Central European Media Enterprises Rating: Buy

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1 SATELLITE, CABLE & BROADCASTING David B. Kestenbaum Company Update July 29, 2008 Key Metrics CETV - NASDAQ $82.82 Pricing Date 07/28/2008 Price Target $ Week Range $ $75.38 Shares Outstanding (mm) 36.0 Market Capitalization ($mm) $2, Mo Average Daily Volume 421,845 Institutional Ownership 50% Debt/Total Capital 31.7% ROE Book Value/Share $30.06 Price/Book 2.8x Dividend Yield LTM EBITDA Margin Revenue($mm) Prior Curr. Prior Curr. 2007A 2008E 2008E 2009E 2009E 1Q-Mar A Q-Jun E Q-Sep E Q-Dec E FY ,104.5E -- 1,325.8E EBITDA Prior Curr. Prior Curr. 2007A 2008E 2008E 2009E 2009E 1Q-Mar A Q-Jun E Q-Sep E Q-Dec E FY E E 1 Year Price History for CETV Q2 Q3 Q1 Q Created by BlueMatrix Company Description: Central European Media Enterprises ( is a TV broadcasting company with leading networks in six Central and Eastern European countries.the company's television stations are located in Croatia (Nova TV), Czech Republic (TV Nova, Galaxie Sport), Romania (PRO TV, Acasa, PRO Cinema), Slovakia (Markíza), Slovenia (POP TV, Kanal A) and Ukraine (Studio 1+1). CME is traded on the NASDAQ and the Prague Stock Exchange under the ticker symbol "CETV." Central European Media Enterprises Rating: Buy 2Q08 Preview: On Track; Bulgaria to be Focus of the Call Investment Highlights: Yearly Outlook on Track. We expect management to reiterate its annual guidance when it reports on Wednesday. The company can say this with confidence since roughly 80% of its 2008 revenues are already booked. For the quarter, we expect revenues of $275.5mm, up from $216.3mm in 2Q07, indicating Y/Y growth of 27.4%. Total segment EBITDA is estimated to be $116.3mm, up from $86.9mm in 2Q07, representing Y/Y growth of 33.9%. Bulgaria, CME's 7th Country. Over the past few years, the company has taken a very deliberate approach when adding stations. For the first time in three years, CME announced that it was extending its reach by adding a new country, Bulgaria. Within two weeks, the company intends to purchase an 80% stake in two TV stations in Bulgaria, TV2 and Ring TV. The transaction is expected to cost the company $172mm, payable in cash. TV2 is the number three private terrestrial station in the market and was launched in November Ring TV is a sports cable channel. Bulgaria's population is 7.6mm and the television advertising market was estimated at $168mm. The TV market is forecast to grow by 20% per annum until The company did not share much financial data on its press release, but we expect to learn more about the station's business plan on the quarterly call. CME appears to have prudently, in our view, passed on purchasing News Corps station in the market, which is estimated to be on the market for between $ mm. This is important because the current account deficit is roughly 20%, which we believe could have significant ramifications for the overall economy. The Bulgarian stock market, down 40% from its high, appears to reflect these concerns. Ukraine a large opportunity. We expect CETV will provide the details on its long-term Ukrainian business plan during its 2Q investor call. During the quarter, CME completed the purchase of a 30% minority interest in Studio 1+1 Group. The station has underperformed the other stations in the CME portfolio, but now, with Adrian Sarbu, and a new Ukrainian management team at the helm, and the removal of an obstructive partner, we expect a rapid turnaround. The company has indicated that revenue could double over the next three years. This growth rate is higher than our forecast. The Disclosure section may be found on pages 4-5 of this report. The Valuation section may be found on page 4 of this report.

