CENTRAL EUROPEAN MEDIA ENTERPRISES LTD, PRE 14A, 1998-04-21

CENTRAL EUROPEAN MEDIA ENTERPRISES LTD
PRE 14A, 1998-04-21
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<PAGE>

SCHEDULE 14A
(Rule 14A-101)

INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934

Filed by the Registrant |X|
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c)
or Rule 14a-12
/ / Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))

CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.
________________________________________________________________________________
(Name of Registrant as Specified In Its Charter)

________________________________________________________________________________
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies: N/A

(2) Aggregate number of securities to which transaction applies: N/A

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): N/A

(4) Proposed maximum aggregate value of transaction: N/A

(5) Total fee paid: $0

/ / Fee paid previously with preliminary materials: N/A

/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

(2) Form, Schedule or Registration Statement No.:

(3) Filing Party:

(4) Date Filed:

<PAGE>

CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.

NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS

The Annual General Meeting of Shareholders of CENTRAL EUROPEAN MEDIA
ENTERPRISES LTD. (the "Company"), a Bermuda company, will be held at the offices
of Conyers Dill & Pearman, Clarendon House, Church Street, Hamilton HM CX,
Bermuda, on June 5, 1998 at 10:00 A.M., for the following purposes:

1. To elect seven directors to serve until the next Annual
General Meeting of Shareholders;

2. To consider and act upon a proposal to set the
maximum number of directors to serve on the Board of
Directors until the next Annual General Meeting of
Shareholders at ten;

3. To consider and act upon a proposal to amend the Company's
1995 Stock Option Plan to (a) increase the maximum number
of shares of the Company's Common Stock reserved for
issuance upon the exercise of options granted pursuant to
the 1995 Stock Option Plan by 2,000,000 shares from
1,200,000 shares to 3,200,000 shares and (b) authorize the
grant of options to purchase shares of Class B Common Stock
of the Company to eligible persons in an amount not to
exceed 10% of the number of shares of Company Common Stock
for which options may be granted under the 1995 Stock
Option Plan;

4. To consider and act upon a proposal to grant to Ronald S.
Lauder options to purchase 100,000 shares of Class B Common
Stock of the Company pursuant to the Company's 1995 Amended
Stock Option Plan;

5. To consider and act upon a proposal to adopt the Director,
Officer and Senior Executive Co-Investment Plan of the
Company, which includes the ability of the Company to make
matching loans in the aggregate amount of $2,000,000 to
senior executives for the purchase of shares of the
Company's Common Stock;

6. To consider and act upon a proposal to approve certain
stock depreciation protection provisions in Leonard M.
Fertig's severance agreement;

7. To receive and adopt the financial statements of the
Company for the Company's fiscal year ended December 31,
1997 together with the auditors' report thereon; and

8. To appoint Arthur Andersen & Co. as auditors for the
Company and to authorize the directors to approve their

fee.

The approval and adoption of each matter to be presented to the
shareholders is independent of the approval and adoption of each other matter to
be presented to the shareholders.

<PAGE>

Only shareholders of record at the close of business on April 27, 1998
are entitled to notice of and to vote at the meeting.

By order of the Board of Directors,

NICOLAS G. TROLLOPE
Secretary
Hamilton, Bermuda
May [ ], 1998

IMPORTANT: The prompt return of proxies will ensure that your shares will be
voted. A self-addressed envelope is enclosed for your convenience.

<PAGE>

CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.

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

PROXY STATEMENT FOR ANNUAL GENERAL MEETING OF SHAREHOLDERS
June 5, 1998

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

This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.
(the "Company" or "CME"), a Bermuda company, for use at the Annual General
Meeting of Shareholders of the Company (the "Meeting") to be held at the offices
of Conyers, Dill & Pearman, Clarendon House, Church Street, Hamilton HM CX,
Bermuda, on June 5, 1998, at 10:00 A.M., and at any adjournments thereof.

Shareholders may vote their shares either by signing and returning the
proxy card accompanying this Proxy Statement or by touchtone telephone.
Instructions for telephone voting are set forth on the accompanying proxy card.
Shareholders who execute proxies retain the right to revoke them at any time by
notice in writing to the Secretary of the Company, by revocation in person at
the Meeting or by presenting a later-dated proxy. Unless so revoked, the shares
represented by proxies will be voted at the Meeting in accordance with the
directions given therein. Shareholders vote at the Meeting by casting ballots
(in person or by proxy) which are tabulated by a person who is appointed by the
Board of Directors before the Meeting to serve as inspector of election at the
Meeting and who has executed and verified an oath of office. The presence, in
person or by proxy, of shareholders entitled to cast at least a majority of the
total number of votes entitled to be cast on each matter to be voted upon at the
Meeting constitutes a quorum as to each such matter. Abstentions and broker
"non-votes" are included in the determination of the number of shares present at
the Meeting for quorum purposes, but abstentions and broker "non-votes" are not
counted in the tabulations of the votes cast on proposals presented to
shareholders. A broker "non-vote" occurs when a nominee holding shares for a
beneficial owner does not vote on a particular proposal because the nominee does
not have discretionary voting power with respect to that item and has not
received instructions from the beneficial owner or has discretionary power but
elects not to exercise it.

The registered office of the Company is located at Clarendon House,
Church Street, Hamilton HM CX, Bermuda. Certain of the Central European Media
Enterprises Ltd. group of companies also maintain offices at 18 D'Arblay Street,
London W1V 3FP, England. The date on which this Proxy Statement and the enclosed
form of proxy will be first sent to shareholders is on or about May 1, 1998.

Shareholders of record of the Class A Common Stock, par value $.01 per
share, of the Company (the "Class A Common Stock") at the close of business on
April 27, 1998 shall be entitled to one vote for each share then held.
Shareholders of record of the Class B Common Stock, par value $.01 per share, of
the Company (the "Class B Common Stock") at the close of business on April 27,

1998 shall be entitled to ten votes for each share then held. The Class A Common
Stock and the Class B Common Stock shall be voted on all matters presented as a
single class. There were issued and outstanding at the close of business on
April 27, 1998, [17,041,902] shares of Class A Common Stock and [6,863,278]
shares of Class B Common Stock.

<PAGE>

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information as of April 27, 1998
with respect to the beneficial ownership of the Company's Class A Common Stock
and Class B Common Stock and also sets forth certain information with respect to
voting power and percentage of ownership as of April 27, 1998, by (i) each
shareholder known by the Company to beneficially own more than 5% of any class
of the Company's outstanding voting securities, (ii) each director and nominee
for director of the Company, (iii) the Chief Executive Officer, the former Chief
Executive Officer and each other executive officer and (iv) all directors and
executive officers of the Company as a group. Except as otherwise noted below,
each of the shareholders identified in the table has sole voting and investment
power over the shares beneficially owned by such person.

<TABLE>
<CAPTION>
Beneficial Ownership of Beneficial Ownership of Common Stock
Class A Common Class B Common % of %
Stock (a) Stock Voting Owner-
Name of Beneficial Owner Number Percent Number Percent Power(b) ship (b)
- ------------------------ ------ ------- ------ ------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Ronald S. Lauder(1)(12)............ 320,000(19) 1.8% 4,940,595(28) 80.0% 62.2% 21.7%
Michel Delloye..................... --(20) -- -- -- -- --
Leonard M. Fertig(c)............... 498,805(21) 2.8 -- -- * 2.1
Andrew Gaspar(1)(13)(d)............ 694,582(22) 3.9 -- -- * 2.9
Peter R. Goldscheider.............. -- -- -- -- -- --
Robert A. Rayne.................... 5,000(23) * -- -- * *
Herbert S. Schlosser............... 60,500(24) * -- -- * *
Nicolas G. Trollope(2)............. 1,700 * -- -- * *
John A. Schwallie.................. 85,000(25) * -- -- * *
Frederic T. Klinkhammer............ 1,000(26) * -- -- * *
All directors and executive officers
as a group (10 persons).......... 1,666,587(27) 9.0 4,940,595(28) 80.0 63.3 26.8
Robert R. Grusky................... -- -- -- -- -- --
Mercury Asset Management plc(3).... 2,169,950 12.2 -- -- 2.7 9.1
Genesis Asset Managers Limited(4).. 1,770,616 10.0 -- -- 2.2 7.4
Warburg, Pincus Counsellors,
Inc.(5).......................... 1,742,400 9.8 -- -- 2.2 7.3
Dresdner Bank AG(6)(14)............ 1,505,100 8.5 -- -- 1.9 6.3
RCM Capital Management
L.L.C.(7)(15).................... 1,505,100 8.5 -- -- 1.9 6.3
The Capital Group Companies,
Inc.(8).......................... 1,227,000 6.9 -- -- 1.5 5.1
Pioneering Management
Corporation(9)................... 862,450 4.9 -- -- 1.1 3.6

Leonard A. Lauder (10)(16)......... -- -- 1,368,568 22.2 17.2 5.7
EL/RSLG Media, Inc.(1)(17)......... -- -- 646,895 10.5 8.1 2.7
Mark Palmer(11)(18)................ -- -- 400,060 6.5 5.0 1.7
</TABLE>

- -----------------
* Less than 1.0%

(a) Does not include 6,062,328 shares of Class A Common Stock issuable upon
conversion of shares of Class B Common Stock. Includes as shares of Class
A Common Stock 688,590 shares of Class B Common Stock beneficially owned
by Andrew Gaspar which are currently in the process of being converted.
Shares of Class B Common Stock are convertible at any time into shares of
Class A Common Stock for no additional consideration on a share-for-share
basis.

(b) Represents the percentage of total voting power and the percentage
ownership of the Class A Common Stock and the Class B Common Stock
currently beneficially owned by each identified shareholder and all
directors and executive officers as a group. The Class A Common Stock and
the Class B Common Stock are the only authorized classes of the Company's
capital stock with shares outstanding. Includes as shares of Class A
Common Stock and not as shares of Class B Common Stock 688,590 shares of
Class B Common Stock beneficially owned by Andrew Gaspar which are
currently in the process of being converted into shares of Class A Common
Stock.

(Footnotes continued on next page)

<PAGE>

(Footnotes continued from previous page)

(d) Not standing for re-election to the Company's Board of Directors.

(1) The address of each of the shareholders indicated is Suite 4200, 767 Fifth
Avenue, New York, New York 10153.

(2) These shares are owned beneficially by the Proverbs Trust of which Mr.
Trollope and his wife are co-trustees and beneficiaries.

(3) Information in respect of the beneficial ownership of Mercury Asset
Management plc (other than percentage ownership) is based upon a
statement on Schedule 13D filed by such person. The address of Mercury
Asset Management plc is 33 King William Street, London, EC4R 9AS, England.

(4) Information in respect of the beneficial ownership of Genesis Asset
Managers Limited (other than its percentage ownership) is based upon a
statement on schedule 13G filed by such person. The address of Genesis
Asset Managers Limited is Harbour Court, Les Amballes, St. Peter Port,

Guernsey, Channel Islands.

(5) Information in respect of the beneficial ownership of Warburg, Pincus
Counsellors, Inc. (other than its percentage ownership) is based upon a
statement on Schedule 13G filed by such person. The address of Warburg,
Pincus Counsellors, Inc. is 466 Lexington Avenue, New York, New York 10017.

(6) Information in respect of the beneficial ownership of Dresdner Bank AG
(other than percentage ownership) is based upon a statement on Schedule
13G filed by such person. The address of Dresdner Bank AG is
Jurgen-Ponto-Platz 1, 60301 Frankfurt, Germany. Dresdner Bank AG reported
beneficial ownership of 1,505,100 shares, but only to the extent that it
is deemed to have beneficial ownership of securities beneficially owned
by RCM Capital Management, L.L.C., a wholly-owned subsidiary of Dresdner
Bank AG.

(7) Information in respect of the beneficial ownership of RCM Capital
Management, L.L.C. (other than percentage ownership) is based upon a
statement on Schedule 13G filed jointly by such person, RCM Limited L.P.
and RCM General Corporation. The address of each of these shareholders is
Four Embarcadero Center, Suite 2900, San Francisco, California 94111.

(8) Information in respect of the beneficial ownership of The Capital Group
Companies, Inc. (other than its percentage ownership) is based upon a
statement on Schedule 13G filed by such person. The address of The
Capital Group Companies, Inc. is 333 South Hope Street, Los Angeles,
California 90071. The Capital Group Companies, Inc. disclaims beneficial
ownership of all of these shares.

(9) Information in respect of the beneficial ownership of Pioneering
Management Corporation (other than its percentage ownership) is based
upon a statement on Schedule 13G filed by such person. The address of
Pioneering Management Corporation is 60 State Street, Boston,
Massachusetts 02109.

(10) Information in respect of the beneficial ownership of Leonard A. Lauder
(other than his percentage ownership) is based upon a statement on Schedule
13D filed by such person. The address of Mr. Leonard Lauder is c/o The
Estee Lauder Companies Inc., 767 Fifth Avenue, New York, New York 10153.

(Footnotes continued on next page)

<PAGE>

(Footnotes continued from previous page)

(11) Information in respect of the beneficial ownership of Mark Palmer (other
than his percentage ownership) is based upon information contained in the
stock ledger for the Company's Class B Common Stock. The address of Mr.
Palmer is 4437 Reservoir Road, N.W., Washington, D.C. 20007.

(12) 120,034 of these shares of Class B Common Stock are owned directly by

Ronald S. Lauder, 3,385,417 of these shares of Class B Common Stock are
owned beneficially by RSL Investments Corporation and 577,788 of these
shares of Class B Common Stock are owned beneficially by Duna Investments,
Inc., both of which are owned by Mr. Lauder. 210,461 of these shares of
Class B Common Stock are held by RAJ Family Partners L.P. and beneficially
owned by Mr. Lauder, and 646,895 of these shares of Class B Common Stock
are held by EL/RSLG Media, Inc., of which 50% of the common stock
outstanding is beneficially owned by the 1995 Estee Lauder RSL Trust and
beneficially owned by Mr. Lauder.

(13) 5,992 of these shares are owned directly by Mr. Gaspar and 688,590 of these
shares are owned beneficially by Bukfenc Inc., which is wholly-owned by Mr.
Gaspar and members of his family.

(14) These shares are also included in the shares reported as being beneficially
owned by RCM Capital Management, L.L.C., which is a wholly-owned subsidiary
of Dresdner Bank AG.

(15) These shares are also included in the shares reported as being beneficially
owned by Dresdner Bank AG, the parent holding company of RCM Capital
Management, L.L.C.

(16) 285,239 of these shares of Class B Common Stock are owned directly by
Leonard A. Lauder. 646,895 of these shares of Class B Common Stock are held
by EL/RSLG Media, Inc., of which 50% of the common stock outstanding is
beneficially owned by the 1995 Estee Lauder LAL Trust, of which Leonard A.
Lauder is a co-trustee and beneficiary. 436,434 of these shares of Class B
Common Stock are held by LWG Family Partners L.P., a partnership whose
managing partner is a corporation which is one-third owned by Mr. Lauder.

(17) These shares are also included in the shares reported as being beneficially
owned by Ronald S. Lauder and Leonard A. Lauder.

(18) 7,593 of these shares are owned directly by Mr. Palmer and 392,467 of these
shares are owned beneficially by Democracy, Inc., which is wholly-owned by
Mr. Palmer.

(19) Represents shares of Class A Common Stock underlying warrants which are
currently exercisable at exercise prices per share of $16.10 and $30.25 on
250,000 and 70,000 shares of Class A Common Stock, respectively. Does not
include 10,000 shares of Class A Common Stock underlying options which are
not currently exercisable and which will not become exercisable within 60
days.

(20) Does not include 225,000 shares of Class A Common Stock underlying options
which are not currently exercisable and which will not become exercisable
within 60 days.

(21) Includes 325,000 shares of Class A Common Stock underlying options which
are currently exercisable or which will become exercisable within 60 days
at exercise prices per share of $14.00, $19.13, $21.75 and $23.00 on
25,000, 200,000, 50,000 and 50,000 shares of Class A Common Stock,
respectively.

(Footnotes continued on next page)

<PAGE>

(Footnotes continued from previous page)

(22) Includes 688,590 shares of Class A Common Stock issuable upon conversion of
shares of Class B Common Stock which are currently in the process of being
converted. Does not include 10,000 shares of Class A Common Stock
underlying options which are not currently exercisable and which will not
become exercisable within 60 days.

