.

The costs incurred to acquire program rights are capitalized and amortized over their expected useful lives in a manner which reflects the pattern we expect to use and benefit from the programming. If the initial airing of content allowed by a license is expected to provide more value than subsequent airings, we apply an accelerated method of amortization. These accelerated methods of amortization depend on the estimated number of runs the content is expected to receive, and are determined based on a study of historical results for similar programming. For programming that is not advertising supported, each program's costs are amortized on a straight-line basis over the license period. For content that is expected to be aired only once, the entire cost is expensed on the first run.45

Produced program rights

Program rights that are produced by us consist of deferred film and television costs including direct costs, production overhead and development costs. The costs are stated at the lower of cost, net of accumulated amortization, or net realizable value. The amount of capitalized production costs recognized as cost of revenues for a given production as it is exhibited in various markets is determined using the individual film forecast method. The proportion of costs recognized is equal to the proportion of the revenue recognized compared to the total revenue expected to be generated throughout the product's life cycle (the "ultimate revenues"). Our process for evaluating ultimate revenues is tailored to the potential we believe a title has for generating multiple revenues. The majority of our production is intended primarily for exploitation by our own broadcasters. In such cases, we consider mainly the free television window in our calculation of the ultimate revenues. Changes in estimates of ultimate revenues from period to period affect the amount of film costs amortized in a given period and, therefore, could have an impact on our results for that period.

Produced program rights are amortized on an individual production basis using the ratio of the current period's gross revenues to estimated remaining total ultimate revenues from such programs. Produced program rights are evaluated to determine if expected revenues, less additional costs to be incurred (including exploitation costs) are sufficient to cover the unamortized portion of the program. To the extent that expected revenues are insufficient, the program rights are written down to their net realizable value.

Index

CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Produced program rights

Property, Plant and Equipment

Property, plant and equipment is carried at cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives assigned to each major asset category as below:



Asset category	Estimated useful life
Land	Indefinite
Buildings	25 years
Machinery, fixtures and equipment	4 - 8 years
Other equipment	3 - 8 years
Software	3 - 5 years

Construction-in-progress is not depreciated until put into use. ~~Capital~~Assets under finance leases are depreciated on a straight-line basis over the shorter of the estimated useful life of the asset or the lease term. Leasehold improvements are depreciated over the shorter of the related lease term or the life of the asset. Assets to be disposed of are reported at the lower of carrying amount or fair value, less expected costs of disposal.

Long-Lived Assets Including Intangible Assets with Finite Lives

Long-lived assets include property, plant, equipment and intangible assets with finite lives. We evaluate the remaining useful life of intangible assets with finite lives each reporting period. We review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Long-lived assets are evaluated at the asset group level when there is an indication that they may be impaired. The carrying amounts of long-lived assets are considered impaired when the anticipated undiscounted cash flows from such assets are less than their carrying amounts. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair value.

Goodwill and Indefinite-Lived Intangible Assets

We evaluate goodwill and indefinite-lived intangible assets for impairment annually as of October 1, or more frequently if events or changes in circumstances indicate that the asset might be impaired. Such events and changes in circumstances include:


•	under-performance of operating segments or changes in projected results;


•	changes in the manner of utilization of an asset;


•	severe and sustained declines in the trading price of shares of our Class A common stock that are not attributable to factors other than the underlying value of our assets;


•	negative market conditions or economic trends; and


•	specific events, such as new legislation, new market entrants, changes in technology or adverse legal judgments that we believe could have a negative impact on our business.

Goodwill is evaluated at the reporting unit level, which we have determined is each of our five operating segments. We elected to bypass the qualitative assessment for all of our reporting units in ~~2018~~2019 and ~~proceed~~proceeded directly to performing the quantitative goodwill impairment test. The fair values of our reporting units ~~are~~were determined based on the present value of expected future cash flows, including terminal value, discounted at appropriate rates, determined separately for each reporting unit, and on publicly available information, where appropriate. The determination of fair value involves the use of significant estimates and assumptions, including: revenue growth rates, operating margins, capital expenditures, working capital requirements, tax rates, terminal growth rates, management's long-term plan and a discount rate selected with reference to the relevant cost of capital. An impairment exists when the carrying amount of a reporting unit (including its goodwill), exceeds its fair value.

We evaluate whether the useful life of each indefinite-lived intangible asset remains indefinite. Each indefinite-lived intangible asset is evaluated for impairment individually. The fair values of our indefinite-lived intangible assets are determined using the relief from royalty method. An impairment loss is recognized if the carrying amount of an indefinite-lived intangible asset exceeds its fair value.

~~Income Taxes~~46

We account for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the tax bases of assets and liabilities and their reported amounts. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which the temporary differences are expected to be recovered or settled. Valuation allowances are established when necessary to reduce deferred tax assets to amounts which are more likely than not to be realized. In evaluating the realizability of our deferred tax assets, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations.

We recognize in the consolidated financial statements those tax positions determined to be "more likely than not" of being sustained upon examination, based on the technical merits of the positions and we recognize, when applicable, both accrued interest and penalties related to uncertain tax positions in income tax expense in the accompanying consolidated statements of operations and comprehensive income / loss.

Index

CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Income Taxes

Foreign Currency

Translation of financial statements

Our reporting currency is the dollar. The financial statements of our operations whose functional currency is other than the dollar are translated from such functional currency to dollars at the exchange rates in effect at the balance sheet date for assets and liabilities, and at weighted average rates for the period for revenues and expenses, including gains and losses. Translational gains and losses are charged or credited to accumulated other comprehensive income / loss, a component of equity.

Certain of our intercompany loans to our subsidiaries are of a long-term investment nature. We recorded the results of the retranslation of these intercompany loans as an adjustment to accumulated other comprehensive income / loss, a component of shareholders' equity, as settlement of these loans is not planned or anticipated in the foreseeable future.

Transactions in foreign currencies

Gains and losses from foreign currency transactions are included in foreign currency exchange gain / loss, net in the consolidated statements of operations and comprehensive income / loss in the period during which they arise.

Leases

~~Leases~~We determine if an arrangement includes a lease at inception. A right-of-use asset ("ROU") represents our right to use an underlying asset for the lease term and the corresponding lease liability represents our obligation to make periodic payments arising from that lease. ROUs and liabilities are ~~classified~~recognized asat ~~either~~their ~~capital~~commencement ordate ~~operating~~based on the present value of the lease payments over the lease term. ~~Those~~As most of our leases ~~that~~do ~~transfer~~not ~~substantially~~provide ~~all~~an ~~benefits~~implicit ~~and~~rate, ~~risks~~we use an incremental borrowing rate based on the information available at the commencement date of ~~ownership~~a lease in determining the present value of the ~~property~~lease payments. An ROU also includes any lease payments made prior to uscommencement ~~are~~and ~~accounted~~excludes ~~for~~any aslease ~~capital~~incentives ~~leases~~received or to be received under the agreement. ~~All~~Our ~~other~~determination ~~leases~~of ~~are~~the ~~accounted~~lease ~~for~~term asmay ~~operating~~include ~~leases~~options to extend or terminate the lease when it is reasonably certain that we will exercise such option.