2 Central European Media Enterprises Support Behind Revenue Q07 2Q07 3Q07 4Q Q08 2Q08E 3Q08E 4Q08E 2008E 2009E Television Operations Net Revenue: Romania $103,914 $148,617 $39,342 $52,224 $44,412 $79,424 $215,402 $57,996 $67,891 $57,736 $103,251 $286,874 $372,936 Slovak Republic (Markiza TV) 64,267 73,420 18,677 29,652 20,286 41, ,539 26,234 35,582 24,343 50, , ,115 Slovenia (POP TV and Kanal A) 48,769 54,534 12,669 20,095 11,545 25,338 69,647 17,951 24,114 13,854 30,406 86,325 93,231 Czech Republic 154, ,386 51,519 80,544 51,140 96, ,237 85, ,707 66, , , ,830 Croatia 22,029 22,310 7,232 10,414 7,055 12,492 37,193 11,534 13,538 9,172 16,240 50,483 63,104 Ukraine (Kino, CITI) , ,308 1,632 1,564 5,482 10,964 Ukraine (Studio 1+1 Group) 72,846 97,168 18,075 22,701 39,582 44, ,323 23,219 28,376 49,478 56, , ,599 Total Net Revenue $465,838 $604,876 $147,912 $216,284 $174,836 $300,959 $839,991 $223,470 $275,517 $222,696 $382,820 $1,104,503 $1,325,779 Other Consolidated Entities: Ukraine (Studio 1+1 Group) Slovak Republic (Markiza TV) (64,267) (1,761) Media Pro - Romania (593) Station Depreciation Reportable Revenue $400,978 $603,115 $147,912 $216,284 $174,836 $300,959 $839,991 $223,470 $275,517 $222,696 $382,820 $1,104,503 $1,325,779 Net Revenue Growth Romania 35.9% 43.0% 31.7% 38.3% 51.6% 53.7% 44.9% 47.4% 30.0% 30.0% 30.0% 33.2% 30.0% Slovak Republic (Markiza TV) 4.4% 14.2% 66.7% 47.9% 46.0% 48.3% 50.6% 40.5% 20.0% 20.0% 20.0% 23.5% 10.0% Slovenia (POP TV and Kanal A) 7.4% 11.8% 23.9% 29.2% 26.9% 28.9% 27.7% 41.7% 20.0% 20.0% 20.0% 23.9% 8.0% Czech Republic 100.0% 35.3% 27.1% 43.0% 27.4% 34.5% 34.0% 66.1% 30.0% 30.0% 30.0% 36.7% 15.0% Croatia 125.8% 1.3% 89.8% 84.4% 64.5% 45.8% 66.7% 59.5% 30.0% 30.0% 30.0% 35.7% 25.0% Ukraine (Kino, CITI) 100.0% 100.0% 100.0% 100.0% 77.3% 500.9% 145.7% 100.0% 100.0% 100.0% 106.9% 100.0% Ukraine (Studio 1+1 Group) 36.5% 33.4% -30.1% 6.8% 151.2% 31.1% 29.0% 28.5% 25.0% 25.0% 25.0% 25.5% 25.0% Total Net Revenue 89.0% 29.8% 21.7% 38.1% 55.4% 40.4% 39.3% 51.1% 27.4% 27.4% 27.2% 31.5% 20.0% Segment EBITDA: Romania $43,540 $65,862 $15,136 $22,530 $19,486 $35,921 $93,073 $23,376 $29,329 $25,438 $52,142 $130,285 $167,821 Slovak Republic (Markiza TV) 17,240 20,805 5,756 11,712 5,544 18,520 41,532 9,137 14,767 8,033 22,639 54,576 60,046 Slovenia (POP TV and Kanal A) 19,337 19,843 3,001 8, ,522 22,765 4,340 10,369 1,524 13,607 29,839 32,631 Czech Republic 71, ,485 25,667 47,595 25,989 57, ,496 43,845 62,824 34,571 75, , ,298 Croatia (15,864) (14,413) (4,652) (2,167) (2,981) (4,083) (13,883) (2,730) (2,708) (2,293) 