(23) Represents shares of Class A Common Stock underlying options which are
currently exercisable at an exercise price per share of $21.75. Does not
include 15,000 shares of Class A Common Stock underlying options which are
not currently exercisable and which will not become exercisable within 60
days.

(24) Includes 57,500 shares of Class A Common Stock underlying options which are
currently exercisable at exercise prices per share of $14.00, $14.63,
$24.50 and $21.75 on 10,000, 25,000, 10,000 and 12,500 shares of Class A
Common Stock, respectively. Does not include 32,500 shares of Class A
Common Stock underlying options which are not currently exercisable and
which will not become exercisable within 60 days.

(25) Represents shares of Class A Common Stock underlying options which are
currently exercisable at exercise prices per share of $14.00, $14.63 and
$20.75 on 10,000, 50,000 and 25,000 shares of Class A Common Stock,
respectively. Does not include 80,000 shares of Class A Common Stock
underlying options which are not currently exercisable and which will not
become exercisable within 60 days.

(26) Does not include 150,000 shares of Class A Common Stock underlying options
which are not currently exercisable and which will not become exercisable
within 60 days.

(27) Includes 472,500 shares of Class A Common Stock underlying options which
are currently exercisable or which will become exercisable within 60 days
and 320,000 shares of Class A Common Stock underlying warrants which are
currently exercisable. Does not include 522,500 shares of Class A Common
Stock underlying options which are not currently exercisable and which will
not become exercisable within 60 days.

(28) Does not include 100,000 shares of Class B Common Stock underlying options
which are not currently exercisable and which will not become exercisable
within 60 days.

<PAGE>

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's executive officers, directors and persons who
beneficially own greater than 10% of a registered class of the Company's equity
securities to file certain reports ("Section 16 Reports") with the Securities
and Exchange Commission with respect to ownership and changes in ownership of
the Common Stock and other equity securities of the Company. Based solely on the
Company's review of the Section 16 Reports furnished to the Company and written
representations from certain reporting persons, the Company believes that,
during the fiscal year ended December 31, 1997, all filing requirements under
Section 16(a) applicable to its officers, directors and greater than 10%
beneficial owners were complied with on a timely basis.

ELECTION OF DIRECTORS

Seven directors will be elected at the Meeting to serve until the
Company's next annual general meeting of shareholders. The election of directors
requires the affirmative vote of a majority of the votes cast, in person or by
proxy, at the Meeting, provided that a quorum is present in person or by proxy.
Abstentions and broker non-votes will be included in determining the presence of
a quorum, but are not counted as votes cast. Unless otherwise indicated, the
accompanying form of proxy will be voted FOR the persons listed below. At this
time, the Board of Directors knows of no reason why any nominee might be unable
to serve. All nominees are currently directors, except for Mr. Robert R. Grusky.
There is no arrangement or understanding between any director and any other
person pursuant to which such person was selected as a director.

<TABLE>
<CAPTION>
Year
Became
a
Name of Nominee Principal Occupation Age Director
- --------------- -------------------- --- --------
<S> <C> <C> <C>
Ronald S. Lauder..................Nonexecutive Chairman of the Board of the Company; 54 1994
Chairman of RSL Communications, Ltd.

Michel Delloye....................President and Chief Executive Officer of the Company 41 1998

Peter R. Goldscheider.............Managing Partner of European Privatization and Investment 54 1998
Corporation

Robert A. Rayne...................Director of London Merchant Securities plc 49 1996

Herbert S. Schlosser..............Senior Advisor, Schroder & Co. Inc. 71 1994

Nicolas G. Trollope...............Partner, Conyers Dill & Pearman 50 1994

Robert R. Grusky..................President, RSL Investments Corporation 40 nominee
for initial
election
</TABLE>

<PAGE>

Ronald S. Lauder, a founder of the Company, has served as nonexecutive
Chairman of the Board of the Company since its incorporation in 1994. He is also
the co-founder and has served as the Chairman of RSL Communications, Ltd.
("RSLC"), an international telecommunications company, since 1994. Mr. Lauder is
a principal shareholder of The Estee Lauder Companies Inc. ("Estee Lauder") and
has served as Chairman of Estee Lauder International and Chairman of Clinique
Laboratories, Inc., divisions of Estee Lauder, since returning to the private
sector from government service in 1987. From 1986 until 1987, Mr. Lauder served
as U.S. Ambassador to Austria. From 1983 to 1986, Mr. Lauder served as Deputy
Assistant Secretary of Defense for European and NATO Affairs. Mr. Lauder
currently is a director of Estee Lauder. He is Chairman of the Board of Trustees
of the Museum of Modern Art, President of the Jewish National Fund, Chairman of
the International Public Committee of the World Jewish Restitution Organization,
Treasurer of the World Jewish Congress, a member of the Board of Governors of
the Joseph H. Lauder Institute of Management and International Studies at the
University of Pennsylvania and a member of the Visiting Committee of the Wharton
School at the University of Pennsylvania.

Michel Delloye has served as President and Chief Executive Officer of
the Company since March 1998. Mr. Delloye is also President and Chief Executive
Officer of CME Development Corporation. From 1996 until 1998, Mr. Delloye ran
his own advisory and management business in Belgium. From 1992 until 1996, he
served as Managing Director and Chief Executive Officer of Compagnie
Luxembourgeoise de Telediffusion (CLT-UFA), the largest European TV and radio
broadcaster. Before joining CLT-UFA, Mr. Delloye served in a number of executive
positions with Groupe Bruxelles Lambert in Brussels, including Chief Financial
Officer, President of North American operations in New York and General Manager
in Brussels.

Peter R. Goldscheider has been co-owner, Managing Partner and Chairman
of the Board of European Privatization and Investment Corporation ("EPIC"), an
investment and merchant bank, since 1991. From March to December 1990, Mr.
Goldscheider co-owned and managed Landerbank Business Development Ges.b.b.H.,
EPIC's predecessor. From March 1977 to February 1987, Mr. Goldscheider was
President for marketing and sales and a Member of the Board of Zurich Kosmos
Insurance Company, an Austrian company. Prior to joining Zurich Kosmos Insurance
Company, Mr. Goldscheider served in a number of executive positions with
International Business Machines Corp. Austria, including Marketing Manager for
Finance (Banking and Insurance). Mr. Goldscheider also serves as Chairman of the
Board of Directors of EPIC Russia (formerly Sector Capital Development Company);
Chairman of the Supervisory board of I. EPIC Holdings, Prague; and President of
the Board of KINTO, Kiev.

Robert A. Rayne has been a director of London Merchant Securities plc,
a U.K. investment firm, since 1983. Mr. Rayne also is Investment Director of
Westpool Investment Trust plc. Mr. Rayne serves as a director for several
U.K.-based companies and in addition, serves on the Board of Directors of Energy
Ventures Inc.

Herbert S. Schlosser has served as a Senior Advisor, Broadcasting and

Entertainment to Schroder & Co. Inc., an international investment banking firm,
since 1986. Mr. Schlosser serves as a consultant to the Company and receives a
fee for such services (see page 12). Mr. Schlosser was Executive Vice President
of RCA Corporation from 1978 until 1985 and President of the National
Broadcasting Company (NBC) from 1974 until 1978. Mr. Schlosser is a director of
United States Satellite Broadcasting Company, Inc. and Data Broadcasting
Corporation.

Robert R. Grusky has been President of RSL Investments Corporation
since April 1998 and Senior Advisor to Ronald S. Lauder since April 1997. Mr.
Grusky was with Goldman, Sachs & Co., an international investment banking firm,
from 1985 to 1997, with a one-year leave of absence commencing in 1990 during
which he was appointed a White House Fellow by President Bush and served as
Assistant to the then Secretary of Defense Dick Cheney. At Goldman, Sachs, Mr.
Grusky was a member of the Mergers and Acquisitions (M&A) Department, and later
in the Principal Investment Area. Mr. Grusky is a graduate of the Harvard
Business School and Union College and is a member of the Board of Trustees of
the Hackley School.

<PAGE>

Nicolas G. Trollope has served as Vice President and Secretary of the
Company since January 1997. Mr. Trollope has been a partner with the law firm of
Conyers, Dill & Pearman, Hamilton, Bermuda, since 1991. Mr. Trollope serves as a
director of RSLC.

Committees of the Board

The Board of Directors has an Audit Committee, which, during 1997, was
composed of Messrs. Lauder, Schlosser and Andrew Gaspar, a current director who
is retiring from the Board of Directors. Following the Meeting, the Board of
Directors intends to change the composition of the Audit Committee to Messrs.
Rayne (Chair), Goldscheider, Grusky, Lauder and Schlosser (assuming their
election as directors). The Audit Committee is responsible for recommending
annually to the Board of Directors the independent auditors to be retained by
the Company, reviewing with the independent auditors the scope and results of
the audit engagement and establishing and monitoring the Company's financial
policies and control procedures. During the fiscal year ended December 31, 1997,
the Audit Committee met on one occasion.

The Board of Directors has a Compensation Committee, which, during
1997, was composed of Messrs. Lauder, Gaspar and Rayne. Following the Meeting,
the Board of Directors intends to change the composition of the Compensation
Committee to Messrs. Lauder (Chair), Grusky and Rayne (assuming their election
as directors). The Compensation Committee is responsible for determining
executive compensation policies and guidelines and for administering the
Company's 1994 Stock Option Plan (the "1994 Stock Option Plan") and the
Company's 1995 Stock Option Plan (the "1995 Stock Option Plan"; collectively,
the 1994 Stock Option Plan and the 1995 Stock Option Plan may be referred to as
the "Stock Option Plans"), including granting options and setting the terms
thereof pursuant to such plans. In addition, commencing in March 1998, the

Compensation Committee will be responsible for reviewing and approving
significant employment agreements and if the Company's Director, Officer and
Senior Executive Co-Investment Plan (as more fully described on page 32) is
approved by the Company's shareholders, the Compensation Committee will be
responsible for the administration of the Director, Officer and Senior Executive
Co-Investment Plan. During the fiscal year ended December 31, 1997, the
Compensation Committee met on three occasions.

During 1997, the Board of Directors also had an Administrative
Committee composed of Messrs. Trollope and Leonard Fertig, who is resigning from
the Board of Directors effective May 1, 1998. The Administrative Committee was
responsible for acting on routine matters incidental to the day-to-day affairs
of the Company. The Administrative Committee did not meet during the fiscal year
ended December 31, 1997. Following the Meeting, the Board of Directors intends
to discontinue the Administrative Committee.

During the fiscal year ended December 31, 1997, the Board of Directors
met, or acted by unanimous consent, on nine occasions. Each member of the Board
of Directors attended at least 75% of the aggregate number of meetings of the
Board of Directors and the Committees of the Board on which they served during
the periods that they served.

Following the Meeting, the Board of Directors intends to create a
Finance Committee, which will be responsible for general supervision over the
investments of and all matters of financing by the Company, and a Nominating
Committee, which will review qualifications of candidates for board membership,
recommend to the board candidates for membership on the board and the annual
slate of nominees for director, and recommend to the board criteria for board
membership, composition of the board, tenure of directors and fees to be paid to
directors. No decision has been made as to whether the Nominating Committee, if
created, will consider nominees recommended by shareholders. The Board of
Directors anticipates that the members of the Finance Committee will be Messrs.
Grusky (Chair), Goldscheider, Lauder, Rayne and Schlosser, and the members of
the Nominating Committee will be Messrs. Lauder (Chair), Goldscheider, Schlosser
and Trollope (assuming their election as directors).

<PAGE>

There is no family relationship among any directors or executive
officers of the Company.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE IN FAVOR OF THE
ELECTION OF THE SEVEN NOMINEES TO THE COMPANY'S BOARD OF DIRECTORS.

EXECUTIVE OFFICERS

Set forth below is certain information describing the Company's other
executive officers:

Frederic T. Klinkhammer, age 52, has served as Chief Operating Officer
and Executive Vice President of the Company, and as Chief Operating Officer,

Executive Vice President and Managing Director of CME Development Corporation,
since January 1998. From July 1992 to December 1997, Mr. Klinkhammer operated an
international broadcasting and telecommunications consulting practice. Mr.
Klinkhammer was founding Chief Executive Officer of MediaLinx, the multimedia
arm of BCE Inc., from March 1993 to August 1996 and was responsible for the
creation of Sympatico, Canada's largest internet service provider. Mr.
Klinkhammer was President and Chief Executive Officer of IMAX Corporation from
August 1990 to June 1992, during which time that company produced its first two
feature length films. From March 1984 to August 1990, Mr. Klinkhammer served as
President and Chief Operating Officer of First Choice, Canada's largest pay
television company. From March 1983 to March 1984, Mr. Klinkhammer served as
Chief Executive Officer of Cablenet Ltd., a multi system cable operator with
operations in the U.S. and Canada. From January 1974 to March 1983, Mr.
Klinkhammer served as Vice President-Finance and later Vice President and
General Manager of Citytv in Toronto, Canada. Mr. Klinkhammer is a certified
Management Accountant, a graduate of Ryerson Polytechnical Institute in Business
and received his early consumer product training at Procter & Gamble.

John A. Schwallie, age 35, has served as Vice President-Finance and
Chief Financial Officer of the Company since August 1995. Mr. Schwallie, a
certified public accountant, served as Financial Director of CNTS from 1994
until August 1995. From 1992 until 1993, Mr. Schwallie served as the Advisor to
the Financial Director of Prague Breweries, the second largest brewery in the
Czech Republic. During 1991, he served as the Assistant to the Regional Director
of General Atlantic, a London based multi-billion dollar privately held
conglomerate, operating retail outlets in Prague. Mr. Schwallie has his M.B.A.
degree from Cornell University.

There is no arrangement or understanding between any executive officer
and any other person regarding selection as an executive officer.

<PAGE>

EXECUTIVE COMPENSATION

Summary Compensation Table

The following table summarizes all plan and non-plan compensation
awarded to, earned by, or paid to the Company's former Chief Executive Officer
and its other executive officer (together, the "Named Executive Officers") who
either served as executive officers during, or were serving as executive
officers at the end of, the last completed fiscal year ended December 31, 1997,
for services rendered in all capacities to the Company and its subsidiaries for
each of the Company's last three fiscal years.

<TABLE>
<CAPTION>
Long-Term Compensation
-----------------------------------------
Awards
-----------------------------------------
Annual Compensation Securities
----------------------------------------------
Other Annual Restricted Stock Underlying All Other
Name and Salary Bonus Compensation Award(s) Options Compensation
Principal Position Year $ $ $ $ # $
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Leonard M. Fertig 1997 334,821 150,000 67,562(2) -- 50,000 --
Former President and Chief 1996 309,840 150,000 64,358(3) -- 50,000 --
Executive Officer (1)..... 1995 220,623 125,000 58,806(4) -- 200,000 --

John A. Schwallie 1997 210,417 75,000 -- -- 80,000 --
Vice President-Finance 1996 184,375 50,000 -- -- -- 696(5)
and Chief Financial 1995 120,193 35,000 7,366(6) -- 75,000 600(5)
Officer...................
</TABLE>

- -----------------
(1) Mr. Fertig resigned as President and Chief Executive Officer of the
Company on March 26, 1998.

(2) Of this amount, $59,004 represents housing costs paid by the Company
and $8,558 represents use of a Company automobile.

(3) Of this amount, $55,800 represents housing costs paid by the Company
and $8,558 represents use of a Company automobile.

(4) Of this amount, $45,918 represents housing costs paid by the Company
and $12,888 represents use of a Company automobile.

(5) Represents life insurance benefits paid by the Company.

(6) Represents housing costs paid by the Company.

No stock appreciation rights or long-term incentive plan awards (all as
defined in the proxy regulations of the Securities and Exchange Commission) were
awarded to, earned by, or paid to the Named Executive Officers during the time
periods described above.

<PAGE>

Option Grants In Last Fiscal Year

The following table sets forth information with respect to grants of
stock options to purchase Class A Common Stock granted to the Named Executive
Officers during the fiscal year ended December 31, 1997.