~~Capital~~Where ~~leases~~lease ~~are~~agreements ~~accounted~~include ~~for~~both aslease ~~assets~~ and ~~are~~non-lease ~~depreciated~~components, onwe agenerally ~~straight-line~~account ~~basis~~for ~~over~~each ~~the~~separately. ~~shorter~~For ofcertain ~~the~~equipment ~~estimated~~leases, ~~useful~~such ~~life~~as ofvehicles, ~~the~~we ~~asset~~account orfor the lease ~~term.~~and ~~Commitments~~non-lease tocomponents ~~repay~~as ~~the~~a ~~principal~~single ~~amounts arising under capital~~ lease ~~obligations~~component. ~~are~~We ~~included~~consider inoperating ~~current~~leases ~~liabilities to the extent~~ that ~~the~~are ~~amount~~for isa ~~repayable~~period ~~within~~less ~~one~~than ~~year;~~12 ~~otherwise~~months, ~~the~~inclusive ~~principal~~of isoptions ~~included~~to inextend ~~non-current~~that ~~liabilities.~~we ~~The~~are ~~capitalized~~reasonably ~~lease~~certain ~~obligation~~to ~~reflects~~exercise, ~~the~~as ~~present value of future lease payments~~short-term. ~~The~~Short-term ~~financing~~leases ~~element~~are ofnot ~~the~~recognized ~~lease~~on ~~payments is charged to interest expense over~~ the ~~term~~balance ~~of the lease~~sheet. ~~Operating~~Short-term lease ~~costs~~cost ~~are~~is ~~expensed~~recognized on a straight-line basis over the ~~term of the~~ lease. ~~See below "Recent Accounting Pronouncements" for information on the adoption of ASC 842 "Leases" as at January 1, 2019~~term.

ROUs and related operating lease liabilities are included in other non-current assets, other current liabilities and other non-current liabilities, respectively on our consolidated balance sheets. Operating lease costs are recognized on a straight-line basis over the lease term within content costs, other operating costs or sales, general and administrative expenses based on the use of the related ROU. ROUs and related finance lease liabilities are included in property and equipment, and long-term debt and other financing arrangements, respectively, on our consolidated balance sheets. Depreciation of an asset held under a finance lease is recognized in depreciation of property, plant and equipment.

See below "Recent Accounting Pronouncements" for information on the adoption of Financial Accounting Standards Board ("FASB") Accounting Standards Codification Topic 842, "Leases" as at January 1, 2019.

Financial Instruments

Fair value of financial instruments

The carrying amount of financial instruments, including cash, accounts receivable, and accounts payable and accrued liabilities, approximate their fair value due to the short-term nature of these items. The fair value of our long-term debt (as defined hereinafter) is included in Note 54, "Long-term Debt and Other Financing Arrangements".

Fair value is the ~~amount~~price ~~for~~that ~~which~~would be received to sell an asset or ~~liability~~paid ~~could~~to betransfer ~~exchanged~~a orliability ~~incurred~~ in aan ~~current~~orderly transaction between ~~knowledgeable,~~market ~~able~~participants ~~and~~at ~~willing~~the ~~parties~~measurement ~~that is not a forced sale or liquidation~~date. US GAAP requires significant management estimates in determining fair value. The extent of management’s judgments is highly dependent on the valuation model employed and the observability of inputs to the fair value model. The level of management judgment required in establishing fair value of financial instruments is more significant where there is no active market in which the instrument is traded. For financial instruments that are not remeasured through net income, we estimate fair value at issuance and account for the instrument at amortized cost. For financial instruments that are remeasured through net income, we assess the fair value of the instrument at each period end or earlier when events occur or circumstances change that would so require (see Note 1412, "Financial Instruments and Fair Value Measurements").

Derivative financial instruments

We use derivative financial instruments for the purpose of mitigating currency and interest rate risks, which exist as part of ongoing business operations and financing activities. As a policy, we do not engage in speculative or leveraged transactions, nor do we hold or issue derivative financial instruments for trading purposes.

Forward exchange contracts and currency swaps are used to mitigate exposures to currency fluctuations on certain short-term transactions generally denominated in currencies other than our functional currency. These contracts are marked to market at the balance sheet date, and the resultant unrealized gains and losses are recorded in the consolidated statements of operations and comprehensive income / loss, together with realized gains and losses arising on settlement of these contracts.47

Interest rate swaps and other instruments may be used to mitigate exposures to interest rate fluctuations on certain of our long-term debt instruments with variable interest rates. These contracts are marked to market at the balance sheet date, and the resultant unrealized gains and losses are recorded in the consolidated statements of operations and comprehensive income / loss, together with realized gains and losses arising on settlement of these contracts. From time to time, we may designate certain of these instruments as hedges and apply hedge accounting as discussed in Note 14, "Financial Instruments and Fair Value Measurements".

Stock-Based Compensation

Stock-based compensation is recognized at fair value using the Black-Scholes option pricing model calculated as the closing price of our Class A common stock on the date of grant. The fair value of stock option awards is recognized on a straight-line basis over the vesting period of the award as a component of selling, general and administrative expenses.

For awards with performance conditions, recognition of compensation expense over the vesting period depends on our assessment of the probability that the performance targets will be met. We update our assessments of the probability of achieving performance targets at each reporting period. Changes in our assessments of such probability may result in recording additional expense or reversing previously recorded expense in the current period reported.

Upon vesting of shares or exercise of options, shares of Class A common stock are issued from authorized but unissued shares. Stock-based compensation awards are accounted for as equity-settled transactions. Forfeitures of awards are recognized as they occur.

Index

CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Interest rate swaps and other instruments may be used to mitigate exposures to interest rate fluctuations on certain of our long-term debt instruments with variable interest rates. These contracts are marked to market at the balance sheet date, and the resultant unrealized gains and losses are recorded in the consolidated statements of operations and comprehensive income / loss, together with realized gains and losses arising on settlement of these contracts. From time to time, we may designate certain of these instruments as hedges and apply hedge accounting as discussed in Note 12, "Financial Instruments and Fair Value Measurements".

Stock-Based Compensation

Stock-based compensation is recognized at fair value using the Black-Scholes option pricing model calculated as the closing price of our Class A common stock on the date of grant. The fair value of stock awards is recognized on a straight-line basis over the vesting period of the award as a component of selling, general and administrative expenses.

Contingencies

The estimated loss from a loss contingency such as a legal proceeding or other claim is recorded in the consolidated statements of operations and comprehensive income / loss if it is probable that an asset has been impaired or a liability has been incurred and the amount of the loss can be reasonably estimated. Disclosure of a loss contingency is made if there is at least a reasonable possibility that a loss has been incurred.

Advertising Costs

Advertising costs are expensed as incurred. Advertising expense incurred for the years ended December 31, ~~2018~~2019, ~~2017~~2018 and ~~2016~~2017 totaled US$ 6.24 million, US$ 56.42 million and US$ 45.84 million, respectively.

Earnings Per Share

Basic and diluted net income / loss per share is calculated using the two-class method. Under the two-class method, basic net income / loss per common share is computed by dividing the net income available to common shareholders after deducting contractual amounts of accretion on our Series B Preferred Shares, as well as income allocated to these shares, by the weighted-average number of common shares outstanding during the period including the common stock underlying the Series A Preferred Shares. Diluted net income / loss per share is computed by dividing the adjusted net income by the weighted-average number of dilutive shares outstanding during the period after adjusting for the impact of those dilutive shares on the allocation of income to the Series B Preferred Shares. For further information on how to calculate basic and diluted earnings per share for continuing operations and discontinued operations, see Note 19, "Earnings per-share".