0 (7,731) 6,310 Ukraine (Kino, CITI) (1,977) (2,370) (1,755) (1,339) (1,782) (7,246) (1,206) (2,500) (2,500) (2,500) (8,706) (10,000) Ukraine (Studio 1+1 Group) 21,801 28,246 (2,417) ,599 12,211 26,958 (2,063) 4,256 2,474 19,672 24,340 58,980 Total EBITDA $157,599 $218,851 $40,121 $86,868 $64,152 $128,554 $319,695 $74,699 $116,338 $67,247 $181,340 $439,624 $579,086 Yr/Yr Growth NA 38.9% 21.9% 37.5% 146.7% 32.8% 46.1% 86.2% 33.9% 4.8% 41.1% 37.5% 31.7% EBITDA Margins Romania 41.9% 44.3% 38.5% 43.1% 43.9% 45.2% 43.2% 40.3% 43.2% 44.1% 50.5% 45.4% 45.0% Slovak Republic (Markiza TV) 26.8% 28.3% 30.8% 39.5% 27.3% 44.2% 37.6% 34.8% 41.5% 33.0% 45.0% 40.0% 40.0% Slovenia (POP TV and Kanal A) 39.7% 36.4% 23.7% 41.7% 7.4% 41.5% 32.7% 24.2% 43.0% 11.0% 44.8% 34.6% 35.0% Czech Republic 46.5% 48.2% 49.8% 59.1% 50.8% 59.6% 56.0% 51.2% 60.0% 52.0% 60.7% 56.9% 60.0% Croatia NA -64.6% NA NA NA NA -37.3% NA -20.0% -25.0% 0.0% -15.3% 10.0% Ukraine (Kino, CITI) % Ukraine (Studio 1+1 Group) 29.9% 29.1% -13.4% 2.5% 41.9% 27.2% 21.5% -8.9% 15.0% 5.0% 35.0% 15.5% 30.0% Total EBITDA Margins 33.8% 36.2% 27.1% 40.2% 36.7% 42.7% 38.1% 33.4% 42.2% 30.2% 47.4% 39.8% 43.7% Source: Company Reports; Morgan Joseph & Co. Inc. estimates 2 MORGAN JOSEPH & CO. INC.

3 Central European Media Enterprises - Income Statement Fiscal year = December $ in millions except EPS Q07 2Q07 3Q07 4Q Q08 2Q08E 3Q08E 4Q08E 2008E 2009E Total Revenues $182,339 $400,978 $603,115 $147,912 $216,284 $174,836 $300,959 $839,991 $223,470 $275,517 $222,696 $382,820 $1,104,503 $1,325,779 Yr/Yr Change in $ Revenue 53.8% 119.9% 50.4% 23.5% 38.1% 55.4% 40.4% 39.3% 51.1% 27.4% 27.4% 27.2% 31.5% 20.0% Qtr/Qtr Change in $ Revenue NA NA NA -31.0% 46.2% -19.2% 72.1% NA -25.7% 23.3% -19.2% 71.9% NA NA Station Expenses Other Operating costs and Expenses $33,615 $65,138 $90,060 $25,657 $30,944 $27,166 $34,192 $117,959 $33,262 $39,483 $40,816 $55,134 $168,695 $199,518 Amortization of Programming Rights 71, , ,509 66,353 82,773 65, , ,303 94,754 99,697 92, , , ,175 Percentage of Revenues 39.4% 37.1% 37.7% 44.9% 38.3% 37.7% 38.3% 39.3% 42.4% 33.0% 40.0% 30.0% 36.8% 33.0% Depr. of station fixed assets and other intang 6,663 16,367 25,795 6,899 7,680 8,768 9,947 33,294 12,340 8,500 8,500 8,500 37,840 34,000 Total Station Op. Costs and Exp. $112,071 $230,342 $343,364 $98,909 $121,397 $101,843 $159,407 $481,556 $140,356 $147,680 $141,948 $182,980 $612,964 $670,693 % of Total Revenue 61.5% 57.4% 56.9% 66.9% 56.1% 58.3% 53.0% 57.3% 62.8% 53.6% 63.7% 47.8% 55.5% 50.6% SG&A Exp. 