<TABLE>
<CAPTION>
Individual Grants
--------------------------------------------------------
Percent of Potential Realizable
Number of Total Value at Assumed Annual
Securities Options Rates of Stock Price
Underlying Granted to Appreciation
Options Employees Exercise for Option Term
--------------------------
Granted in Fiscal Price Expiration 5% 10%
Name (#) Year ($/sh) Date ($) ($)
- ---- --- ---- ------ ---- --- ---
<S> <C> <C> <C> <C> <C> <C>
Leonard M. Fertig.............. 50,000 6.56% 23.00 8/1/07 723,000 1,833,000
John A. Schwallie.............. 80,000 10.49% 23.00 8/1/07 1,157,000 2,932,000
</TABLE>

Aggregated Option Exercises in last Fiscal Year and Fiscal Year-End Option
Values

The following table sets forth information with respect to each
exercise of stock options during the fiscal year ended December 31, 1997 by the
Named Executive Officers and the value at December 31, 1997 of unexercised stock
options held by the Named Executive Officers.

<TABLE>
<CAPTION>
Number of Securities
Underlying Value of Unexercised
Unexercised Options at In-the-Money Options at
Shares Acquired Value Fiscal Year-end Fiscal Year-End(1)
on Exercise Realized (#) ($)
Name (#) ($) Exercisable/Unexercisable Exercisable/Unexercisable
- ---- ----- ----- ------------------------------------------------
<S> <C> <C> <C> <C>
Leonard M. Fertig...... 0 0 250,000/75,000 1,593,750/200,000
John A. Schwallie...... 0 0 85,000/80,000 756,250/180,000

</TABLE>

- -----------------
(1) Fair market value of securities underlying the options at fiscal year
end minus the exercise price of the options.

Compensation of Directors

The Company pays a cash fee to each of its non-employee directors of
$10,000 per annum. In addition, under the 1995 Stock Option plan, non-employee
directors (other than Mr. Trollope who declines such options) are also
automatically granted an option to purchase 10,000 shares of Class A Common
Stock once per year. Options granted prior to 1998 had an exercise price per
share equal to the fair market value of a share of Class A Common Stock on the
date of grant, became exercisable in two annual installments commencing on the
first anniversary of the date of grant (subject to the director's continued
service as a director on such date) and generally expired 10 years from the date
of grant. In August 1997, all non-employee directors (other than Mr. Trollope)
received an option to purchase 10,000 shares of Class A Common Stock at an
exercise price of $23.00 per share. In addition, the Board (Mr. Lauder
abstaining) authorized the grant of an additional option to Mr. Lauder to
purchase 100,000 shares of Common Stock. The grant was confirmed in February
1998, and it was determined by the Board, subject to the approval of
shareholders, that such option be an option to purchase 100,000 shares of Class
B Common Stock and that the exercise price be 105% of the average of the closing
price of a share of Class A Common Stock as reported by the Nasdaq National
Market for the 10 days following the date of grant. The exercise price is
$23.927 per share. As with the other directors' options, the additional option
will vest in two equal annual installments commencing on the first anniversary
of the February 1998 confirmation of the grant, subject to Mr. Lander's
continued service as a director, and will generally expire 10 years from the
date of grant.

<PAGE>

As described more fully on page 25, the Company is proposing to amend
the 1995 Stock Option Plan (the "1995 Amended Stock Option Plan"). These
amendments will, if adopted, and unless otherwise determined by the Compensation
Committee, (i) lengthen the vesting period for options awarded to non-employee
directors to five years from two years, (ii) add a "cost of capital" factor or
other annual increase to the exercise price, (iii) establish a formula for
determining the initial exercise price for non-employee directors and (iv) set a
maximum number of shares of Class B Common Stock for which options may be
granted equal to 10% of the number of shares of Company Common Stock for which
options may be granted under the 1995 Amended Stock Option Plan. The objective
of these amendments is to further align the Board of Directors with the
Company's shareholders. If these amendments are approved, on the first business
day following each annual meeting of the Company's shareholders during the term
of the 1995 Amended Stock Option Plan, each non-employee director of the Company
(including for these purposes the Chairman and Vice Chairman) who has served as
a director since the last annual meeting of shareholders will be granted options
to purchase 10,000 shares (or in, the case of the Chairman and Vice Chairman,

such higher number as the Board of Directors shall determine) of Class A Common
Stock (in the case of the Chairman and Vice Chairman, Class B Common Stock if
such person is eligible to hold Class B Common Stock and the Board approves such
granting of options on Class B Common Stock). Under the 1995 Amended Stock
Option Plan, the exercise price of the options will initially equal the fair
market value of the Class A Common Stock on the date of grant or the average
fair market value of the Class A Common Stock for the 10 business days following
the date of grant (105% of the fair market value of the Class A Common Stock in
the case of an option to acquire Class B Common Stock). In the case of any such
options granted immediately following the Meeting, the Board has determined that
the initial exercise price will be increased on the first day of each calendar
quarter by one-quarter of the rate at the time of grant for U.S. Treasury
securities having a maturity approximately equal to the ten year term of such
options, compounded annually and, with respect to such grants made in subsequent
years under the plan, may increase by a similar factor or other factor(s) as
determined by the Board of Directors at the time of grant. The options will
become exercisable as to 10% on the first anniversary of the grant date, an
additional 15% on each of the second and third anniversaries of the grant date,
an additional 25% on the fourth anniversary of the grant date and an additional
35% on the fifth anniversary of the grant date and will otherwise be subject to
the general terms of the 1995 Amended Stock Option Plan.

The Company reimburses each director for expenses in connection with
attending meetings of the Board of Directors. Mr. Trollope is a partner in the
law firm of Conyers Dill & Pearman, Hamilton, Bermuda, which served as the
Company's Bermuda counsel for the fiscal year ended December 31, 1997 and is
expected to continue to serve as the Company's Bermuda counsel in 1998. For the
fiscal year ended December 31, 1997, the Company paid fees of $128,624 to
Conyers, Dill & Pearman, which includes the services of Mr. Trollope as a
director. No separate compensation is paid to any director for serving on
committees. Directors who are also employees of the Company receive no
additional compensation for service as a director.

On August 1, 1996, the Company and Mr. Schlosser entered into a one
year consulting agreement which automatically renews for subsequent one year
terms unless terminated by either party 60 days prior to the end of each yearly
term. Under the consulting agreement, Mr. Schlosser serves as a consultant to
the Company and, at the request of the Company's management, performs general
consulting services relating to the Company's broadcast operations. Pursuant to
the agreement, the Company pays Mr. Schlosser at the rate of $100,000 per annum
and initially granted Mr. Schlosser 10 year options to purchase 15,000 shares of
Class A Common Stock at an exercise price equal to the last reported sale price
of the Class A Common Stock on the Nasdaq National Market on August 1, 1996
($21.75 per share). In August 1997, Mr. Schlosser was granted a discretionary
award of 10 year options to purchase 10,000 shares of Class A Common Stock at an
exercise price equal to the last reported sale price of the Class A Common Stock
on the Nasdaq National Market on August 1, 1997 ($23.00 per share). Such options
are in addition to those granted separately to Mr. Schlosser for serving as a
director. In March 1998, the Board recommended that the Company renew Mr.
Schlosser's consulting agreement in August 1998 for an additional one year term.

As more fully described in the Compensation Committee Report on
Executive Compensation (see pages 17- 21), on March 11, 1998 the Board of
Directors adopted a new set of Compensation Principles that provide principles

<PAGE>

for the compensation of the Company's executives and other key employees, as
well as the Company's non-employee directors. As the Compensation Principles
apply to directors, they express the Company's belief that it is important for
non-employee directors to have a meaningful equity interest in the Company and
to have the bulk of directors' compensation paid in equity-related items. In
order to encourage the Company's non-employee directors to increase their
ownership of the Company's Common Stock, under the Compensation Principles (as
they apply to non-employee directors), the Board will, under the 1995 Amended
Stock Option Plan, grant to any person who is not currently a director of the
Company and who becomes a non-employee director of the Company an option to
acquire a share of Class A Common Stock (or Class B Common Stock if such person
is eligible to hold Class B Common Stock under the Company's Bye-Laws) for each
share of Common Stock that he or she purchases within 90 days of his or her
first election to the Board of Directors, up to a maximum of 25,000 shares. If a
current non-employee director purchases a number of shares of Common Stock at
least equal to the number of shares underlying options that have previously been
granted to such non-employee director, in his capacity as a director, the Board
will, under the 1995 Amended Stock Option Plan, grant an option to acquire a
share of Class A Common Stock (or Class B Common Stock if such person is
eligible to hold Class B Common Stock under the Company's Bye-Laws) for each
share of Common Stock purchased within 90 days thereafter, up to a maximum of
25,000 shares. Any such option granted to a non-employee director will generally
become exercisable as to 10% on the first anniversary of the grant date, an
additional 15% on each of the second and third anniversaries of the grant date,
an additional 25% on the fourth anniversary of the grant date and an additional
35% on the fifth anniversary of the grant date and will expire on the earlier of
(a) 30 days after the recipient ceases to serve as a director for any reason
other than death or disability, (b) one year following the date the recipient
ceases to serve as a director as a result of his or her death or disability and
(c) the tenth anniversary of the date of grant. If the Company's Director,
Officer and Senior Executive Co-Investment Plan is approved by the Company's
shareholders, non-employee directors will be permitted to purchase such shares
directly from the Company (but non-employee directors will not be eligible to
receive loans from the Company under the Director, Officer and Senior Executive
Co-Investment Plan). While not required, all directors are encouraged to hold
their shares in the Company, or options convertible into shares, as long as they
serve as directors (other than charitable gifts, transfers for estate planning
purposes or sales for tax reasons relating to the exercise of stock options).

Employment Agreements, Termination of Employment and Change-in-Control
Arrangements

Michel Delloye has entered into five year employment agreements dated
as of March 23, 1998 with the Company and a wholly-owned subsidiary of the
Company. The employment agreements provide that Mr. Delloye will serve as
President and Chief Executive Officer of both the Company and of such
subsidiary. Under the employment agreements, Mr. Delloye will be entitled to
receive a base salary of $350,000 for the first year, with such base salary
being increased by not less than $10,000 per year. In addition, Mr. Delloye will

receive an expatriate premium of UK (pound)202,500 per annum (plus an additional
amount based on the increase in the consumer price index in the London
metropolitan area). The employment agreements provide for an annual cash bonus
opportunity of 75% of base salary if performance is at 100% of target
performance goals established by the Compensation Committee for such year and up
to 100% of his base salary if performance is at or above 150% of such target.
The employment agreements also provide that Mr. Delloye shall receive an
additional one time bonus of $1,000,000 if, at the end of the contract term,
i.e., March 23, 2003, and subject to his continued employment through such date,
the price of the Company's Class A Common Stock has increased from its price as
of March 23, 1998 (i.e., $24.563 per share) and the percentage increase exceeds
that of the Nasdaq Stock Market Index (or, if the Company replaces that index
with a different index in its 1998 proxy statement Performance Graph, such
index) for such period.

Under Mr. Delloye's employment agreement with the Company, he was
awarded options to acquire, in the aggregate, 225,000 shares of the Company's
Class A Common Stock. The initial exercise price of all of these options is
$24.563 per share, the mean between the high and low trading prices of the
Company's Class A Common Stock on the date of the grant. As to 175,000 of such
options, the options will generally become exercisable in equal installments on
each of the first two anniversaries of the date of grant and will generally
remain exercisable for ten years. As to 50,000 of such options, the options will
generally become exercisable in equal annual installments on

<PAGE>

the third, fourth and fifth anniversaries of the grant date, will generally
expire on the seventh anniversary of the grant date, and the exercise price per
share will be increased on the first day of each calendar quarter by one-quarter
of 5.63% (the rate at the time of grant for U.S. Treasury securities having a
maturity approximately equal to the term of such options), compounded annually,
pro rated for the first period. All such options shall become exercisable in the
event that Mr. Delloye's employment is terminated by the Company as a result of
a change in control of the Company or in the event of a merger, reorganization
or consolidation in which the Company is not the surviving corporation. The
timing and amount of any subsequent option awards will be at the discretion of
the Compensation Committee and approved by the Board of Directors, and will be
commensurate with Mr. Delloye's position with the Company and taking into
account option awards made to other executives of the Company. The Company has
also agreed to give Mr. Delloye an additional bonus that will not exceed
$542,000. The specific details of this additional bonus are subject to agreement
between the Company and Mr. Delloye.

Under Mr. Delloye's employment agreement with the Company (if the
proposal to adopt the Director, Officer and Senior Executive Co-Investment Plan
is approved by the Company's shareholders at the Meeting) for each $1 of Class A
Common Stock of the Company that Mr. Delloye purchases by July 21, 1998, the
Company will lend him $1 (up to $500,000) on a non-recourse basis to purchase
additional shares of Class A Common Stock of the Company (such additional shares
to be pledged as security for the loan). Interest on the loan will be at the
rate at the time of the grant for seven-year U.S. Treasury securities and will

generally be due when the loan is paid. In addition, for each share of the
Company's Class A Common Stock purchased by Mr. Delloye by July 21, 1998
(including financed shares) the Company will grant him an option to purchase two
shares (up to 50,000 shares) as soon as practicable after July 21, 1998. The
initial exercise price of such options will be the mean between the high and low
trading prices of the Company's Class A Common Stock on the date of the grant,
and will be increased on the first day of each calendar quarter by one-quarter
of the rate at the time of grant for seven-year U.S. Treasury securities. Such
options will generally become exercisable in equal installments on each of the
first five anniversaries of the date of grant and will generally expire on the
seventh anniversary of the grant date.

Mr. Delloye's employment agreements also contain noncompetition
provisions applicable during the term of the employment agreements and for a two
year period thereafter, prohibit Mr. Delloye from using confidential information
of the Company during the term of the employment agreements and thereafter, and
specify certain benefits and perquisites that Mr. Delloye shall be entitled to
receive. The term of the employment agreements expire on March 23, 2003.

Frederic T. Klinkhammer has entered into employment agreements dated as
of January 1, 1998 with the Company and a wholly-owned subsidiary of the
Company. The employment agreements provide that Mr. Klinkhammer will serve as
Executive Vice President and Chief Operating Officer of the Company, and
Executive Vice President, Managing Director and Chief Operating Officer of such
subsidiary. Under the employment agreements, Mr. Klinkhammer will be entitled to
receive a base salary of $300,000 per year, and an expatriate premium of UK
(pound)45,000 per annum (plus an additional amount based on the increase in the
consumer price index in the London metropolitan area). The employment agreements
provide for an annual cash bonus opportunity in a target amount of 75% of base
salary for superior performance, and up to 100% of his base salary, to be
determined based upon the joint recommendation of the Chairman and the Company's
Chief Executive Officer, subject to the Compensation Committee's approval in its
sole discretion. The employment agreements also provide that Mr. Klinkhammer
shall receive an additional one time bonus of $750,000 if, at the end of the
contract term, i.e., December 31, 2002, and subject to his continued employment
through such date, the price of the Company's Class A Common Stock has increased
from its price as of January 1, 1998 (i.e., $25.25 per share) and the percentage
increase exceeds that of the Nasdaq Stock Market Index (or, if the Company
replaces that index with a different index in its 1998 proxy statement
Performance Graph, such index) for such period.

Under Mr. Klinkhammer's employment agreement with the Company, he was
awarded on two different dates options to acquire, in the aggregate, 150,000
shares of the Company's Class A Common Stock. The initial exercise price of
100,000 of these options is $24 per share and the initial exercise price of
50,000 of these options is $23.3125 per share. In each case, this was the mean
between the high and low trading prices of the Company's

<PAGE>

Class A Common Stock on the date of grant. As to 80,000 of such options, the
options will generally become exercisable in equal installments on each of the

first two anniversaries of the date of grant and will generally remain
exercisable for ten years. As to 70,000 of such options, the options will
generally become exercisable in equal annual installments on the third and
fourth anniversaries of the grant date and on December 31, 2002, will generally
expire on the seventh anniversary of the grant date, and the exercise price per
share will be increased on each January 1 by 5.55% (per annum), the rate at the
time of grant for U.S. Treasury securities having a maturity approximately equal
to the term of such options. All such options shall become exercisable in the
event that Mr. Klinkhammer's employment is terminated by the Company as a result
of a change in control of the Company or in the event of a merger,
reorganization or consolidation in which the Company is not the surviving
corporation. The timing and amount of any subsequent option awards will be at
the discretion of the Compensation Committee and approved by the Board of
Directors, and will be commensurate with Mr. Klinkhammer's position with the
Company and taking into account option awards made to other executives of the
Company.