Discontinued Operations and Assets Held for Sale

We present our results of operations, financial position and cash flows of operations that have either been sold or that meet the criteria for "held-for-sale accounting" as discontinued operations if the disposal represents a strategic shift that will have a major effect on our operations and financial results. At the time an operation qualifies for held-for-sale accounting, the operation is evaluated to determine whether or not its carrying amount exceeds its fair value less cost to sell. Any loss as a result of carrying amounts in excess of fair value less cost to sell is recorded in the period the operation qualifies for held-for-sale accounting. Management judgment is required to (1) assess the criteria required to qualify for held-for-sale accounting, and (2) estimate fair value. Our Croatian operations are presented as discontinued operations for all periods in this report and Assets held for sale for the year ended December 31, 2017. See Note 3, "Discontinued Operations and Assets Held for Sale".

Recent Accounting Pronouncements

Accounting Pronouncements Adopted

~~On January 1,~~In ~~2018~~February 2016, wethe ~~adopted~~FASB ~~ASC~~issued ~~606~~guidance ~~using~~to ~~the~~increase ~~modified~~transparency ~~retrospective~~and ~~method~~comparability ~~applied~~among toorganizations ~~those~~by ~~contracts~~recognizing ~~which~~leasing ~~were~~assets ~~not~~and ~~completed~~liabilities ason of the ~~adoption~~balance ~~date.~~sheet ~~Results~~and ~~for~~requiring ~~reporting~~additional ~~periods~~disclosures ~~beginning~~about ~~after January 1,~~an ~~2018 are~~entity's ~~presented~~leasing ~~under~~arrangements. ~~ASC~~The ~~606,~~guidance ~~while~~requires ~~prior~~that ~~period~~a ~~amounts~~lessee ~~are~~recognize ~~not~~a ~~adjusted~~liability ~~and~~to ~~continue~~make tolease bepayments ~~reported~~and inan ~~accordance~~ROU, with ~~our~~an ~~historic~~available ~~accounting~~exception ~~under~~for ~~legacy~~leases ~~guidance.~~with ~~Based~~an oninitial ~~our~~term ~~assessment~~shorter ofthan ~~the~~twelve ~~guidance~~months. inAdoption ~~ASC 606, our method~~ of ~~recognizing~~the ~~revenue~~guidance ~~did~~changed ~~not~~our ~~change.~~accounting ~~Furthermore,~~for weoperating ~~did~~leases ~~not~~while ~~record~~the anaccounting ~~adjustment~~for toour ~~opening~~finance ~~retained~~leases ~~earnings~~(previously ascalled ~~of January 1,~~capital ~~2018~~leases) ~~and~~remained ~~there~~substantially ~~was no impact to revenues for the year ended December 31, 2018~~unchanged.

InWe ~~August~~adopted ~~2016,~~this ~~the FASB issued~~ guidance ~~which~~as isof ~~intended to reduce~~ the ~~existing~~transition ~~diversity~~date inof ~~practice~~January ~~related~~1, ~~to specific cash flow issues. As applicable to us~~2019, using the ~~guidance~~modified ~~requires~~retrospective ~~that~~approach ~~cash~~and ~~flows~~have atelected the ~~settlement~~transition ofoption ~~zero-coupon~~which ~~debt~~allows ~~instruments~~us orto ~~debt~~continue ~~instruments with coupon interest rates that are insignificant in relation~~ to ~~the~~apply ~~effective interest rate of~~ the ~~borrowing~~legacy beguidance ~~bifurcated between cash outflows~~ for ~~operating~~comparative ~~activities~~periods, ~~for~~including ~~the~~disclosure ~~portion attributable to accrued interest~~requirements, ~~and~~in ~~cash outflows for financing activities for~~ the ~~portion~~year ~~attributable~~of ~~to the principal~~adoption. We ~~adopted~~have ~~this~~elected ~~guidance~~to asuse the package of ~~January~~practical 1,expedients ~~2018.~~available ~~Upon~~to ~~adoption~~us, ~~our~~including ~~net cash flows generated from / used in continuing operating activities for~~ the ~~year~~short-term ~~ended~~lease ~~December 31~~exception, ~~2016~~however ~~decreased~~we byhave ~~US$~~not ~~110.7~~elected ~~million~~the ~~with~~use ~~a corresponding increase in net cash used in / provided by continuing financing activities. The adoption~~ of ~~this~~hindsight ~~guidance~~and ~~did~~have not ~~impact~~elected onto ~~our~~combine ~~net~~lease ~~cash~~and ~~flows~~non-lease ~~generated~~components ~~from~~for ~~continuing~~our ~~operating~~main ~~activities~~classes inof ~~2018 or 2017~~assets.

InOn ~~August 2018~~transition, ~~the~~we ~~FASB~~recorded ~~issued~~US$ guidance to align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software as well as hosting arrangements that include an internal use software license11.9 Wemillion ~~have early adopted the guidance~~ in ~~the~~operating ~~fourth~~lease ~~quarter~~liabilities ofand ~~2018~~related ~~prospectively with insignificant current period impact~~ROUs.

Recent Accounting Pronouncements Issued

In ~~February~~June 2016, the FASB issued new guidance to ~~increase~~provide ~~transparency~~financial ~~and~~statement ~~comparability~~users ~~among~~with ~~organizations~~more byinformation ~~recognizing~~about ~~leasing~~the ~~assets~~expected ~~and~~credit ~~liabilities~~losses on ~~the~~financial ~~balance~~instruments ~~sheet~~ and ~~requiring~~other ~~additional~~commitments ~~disclosures~~to ~~about~~extend ancredit held by a reporting entity's ~~leasing~~at ~~arrangements~~each reporting date. The ~~guidance~~amendments ~~requires~~replace ~~that~~the aincurred ~~lessee~~loss ~~recognize~~impairment methodology in the current guidance with a ~~liability~~methodology tothat ~~make~~reflects ~~lease~~expected ~~payments~~credit losses and arequires ~~right-~~consideration of~~-use~~ ~~asset,~~a ~~with~~broader anrange ~~available~~of ~~exception~~reasonable ~~for~~and ~~leases~~supportable ~~with~~information anto ~~initial~~inform ~~term~~credit ~~shorter~~loss ~~than twelve months~~estimates. The guidance is effective for our fiscal year beginning January 1, ~~2019~~2020. Based on our assessment, the guidance primarily applies to our accounts receivable and is not expected to substantially change our procedures for estimating our bad debt expense or the anticipated results of those procedures. We adopted this guidance on January 1, 2020.

WeIn ~~will~~March ~~adopt~~2019, the FASB issued new guidance ~~using~~that aligns the ~~modified~~accounting ~~retrospective~~for ~~approach~~production costs of an episodic television series with the accounting for production costs of films. The guidance further requires that an entity test a film or license agreement or program material for impairment at a film group level and ~~have~~under ~~elected~~a fair value model when the ~~transition~~film ~~option~~or ~~which~~license ~~allows~~agreement usis topredominantly ~~continue~~monetized with other films and/or license agreements. Further, content acquired under a license agreement is not required to ~~apply~~be separately presented on the ~~legacy~~balance sheet based on the estimated time of usage. Additional disclosures are required. We adopted this guidance ~~for~~on ~~comparative~~January ~~periods~~1, ~~including~~2020. ~~disclosure~~Based ~~requirements~~on our assessment of the guidance, each operating segment predominantly monetizes its content as a film group and we anticipate classifying all our acquired content as non-current on our consolidated balance sheets. We do not anticipate that this guidance will significantly impact the impairment we recognize in the ~~year~~consolidated statement of ~~adoption~~operations.

We have elected to use the package of practical expedients available to us, including the short-term lease exception, however we have not elected the use of hindsight and have not elected to combine lease and non-lease components. We do not anticipate any meaningful impact to the consolidated statements of operations when compared to reporting under historical guidance and do not expect any impact to cash flows from or used in operating, financing, or investing on our consolidated cash flows statements. Furthermore, there will be no impact on the covenants under our existing debt agreements.48

On transition, we expect to book approximately US$ 11.9 million in operating lease liabilities and right of use assets while our accounting for capital leases will remain substantially unchanged.