22,112 46,382 65,412 15,781 15,699 17,609 22,945 72,034 20,755 20,000 22,000 27,000 89, ,000 % of Total Revenue 12.1% 11.6% 10.8% 10.7% 7.3% 10.1% 7.6% 8.6% 9.3% 7.3% 9.9% 7.1% 8.1% 8.3% Corporate Expenses: Corporate Operating costs and expenses 19,085 22,374 30,504 7,604 6,144 12,339 11,160 37,247 8,217 8,500 10,500 11,000 38,217 42,000 Net Arbitration related proceeds/(costs) Stock based compensation 10,100 3,000 3,600 1,200 1,300 1,500 1,600 5,600 1, ,050 3,000 Amortization of license costs/goodwill ,180 18,813 5,162 5,165 6,595 8,062 24,984 7,666 5,500 5,500 5,500 24,166 22,000 Operating Income $18,740 $87,700 $141,422 $19,256 $66,579 $34,950 $97,785 $218,570 $44,676 $93,088 $41,997 $155,590 $335,351 $478,086 % of Revenues 10.3% 21.9% 23.4% 13.0% 30.8% 20.0% 32.5% 26.0% 20.0% 33.8% 18.9% 40.6% 30.4% 36.1% Interest (Expense) Income 3,115 (25,263) (37,863) (9,982) (17,706) (10,703) (10,880) (49,271) (12,070) (17,226) (17,226) (17,226) (63,749) (68,904) Equity in income/loss of affiliate 10,619 8,238 (730) Other Income (expense) (1,272) (2,068) (55,157) (4,825) 4,866 (38,368) (4,452) 0 (27,028) (27,028) 0 Pretax Income $31,202 $68,607 $47,672 $4,449 $53,739 ($14,121) $82,453 $169,299 $5,578 $75,861 $24,771 $138,364 $244,574 $409,182 Pretax Income Margin 17.1% 17.1% 7.9% 3.0% 24.8% 27.4% 20.2% 2.5% 27.5% 36.1% 22.1% 30.9% Income Tax (11,089) (16,691) (14,962) (5,059) (13,419) (131) (2,186) (30,007) 10,342 (14,659) (1,886) (30,284) (36,487) (85,069) Net Income Before Minority Interest $20,113 $51,916 $32,710 ($610) $40,320 ($14,252) $80,267 $139,292 $15,920 $61,203 $22,885 $108,079 $208,087 $324,112 Minority Interest in (Loss)/Gain (4,106.0) (8,908.0) (7,423.0) (5,730.0) (4,511.0) (7,276.0) (17,475.8) (1,025.0) (2,149.1) (1,007.5) (2,075.7) (6,257.4) (6,672.9) Net income(loss) $16,007 $43,008 $25,287 ($250) $34,590 ($18,763) $72,991 $121,816 $14,895 $59,053 $21,877 $106,004 $201,829 $317,440 EPS (weighted average) ($) $0.57 $1.24 $0.60 ($0.01) $0.84 ($0.45) $1.73 $2.94 $0.35 $1.39 $0.51 $2.48 $4.74 $7.41 EPS (fully diluted) ($) $0.55 $1.21 $0.59 ($0.01) $0.84 ($0.45) $1.71 $2.93 $0.35 $1.38 $0.51 $2.46 $4.70 $7.26 EPS Growth NA 120.7% -51.4% 366.7% % 167.2% 396.5% 64.3% % 43.9% 60.4% % Shares (weighted average) 27,871 34,664 40,018 40,793 40,941 41,489 42,297 41,380 42,316 42,441 42,566 42,691 42,504 42,816 Shares (fully diluted) 29,100 35,430 40,438 40,793 41,407 41,489 42,654 41,586 42,732 42,857 42,982 43,107 42,920 43,732 Source: Company Reports & Morgan Joseph & Co. Inc. estimates 3 MORGAN JOSEPH & CO. INC.