Mr. Klinkhammer's employment agreements also contain noncompetition
provisions applicable during the term of the employment agreement and for a two
year period thereafter, will prohibit Mr. Klinkhammer from using confidential
information of the Company during the term of the employment agreements and
thereafter, and will specify certain benefits and perquisites that Mr.
Klinkhammer shall be entitled to receive. The term of the employment agreements
generally expire on December 31, 2002. The employment agreements provide that if
Mr. Klinkhammer's employment agreements are not extended at the expiration of
the five year term, he will serve as a part-time consultant for two-years
following such expiration, for which he will be paid $200,000 per annum.

John A. Schwallie, Vice President-Finance and Chief Financial Officer
of the Company, has employment agreements commencing August 1, 1997 and
terminating August 14, 1999 with the Company and a wholly-owned subsidiary of
the Company. Under the terms of the employment agreements, Mr. Schwallie
receives in the aggregate a salary of $225,000 for the first year and $250,000
for the second year, as well as a monthly living allowance of UK (pound)2,000
for each calendar month during which he maintains a principal residence in the
Greater London Metropolitan area. At the sole discretion of the Board of
Directors, Mr. Schwallie may be granted an annual bonus. The employment
agreements contain a confidentiality covenant and a non-compete covenant which
has a term of two years after the termination of Mr. Schwallie's employment. Mr.
Schwallie, who had previously been granted options to purchase 85,000 shares of
Class A Common Stock, all of which are currently exercisable, has been granted
10 year options under his current agreements to purchase an additional 80,000
shares of Class A Common Stock at an exercise price equal to the last reported
sale price of the Class A Common Stock on the Nasdaq National Market on August
1, 1997 ($23.00 per share), pursuant to the Company's Stock Option Plans, 40,000
of which are exercisable on August 1, 1998 and 40,000 of which are exercisable
on August 1, 1999. In addition, if Mr. Schwallie meets or exceeds performance
goals to be established by agreement between the President and Chief Executive
Officer of the Company and Mr. Schwallie, options to purchase up to an
additional 20,000 shares of Class A Common Stock may be granted to Mr. Schwallie
by the Board each year. In the event of a merger, reorganization or
consolidation in which the Company is not the surviving corporation, then all
options which have been granted to Mr. Schwallie shall be immediately
exercisable in full.

Termination of Employment

The Company and two of its wholly-owned subsidiaries have entered into
a severance agreement, dated as of March 25, 1998, with Leonard M. Fertig, who
resigned as the Company's President and Chief Executive Officer on March 26,
1998. Mr. Fertig is resigning as a director of the Company effective May 1,
1998. Pursuant to the severance agreement, certain employment and consulting
agreements between Mr. Fertig, a company owned by Mr. Fertig, and the Company
and these subsidiaries were terminated. Under the severance agreement, Mr.
Fertig will continue as an employee and his consulting company will continue its
consulting arrangements on a full-time basis until May 1, 1998, and on a part
time basis through August 10, 1998. After August 10, 1998, Mr. Fertig will serve
as a consultant and his consulting company will continue to provide consulting
services until August 10, 1999. Mr. Fertig may terminate these arrangements with
the Company and these subsidiaries prior to August 10, 1999 on not less than 10
days' (but not more than 15 days') written notice. From March 26, 1998 until
either August 10, 1999

<PAGE>

or such earlier date as Mr. Fertig ceases to be an employee or consultant, Mr.
Fertig will receive a base salary or consulting fee of $300,000 per year, and
his consulting company will receive a fee of $50,000 per year and both Mr.
Fertig and his consulting company will provide services on an as requested basis
by the Chairman or Chief Executive Officer of the Company or these subsidiaries,
provided that after May 1, 1998, such services will not unreasonably interfere
with Mr. Fertig's ability to seek other employment or consulting opportunities
or exceed 20 hours per calendar month.

Until the earliest of the time that Mr. Fertig ceases to be an employee
or consultant, or moves his principal residence from the United Kingdom, or
August 10, 1999, Mr. Fertig will receive an expatriate payment of UK(pound)3,000
per month. If Mr. Fertig relocates to the United States before August 10, 1999,
the Company will pay the actual and reasonable costs associated with such
relocation. In addition, the Company will provide Mr. Fertig with the
opportunity to buy, for book value, the automobile which has been available for
his use in the Netherlands and will pay Mr. Fertig up to $10,000 for legal
expenses in connection with the negotiation of the severance agreement.

The severance agreement provided for Mr. Fertig to be paid a bonus of
$150,000 for services performed during 1997.

Under previous agreements, Mr. Fertig has been granted options to
purchase 325,000 shares of Class A Common Stock, 225,000 of which are currently
exercisable. Under the severance agreement, the remaining unexercisable options
will become exercisable on May 1, 1998. All 325,000 options will generally
remain exercisable until the one year anniversary of the date on which Mr.
Fertig ceases to be an employee or consultant.

Under the severance agreement, Mr. Fertig has agreed not to sell more
than 50,000 shares of the Company's Class A Common Stock prior to May 1, 1998 or

the three month anniversary of the date on which he ceases to be a member of the
Board of Directors of the Company, whichever is later (the "Initial Sales
Period"). If during the Initial Sales Period the average per share selling price
(before commissions and other expenses of sale) for all shares of the Company's
Class A Common Stock owned by Mr. Fertig on March 25, 1998 (the "Owned Shares")
plus all shares of Class A Common Stock acquired by Mr. Fertig upon exercise of
options owned by Mr. Fertig on March 25, 1998 if sold prior to the disposition
of the Owned Shares (together the "Eligible Owned Shares"), sold in arm's length
transactions is less than $27.625 per share, the Company will pay Mr. Fertig an
amount equal to the difference between $27.625 and the higher of either $20.00
or the average selling price of such shares (before deduction for commissions
and other expenses of sale) per share sold during the Initial Sales Period.

On April 30, 1999 or such earlier date as Mr. Fertig has either
disposed of the Owned Shares or the average between the high and low selling
prices of a share of the Company's Class A Common Stock for 20 consecutive
trading days commencing after the Initial Sales Period is $30.00 or more (the
"Trigger Date"), the Company will pay to Mr. Fertig an amount equal to the
lesser of (x) $600,000 minus such amounts, if any, paid to Mr. Fertig pursuant
to the previous paragraph and (y) the number of Owned Shares not sold during the
Initial Sales Period multiplied by the excess, if any, of $23.48 over the sum of
(1) the aggregate selling price (before commissions and other expenses of sale)
for all Eligible Owned Shares sold in arm's length transactions by Mr. Fertig
after the Initial Sales Period and on or before the earlier of April 30, 1999
and the Trigger Date plus (2) the average of the closing prices for a share of
the Company's Class A Common Stock for the 20 consecutive trading days ending on
either April 30, 1999 or the Trigger Date, whichever is earlier, multiplied by
the number of Owned Shares not disposed of during the Initial Sales Period or
taken into account in clause (1) divided by the number of Owned Shares not
disposed of during the Initial Sales Period.

Mr. Fertig continues to be subject to a confidentiality covenant and to
a non-compete covenant, which expires on the earlier of the date that Mr. Fertig
ceases to serve as an employee or consultant or August 10, 1999. Under the
severance agreement, Mr. Fertig agreed to convert, and has subsequently
converted, all of his shares of Class B Common Stock of the Company into shares
of Class A Common Stock of the Company.

<PAGE>

Compensation Committee Interlocks and Insider Participation

The members of the Compensation Committee during the fiscal year ended
December 31, 1997 were Ronald S. Lauder, Andrew Gaspar, who was Vice President
and Secretary of the Company until December 31, 1996, and Robert A. Rayne. See
"Compensation of Directors" and "Certain Relationships and Related
Transactions."

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

The Company's compensation programs for its officers, select operating
managers of the Company's principal subsidiaries and station managers are

administered by the Compensation Committee, which also administers the Company's
Stock Option Plans and, if approved by the Company's shareholders, will
administer the Company's Director, Officer and Senior Executive Co-Investment
Plan. This report sets forth the Compensation Committee's policies that were
applicable to the Company's executive officers during the 1997 fiscal year, and
details how those policies were applied in determining the compensation of the
Company's Chief Executive Officer with respect to such fiscal year. In addition,
commencing in late 1997 the Compensation Committee and the Board of Directors
undertook a review of the Company's compensation policies and, on March 11,
1998, the Board of Directors adopted a new set of Compensation Principles, the
principal elements of which are summarized below.

Fiscal Year 1997

With respect to fiscal year 1997, the primary objective of the
Compensation Committee in determining the compensation packages of the Chief
Executive Officer and the Chief Financial Officer was to provide a remuneration
opportunity that motivated and retained these key executives of the Company, and
based on these objectives, the Company adopted the following basic principles
for compensating these executives: (i) compensation should reward individual and
corporate achievement, and (ii) short or long-term incentives must be
effectively balanced to satisfy both the short and long-term goals of the
Company.

Based on the Compensation Committee's own knowledge of compensation
packages for comparable positions at other media companies, both public and
private, for fiscal year 1997 the Compensation Committee devised pay packages
that consist of three components, each designed to achieve a distinctive
objective:

Base Salary provides regular compensation for services rendered at a
sufficient level to motivate the Chief Executive Officer and to retain and
motivate the Chief Financial Officer.

Bonus provides cash incentive compensation for services rendered to
motivate and reward the Chief Executive Officer and the Chief Financial Officer.
Bonuses are determined at the Compensation Committee's discretion, considering
individual performance as well as contribution to the growth, development and
success of the Company.

Stock Options are an integral part of the pay packages of the Chief
Executive Officer and the Chief Financial Officer. Options provide a unique
compensation opportunity. The Compensation Committee believes that stock
options, which are designed to focus attention on stock values, help to align
the long-term interests of the Chief Executive Officer and the Chief Financial
Officer with those of the Company's shareholders. Options granted during 1997
were granted at prices equal to the fair market value at the date of grant, are
not exercisable until the first anniversary of the date of grant and do not
become fully exercisable until the second anniversary of the date of grant.
These options generally remain exercisable during continued employment until the
tenth anniversary of the date of grant, which provides executives an incentive
to increase shareholder value over the long term since the executive will
receive a greater benefit from the options if the Company's stock price
appreciates consistently over a long period of years (rather than encouraging

short-term, unsustainable gains).

<PAGE>

Compensation of Chief Executive Officer

Leonard M. Fertig served as the Company's Chief Executive Officer
during 1997. He resigned from this position on March 26, 1998. Accordingly, this
discussion on "Compensation of Chief Executive Officer" addresses Mr. Fertig's
historical performance and compensation. The goal of the Compensation Committee
in developing a pay package for the Chief Executive Officer was to provide him
with clear, simple financial incentives to increase shareholder value. During
1997, Mr. Fertig had employment agreements which were to expire in August 1998.
They provided:

Salary

An initial base salary of $250,000 per year with $25,000 increases in
base salary per year provided during the term of the agreements. Under these
agreements, the annual base salary was $300,000 after August 10, 1997. In
addition, pursuant to a consulting agreement with a wholly-owned subsidiary of
the Company, a consulting company owned by Mr. Fertig was paid $50,000 per year.

Annual Bonus

The Compensation Committee granted a $150,000 bonus to Mr. Fertig for
1997. This bonus was discretionary and not expressly provided for in the
employment agreement with Mr. Fertig. The Compensation Committee took into
consideration the 1997 performance criteria set forth in the following paragraph
and other factors.

Stock Options

During 1995, the Chief Executive Officer was granted options to
purchase 200,000 shares of Class A Common Stock, at an exercise price of $19.13
per share, which vested equally after the first and second anniversaries of this
grant and had a 10 year expiry. Having satisfied performance criteria
established by agreement between the Compensation Committee and the Chief
Executive Officer, the Chief Executive Officer was granted options to purchase
an additional 50,000 shares of Class A Common Stock in August 1996, at an
exercise price of $21.75 per share, with two year vesting and a 10 year expiry.
In addition, having satisfied performance criteria established by agreement
between the Compensation Committee and the Chief Executive Officer, the Chief
Executive Officer was granted options to purchase an additional 50,000 shares of
Class A Common Stock in August 1997, at an exercise price of $23.00 per share,
with two year vesting and a 10 year expiry. Such performance criteria for 1997
included: (i) the recruiting and hiring of a Chief Operating Officer with strong
television operations capability and experience; (ii) financial performance, by
television station and in the aggregate, versus budget, on such measures as
revenues, EBITDA and Broadcast Cash Flow; and (iii) the launch of new operations
in Poland and Hungary.

In setting the above compensation package a number of factors were
considered, including: (i) the skills and experience of the Chief Executive
Officer, (ii) total compensation of key executives at other media companies and
(iii) the importance of the Chief Executive Officer to the continued growth and
success of the Company and the need to provide him with a significant incentive
to motivate and retain his services for a three-year period starting in 1995.

The New Compensation Principles

Commencing in late 1997 the Compensation Committee, at the direction of
the Board of Directors, undertook a thorough review of the Company's
compensation arrangements for the Company's executive officers, certain select
operating managers of the Company's principal subsidiaries and station managers,
nonemployee directors, as well as a review of the Company's equity -based
compensation for the other employees and, on March

<PAGE>

11, 1998, the Board of Directors adopted the Compensation Committee's proposed
new Compensation Principles for the Company.

Compensation Philosophy

The Company seeks highly motivated individuals who are self starters.
To attract and retain such individuals, the Company's base compensation may be
somewhat less than might otherwise be available to an employee in light of his
or her experience and position, but the Company will provide significant
opportunities in the form of bonuses, stock options and incentives to acquire
stock in the Company for excellent performance by the employee that advances the
interests of shareholders, such that an employee's total compensation may fall
within a comparative range (determined by the Compensation Committee) of
compensation offered by outstanding media companies.

Annual Bonus for Executives and Officers

The Company will implement an annual bonus plan for officers of the
Company, CEOs of principal subsidiaries and station managers that will provide
participants an opportunity to earn bonuses equal to a specified percentage of
their salaries. A portion of the bonus (determined by the Compensation
Committee) will be based on the achievement of company-wide financial objectives
established by the Compensation Committee, and the remainder will be based on a
evaluation of personal performance submitted by management and approved by the
Compensation Committee. The annual bonus plan will not be applicable to existing
employees with an agreement providing for a different bonus opportunity.

Co-investment Opportunity

In consideration of the Compensation Principles, the Board of Directors
came to the conclusion that it is in the best interests of the Company and its
shareholders for the Company's most senior executives to hold a meaningful
amount of their liquid net worth in Common Stock of the Company, and to bear
risk of loss, as well as upside, with respect to the Company's Common Stock.

This will encourage the executives to think as owners of the Company, and
further align their interests with those of the Company and its shareholders.
Accordingly, the Board of Directors approved the Compensation Committee's
proposal that the Company establish the Director, Officer and Senior Executive
Co-Investment Plan, and submit it for approval by the shareholders. Under the
Director, Officer and Senior Executive Co-Investment Plan, the Company will be
authorized to make matching non-recourse loans (or recourse loans), on a
dollar-for-dollar basis, to eligible senior executives of the Company and key
station managers who purchase Company Common Stock (other than through exercise
of options). The financed shares shall be pledged as security for such loans,
and may not be sold until the executive's employment is terminated or after
seven years, whichever period is shorter. The aggregate amount of such loans at
any time outstanding to all senior executives may not exceed $2,000,000. Any
such loans will bear interest at the rate specified in the plan. At any time,
the maximum amount of any such loans to a particular executive that may be
outstanding may not exceed such executive's annual base salary. Any such loan
shall be come due at the earlier of (a) the expiration of 7 years, (b)
termination of employment for any reason other than death or disability, (c) one
year after termination of employment by reason of death or disability and (d)
sale of the non-financed shares (in which case the loan shall become due on a
pro rata basis with the non-financed shares sold). A participant shall be
required to apply 25% of his or her annual cash bonus to repay the principal of
any such loan. To encourage further ownership of Company Common Stock, the
Compensation Committee may match share purchases with grants of options to
acquire Class A Common Stock under the 1995 Amended Stock Option Plan. In
addition, to facilitate purchases of Class A Common Stock, the Company is
authorized to sell shares of Class A Common Stock to a participant in the
Co-Investment Plan, although shares eligible for matching loans may (to the
extent permitted by applicable laws and regulations) also be purchased on the
open market.