In June 2016, the FASB issued new guidance to provide financial statement users with more information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The amendments replace the incurred loss impairment methodology in the current guidance with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The guidance is effective for our fiscal year beginning January 1, 2020 with early adoption permitted for our fiscal year beginning January 1, 2019. We are in the process of assessing the potential impacts of this guidance and expect to adopt on January 1, 2020.

Index

CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

3. ~~DISCONTINUED~~GOODWILL ~~OPERATIONS~~ AND ~~ASSETS~~INTANGIBLE ~~HELD FOR SALE~~ASSETS

On July 9, 2017, we entered into a framework agreement with Slovenia Broadband S.à r.l. (the "Purchaser"), a wholly owned subsidiary of United Group B.V., relating to the sale of our Croatian and Slovenian operations for cash consideration of EUR 230.0 million (the "Divestment Transaction").

On July 5, 2018 we signed an amended and restated framework agreement, which bifurcated the Divestment Transaction into individual transactions for the sale of our Croatian operations (the "Croatian Transaction") and our Slovenian operations (the "Slovenian Transaction"). On July 31, 2018, we completed the Croatian Transaction for proceeds of EUR 86.4 million (approximately US$ 101.4 million at July 31, 2018 rates), resulting in a gain on sale of US$ 58.4 million.

Our Slovenian operations no longer met the criteria to be classified as held for sale as at December 31, 2018. The Slovenian Transaction was subsequently terminated on January 18, 2019. Our Slovenian operations are presented as continuing operations for all periods presented. Assets held for sale and liabilities held for sale at December 31, 2017 represent the assets and liabilities of our Croatian operations. Income / (loss) from discontinued operations, net of tax for the years ended December 31, 2018, 2017 and 2016 represent the results of our Croatian operations, including the gain on sale. For the year ended December 31, 2018, the results of our Croatian operations are through the date of sale.

The carrying amounts of the major classes of assets and liabilities of our discontinued operations that are classified as held for sale in the consolidated balance sheets at December 31, 2018 and December 31, 2017 were:

	December 31, 2018		December 31, 2017
Assets held for sale
Cash and cash equivalents	$	—	$	4,939
Accounts receivable, net	—		18,273
Program rights, net	—		26,254
Property, plant and equipment, net	—		7,169
Other assets	—		3,058
Total assets held for sale	$	—	$	59,693
Liabilities held for sale
Accounts payable and accrued liabilities	$	—	$	13,894
Other liabilities	—		362
Total liabilities held for sale	$	—	$	14,256

Income / (loss) from discontinued operations, net of tax comprised the following for the years ended December 31, 2018, 2017 and 2016:

	For The Year Ended December 31,
	2018			2017			2016
Net revenues	$	36,885		$	57,843		$	55,007
Cost of revenues	23,863			38,766			41,345
Selling, general and administrative expenses	6,853			13,572			7,811
Operating income	6,169			5,505			5,851
Interest expense (1)	(2,766		)	(6,024		)	(5,846		)
Other non-operating income / (expense), net	126			109			(245		)
Income / (loss) from discontinued operations, before tax, before gain on sale	3,529			(410		)	(240		)
Gain on sale of divested businesses	58,442			—			—
Income / (loss) from discontinued operations, before tax	61,971			(410		)	(240		)
Provision for income taxes	(1,423		)	(1,226		)	(678		)
Income / (loss) from discontinued operations, net of tax	$	60,548		$	(1,636	)	$	(918	)

(1) For the years ended December 31, 2018, 2017 and 2016, we paid US$ 7.0 million, US$ 4.2 million and US$ 6.8 million, respectively, of interest and Guarantee Fees associated with the 2019 Euro Loan and the 2021 Euro Loan (each as defined in Note 5, "Long-term Debt and Other Financing Arrangements"). These payments were allocated to Net cash provided by / (used in) discontinued operations - operating activities in our consolidated statements of cash flows as we were required to apply the proceeds from the Divestment Transaction towards the repayment of debt and related obligations. The interest allocated is in direct proportion to the amount of principal repaid.

Index

CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

4. GOODWILL AND INTANGIBLE ASSETS

Goodwill:

Goodwill by reporting unit as at December 31, ~~2018~~2019 and December 31, ~~2017~~2018 was as follows:

	Bulgaria			Czech Republic			Romania			Slovak Republic			Slovenia			Total
Gross Balance, December 31, 2016	$	171,389		$	744,483		$	82,786		$	46,089		$	19,400		$	1,064,147
Gross Balance, December 31, 2017	$	175,071		$	837,732		$	90,305		$	52,463		$	19,400		$	1,174,971
Accumulated impairment losses	(144,639		)	(287,545		)	(11,028		)	—			(19,400		)	(462,612		)
Balance, December 31, 2016	26,750			456,938			71,758			46,089			—			601,535
Foreign currency	3,682			93,249			7,519			6,374			—			110,824
Balance, December 31, 2017	30,432			550,187			79,277			52,463			—			712,359
Foreign currency	(1,377		)	(28,762		)	(3,505		)	(2,382		)	—			(36,026		)
Balance, December 31, 2018	29,055			521,425			75,772			50,081			—			676,333
Accumulated impairment losses	(144,639		)	(287,545		)	(11,028		)	—			(19,400		)	(462,612		)
Gross Balance, December 31, 2017	$	175,071		$	837,732		$	90,305		$	52,463		$	19,400		$	1,174,971
Gross Balance, December 31, 2018	$	173,694		$	808,970		$	86,800		$	50,081		$	19,400		$	1,138,945

	Bulgaria			Czech Republic			Romania			Slovak Republic			Slovenia			Total
Gross Balance, December 31, 2017	$	175,071		$	837,732		$	90,305		$	52,463		$	19,400		1,174,971
Gross Balance, December 31, 2018	$	173,694		$	808,970		$	86,800		$	50,081		$	19,400		$	1,138,945
Accumulated impairment losses	(144,639		)	(287,545		)	(11,028		)	—			(19,400		)	(462,612		)
Balance, December 31, 2017	30,432			550,187			79,277			52,463			—			712,359
Foreign currency	(1,377		)	(28,762		)	(3,505		)	(2,382		)	—			(36,026		)
Balance, December 31, 2018	29,055			521,425			75,772			50,081			—			676,333
Foreign currency	(548		)	(3,574		)	(3,279		)	(944		)	—			(8,345		)
Balance, December 31, 2019	28,507			517,851			72,493			49,137			—			667,988
Accumulated impairment losses	(144,639		)	(287,545		)	(11,028		)	—			(19,400		)	(462,612		)
Gross Balance, December 31, 2018	$	173,694		$	808,970		$	86,800		$	50,081		$	19,400		$	1,138,945
Gross Balance, December 31, 2019	$	173,146		$	805,396		$	83,521		$	49,137		$	19,400		$	1,130,600

Other intangible assets:

~~Changes~~The ~~in the~~ net book ~~value~~values of our other intangible assets as at December 31, ~~2018~~2019 and December 31, ~~2017~~2018 ~~was~~were as follows:

December 31, 2018

December 31, 2017

December 31, 2019

December 31, 2018

Gross

Accumulated Amortization

Net

Gross

Accumulated Amortization

Net

Indefinite-lived:

Trademarks

8785,~~356~~484

—

8785,~~356~~484

9187,~~642~~356

—

9187,~~642~~356

Amortized:

Broadcast licenses

~~210~~208,~~447~~669

(~~162~~169,~~936~~239

)

4739,~~511~~430

~~221~~210,~~842~~447

(~~163~~162,~~468~~936

)

5847,~~374~~511

Trademarks

~~631~~609

(~~631~~609

)

—

~~661~~631

(~~661~~631

)

—

Customer relationships

5654,~~024~~807

(5554,~~158~~288

)

~~866~~519

5856,~~771~~024

(5655,~~996~~158

)

~~1,775~~866

Other

14,~~868~~033

(1,~~549~~877

)

~~319~~2,156

1,~~753~~868

(1,~~567~~549

)

~~186~~319

Total

~~356~~353,~~326~~602

(~~220~~226,~~274~~013

)

~~136~~127,~~052~~589

~~374~~356,~~669~~326

(~~222~~220,~~692~~274

)

~~151~~136,~~977~~052

~~Broadcast~~Net broadcast licenses consist solely of our TV NOVA license in the Czech Republic, which is amortized on a straight-line basis through ~~the~~its expiration date ~~of the license~~ in 2025. Our customer relationships are deemed to have an economic useful life of, and are amortized on a straight-line basis, over five years to fifteen years. Other intangibles primarily consist of non-cloud based software licenses which are typically amortized on a straight-line basis over the shorter of the contractual term or a period of up to five years.

The estimated amortization expense for the succeeding five years for our intangible assets with finite lives as of December 31, ~~2018~~2019 is as follows:

2019	$	8,374
2020	$	8,638
2020	8,119
2021	8,622
2021	8,051
2022	8,313
2022	7,827
2023	7,912
2023	7,827
2024	7,855

Impairment of goodwill and other intangible assets:

Our annual assessment of impairment includes the allocation of corporate debt to individual reporting units based on their relative fair values. ~~This~~For the purpose of the impairment assessment, this allocation resulted in a negative carrying ~~values~~value for the ~~Romania, the~~ Slovak Republic and Slovenia segments ~~for the purpose of the assessment~~, however, ~~none of~~ these segments were not determined to be impaired.

Upon conclusion of our annual impairment assessment, we determined that the fair value of our reporting units and other intangible assets were substantially in excess of their respective carrying values. We did not recognize any impairment charges in respect of goodwill and other intangible assets during the years ended December 31, 2018, 2017 or 2016. See Note 2, "Basis of Presentation and Summary of Significant Accounting Policies" for further information.49

Index

CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

5Upon conclusion of our annual impairment assessment, we determined that the fair value of our reporting units and other intangible assets were substantially in excess of their respective carrying values. ~~LONG-TERM~~ ~~DEBT~~We ~~AND~~did ~~OTHER~~not ~~FINANCING~~recognize ~~ARRANGEMENTS~~any impairment charges in respect of goodwill and other intangible assets during the years ended December 31, 2019, 2018 or 2017. See Note 2, "Basis of Presentation and Summary of Significant Accounting Policies" for further information.

4. LONG-TERM DEBT AND OTHER FINANCING ARRANGEMENTS

Summary

	December 31, 2018			December 31, 2017
	December 31, 2019			December 31, 2018
Long-term debt	$	~~772~~590,~~339~~777		$	1772,~~079,187~~339
Other credit facilities and capital leases	15,891			10,193
Other credit facilities and finance leases(1)	16,332			15,891
Total long-term debt and other financing arrangements	~~788~~607,~~230~~109			1788,~~089,380~~230
Less: current maturities	(5,545		)	(3,269		)
Less: current maturities(1)	(6,836		)	(5,545		)
Total non-current long-term debt and other financing arrangements	$	~~782~~600,~~685~~273		$	1782,~~086,111~~685

~~Financing~~(1) ~~Transactions~~Balance consists entirely of finance leases. For more information on finance leases, see Note 11, "Leases".

On February 5, 2018, we entered into an amendment to extend the maturity date of the 2019 Euro Loan from November 1, 2018 to May 1, 2019. On February 6, 2018, we paid EUR 50.0 million (approximately US$ 61.6 million at February 6, 2018 rates) of the outstanding principal balance of the 2019 Euro Loan.

On April 25, 2018, we entered into a series of amendments (effective on April 26, 2018) which modified certain terms of our 2021 Euro Loan, the 2023 Euro Loan, the 2023 Revolving Credit Facility (each as defined below) and the Reimbursement Agreement (as defined below) (collectively, the "Financing Transactions"). The Financing Transactions reduced the rates payable under the pricing grid under the Reimbursement Agreement and the 2023 Revolving Credit Facility as well as extended the maturity dates of the 2021 Euro Loan, the 2023 Euro Loan and the 2023 Revolving Credit Facility. The amount available to us under the 2023 Revolving Credit Facility increased to US$ 75.0 million from April 26, 2018.

On May 3, 2018, we paid EUR 110.0 million (approximately US$ 132.0 million at May 3, 2018 rates) of the outstanding principal balance of the 2019 Euro Loan with the proceeds from the exercise of warrants and cash generated from our operations.

On July 31, 2018, we used the proceeds from the completion of the Croatian Transaction together with cash from operations to repay (1) the outstanding principal amount of EUR 40.8 million (approximately US$ 47.9 million at July 31, 2018 rates) of the 2019 Euro Loan and accrued interest thereon and (2) EUR 25.0 million (approximately US$ 29.3 million at July 31, 2018 rates) of the 2021 Euro Loan plus accrued interest thereon. In addition, we paid US$ 41.2 million to Warner Media, LLC ("Warner Media") to repay (1) all Guarantee Fees payable to Warner Media as of the date of repayment under the 2019 Euro Loan and (2) all outstanding Guarantee Fees and the Commitment Fee, together with accrued interest thereon, previously paid in kind which were payable to Warner Media prior to repayment of the portion of the 2021 Euro Loan.

On January 31, 2019, we paid EUR 60.0 million (approximately US$ 68.9 million at January 31, 2019 rates) of the outstanding principal balance of the 2021 Euro Loan with cash generated by our operations.

Overview

Total long-term debt and credit facilities comprised the following at December 31, ~~2018~~2019:

	Principal Amount of Liability Component		Debt Issuance Costs (1)			Net Carrying Amount
2021 Euro Loan	~~240,834~~$	67,781	~~(538~~$	(98	)	~~240,296~~$	67,683
2023 Euro Loan	~~536~~526,~~776~~650		(43,~~733~~556		)	~~532~~523,~~043~~094
2023 Revolving Credit Facility	—		—			—
Total long-term debt and credit facilities	$	~~777~~594,~~610~~431	$	(53,~~271~~654	)	$	~~772~~590,~~339~~777

(1) Debt issuance costs related to the 2021 Euro Loan, ~~and~~the 2023 Euro Loan and the 2023 Revolving Credit Facility (each as defined below) are being amortized on a straight-line basis, which approximates the effective interest method, over the life of the respective instruments. Debt issuance costs related to the 2023 Revolving Credit Facility are classified as non-current assets in our consolidated balance sheet ~~and are being amortized on a straight-line basis over the life of the 2023 Revolving Credit Facility~~.

On January 31, 2019, June 14, 2019 and September 23, 2019, we paid EUR 60.0 million (approximately US$ 68.9 million at January 31, 2019 rates), EUR 40.0 million (approximately US$ 45.1 million at June 14, 2019 rates) and EUR 50.0 million (approximately US$ 54.9 million at September 23, 2019 rates), respectively, of the outstanding principal balance of the 2021 Euro Loan.