4 Required Disclosures Rating and Price Target History for: Central European Media Enterprises (CETV) as of /07/05 Buy:$63 03/03/06 Buy:$74 05/05/06 Buy:$78 03/02/07 Buy:$90 05/04/07 Buy:$110 07/16/07 Buy:$114 11/02/07 Buy:$ Q2 Q3 Q1 Q2 Q3 Q1 Q2 Q3 Q1 Q Created by BlueMatrix Price Target Our price target is $ Valuation Methodology Our price target is $ Our price target represents a 14.4x multiple of our 2009E attributable segment TEV/EBITDA vs. the current 7.6x 2009E TEV/EBITDA multiple. We also note that the stock appears attractive on a P/E multiple basis. We are estimating EPS of $7.26 in 2009, which we believe currently reflects a reasonable 11.4x multiple on 2009E earnings. We note that our analysis does not account for the value that could be derived from additional acquisitions, new channel additions, or increases in ownership percentages of current properties. Risk Factors There exists an emerging-market volatility and currency risk. CETV operates in the emerging markets of Slovenia, Croatia, the Czech Republic, the Slovak Republic, Romania, and Ukraine. These newly independent countries could revert back towards their old economic and legal systems, complicating CETV's ability to operate effectively. On a credit basis, Slovenia, Croatia, the Czech Republic, and the Slovak Republic are highly rated, while Romania and Ukraine are generally more risky. An investment in CETV is subject to currency volatility. A strengthening of the dollar could negatively impact results. However, while CETV is paid in local currency in its most risky markets, Ukraine and Romania, these payments are pegged to the US dollar, which mitigates some of the risk. There is always the potential for a bad acquisition. One of the company's key strategies is to pursue acquisitions of broadcasters in Eastern Europe. An ill-advised acquisition would burn capital and could waste management resources. The acquisition of NOVA TV in Croatia has been disappointing, since it is now expected that it will take longer than previously anticipated to reach EBITDA breakeven. Two shareholders effectively control the company. Chairman Ronald Lauder and APAX own roughly 20% of the equity, but have 71% of the vote because of Mr. Lauder's ownership of super-voting Class B shares. Therefore, the two have effective control of the company. I, David Kestenbaum, the author of this research report, certify that the views expressed in this report accurately reflect my personal views about the subject securities and issuers, and no part of my compensation was, is, or will be directly or indirectly tied to the 4 MORGAN JOSEPH & CO. INC.

5 specific recommendations or views contained in this research report. Research analyst compensation is dependent, in part, upon investment banking revenues received by Morgan Joseph & Co. Inc. Morgan Joseph & Co. Inc. intends to seek or expects to receive compensation for investment banking services from the subject company within the next three months. Investment Banking Services/Past 12 Mos. Rating Percent Percent BUY [B] HOLD [H] SELL [S] Meaning of Ratings A) Buy means reasonable outperformance relative to the market over months. B) Hold means market-type risk adjusted performance; potential source of funds. C) Sell means expected to underperform the market. Other Disclosures The information contained herein is based upon sources believed to be reliable but is not guaranteed by us and is not considered to be all inclusive. It is not to be construed as an offer or the solicitation of an offer to sell or buy the securities mentioned herein. Morgan Joseph & Co. Inc., its affiliates, shareholders, officers, staff, and/or members of their families, may have a position in the securities mentioned herein, and, before or after your receipt of this report, may make or recommend purchases and/or sales for their own accounts or for the accounts of other customers of the Firm from time to time in the open market or otherwise. Opinions expressed are our present opinions only and are subject to change without notice. Morgan Joseph & Co. Inc. is under no obligation to provide updates to the opinions or information provided herein. Additional information is available upon request. Copyright 2008 by Morgan Joseph & Co. Inc. Morgan Joseph & Co. Inc. 600 Fifth Avenue, 19th Fl New York, NY Tel Fax Sales and Trading New York Tel Fax Pittsford Tel Fax MORGAN JOSEPH & CO. INC.