Key executives and senior managers will be encouraged to hold Company
Common Stock having a value at least equal to their base salaries.

<PAGE>

Stock Options

Corporate Officers, CEOs of Principal Subsidiaries and Station Managers.
Stock options under the 1995 Amended Stock Option Plan may but need not be
granted annually, depending on individual and Company performance. Except in
unusual situations approved in advance by the Compensation Committee, option
grants will be limited to non-employee directors, corporate officers, CEOs of
principal subsidiaries and key station managers. To continue the Company's
culture of broad equity ownership, thereby aligning the interests of employees
with those of the Company's shareholders, but to avoid excess dilution of the
Company's shareholders, the Company may grant phantom equity or other similar
equity-linked incentives to employees other than those specified above who
formerly might have been awarded stock options. Phantom equity and other similar
incentives will, most likely, increase the Company's U.S. GAAP reported
compensation expense compared to issuing fixed-price options, but the Company
believes that it may more accurately reflect the Company's costs.

Option grants will generally take any of the following three forms, at
the discretion of the Compensation Committee.

<TABLE>
<CAPTION>
Expiry Vesting Schedule (Years)
------------------------------------------------------------------------
1 2 3 4 5
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Two-year options 5 years 33% 67%
- -------------------------------------------------------------------------------------------------------------------
Three-year options 7 years 25% 30% 45%
- -------------------------------------------------------------------------------------------------------------------
Five-year options 10 years 10% 15% 15% 25% 35%
</TABLE>

The exercise price of each option on shares of Class A Common Stock
will not be less than the fair market value on the date the grant is approved by
the Compensation Committee, and the exercise price (at least for options granted
in 1998) will increase on the first day of each calendar quarter by one-quarter
of the rate for U.S. Treasury securities with a maturity at the date of grant
equal to the term of the option, compounded annually. The Company will not, as a
matter of principle, reprice options downward. An escalating exercise price is
in the interest of the Company and its shareholders because the Company must at
least earn the risk-free Treasury rate of return before holders of options gain
from their options, and because it will sensitize executives to the "opportunity
cost" or "carrying cost" of capital. The Compensation Committee intends to use
the risk-free rate of return to increase the exercise price for 1998 option
grants. Beginning in 1999, instead of a "cost of capital" factor tied to the
risk-free rate of return, the Compensation Committee may set the exercise price
of some or all of an option significantly in excess of fair market value, or
index the exercise price to the stock performance of a peer group or stock
market average, or such other mechanisms as the Compensation Committee thinks
appropriate to reflect carrying costs, and to incentivize holders.

Going forward, options will expire on the earlier of their stated
expiration date or one year after termination of an executive's employment,
except that options terminate immediately following a termination for cause and
90 days following a voluntary termination by the executive. If there is a Change
in Control of the Company, options will become exercisable if an executive is
thereafter terminated by the Company other than for cause, or if the executive
terminates for good reason. Options that have not vested at the time of
termination of employment cannot be exercised.

Directors. Under the 1995 Amended Stock Option Plan, on the first
business day following each annual meeting of the Company's shareholders during
the term of the 1995 Amended Stock Option Plan, each non-employee director of
the Company (including for these purposes the Chairman and Vice Chairman) who
has served as a director since the last annual meeting of shareholders will be
granted options to purchase 10,000 shares (or in, the case of the Chairman and
Vice Chairman, such higher number as the Board of Directors shall determine) of

Class A Common Stock (in the case of the Chairman and Vice Chairman, Class B
Common Stock if such person is eligible to hold Class B Common Stock). Under the
1995 Amended Stock Option Plan, the exercise price of the options will initially
equal the fair market value of the Class A Common Stock on the date of grant
(105% of the fair market

<PAGE>

value of the Class A Common Stock in the case of a option to acquire Class B
Common Stock) for the 10 business days following the date of grant. In the case
of any such options granted immediately following the Meeting, the Board has
determined that the initial increase price will be increased on the first day of
each calendar quarter by one-quarter of the rate at the time of grant for U.S.
Treasury securities having a maturity approximately equal to the ten year term
of such options, compounded annually, and, with respect to such grants made in
subsequent years under the Plan, may increase by a similar factor or other
factor(s) as determined by the Board of Directors. The options will be
exercisable as to 10% on the first anniversary of the grant date, an additional
15% on each of the second and third anniversaries of the grant date, an
additional 25% on the fourth anniversary of the grant date and an additional 35%
on the fifth anniversary of the grant date and will otherwise be subject to the
general terms of the 1995 Amended Stock Option Plan.

Director Co-Investment and Stock Retention Policy

The Company believes that it is important for non-employee directors to
have a meaningful (to them) equity interest in the Company and to have the bulk
of directors' compensation paid in equity-related items. In order to encourage
the Company's non-employee directors to increase their ownership of the
Company's Common Stock, under the Compensation Principles (as they apply to
non-employee directors) the Board will, under the 1995 Amended Stock Option
Plan, grant to any person who is not currently a director of the Company and who
becomes a non-employee director of the Company an option to acquire a share of
Class A Common Stock (or Class B Common Stock if such person is eligible to hold
Class B Common Stock under the Company's Bye-Laws) for each share of Common
Stock that he or she purchases within 90 days of his or her first election to
the Board of Directors, up to a maximum of 25,000 shares. If a current
non-employee director purchases a number of shares of Common Stock at least
equal to the number of shares underlying options that have previously been
granted to such non-employee director, the Board will, under the 1995 Amended
Stock Option Plan, grant an option to acquire a share of Class A Common Stock
(or Class B Common Stock if such person is eligible to hold Class B Common Stock
under the Company's Bye Laws) for each share of Common Stock purchased within 90
days thereafter, up to a maximum of 25,000 shares. Any such option granted to a
non-employee director will have the same general terms as those described above
for the automatic annual grants to non-employee directors. If the Company's
Director, Officer and Senior Executive Co-Investment plan is approval by the
Company's shareholders, non-employee directors will be permitted to purchase
such shares directly from the Company (but non-employee directors will not be
eligible to receive loans from the Company under the Director, Officer and
Senior Executive Co-Investment Plan) to facilitate such purchases.

While not required, all directors are encouraged to hold their shares
in the Company, or options convertible into shares, as long as they serve as
directors (other than charitable gifts, transfers for estate planning purposes
or sales for tax reasons relating to the exercise of stock options).

Compensation Committee

RONALD S. LAUDER
ANDREW GASPAR
ROBERT A. RAYNE

<PAGE>

PERFORMANCE GRAPH

The following performance graph is a line graph comparing the change in
the cumulative shareholder return of the Class A Common Stock against the total
cumulative total return of the NASDAQ Composite Index, the Dow Jones US Cable
and Broadcasting Index and the Dow Jones Global Cable and Broadcasting Index
between October 13, 1994 (the first day on which the Class A Common Stock
commenced trading on the Nasdaq National Market) and December 31, 1997.

[GRAPH]

DOW JONES DOW JONES
NASDAQ US Cable Global Cable
Composite and and
Date CETV Index Broadcasting (1) Broadcasting (2)
---- ---- --------- ---------------- ----------------
10/94 100.00 100.00 100.00 100.00
12/94 100.00 98.04 94.99 93.03
12/95 146.43 137.17 128.02 113.27
12/96 226.79 168.32 101.44 114.18
12/97 180.36 204.74 177.67 141.21

Value of $100 invested at October 13, 1994 as of December 31, 1997:

Central European Media Enterprises Ltd. $180.36
NASDAQ Composite Index $204.74
Dow Jones US Cable and Broadcasting Index (1) $177.67
Dow Jones Global Cable and Broadcasting Index (2) $141.21

- ----------
(1) This index was formerly known as the Dow Jones Broadcasting Index. This
index is comprised of the following companies: Cablevision Systems Corp.,
CBS Corp., Comcast Corp., Tele-Communications, Inc. and U.S. West Media
Group.

(Footnotes continued on next page)

<PAGE>

(Footnotes continued from previous page)

(2) The Company has decided to add the Dow Jones Global Cable and Broadcasting
Index to its performance graph this year. This index includes 20 companies,
many of which are non-U.S. based. Accordingly, the Company believes that
the inclusion of this index is useful in understanding the stock
performance of the Company against companies in the television broadcast
and cable industry.

<PAGE>

NUMBER OF DIRECTORS

The Board of Directors believes that it is in the best interests of the
Company and its shareholders that the Company have independent directors with
outstanding achievement in their personal careers, broad experience and skills,
an understanding of the Company's business environment, an ability to make
independent analytical inquiries and who can provide the Company with the
benefit of their insights and devote adequate time to Board duties. To this end,
in February 1998 the Board of Directors appointed Peter R. Goldschieder to serve
on the Board of Directors. In addition, the Board of Directors intends to
continue to seek out additional candidates for appointment to the Board of
Directors when appropriate, or to fill any vacancies that may arise (although
the Board of Directors does not believe that any current nominee will be unable
to serve). Under Bermuda law, in order for the Board of Directors to elect
additional directors after the Meeting to serve until the Company's next annual
general meeting of shareholders, the shareholders are required to establish a
maximum number of directors which provides for vacancies on the Board of
Directors. Accordingly, the Board of Directors believes that it is in the best
interests of the Company to set the maximum number of directors to serve on the
Board of Directors until the next annual general meeting of shareholders at ten,
which would allow the Board of Directors to elect directors to fill the three
vacancies prior to the next annual general meeting of shareholders.

Vote Required; Recommendation

THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS A VOTE IN FAVOR
OF SETTING THE MAXIMUM NUMBER OF DIRECTORS TO SERVE ON THE BOARD OF DIRECTORS
UNTIL THE NEXT ANNUAL GENERAL MEETING OF SHAREHOLDERS AT TEN.

<PAGE>

AMENDMENTS TO THE COMPANY'S 1995 STOCK OPTION PLAN
CONCERNING (1) INCREASING THE MAXIMUM NUMBER OF SHARES OF
COMMON STOCK RESERVED FOR ISSUANCE UPON THE EXERCISE OF OPTIONS
GRANTED UNDER THE PLAN AND (2) PERMITTING THE GRANT OF OPTIONS TO PURCHASE
SHARES OF CLASS B COMMON STOCK TO ELIGIBLE PERSONS

The Board of Directors believes that stock options are an integral part of
the compensation packages to be offered to the Company's employees and

non-employee directors and that the grant of stock options, which help to align
the interests of the recipients with those of the Company's shareholders, is an
effective method to attract and retain employees and non-employee directors. No
further options are available for grant under the Company's 1994 Stock Option
Plan. In 1997 the Company granted options on the remaining 382,070 shares that
were authorized for award under the Company's 1995 Stock Option Plan.
Accordingly, in order to be able to continue to grant stock options to
employees, non-employee consultants and non-employee directors, on February 9,
1998 the Board of Directors adopted an amendment to the 1995 Stock Option Plan
providing for an increase of 2,000,000 in the number of shares with respect to
which options may be granted pursuant to the 1995 Stock Option Plan, thus
increasing the shares of Company Common Stock for which options may be granted
under the 1995 Stock Option Plan from 1,200,000 to 3,200,000.

In 1997 and the first quarter of 1998, the Company granted options to acquire
945,530 additional shares, subject to shareholder approval of the increase in
the number of shares authorized for issuance under the 1995 Stock Option Plan.

In addition, the 1995 Stock Option Plan has provided only for the granting of
options to purchase shares of the Company's Class A Common Stock. The Board of
Directors has determined that the ability of the Company to achieve long term
growth and stability will be enhanced by permitting the Company to grant options
for shares of the Company's Class B Common Stock to those persons permitted to
hold shares of Class B Common Stock pursuant to the Company's Bye-laws.
Accordingly, on February 9, 1998 the Board of Directors adopted a provision for
inclusion in the 1995 Stock Option Plan which would permit the Company to grant
options to purchase shares of Class B Common Stock in an amount not to exceed
10% of the number of shares of Company Common Stock for which options may be
granted under the 1995 Stock Option Plan (320,000 shares) to those persons
permitted to hold shares of Class B Common Stock pursuant to the Company's
Bye-laws.

The current employees and non-employee directors of the Company who are
eligible to hold shares of Class B Common Stock are Ronald S. Lauder, Leonard M.
Fertig and Andrew Gaspar. Mr. Fertig and Mr. Gaspar have not been granted any
options on shares of Class B Common Stock and, following May 1, 1998, in the
case of Mr. Fertig, and the Meeting, in the case of Mr. Gaspar, they will become
ineligible, because they will no longer be employees or non-employee directors
of the Company. No other employee or non-employee director is eligible to hold
Class B Common Stock. The Company believes that the only person eligible to hold
Class B Common Stock and who might be awarded options to acquire shares of Class
B Common Stock under the 1995 Amended Stock Option Plan, if approved, will be
Ronald S. Lauder, who, as Chairman, is eligible to receive options to acquire
10,000 shares of Class B Common Stock (or such higher amount as determined by
the Board of Directors) on the date of each annual meeting of the Company's
shareholders following the Meeting.

The Board of Directors also made certain changes to the 1995 Stock Option
Plan that were within the scope of its authority to amend the plan without
shareholder approval. The principal terms of the 1995 Amended Stock Option Plan,
as amended, including the amendments for which shareholder approval is sought,
are summarized below. A complete copy of the 1995 Amended Stock Option Plan,
marked to show additions and deletions from the 1995 Stock Option Plan as
approved by the Company's shareholders in May 1996 accompanies this Proxy

Statement as Exhibit A.

<PAGE>

Nature and Purpose of the 1995 Amended Stock Option Plan

The purpose of the 1995 Amended Stock Option Plan is to induce employees,
non-employee consultants and directors who are not employees of the Company or a
subsidiary (including for these purposes the Chairman and Vice-Chairman of the
Board of Directors) ("Non-Employee Directors") to remain in the employ or
service of the Company, its affiliates and its present and future subsidiaries,
to attract new employees, non-employee consultants and directors and to
encourage such persons to secure or increase on reasonable terms their stock
ownership in the Company. The 1995 Amended Stock Option Plan provides for grants
of Options only to a key employee or non-employee consultant of the Company or a
subsidiary or to a Non-Employee Director of the Company.

The 1995 Amended Stock Option plan authorizes the grant to employees,
non-employee consultants of the Company and Non-Employee Directors of options
(the "Options") to purchase up to 3,200,000 shares of Class A Common Stock and
up to 320,000 shares of Class B Common Stock, provided that the total number of
shares of all classes of Company Common Stock issued under the 1995 Amended
Stock Option Plan may not exceed 3,200,000. Options granted under the 1995
Amended Stock Option Plan are intended to qualify as incentive stock options
("ISOs") within the meaning of Section 422(b) of the Internal Revenue Code of
1986, as amended (the "Code"), or as non-incentive stock options ("NISOs").

Duration and Modification of the 1995 Amended Stock Option Plan

The 1995 Amended Stock Option Plan will terminate on August 1, 2005, the
business day preceding the tenth anniversary of its original effective date. The
Board of Directors may at any earlier time terminate the 1995 Amended Stock
Option Plan or make such modifications of the 1995 Amended Stock Option Plan as
it shall deem advisable. However, the Board of Directors may not, without
further approval by the shareholders, increase either the aggregate total number
of shares to which Options may be granted under the 1995 Amended Stock Option
Plan or the number of shares of Class A or Class B Common Stock available to be
issued, change the class of persons eligible to participate in the 1995 Amended
Stock Option Plan, change the manner of determining Options prices, or extend
the period during which an Option may be granted or exercised.

Administration of the 1995 Amended Stock Option Plan

The 1995 Amended Stock Option Plan is administered by the Compensation
Committee of the Board of Directors, or such other Committee appointed by the
Board of Directors to administer the 1995 Amended Stock Option Plan (the
"Committee"). All of the members of the Committee will be "Non-Employee
Directors" within the meaning of Rule 16b-3(b)(i) promulgated under the
Securities Exchange Act of 1934, as amended. The Committee has complete
authority, in its discretion, to interpret the 1995 Amended Stock Option Plan,
to prescribe, amend and rescind rules and regulations relating to it, to
determine the terms and provision of the respective option agreements or

certificates (which need not be identical), to determine the individuals (each a
"Participant") to whom and the times and the prices at which Options shall be
granted, including the price at which and period during which Options shall be
exercisable, the number of shares of Class A or Class B Common Stock subject to
each Option, and whether an Option shall be an ISO or a NISO; provided that
Options on Class B Common Stock shall be granted only to persons eligible to be
a holder of Class B Common Stock pursuant to the Company's Bye-Laws; provided,
further, that only the Board shall grant Options to Non-Employee Directors
(other than Options granted to non-employee directors in connection with the
annual meeting of the Company's shareholders, as described below) and determine
the terms thereof.