At December 31, 2019, the maturity of our long-term debt and credit facilities was as follows:



2020	—
2021	67,781
2022	—
2023	526,650
2024	—
2025 and thereafter	—
Total long-term debt and credit facilities	594,431
Debt issuance costs	(3,654		)
Carrying amount of long-term debt and credit facilities	$	590,777

Long-term Debt

Our long-term debt comprised the following at December 31, ~~2018~~2019 and December 31, ~~2017~~2018:

	Carrying Amount				Fair Value
	December 31, 2018		December 31, 2017		December 31, 2018		December 31, 2017
	December 31, 2019		December 31, 2018		December 31, 2019		December 31, 2018
2019 Euro Loan	$	—	$	240,545	$	—	$	236,337
2021 Euro Loan	$	67,683	$	240,296	$	68,120	$	233,058
2021 Euro Loan	240,296		281,871		233,058		268,858
2023 Euro Loan	523,094		532,043		529,303		502,617
2023 Euro Loan	532,043		556,771		502,617		510,882
	$	590,777	$	772,339	$	597,423	$	735,675
	$	772,339	$	1,079,187	$	735,675	$	1,016,077

The estimated fair values of the Euro Loans (as defined below) as at December 31, ~~2018~~2019 and December 31, ~~2017~~2018 were determined ~~based~~using onthe ~~comparable~~average ~~euro~~yield ~~bond~~curve ~~yield~~of ~~curves~~comparable ~~based~~bonds onwith equivalent credit ratings. ~~This~~which ~~measurement~~is ofa ~~estimated fair value uses~~ Level 2 ~~inputs~~input as described in Note 1412, "Financial Instruments and Fair Value Measurements". Certain derivative instruments, including contingent event of default and change of control put options, have been identified as being embedded in each of the Euro Loans. The embedded derivatives are considered clearly and closely related to their respective Euro Loan, and as such are not required to be accounted for separately.

5250

Index

CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

2021 Euro Loan

As at December 31, ~~2018~~2019, the principal amount of our floating rate senior unsecured term credit facility (the "2021 Euro Loan") outstanding was EUR ~~210~~60.3 million (approximately US$ ~~240~~67.8 million). The 2021 Euro Loan bears interest at three-month EURIBOR (fixed pursuant to customary hedging arrangements (see Note 1412, "Financial Instruments and Fair Value Measurements")) plus a margin of between 1.1% and 1.9% depending on the credit rating of Warner Media. As at December 31, ~~2018~~2019, the all-in borrowing rate on amounts outstanding under the 2021 Euro Loan was 3.25% (the components of which are shown in the table below under the heading "Interest Rate Summary").

Interest on the 2021 Euro Loan is payable quarterly in arrears on each February 13, May 13, August 13 and November 13. The 2021 Euro Loan matures on November 1, 2021 and may ~~currently~~ be prepaid at our option, in whole or in part, without premium or penalty from cash generated from our operations. From April 26, 2020, the 2021 Euro Loan may be refinanced at our option. The 2021 Euro Loan is a senior unsecured obligation of CME Ltd. and is unconditionally guaranteed by CME Media Enterprises B.V. ("CME BV") and by Warner Media, LLC ("Warner Media") and certain of its subsidiaries.

2023 Euro Loan

As at December 31, ~~2018~~2019, the principal amount of our floating rate senior unsecured term credit facility (the "2023 Euro Loan") outstanding was EUR 468.8 million (approximately US$ ~~536~~526.87 million). The 2023 Euro Loan bears interest at three-month EURIBOR (fixed pursuant to customary hedging arrangements (see Note 1412, "Financial Instruments and Fair Value Measurements")) plus a margin of between 1.1% and 1.9% depending on the credit rating of Warner Media. As at December 31, ~~2018~~2019, the all-in borrowing rate on amounts outstanding under the 2023 Euro Loan was 3.7550% (the components of which are shown in the table below under the heading "Interest Rate Summary").

Interest on the 2023 Euro Loan is payable quarterly in arrears on each January 7, April 7, July 7 and October 7. The 2023 Euro Loan matures on April 26, 2023 and may be prepaid at our option, in whole or in part, without premium or penalty from cash generated from our operations. From April 26, 2020, the 2023 Euro Loan may be refinanced at our option. The 2023 Euro Loan is a senior unsecured obligation of CME BV and is unconditionally guaranteed by CME Ltd. and by Warner Media and certain of its subsidiaries.

Reimbursement Agreement and Guarantee Fees

In connection with Warner Media’s guarantees of the ~~2019 Euro Loan, the~~ 2021 Euro Loan and 2023 Euro Loan (collectively, the "Euro Loans"), we entered into a reimbursement agreement (as amended, the “Reimbursement Agreement") with Warner Media. The Reimbursement Agreement provides for the payment of guarantee fees (collectively, the "Guarantee Fees") to Warner Media as consideration for those guarantees, and the reimbursement to Warner Media of any amounts paid by them under any guarantee or through any loan purchase right exercised by it. The loan purchase right allows Warner Media to purchase any amount outstanding under the Euro Loans from the lenders following an event of default under the Euro Loans or the Reimbursement Agreement. The Reimbursement Agreement is ~~jointly and severally~~ guaranteed by ~~both~~ our ~~100%~~wholly owned subsidiary ~~Central European Media Enterprises N.V. ("~~CME ~~NV") and CME~~ BV and is secured by a pledge over 100% of the outstanding shares of ~~each of~~ CME ~~NV and CME~~ BV. The covenants and events of default under the Reimbursement Agreement are substantially the same as under the 2023 Revolving Credit Facility (described below).

We pay Guarantee Fees to Warner Media based on the amounts outstanding on the Euro Loans calculated on a per annum basis and on our consolidated net leverage (as defined in the Reimbursement Agreement) as shown in the tables below:

All-in Rate



Consolidated Net Leverage				2021 Euro Loan		2023 Euro Loan
≥	7.0x			6.00	%	6.50	%
<	7.0x	-	6.0x	5.00	%	5.50	%
<	6.0x	-	5.0x	4.25	%	4.75	%
<	5.0x	-	4.0x	3.75	%	4.25	%
<	4.0x	-	3.0x	3.25	%	3.75	%
<	3.0x			3.25	%	3.50	%

Our consolidated net leverage as at December 31, ~~2018~~2019 and December 31, ~~2017~~2018 was 32.5x4x and 53.4x5x, respectively. For the years ended December 31, ~~2018~~2019, ~~2017~~2018 and ~~2016~~2017, we recognized US$ 2613.74 million, US$ 5526.7 million; and US$ 6455.47 million, respectively, of Guarantee Fees as interest expense in our consolidated statements of operations and comprehensive income / loss.

The Guarantee Fees relating to the 2021 Euro Loan are payable semi-annually in arrears on each May 1 and November 1. The Guarantee Fees relating to the 2023 Euro Loan are payable semi-annually in arrears on each June 1 and December 1.

The Guarantee Fees on the 2023 Euro Loan that were previously paid in kind are presented as a component of other non-current liabilities (see Note 1110, "Other Liabilities") and bear interest per annum at the applicable Guarantee Fee rate (as set forth in the table below). Guarantee Fees are included in cash flows from operating activities in our ~~condensed~~ consolidated statements of cash flows.