Exercise of Stock Options

Unless otherwise provided by the Committee at the time of grant, a
Participant may not exercise an Option granted under the 1995 Amended Stock
Option Plan prior the first anniversary of the date of grant. Under the 1995
Amended Stock Option Plan, an Option generally will be exercisable in
installments, which need not be equal, as specified by the Committee at the time
of grant.

<PAGE>

An Option may be exercised by a written notice of intent to exercise such
Option with respect to a specified number of shares of the Common Stock and
payment in cash or in shares of Class A of Class B Common Stock, of the exercise
price for the number of shares so specified. The initial per share exercise
price of an Option which is an ISO may not be less than the fair market value of
a share of Class A or Class B Common Stock, as the case may be, on the date of
grant or 110% of such fair market value, with respect to a Participant who, at
such time, owns stock representing more than 10% of the total combined voting
power of all classes of stock of the Company. The initial per share exercise
price of an Option which is a NISO granted to an employee or nonemployee
consultant shall be the price determined by the Committee, but shall not be less
than the fair market value of a share of Class A or Class B Common Stock, as the
case may be, on the date of grant or the average fair market value of a share of
Class A or Class B Common Stock, as the case may be, over a period specified in
the grant following the grant date (not to exceed 20 business days). The initial
per share exercise price of any Option granted at a time other than at each
annual meeting of the Company's shareholders to a Non-Employee Director shall be
the price determined by the Board of Directors. The initial per share exercise
price of any Option to acquire shares of Class B Common Stock shall be not less
than 105% of either the fair market value of a share of the Class A Common Stock
on the date of grant, or the average fair market value of a share of the Class A
Common Stock over a period specified in the grant following the grant date (not
to exceed 20 business days) as the Board of Directors or the Committee shall
determine. The Committee may provide that the option price per share will
increase to reflect the Company's cost of capital or any other objective
measure, or may set the initial exercise price at an amount in excess of the
fair market value of Company Common Stock at the time of grant. The Committee
also has the authority to implement procedures to allow a broker-dealer selected
by a Participant to make payment of all or a portion of the shares of Common

Stock issuable upon exercise.

No Option granted pursuant to the 1995 Amended Stock Option Plan may be
exercised more than 10 years after the date of grant. ISOs granted to
Participants who own more than 10% of the total combined voting power of all
classes of stock of the Company at the time the ISO is granted may not be
exercised after five years after the date of grant. No Participant may be
granted ISOs which are exercisable for the first time in any one calendar year
with respect to Class A or Class B Common Stock having an aggregate fair market
value in excess of $100,000 on the date of grant. No Option granted under the
1995 Amended Stock Option Plan is transferable by the Participant except by will
and/or by the laws of descent and distribution, provided that the Board of
Directors or the Committee may provide that the Participant may transfer an
Option for no consideration to any member of his or her immediate family or to
any trust for the benefit of the Participant's immediate family.

Generally, an Option may be exercised only while the Participant is in the
active employee or service of the Company. If an option holder ceases employment
or service with the Company as a result of the holder's (i) death, (ii)
disability, or (iii) retirement at or after age 65, the holder (or his or her
beneficiary or legal representative) may exercise any Option (other than an
Option that has previously expired or been canceled), regardless of whether then
exercisable, for a period of one year, but in no event after the date the option
otherwise expires. If an option holder's employment is terminated for cause, all
of his or her options shall immediately terminate, regardless of whether then
exercisable. If an option holder's employment terminates for any other reason,
the holder (or his or her beneficiary or legal representative) may exercise any
option that was exercisable at the time of such termination for 90 days
following the date of such termination, but in no event after the date the
option otherwise expires.

The number of shares of Class A and Class B Common Stock available for grant
under the 1995 Amended Stock Option Plan and covered by each Option granted
thereunder will be adjusted in the event of a stock dividend, reorganization,
recapitalization, stock split-up, combination of shares, sale of assets, merger
or consolidation in which the Company is the surviving corporation or, in the
event of any other change affecting the number or kind of the Company's
outstanding Class A or Class B Common Stock, if the Committee determines that
such change equitably requires an adjustment in the number or kind of shares
then subject to any Option, or in the number or kind of shares reserved for
issuance under the 1995 Amended Stock Option Plan. In the event of dissolution
or liquidation of the Company, or a merger, reorganization or consolidation in
which the Company is not the surviving corporation, all outstanding Options
shall be immediately exercisable in full.

<PAGE>

Annual Awards to Non-Employee Directors

At each annual meeting the Company's shareholders following the approval and
ratification of the 1995 Amended Stock Option Plan, each Non-Employee Director

of the Company (including for these purposes the Chairman and Vice Chairman) who
has served as a director since the last annual meeting of shareholders will be
granted options to purchase 10,000 shares (or in the case of the Chairman and
Vice Chairman, such higher number as the Board of Directors shall determine) of
Class A Common Stock (or in the case of the Chairman and Vice Chairman, Class B
Common Stock if such person is eligible to hold Class B Common Stock and such
grant is approved by the Board). Under the 1995 Amended Stock Option Plan, the
exercise price of the options will initially equal either the fair market value
of a share of Class A Common Stock on the date of grant or the average fair
market value of a share of Class A Common Stock for the 10 business days
following the date of grant (105% of the fair market value of the Class A Common
Stock, or 10 business day average thereof, in the case of an option to acquire
Class B Common Stock). In the case of any such options granted immediately
following the Meeting, the Board has determined that the initial exercise price
will be increased on the first day of each calendar quarter by one-quarter of
the rate at the time of grant for U.S. Treasury securities having a maturity
approximately equal to the 10 year term of such options, compounded annually,
and, with respect to such grants made in subsequent years under the plan, may
increase by a similar factor or other factor(s) as determined by the Board of
Directors. The options will become exercisable as to 10% on the first
anniversary of the grant date, an additional 15% on each of the second and third
anniversaries of the grant date, an additional 25% on the fourth anniversary of
the grant date and an additional 35% on the fifth anniversary of the grant date
and will otherwise be subject to the general terms of 1995 Amended Stock Option
Plan.

United States Federal Income Tax Consequences of Issuance and Exercise of
Options

The following discussion of the United States Federal income tax consequences
of the granting and exercise of options under the 1995 Amended Stock Option
Plan, and the sale of the Class A or Class B Common Stock acquired as a result
thereof, is based on an analysis of the Code, as currently in effect, existing
laws, judicial decisions and administrative rulings and regulations, all of
which are subject to change. The following discussion applies only to a
Participant who is a United States person (hereinafter referred to as a "United
States Participant"). For purposes of this discussion, a "United States
Participant" means a citizen or resident alien of the United States. In addition
to being subject to the United States Federal income tax consequences described
below, a United States Participant may also be subject to state, local and/or
foreign income tax consequences in the jurisdiction in which he or she works
and/or resides.

Non-Incentive Stock Options:

No income will be recognized by a United States Participant at the time a
NISO is granted.

Ordinary income will be recognized by a United States Participant at the time
a NISO is exercised, and the amount of such income will be equal to the excess
of the fair market value on the exercise date of the shares issued to the United
States Participant over the exercise price. In the case of a United States
Participant who is an employee of the Company or its subsidiaries, this ordinary
income may also constitute wages subject to the withholding of income tax, and

the Company or its subsidiaries will be required to make whatever arrangements
are necessary to ensure that the amount of the tax required to be withheld is
available for payment to the Internal Revenue Service in money.

A United States Participant generally will recognize capital gain or loss on
a subsequent sale or other taxable disposition of the shares of Class A or Class
B Common Stock acquired upon exercise of a NISO, and such gain or loss will be
measured by the difference between the amount realized on the disposition and
the tax basis of such shares. The tax basis of the shares acquired upon the
exercise of the NISO will be equal to the sum of the exercise price of the NISO
and the amount included in income upon exercise of the NISO. The holding period
of the shares will be measured from the date of exercise. Depending on whether
the shares are held less than 12 months, 12 to 18 months, or longer than 18
months, capital gain or loss will be either short-term, mid-term or long-term.

<PAGE>

If a United States Participant makes payment of the exercise price of a NISO
by delivering shares of Class A or Class B Common Stock, he or she generally
will not recognize any gain with respect to such shares as a result of such
delivery, but the amount of gain, if any, which is not so recognized will be
excluded from his or her basis in the new shares received.

The Company or its subsidiaries generally will be entitled to a deduction for
United States Federal income tax purposes at such time and in the same amount as
the amount included in ordinary income by the United States Participant upon
exercise of his or her NISO, subject to the usual rules as to reasonableness of
compensation and provided that the Company or its subsidiaries timely complies
with applicable information reporting requirements.

Incentive Stock Options:

In general, neither the grant nor the exercise of an ISO will result in
taxable income to a United States Participant or a deduction to the Company or
its subsidiaries. However, for purposes of the alternative minimum tax, the
spread on the exercise of an ISO will be considered as part of the United States
Participant's income.

The sale of the shares of Class A or Class B Common Stock received pursuant
to the exercise of an ISO which satisfies the holding period rules will result
in capital gain to a United States Participant and will not result in a tax
deduction to the Company or its subsidiaries. To receive incentive stock option
treatment as to the shares acquired upon exercise of an ISO, a United States
Participant must neither dispose of such shares within two years after the ISO
is granted nor within one year after the exercise of the ISO. In addition, a
United States Participant generally must be an employee of the Company (or a
subsidiary of the Company) at all times between the date of grant and the date
three months before exercise of the ISO.

If the holding period rules are not satisfied, the portion of any gain
recognized by a United States Participant on the disposition of the shares
acquired upon the exercise of an ISO that is equal to the lesser of (a) the fair

market value of the Class A or Class B Common Stock on the date of exercise
minus the exercise price or (b) the amount realized on the disposition minus the
exercise price, will be treated as ordinary income, with any remaining gain
being treated as capital gain. The Company or its subsidiaries generally will be
entitled to a deduction for United States Federal income tax purposes equal to
the amount of such ordinary income.

If the United States Participant makes a payment of the exercise price of an
ISO by delivering shares of Class A or Class B Common Stock, he or she generally
will not recognize any gain with respect to such shares as a result of such
delivery, but the amount of gain, if any, which is not so recognized will be
excluded from his or her basis in the new shares received. However, the use by a
United States Participant of shares previously acquired pursuant to the exercise
of an ISO to exercise an ISO will be treated as a taxable disposition if the
transferred shares were not held by the Participation for the requisite holding
period.

<PAGE>

Certain Information with Respect to Options Granted

Benefits Under the 1995 Amended Stock Option Plan. The optionees and the
amounts, terms and grant dates of options under the 1995 Stock Option Plan, will
be at the discretion of the Compensation Committee, as they are presently, and
future grants are not presently determinable. The following table sets forth,
with respect to the Named Executive Officers, all executive officers as a group,
all non-employee directors as a group, and all employees as a group (excluding
executive officers), the number of shares of Common Stock subject to options
which were granted during the year ended December 31, 1997 subject to approval
by the shareholders of the proposed amendments to the 1995 Stock Option Plan,
and certain related information:

Number of Shares of Number of Shares of
Class A Common Class B Common
Name of Individual Capacities in Stock Subject to Stock Subject to
or Identity of Group which Served Option Option
-------------------------- ----------------------------- ------------------- -------------------
<S> <C> <C> <C>
Leonard M. Fertig President and Chief Executive 33,405(2) --
Officer (1)
John A. Schwallie Vice President-Finance 53,449(3) --
and Chief Financial
Officer
All executive officers as a 86,854 --
group (2 persons)
All non-employee directors as 33,406 66,810 (4)
a group (5 persons)
All employees (except 345,460 --

executive officers) as a group
(72 persons)
</TABLE>

- --------------
(1) Mr. Fertig resigned as President and Chief Executive Officer of the Company
on March 26, 1998.

(2) Based on the $25.25 market price of the Class A Common Stock on December
31, 1997, the aggregate net value realizable by Mr. Fertig upon exercise of
the options would be $75,161.

(3) Based on the $25.25 market price of the Class A Common Stock on December
31, 1997, the aggregate net value realizable by Mr. Schwallie upon exercise
of the options would be $120,260.

(4) The grant of these options was initially authorized in 1997 and was
confirmed as a grant of options to purchase shares of Class B Common Stock
in February 1998.

In the first quarter of 1998, the Company hired Michel P. Delloye as
President and Chief Executive Officer and Frederic T. Klinkhammer as Executive
Vice President and Chief Operating Officer. Pursuant to their respective
employment agreements, each received option grants (see pages 13-15).

Vote Required; Recommendation

Approval of this proposal requires the affirmative vote of a majority of the
votes cast, in person or by proxy, at the Meeting, provided that a quorum is
present in person or by proxy. Abstentions and broker non-votes will be included
in determining the presence of a quorum but are not counted as votes cast.
Unless otherwise indicated, the accompanying form of proxy will be voted FOR the
adoption of the amendments to the Company's 1995 Stock Option Plan.

<PAGE>

THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS A VOTE IN FAVOR
OF THE ADOPTION OF THE AMENDMENTS TO THE COMPANY'S 1995 STOCK OPTION PLAN TO
PROVIDE FOR INCREASING THE MAXIMUM NUMBER OF SHARES OF THE COMPANY'S COMMON
STOCK TO BE RESERVED FOR ISSUANCE UPON THE EXERCISE OF OPTIONS GRANTED UNDER THE
1995 STOCK OPTION PLAN AND TO PERMIT THE GRANTING OF OPTIONS TO PURCHASE SHARES
OF THE COMPANY'S CLASS B COMMON STOCK TO PERSONS PERMITTED TO HOLD SHARES OF
CLASS B COMMON STOCK PURSUANT TO THE COMPANY'S BYE-LAWS.

GRANT TO RONALD S. LAUDER OF OPTIONS TO PURCHASE
SHARES OF CLASS B COMMON STOCK

The Board of Directors of the Company (without the participation of Ronald S.
Lauder) has noted that Ronald S. Lauder, the founder and Chairman of the Board
of the Company, has been significantly involved in the development of the

Company's overall corporate strategy and in the selection and evaluation of the
Company's senior executive officers. The degree of his involvement in specific
activities of the Company varies from time to time based on his availability and
the needs of the Company. Historically, Mr. Lauder's involvement has been
greatest in connection with the acquisitions of broadcasting rights in certain
countries, in finding local strategic partners in certain markets and in
developing and presenting matters for consideration by the Board of Directors.
While from time to time Mr. Lauder may spend and has spent a significant amount
of time on Company matters, he has not in the past and does not in the future
intend to spend a majority of his time in any particular year on Company
affairs. Mr. Lauder is not an employee of the Company.

The Board of Directors (without the participation of Mr. Lauder) has
determined that (i) on a going forward basis it anticipates that Mr. Lauder will
play a significant role in the Company's activities related to (a) corporate
governance, including the role and the composition of the Board of Directors,
(b) strategic growth and development, both planning and implementation,
horizontally and vertically, (c) capital allocation, (d) compensation policies,
(e) evaluation, recruitment and selection of top management including the
Company's Chief Executive Officer, Chief Operating Officer, Chief Financial
Officer, General Counsel and certain station managers and partners and (f)
maintaining and enhancing the Company's position in certain key markets
including relations with local partners and government officials, (ii) the
Company's ability to grow (a) strategically in traditional television
broadcasting in new markets, (b) vertically and (c) horizontally depends to a
large degree on Mr. Lauder's support, (iii) Mr. Lauder has valuable knowledge
of, and experience in, Central and Eastern Europe, and his expertise can be of
great benefit to, and possibly crucial to the future growth and development of,
the Company and in its maintaining and obtaining television broadcast licenses,
(iv) Mr. Lauder has an extensive network of business and government contacts
throughout Europe and the United States and the Company will only be able to
take advantage of these relationships if Mr. Lauder's involvement with and
availability to the Company continues, (v) the Board of Directors is eager to
preserve and sustain Mr. Lauder's active involvement in the Company beyond that
normally expected of a director, (vi) the Board of Directors wishes to provide
Mr. Lauder with appropriate remuneration for the services which it is expected
he will provide in his capacity as a non-executive director, Mr. Lauder having
never asked for or received any cash compensation for services on behalf of the
Company, in the past or future, (vii) the great majority of Mr. Lauder's
holdings in the Company are in the form of shares of Class B Common Stock of the
Company and he has expressed that his interests lie in acquiring shares of Class
B Common Stock rather than shares of Class A Common Stock and (viii) granting
options to purchase shares of Class B Common Stock to Mr. Lauder would (a)
provide reasonable assurance of the continuation of his support for, and
involvement with, the affairs of the Company beyond that normally expected of a
director, (b) operate as an incentive to Mr. Lauder to concentrate his energies,
talents and resources for the benefit of the Company and (c) further align Mr.
Lauder's interests with those of other shareholders.

Accordingly, the Board of Directors believes that it is in the best interests
of the Company and its shareholders to grant to Ronald S. Lauder options to
purchase 100,000 shares of Class B Common Stock of the Company pursuant

<PAGE>

to the 1995 Amended Stock Option Plan. The exercise price for these options is
equal to 105% of the average of the fair market value for shares of Class B
Common Stock of the Company for the ten business days immediately following
their grant by the Board ($23.927 per share), the options will become
exercisable in two equal installments on the first and second anniversaries of
their grant and will expire on the day preceding the tenth anniversary of their
grant date. Other than the pricing formula and class of shares, the terms of
this option are identical to those approved by the Board of Directors for
options granted to employees and non-employee directors in fiscal year 1997.

Vote Required; Recommendation

Approval of this proposal requires the affirmative vote of a majority of the
votes cast, in person or by proxy, at the Meeting, provided that a quorum is
present in person or by proxy. Abstentions and broker non-votes will be included
in determining the presence of a quorum but are not counted as votes cast.
Approval of this proposal by the shareholders will not be effective unless the
shareholders also approve the amendments to the 1995 Stock Option Plan to be
voted upon at the Meeting. Unless otherwise indicated, the accompanying form of
proxy will be voted FOR the approval of this proposal.

THE BOARD OF DIRECTORS OF THE COMPANY (WITH MR. LAUDER ABSTAINING)
UNANIMOUSLY RECOMMENDS A VOTE IN FAVOR OF GRANTING TO RONALD S. LAUDER
OPTIONS TO PURCHASE 100,000 SHARES OF CLASS B COMMON STOCK OF THE COMPANY
PURSUANT TO THE 1995 AMENDED STOCK OPTION PLAN.

THE DIRECTOR, OFFICER AND SENIOR EXECUTIVE CO-INVESTMENT PLAN

The Board of Directors believes that it is in the best interests of the
Company for the Company's senior executives to hold a meaningful amount of their
liquid net worth in Common Stock of the Company, and to bear risk of loss, as
well as upside, with respect to the Company's Common Stock. This will encourage
the executives to think as owners of the Company, and further align their
interests with those of the Company and its shareholders. Accordingly, in March
1998, in connection with its approval of the Company's Compensation Principles
(see "Compensation Committee Report on Executive Compensation"), the
Compensation Committee has adopted the Director, Officer and Senior Executive
Co-Investment Plan (the "Co-Investment Plan"), as directed by the Board of
Directors in the Compensation Principles. The principal terms of the
Co-Investment Plan are summarized below and the text of the Co-Investment Plan
accompanies this Proxy Statement as Exhibit B.

The Company's most senior corporate executives and key station managers
(approximately [3-5] people at any given time) who will participate in the
Co-Investment Plan will be selected by the Compensation Committee. The
Co-Investment Plan will commence on the date it is ratified by the Company's
shareholders and expire on the tenth anniversary of the date of such
ratification. Under the Co-Investment Plan, the Company will be authorized to
make matching non-recourse loans, on a dollar-for-dollar basis, to eligible

senior executives of the Company and key station managers (but not to
Non-Employee Directors) who purchase Company Common Stock (other than through
exercise of options). The Committee will also be authorized to make such loans
on a recourse basis. The financed shares are required to be pledged as security
for such loans, and may not be sold until the executive's employment is
terminated or after seven years, whichever period is shorter. Any such loans
will bear interest at the 7-year Treasury Note rate at the time of the loan, and
interest will be due at the end of each calendar year. At any time, the maximum
amount of any such loans to a particular executive that may be outstanding may
not exceed such executive's annual base salary. The aggregate amount of such
loans at any time outstanding to all senior executives may not exceed
$2,000,000. Any such loan will become due at the earlier of (a) the expiration
of 7 years, (b) termination of employment for any reason other than death or
disability, (c) one year after termination of employment by reason of death or
disability and (d) sale of the non-financed shares (in which case the loan shall
become due on a pro rata basis with the non-financed shares sold). A participant
will be required to apply 25% of his or her annual cash bonus to repay the
principal of any such loan. To encourage further ownership of Company

<PAGE>

Common Stock, the Compensation Committee may match share purchases with grants
of options to acquire Class A Common Stock under the 1995 Amended Stock Option
Plan.

To facilitate purchases of Class A Common Stock, the Company is authorized to
sell shares of Class A Common Stock to a participant in the Co-Investment Plan,
although shares eligible for matching loans (to the extent permitted by
applicable laws and regulations) may also be purchased on the open market. In
addition, shares may be purchased from the Company under the Co-Investment Plan
by non-employee directors to facilitate purchases by them in connection with the
non-employee director co-investment component of the Company's Compensation
Principles (see "Compensation of Directors" above). The purchase price for any
such shares shall be the mean between the high and the low trading prices of the
Company's Class A Common Stock on the date of purchase as reported on the Nasdaq
National Market System (or such other recognized market or quotation system on
which the trading prices of the Class A Common Stock are reported at such time).

The Co-Investment Plan will be interpreted and administered by the
Compensation Committee, which shall establish written procedures concerning the
application for and the making of loans under the Co-Investment Plan and the
sale of shares of Class A Common Stock under the Co-Investment Plan. The
Co-Investment Plan may generally be amended, modified or terminated by the
Board. No such amendment or termination shall adversely affect the right of any
participant under any existing loan without the written consent of the
participant.

The United States Federal income tax consequences for a United States
Participant (as defined above in the discussion of the Federal income tax
consequences of the 1995 Amended Stock Option Plan) with respect to shares
purchased under the Co-Investment Plan with the proceeds of non-recourse loan
from the Company depend, in part, upon whether the shares purchased by an

eligible employee will be considered, under Section 83 of the Internal Revenue
Code of 1986 as amended (the "Code"), actually to have been transferred for
Federal income tax purposes at the time of purchase. Internal Revenue Service
regulations issued under Section 83 of the Code indicate that a purchase of
shares by an employee financed in substantial part by non-recourse debt, may be
treated as either a transfer of property or the grant of an option. The factors
to be taken into account include (i) the type of property involved, (ii) the
extent to which the risk that the property will decline in value has been
transferred, and (iii) the likelihood that the purchase price will, in fact, be
paid. In this regard, it is unclear whether a participant's direct purchase of
shares would be integrated with his purchases with the proceeds of the
non-recourse matching loan from the Company under the Co-Investment Plan.

If the purchase is treated as a transfer of the applicable shares at the time
of the purchase, an employee who is a United States Participant would realize no
income for Federal income tax purposes with respect to the purchase because the
purchase price is the fair market value of the shares. If the initial
transaction were treated instead as the grant of an option, it appears that the
employee would not realize any income for Federal income tax purposes until such
time as the employee bears the risk of a decline in value of the shares
purchased and it becomes sufficiently likely that the purchase price will be
paid, at which time a transfer of property will be deemed to have occurred, and
an employee who is a United States Participant will be subject to Federal income
tax, at ordinary income rates, on an amount equal to the excess of the then fair
market value of the shares over (a) the original purchase price plus (b) any
amounts denominated as interest under the loan to purchase such shares. The
Company generally would be entitled to a Federal income tax deduction in an
identical amount at the time the employee recognizes income.

If a participant's purchase of Common Stock under the Co-Investment Plan is
treated as a transfer of the applicable shares at the time of the purchase, or
upon such later time as a transfer is deemed to occur of Federal income tax
purposes, the Company generally will have interest income equal to interest
payable on any loans made to employees to purchase shares of Common Stock. If
and to the extent the purchase is instead treated as an option, any amounts
denominated as interest under such loans would be treated as a payment under
such deemed option, and the Company would not be subject to income tax on such
amounts. Interest payable by a United States Participant on a loan made under
the Co-Investment Plan may be subject to certain limitations as to
deductibility.

<PAGE>

New Plan Benefits

The number of shares, if any, which may be sold to eligible employees under
the Co-Investment Plan or any options that may be granted to eligible employee
or non-employees directors, in 1998 or thereafter, is not now determinable since
such amounts depend on the direct purchases of Class A Common Stock by such
persons (if any) made after the date of the Meeting.

Vote Required; Recommendation

Approval of this proposal requires the affirmative vote of a majority of the
votes cast, in person or by proxy, at the Meeting, provided that a quorum is
present in person or by proxy. Abstentions and broker-dealer non-votes will be
included in determining the presence of a quorum but are not counted as votes
cast. Unless otherwise indicated, the accompanying form of proxy will be voted
FOR the adoption of the Co-Investment Plan.

THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS A VOTE IN
FAVOR OF THE ADOPTION OF THE COMPANY'S DIRECTOR, OFFICER AND SENIOR EXECUTIVE
CO-INVESTMENT PLAN.

STOCK DEPRECIATION PROTECTION
FOR LEONARD M. FERTIG

The Board of Directors of the Company (without the participation of Leonard
M. Fertig) has determined that it is in the best interests of the Company and
its shareholders to approve certain provisions contained in a severance
agreement entered into on March 25, 1998 between the Company, two wholly-owned
subsidiaries of the Company and Leonard M. Fertig, the former President and
Chief Executive Officer of the Company, and a consulting company owned by Mr.
Fertig, which provide certain price protections against a decline in the value
of shares of the Company's Common Stock which were beneficially owned by Mr.
Fertig at the time that he ceased to be the President and Chief Executive
Officer of the Company. These provisions are summarized below and a full copy of
these provisions accompanies this Proxy Statement as Exhibit C.

Under the severance agreement, Mr. Fertig has agreed not to sell more than
50,000 shares of the Company's Class A Common Stock prior to May 1, 1998 or the
three month anniversary of the date on which he ceases to be a member of the
Board of Directors of the Company, whichever is later (the "Initial Sales
Period"). If during the Initial Sales Period the average per share selling price
(before commissions and other expenses of sale) for all shares of the Company's
Class A Common Stock owned by Mr. Fertig on March 25, 1998 (the "Owned Shares")
plus all shares of Class A Common Stock acquired by Mr. Fertig upon exercise of
options owned by Mr. Fertig on March 25, 1998 if sold prior to the disposition
of the Owned Shares (together the "Eligible Owned Shares"), sold in arm's length
transactions is less than $27.625 per share, the Company will pay Mr. Fertig an
amount equal to the difference between $27.625 and the higher of either $20.00
or the average selling price of such shares (before deduction for commissions
and other expenses of sale) per share sold during the Initial Sales Period.

Trigger Date plus (2) the average of the closing prices for a share of the
Company's Class A Common Stock for the 20 consecutive trading days ending on
either April 30, 1999 or the Trigger Date, whichever is earlier, multiplied by
the number of Owned Shares not disposed

<PAGE>

of during the Initial Sales Period or taken into account in clause (1) divided
by the number of Owned Shares not disposed of during the Initial Sales Period.

Under Bermuda law, the above provisions are required to be approved by the
shareholders of the Company.

Vote Required; Recommendation

THE BOARD OF DIRECTORS OF THE COMPANY (WITH MR. FERTIG ABSTAINING)
UNANIMOUSLY RECOMMENDS A VOTE IN FAVOR OF APPROVING THE STOCK DEPRECIATION
PROTECTION PROVISIONS IN LEONARD M. FERTIG'S SEVERANCE AGREEMENT.

ADOPTION OF FINANCIAL STATEMENTS

The Audit Committee of the Board of Directors has approved the audited
financial statements for the Company's fiscal year ended December 31, 1997 (the
"Financial Statements") for presentation to the shareholders at the Annual
Meeting of Shareholders. Under Bermuda law, the shareholders are requested to
adopt financial statements; under Bermuda law, the adoption of the Financial
Statements by the shareholders does not affect any rights that the shareholders
may have with respect to the Financial Statements.

Vote Required; Recommendation

The adoption of the Financial Statements requires the affirmative vote of a
majority of the votes cast, in person or by proxy, at the Meeting, provided that
a quorum is present in person or by proxy. Abstentions and broker non-votes will
be included in determining the presence of a quorum, but are not counted as
votes cast. Unless otherwise indicated, the accompanying form of proxy will be
voted FOR adoption of the Financial Statements and the auditors' report thereon.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE IN FAVOR OF THE ADOPTION
OF THE FINANCIAL STATEMENTS AND THE AUDITORS' REPORT THEREON.

<PAGE>

SELECTION OF AUDITORS

At the recommendation of the Audit Committee, the Board of Directors
recommends to the shareholders that Arthur Andersen & Co., Victoria Hall,
Hamilton, Bermuda, be appointed to serve as the independent auditors of the
Company until the conclusion of the Company's next annual general meeting of
shareholders. In addition, the Board of Directors recommends to the shareholders
that the shareholders authorize the Board of Directors to approve the auditors'
fee.

Representatives of Arthur Andersen & Co. are expected to be present at the
Meeting, will have an opportunity to make a statement if they so desire and will
be available to respond to appropriate questions from shareholders.

Vote Required; Recommendation

The appointment of Arthur Andersen & Co. to serve as the independent auditors
of the Company and the authorization of the Board of Directors to approve the
auditors' fee requires the affirmative vote of a majority of the votes cast, in
person or by proxy, at the Meeting, provided that a quorum is present in person
or by proxy. Abstentions and broker non-votes will be included in determining
the presence of a quorum, but are not counted as votes cast. Unless otherwise
indicated, the accompanying form of Proxy will be voted FOR the appointment of
Arthur Andersen & Co. as the Company's auditors and FOR the Board of Directors
to approve the auditors' fee.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE IN FAVOR OF THE
APPOINTMENT OF ARTHUR ANDERSEN & CO. AS THE COMPANY'S AUDITORS AND A VOTE IN
FAVOR OF AUTHORIZING THE BOARD OF DIRECTORS TO APPROVE THE AUDITORS' FEE.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

In June 1997, CEDC Praha s.r.o ("CEDC Praha"), which owned the facility that
Nova TV uses as its main studios and its principal offices (the "Nova
Facility"), terminated the capital lease pursuant to which CEDC Praha leased the
Nova Facility to CNTS, and entered into an agreement with CNTS pursuant to which
(i) CEDC Praha assigned the Nova Facility to CNTS and (ii) CNTS assumed CEDC
Praha's obligations under a loan from Ceska Sporitelna Bank ("CS")(the "CS
Loan") secured by a mortgage on the Nova Facility. The CS Loan provides for
quarterly payments of approximately $480,000, plus interest equal to 3 months
PRIBOR plus 1%, to be paid through December 1999. As of December 31, 1997, the
outstanding balance under the CS Loan was approximately $3,600,000. Messrs.
Lauder, Gaspar and Trollope are Chairman, President and a director,
respectively, of the parent company of CEDC Praha, and have an aggregate equity
interest in excess of 10% of such parent company.

R.S. Lauder, Gaspar & Co., LP ("RSLAG") has agreed to perform administrative
services for CME Media Enterprises B.V. ("CME BV"), a subsidiary of the Company,
pursuant to a services agreement dated as of April 1, 1994 (and subsequently

extended) (the "Services Agreement"). Under the Services Agreement, CME BV has
agreed to reimburse RSLAG for its costs (including the costs of employees)
incurred in providing administrative services to the Company. The costs of such
services that may be requested from time to time by the Company pursuant to the
Services Agreement are at a rate that could reasonably be expected to be charged
by an unaffiliated third party. During the fiscal year ended December 31, 1997,
the Company paid $92,800 to RSLAG under the Services Agreement. The Services
Agreement was not negotiated on an arm's length basis. The Company believes,
however, that the terms of the Services Agreement are at least as favorable to
the Company as those it could negotiate with unrelated parties. Mr. Gaspar is
the president of the corporate general partner of RSLAG, and Mr. Lauder is a
limited partner, but holds a majority of the economic interests in RSLAG.