5351

Index

CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Interest Rate Summary

	Base Rate			Rate Fixed Pursuant to Interest Rate Hedges			Guarantee Fee Rate		All-in Borrowing Rate
2021 Euro Loan	1.28	%		0.3147	%	~~(1)~~	1.6650	%	3.25	%
2023 Euro Loan	1.28	%		0.28	%	(21)	21.1994	%	3.7550	%
2023 Revolving Credit Facility (if drawn)	65.3116	%	(32)	—			—		65.3116	%

(1) Effective until ~~November~~February 119, ~~2019~~2021. From ~~November~~February 119, ~~2019~~2021 through maturity on ~~November~~April 126, ~~2021~~2023, the rate fixed pursuant to interest rate hedges will increase to 0.4797%, with a corresponding decrease in the Guarantee Fee rate, such that the all-in borrowing rate remains 3.2550% if our net leverage ratio remains unchanged.

(2) ~~Effective~~Based ~~until February 19, 2021. From February 19, 2021 through maturity~~ on ~~April 26, 2023,~~ the ~~rate~~three ~~fixed~~month ~~pursuant~~LIBOR toof ~~interest rate hedges will increase to 0~~1.9791%, ~~with~~as aat ~~corresponding~~December ~~decrease in the Guarantee Fee rate~~31, ~~such that the all-in borrowing rate remains 3~~2019.~~75% if our net leverage ratio remains unchanged.~~

(3) Based on the three month LIBOR of 2.81% as at December 31, 2018.

2023 Revolving Credit Facility

We had no balance outstanding under the US$ 75.0 million revolving credit facility (the “2023 Revolving Credit Facility”) as at December 31, ~~2018~~2019.

The 2023 Revolving Credit Facility bears interest at a rate per annum based on, at our option, an alternate base rate ("ABR Loans" as defined in the 2023 Revolving Credit Facility Agreement) plus the spread applicable to ABR Loans based on our consolidated net leverage or an amount equal to the greater of (i) an adjusted LIBO rate and (ii) 1.0%, plus the spread applicable to the Eurodollar Loans (as defined in the 2023 Revolving Credit Facility Agreement) based on our consolidated net leverage ratio (as defined in the Reimbursement Agreement), with all amounts payable in cash. The maturity date of the 2023 Revolving Credit Facility is April 26, 2023. When drawn, the 2023 Revolving Credit Facility permits prepayment at our option in whole or in part without penalty.

~~Pursuant~~As toat ~~the~~December 31, ~~Financing Transactions~~2019, the following spreads ~~are~~were applicable:



Consolidated Net Leverage				Alternate Base Rate Loans		Eurodollar Loans
≥	7.0x			5.25	%	6.25	%
<	7.0x	-	6.0x	4.25	%	5.25	%
<	6.0x	-	5.0x	3.50	%	4.50	%
<	5.0x	-	4.0x	3.00	%	4.00	%
<	4.0x	-	3.0x	2.50	%	3.50	%
<	3.0x			2.25	%	3.25	%

The 2023 Revolving Credit Facility is ~~jointly and severally~~ guaranteed by CME ~~NV and CME~~ BV and is secured by a pledge over 100% of the outstanding shares of ~~each of~~ CME ~~NV and CME~~ BV. The 2023 Revolving Credit Facility agreement contains limitations on CME’s ability to incur indebtedness, incur guarantees, grant liens, pay dividends or make other distributions, enter into certain affiliate transactions, consolidate, merge or effect a corporate reconstruction, make certain investments acquisitions and loans, and conduct certain asset sales. The agreement also contains maintenance covenants in respect of interest cover and total leverage ratios, and has covenants in respect of incurring indebtedness, the provision of guarantees, making investments and disposals, granting security and certain events of defaults.

54Other Credit Facilities and Finance Lease Obligations

Cash Pooling

We have a cash pooling arrangement with Bank Mendes Gans (“BMG”), a subsidiary of ING Bank N.V. (“ING”), which enables us to receive credit throughout the group in respect of cash balances which our subsidiaries deposit with BMG. Cash deposited by our subsidiaries with BMG is pledged as security against the drawings of other subsidiaries up to the amount deposited.

As at December 31, 2019, we had deposits of US$ 11.6 million in and no drawings on the BMG cash pool. Interest is earned on deposits at the relevant money market rate. As at December 31, 2018, we had deposits of US$ 36.8 million in and no drawings on the BMG cash pool.

Factoring Arrangements

Under a factoring framework agreement with Factoring Česka spořitelna, a.s., up to CZK 475.0 million (approximately US$ 21.0 million) of receivables from certain customers in the Czech Republic may be factored on a recourse or non-recourse basis. The facility has a factoring fee of 0.19% of any factored receivable and bears interest at one-month PRIBOR plus 0.95% per annum for the period that receivables are factored and outstanding.

Under a factoring framework agreement with Factoring KB, a.s., certain receivables in the Czech Republic may be factored on a non-recourse basis. The facility has a factoring fee of 0.11% of any factored receivable and bears interest at one-month PRIBOR plus 0.95% per annum for the period that receivables are factored and outstanding up to a maximum of 60 days from the due date.

Under a factoring framework agreement with Global Funds IFN S.A., receivables from certain customers in Romania may be factored on a non-recourse basis. The facility has a factoring fee of 4.0% of any factored receivable and bears interest at 6.0% per annum from the date the receivables are factored to the due date of the factored receivable.

As at December 31, 2019, and December 31, 2018, we had no outstanding liability balances on any of our factoring arrangements.

Finance Leases

For additional information on finance leases, see Note 11, "Leases"

Index

CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

~~Other~~5. PROGRAM ~~Credit Facilities and Capital Lease Obligations~~RIGHTS

~~Other~~Program ~~credit~~rights ~~facilities and capital lease obligations~~ comprised the following at December 31, ~~2018~~2019 and December 31, ~~2017~~2018:

	December 31, 2018			December 31, 2017
	December 31, 2019			December 31, 2018
Credit facilities (1) – (4)	$	—		$	—
Program rights:
Capital leases	15,891			10,193
Acquired program rights, net of amortization	$	135,352		$	153,761
Total credit facilities and capital leases	15,891			10,193
Less: current portion of acquired program rights	(75,909		)	(77,624		)
Less: current maturities	(5,545		)	(3,269		)
Total non-current acquired program rights	59,443			76,137
Total non-current credit facilities and capital leases	$	10,346		$	6,924
Produced program rights – Feature Films:
Released, net of amortization	504			653
Produced program rights – Television Programs:
Released, net of amortization	57,190			55,220
Completed and not released	16,578			8,347
In production	32,248			30,904
Development and pre-production	274			610
Total produced program rights	106,794			95,734
Total non-current acquired program rights and produced program rights	$	166,237		$	171,871

~~(1) We have a cash pooling arrangement with Bank Mendes Gans (“BMG”), a subsidiary of ING Bank N~~6.V. ACCOUNTS (“ING”), which enables us to receive credit throughout the group in respect of cash balances which our subsidiaries deposit with BMG. Cash deposited by our subsidiaries with BMG is pledged as security against the drawings of other subsidiaries up to the amount deposited.RECEIVABLE

AsAccounts atreceivable ~~December 31,~~comprised ~~2018, we had deposits of US$ 36.8 million in and no drawings on~~ the ~~BMG~~following ~~cash pool. Interest is earned on deposits~~ at ~~the relevant money market rate. As at~~ December 31, ~~2017,~~2019 ~~we had deposits of US$ 12.5 million in~~ and noDecember 31, ~~drawings on the BMG cash pool.~~2018:

(2) Under a factoring framework agreement with Factoring Česka spořitelna, a.s., up to CZK 475.0 million (approximately US$ 21.1 million) of receivables from certain customers in the Czech Republic may be factored on a recourse or non-recourse basis. The facility has a factoring fee of 0.19% of any factored receivable and bears interest at one-month PRIBOR plus 0.95% per annum for the period that receivables are factored and outstanding.



	December 31, 2019			December 31, 2018
Third-party customers	$	197,166		$	203,068
Less: allowance for bad debts and credit notes	(8,548		)	(9,697		)
Total accounts receivable	$	188,618		$	193,371

Bad debt (3release) ~~Under~~/ aexpense ~~factoring~~for ~~framework~~the ~~agreement~~years ~~with~~ended ~~Factoring KB~~December 31, ~~a.s.~~2019, up2018 toand ~~CZK~~2017 ~~270.0~~was ~~million (approximately~~ US$ 12(2.05) million), ofUS$ ~~receivables from certain customers in the Czech Republic may be factored on a non-recourse basis. The facility has a factoring fee of~~ 0.~~11%~~8 ofmillion, ~~any factored receivable~~ and ~~bears~~US$ ~~interest at one-month PRIBOR plus 0~~1.~~95%~~9 ~~per~~million, ~~annum for the period that receivables are factored and outstanding up to a maximum of 60 days from the due date~~respectively.

~~(4) Under a factoring framework agreement with Global Funds IFN S~~7.~~A.,~~ OTHER receivables from certain customers in Romania may be factored on a non-recourse basis. The facility has a factoring fee of 4.0% of any factored receivable and bears interest at 6.0% per annum from the date the receivables are factored to the due date of the factored receivable.ASSETS

~~Total~~Other ~~Group~~current and non-current assets comprised the following at December 31, 2019 and December 31, 2018:

At December 31, 2018, the maturity of our long-term debt and credit facilities was as follows:



	December 31, 2019		December 31, 2018
Current:
Prepaid acquired programming	$	27,237	$	29,918
Other prepaid expenses	12,775		9,119
VAT recoverable	7,775		1,702
Other	1,045		328
Total other current assets	$	48,832	$	41,067

	December 31, 2019		December 31, 2018
Non-current:
Capitalized debt costs (Note 4)	$	7,277	$	9,660
Deferred tax	2,261		2,411
Operating lease - right-of-use assets (Note 11)	11,682		—
Other	947		337
Total other non-current assets	$	22,167	$	12,408

2019	$	—
2020	—
2021	240,834
2022	—
2023	536,776
2024 and thereafter	—
Total long-term debt and credit facilities	777,610
Debt issuance costs	(5,271		)
Carrying amount of long-term debt and credit facilities	$	772,339

Capital Lease Commitments

We lease certain of our office and broadcast facilities as well as machinery and equipment under various leasing arrangements. The future minimum lease payments, by year and in the aggregate, under capital leases with initial or remaining non-cancellable lease terms in excess of one year, consisted of the following at December 31, 2018:

2019	$	5,824
2020	5,251
2021	3,853
2022	1,488
2023	—
2024 and thereafter	—
Total undiscounted payments	16,416
Less: amount representing interest	(525		)
Present value of net minimum lease payments	$	15,891

Index

CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

6. PROGRAM RIGHTS

Program rights comprised the following at December 31, 2018 and December 31, 2017:

	December 31, 2018			December 31, 2017
Program rights:
Acquired program rights, net of amortization	$	153,761		$	188,370
Less: current portion of acquired program rights	(77,624		)	(81,412		)
Total non-current acquired program rights	76,137			106,958
Produced program rights – Feature Films:
Released, net of amortization	653			939
Produced program rights – Television Programs:
Released, net of amortization	55,220			53,996
Completed and not released	8,347			9,987
In production	30,904			33,877
Development and pre-production	610			470
Total produced program rights	95,734			99,269
Total non-current acquired program rights and produced program rights	$	171,871		$	206,227

7. ACCOUNTS RECEIVABLE

Accounts receivable comprised the following at December 31, 2018 and December 31, 2017:

	December 31, 2018			December 31, 2017
Third-party customers	$	203,068		$	194,606
Less: allowance for bad debts and credit notes	(9,697		)	(10,436		)
Total accounts receivable	$	193,371		$	184,170

Bad debt expense for the years ended December 31, 2018, 2017 and 2016 was US$ 0.8 million, US$ 1.9 million, and US$ 3.8 million, respectively.

8. OTHER ASSETS

Other current and non-current assets comprised the following at December 31, 2018 and December 31, 2017:

	December 31, 2018		December 31, 2017
Current:
Prepaid acquired programming	$	29,918	$	23,291
Other prepaid expenses	9,119		10,409
VAT recoverable	1,702		1,164
Income taxes recoverable	2		174
Other	326		2,178
Total other current assets	$	41,067	$	37,216
	December 31, 2018		December 31, 2017
Non-current:
Capitalized debt costs	$	9,660	$	12,947
Deferred tax	2,411		2,964
Other	337		993
Total other non-current assets	$	12,408	$	16,904

Capitalized debt costs are being amortized over the term of the 2023 Revolving Credit Facility using the straight-line method, which approximates the effective interest method.

568. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment comprised the following at December 31, 2019 and December 31, 2018:



	December 31, 2019			December 31, 2018
Land and buildings	$	100,502		$	100,574
Machinery, fixtures and equipment	212,810			206,491
Other equipment	36,007			35,022
Software	70,294			68,239
Construction in progress	4,774			4,663
Total cost	424,387			414,989
Less: accumulated depreciation	(310,486		)	(297,385		)
Total net book value	$	113,901		$	117,604

Assets held under finance leases (included in the above)
Land and buildings	$	3,914		$	3,989
Machinery, fixtures and equipment	31,961			25,414
Total cost	35,875			29,403
Less: accumulated depreciation	(15,799		)	(10,705		)
Total net book value	$	20,076		$	18,698

Depreciation expense for the years ended December 31, 2019, 2018 and 2017 was US$ 33.5 million, US$ 32.9 million and US$ 31.3 million, respectively.

The movement in the net book value of property, plant and equipment during the years ended December 31, 2019 and 2018 was comprised of:



	For The Year Ended December 31,
	2019			2018
Opening balance	$	117,604		$	119,349
Additions ⁽¹⁾	32,348			36,737
Disposals	(29		)	(42		)
Depreciation	(33,536		)	(32,933		)
Foreign currency movements	(2,486		)	(5,507		)
Ending balance	$	113,901		$	117,604

⁽¹⁾ Includes assets acquired under finance leases. For additional information, see Note 11, "Leases"

9. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities comprised the following at December 31, 2019 and December 31, 2018:



	December 31, 2019		December 31, 2018
Accounts payable and accrued expenses	$	56,343	$	48,708
Related party accounts payable	267		292
Programming liabilities	17,293		16,072
Related party programming liabilities	10,553		12,171
Duties and other taxes payable	9,426		9,014
Accrued staff costs⁽¹⁾	24,027		17,425
Accrued interest payable	2,104		2,456
Related party accrued interest payable (including Guarantee Fees)	1,103		1,749
Income taxes payable	10,304		10,415
Other accrued liabilities	4,230		2,166
Total accounts payable and accrued liabilities	$	135,650	$	120,468

⁽¹⁾ Includes certain retention bonuses related to the proposed Merger agreed in 2019.

10. OTHER LIABILITIES

Other current and non-current liabilities comprised the following at December 31, 2019 and December 31, 2018:



	December 31, 2019		December 31, 2018
Current:
Deferred revenue	$	9,451	$	9,906
Legal provisions	635		1,978
Operating lease liabilities (Note 11)	3,203		—
Other	226		1,795
Total other current liabilities	$	13,515	$	13,679

	December 31, 2019		December 31, 2018
Non-current:
Deferred tax	$

Filing Compare · CENTRAL EUROPEAN MEDIA ENTERPRISES LTD