<PAGE>

Mr. Gaspar, currently a director of the Company, has a services agreement
with the Company which expires in October 1998. Pursuant to the agreement, the
Company pays $125,000 per year to a corporation owned by Mr. Gaspar and members
of his family for services performed by him outside of the United States. Under
the agreement, the Company acknowledges that Mr. Gaspar will devote at least a
majority of his business time to activities unrelated to the business and
affairs of the Company. The agreement contains prohibitions on the disclosure of
confidential information and a non-compete covenant which has a term of two
years after its termination. The Company does not intend to renew this
agreement.

SHAREHOLDER PROPOSALS

Any proposal of an eligible shareholder intended to be presented at the next
annual general meeting of shareholders of the Company must be received by the
Company by January [ ], 1999 to be eligible for inclusion in the Company's proxy
statement and form of proxy relating to such meeting.

MISCELLANEOUS

Under Bermuda law, no matter or business other than those set forth in the
accompanying Notice of Annual Meeting of Shareholders is permitted to be
presented at the Meeting.

The Company will bear the cost of preparing, assembling and mailing the
enclosed form of proxy, this Proxy Statement and other material which may be
sent to shareholders in connection with this solicitation. Officers and regular
employees may solicit proxies by mail, telephone, telegraph and personal
interview, for which no additional compensation will be paid. In addition,
Shareholder Communications Corporation has been engaged by the Company to act as
proxy solicitors and will receive fees of $3,000, plus expenses. The Company may
reimburse persons holding shares in their names or in the names of nominees for
their reasonable expenses in sending proxies and proxy material to their
principals.

The Annual Report to Shareholders for the fiscal year ended December 31, 1997
is being mailed to shareholders simultaneously with this Proxy Statement.

By order of the Board of Directors,

NICOLAS G. TROLLOPE
Secretary

Hamilton, Bermuda
May [ ], 1998

<PAGE>

EXHIBIT A

CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.

1995 STOCK OPTION PLAN
As Amended and Restated to March 11, 1998

1. Purpose.

The purpose of the 1995 Stock Option Plan (the "Plan") is to induce
employees, nonemployee consultants and directors who are not employees of the
Company or a Subsidiary ("nonemployee directors") to retain their association
with Central European Media Enterprises Ltd. (the "Company"), its affiliates and
its present and future subsidiaries (each a "Subsidiary"), as defined in Section
424(f) of the Internal Revenue Code of 1986, as amended (the "Code"), to attract
new employees, nonemployee consultants and directors who are not employees and
to encourage such employees, nonemployee consultants and directors who are not
employees to secure or increase on reasonable terms their stock ownership in the
Company. The Board of Directors of the Company (the "Board") believes that the
granting of stock options (the "Options") under the Plan will promote continuity
of management and increased incentive and personal interest in the welfare of
the Company by those who are or may become primarily responsible for shaping and
carrying out the long range plans of the Company and securing its continued
growth and financial success. Options granted hereunder are intended to be
either (a) "incentive stock options" (which term, when used herein, shall have
the meaning ascribed thereto by the provisions of Section 422(b) of the Code) or
(b) options which are not incentive stock options ("non-incentive stock
options") or (c) a combination thereof, as determined by the Committee (the
"Committee") referred to in Section 5 hereof at the time of the grant thereof.

2. Effective Date of the Plan.

The Plan was adopted by resolution of the Board of Directors of the Company
(the "Board") on August 2, 1995 and ratified by a majority of the votes cast by
holders of outstanding shares of the common stock, $.01 par value, of the
Company (the "Common Stock"), voting as a single class, in person and by proxy,
at the Company's annual general meeting of shareholders held on May 3, 1996. The
Plan was further amended by resolution of the Board on March 17 and October 4,
1997 and was amended and restated by resolution of the Board on March 11, 1998,
which amendment and restatement shall become effective upon ratification of the
Plan by a majority of the votes cast in person or by proxy (provided a quorum is
present) at a meeting of the holders of the Common Stock, voting as a single
class.

3. Stock Subject to Plan.

3,200,000 of the authorized but unissued shares of the Class A Common Stock
(the "Class A Common Stock") and 320,000 of the authorized but unissued shares
of the Class B Common Stock (the "Class B Common Stock"), are hereby reserved
for issue upon the exercise of Options granted under the Plan; provided,
however, that the aggregate number of shares of Common Stock that may be issued
under the Plan shall not exceed 3,200,000; provided further, however, that the
number of shares so reserved may from time to time be reduced to the extent that
a corresponding number of issued and outstanding shares of the Class A Common
Stock or Class B Common Stock are purchased by the Company and set aside for
issue upon the exercise of Options; and provided further, however, that the
number of shares of Class A Common Stock reserved shall be reduced by the number
of shares of Class B Common Stock that are delivered pursuant to the exercise of
an Options hereunder. If any Options expire or terminate for any reason without
having been exercised in full, the unpurchased shares subject thereto shall
again be available for the purposes of the Plan.

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<PAGE>

4. Administration.

The Plan shall be administered by the Committee referred to in Section 5
hereof. Subject to the express provisions of the Plan, the Committee shall have
complete authority, in its discretion, to interpret the Plan, to prescribe,
amend and rescind rules and regulations relating to it, to determine the terms
and provisions of the respective option agreements or certificates (which need
not be identical), to determine the individuals (each a "Participant") to whom
and the times and the prices at which Options shall be granted, the periods
during which each Option shall be exercisable and the vesting schedule therefor
(which may vary with each optionee and may be granted an a basis less favorable
to the optionee than that provided in Section 10 hereof), the number of shares
of the Class A Common Stock or Class B Common Stock to be subject to each Option
and whether such Option shall be an incentive stock option or a non-incentive
stock option and to make all other determinations necessary or advisable for the
administration of the Plan; provided, however, that Options on Class B Common
Stock shall be granted only to persons eligible to he a holder of Class B Common
Stock pursuant to the Company's Bye-laws; and provided further, however, that
only the Board shall grant Options to nonemployee directors, other than Options
granted to nonemployee directors pursuant to Section 20.B. hereof, and to
determine the terms thereof. In making such determinations, the Committee or the
Board, as the case may be, may take into account the nature of the services
rendered by the respective employees , nonemployee consultants and nonemployee
directors, their present and potential contributions to the success of the
Company and the Subsidiaries and such other factors as the Committee or the
Board in its discretion shall deem relevant. The Committee's or Board's
determination on the matters referred to in this Section 4 shall be conclusive.
Any dispute or disagreement which may arise under or as a result of or with
respect to any Option shall be determined by the Committee, in its sole
discretion, and any interpretations by the Committee of the terms of any Option
shall be final, binding and conclusive.

5. Committee.

The Committee shall consist of two or more members of the Board both or all
of whom shall be "Non-Employee Directors" within the meaning of Rule 16b-
3(b)(i) promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). The Committee shall be appointed annually by the Board, which
may at any time and from time to time remove any members of the Committee, with
or without cause, appoint additional members to the Committee and fill
vacancies, however caused, in the Committee. A majority of the members of the
Committee shall constitute a quorum. All determinations of the Committee shall
be made by a majority of its members present at a meeting duly called and held.
Any decision or determination of the Committee reduced to writing and signed by
all of the members of the Committee shall be fully as effective as if it had
been made at a meeting duly called and held.

6. Eligibility.

An Option may be granted only to a key employee or nonemployee consultant
of the Company or a Subsidiary. A director of the Company or a Subsidiary who is
not an employee of the Company or a Subsidiary shall be eligible to receive an
Option, but only as provided in Sections 4 and 20 hereof.

7. Option Prices.

A. The initial per share option price of any Option which is an incentive
stock option shall be the price determined by the Committee, but not less than
the fair market value of a share of the Class A Common Stock or Class B Common
Stock on the date of grant; provided, however, that, in the case of a
Participant who owns more than 10% of the total combined voting power of the
Common Stock at the time an Option which is an incentive

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<PAGE>

stock option is granted to him, the initial per share option price shall not be
less than 110% of the fair market value of a share of the Class A Common Stock
or Class B Common Stock on the date of grant.

B. The initial per share option price of any Option which is a
non-incentive stock option granted to an employee or nonemployee consultant
shall be the price determined by the Committee, but not less than either the
fair market value of a share of Class A Common Stock on the date of grant or the
average fair market value of a share of Class A Common Stock over a period

specified in the grant following the date the Option is granted not to exceed 20
business days . Except as provided in Section 20.B, the initial per share price
of any option granted to a nonemployee director shall be the price determined by
the Board. The initial price per share of any option granted on the shares of
Class B Common Stock shall be not less than 105% of either the fair market value
of a share of the Class A Common Stock on the date of grant or the average fair
market value of a share of Class A Common Stock over a period specified in the
grant following the date the Option is granted not to exceed 20 business days,
as the Board or Committee granting such Option shall determine. The Committee
may provide that the option price per share will increase to reflect the cost of
capital or any other objective measure or may set the initial exercise price at
an amount in excess of the fair market value at the time of grant.

C. For all purposes of the Plan, the fair market value of a share of the
Class A Common Stock or the Class B Common Stock on any date shall be equal to
(i) if, on such day, shares of the Class A Common Stock shall be traded on a
national securities exchange, the closing sales price of a share of the Class A
Common Stock as published by such national securities exchange or if there is no
sale of the Class A Common Stock on such date, the average of the bid and asked
price on such exchange at the close of trading on such date, or (ii) if the
shares of the Class A Common Stock are not listed on a national securities
exchange on such date, and are traded on a national securities market, the
average of the bid and asked price in the over-the-counter market at the close
of trading on such date, or (iii) if the provisions of clause (i) and clause
(ii) shall not be applicable, such amount as shall be determined in good faith
by the Board.

8. Option Term.

Participants shall be granted Options for such term as the Committee shall
determine, not in excess of ten years from the date of the granting thereof;
provided, however, that, in the case of a Participant who owns more than 10% of
the total combined voting power of the Common Stock at the time an Option which
is an incentive stock option is granted to him, the term with respect to such
Option shall not be in excess of five years from the date of the granting
thereof. The Committee may provide that the length of the term of an Option will
vary with the length of the period over which the Option first becomes
exercisable.

9. Limitations on Amount of Incentive Stock Options Granted.

The aggregate fair market value of the shares of the Class A Common Stock
or Class B Common Stock for which any Participant may be granted incentive stock
options which are exercisable for the first time in any calendar year (whether
under the terms of the Plan or any other stock option plan of the Company) shall
not exceed $100,000.

10. Exercise of Options.

A. Each Option shall be exercisable, and the total number of shares subject
thereto shall be purchasable in installments, which need not be equal, as
specified in the Option. Except as otherwise determined by the Committee, the
first installment shall not become exercisable during the period commencing on
the date of the granting of such Option and ending on the day next preceding the
first anniversary of such date.

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<PAGE>

An installment once exercisable shall remain exercisable until the Option
expires or is terminated.

B. Except as hereinbefore otherwise set forth, an Option may be exercised
either in whole at any time or in part from time to time.

C. An Option may be exercised only by a written notice of intent to
exercise such Option with respect to a specific number of shares of the Class A
Common Stock or Class B Common Stock and payment to the Company of the amount of
the option price for the number of shares of the Class A Common Stock or the
Class B Common Stock so specified; provided, however, that all or any portion of
such payment may be made in kind by the delivery of shares of the Class A Common
Stock or Class B Common Stock, as the case may be, having a fair market value
equal to the portion of the option price so paid; provided, further, however,
that, subject to the requirements of Regulation T (as in effect from time to
time) promulgated under the Exchange Act, the Committee may implement procedures
to allow a broker chosen by a Participant to make payment of all or any portion
of the option price payable upon the exercise of an Option and receive, on
behalf of such Participant, all or any portion of the shares of the Class A
Common Stock or Class B Common Stock issuable upon such exercise.

D. Notwithstanding the terms of this Section 10, the Board may, in its
discretion, permit any Option to be exercised, in whole or in part, prior to the
time when it would otherwise be exercisable.

11. Transferability.

No Option shall be assignable or transferable except by will and/or by the
laws of descent and distribution and, during the life of any Participant, each
Option granted to him may be exercised only by him; provided, however that the
Board or Committee may provide that a Participant may transfer an Option for no
consideration to any member of his or her immediate family or to any trust for
the benefit of the Participant's immediate family.

12. Termination of Employment or Service.

In the event a Participant leaves the employ of the Company and the
Subsidiaries, or the services or the contract of a nonemployee consultant of the
Company and the Subsidiaries is terminated or a Participant ceases to serve as a
nonemployee director (a "Termination"), an Option may thereafter be exercised
only as hereinafter provided:

(a) If Termination occurs by reason of (i) termination by the Company or a
Subsidiary other than for Cause (as hereinafter defined), (ii) disability,
(iii) death, or (iv) retirement at or after age 65, each Option theretofore
granted to him which shall not have theretofore expired or otherwise been
canceled shall, to the extent not theretofore exercised, terminate upon the
earlier to occur of the expiration of one (1) year after the date of such
Termination and the date of termination specified in such Option;

(b) If Termination occurs by reason of a Participant's voluntary
termination, each Option theretofore granted to him which shall not have
theretofore expired or otherwise been canceled shall, to the extent not
theretofore exercised, terminate upon the earlier to occur

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<PAGE>

of the expiration of ninety (90) days after the date of Termination and the
date of termination specified in such Option; and

(c) If Termination occurs by reason of termination by the Company for
Cause, each Option theretofore granted to him which shall not have
theretofore expired or otherwise been canceled shall immediately terminate;

"Cause" shall mean (i) the commission by a Participant of any act or
omission that would constitute a felony under United States federal, state or
equivalent foreign law, or an indictable offense under Bermuda law, (ii) a
Participant's gross negligence, recklessness, dishonesty, fraud, disclosure of
trade secrets or confidential information, willful malfeasance or willful
misconduct in the performance of services to the Company or its Subsidiaries,
(iii) willful misrepresentation to shareholders or directors which is injurious
to the Company; (iv) a willful failure without reasonable justification to
comply with reasonable directions of Participant's supervisor; or (v) a willful
and material breach of a Participant's duties or obligations under any agreement
with the Company or a Subsidiary.

13. Adjustment of Number of Shares.

A. In the event that a dividend shall be declared upon the Class A Common
Stock payable in shares of the Class A Common Stock, the number of shares of the
Class A Common Stock then subject to any Option, the number of shares of the
Class A Common Stock reserved for issuance in accordance with the provisions of
the Plan but not yet covered by an Option and the number of shares referred to
in Section 20.B. hereof shall be adjusted by adding to each share the number of
shares which would be distributable thereon if such shares had been outstanding
on the date fixed for determining the stockholders entitled to receive such
stock dividend.

B. In the event that the outstanding shares of the Class A Common Stock
shall be changed into or exchanged for a different number or kind of shares of
stock or other securities of the Company or of another corporation, whether
through reorganization, recapitalization, stock split-up, combination of shares,
sale of assets, merger or consolidation in which the Company is the surviving
corporation, then, there shall be substituted for each share of the Class A
Common Stock then subject to any Option, for each share of the Class A Common
Stock reserved for issuance in accordance with the provisions of the Plan but
not yet covered by an Option and for each share of the Class A Common Stock
referred to in Section 20.B. hereof, the number and kind of shares of stock or
other securities into which each outstanding share of the Class A Common Stock
shall be so changed or for which each such share shall be exchanged.

C. In the event that there shall be any change, other than as specified in
this Section 13, in the number or kind of outstanding shares of the Class A
Common Stock, or of any stock or other securities into which the Class A Common
Stock shall have been changed, or for which it shall have been exchanged, then,
if the Committee shall, in its sole discretion, determine that such change
equitably requires an adjustment in the number or kind of shares then subject to
any Option, the number or kind of shares reserved for issuance in accordance
with the provisions of the Plan but not yet covered by an Option and the number
or kind of shares referred to in Section 20.B. hereof, such adjustment shall be
made by the Committee and shall be effective and binding for all purposes of the
Plan and of each stock option agreement or certificate entered into in
accordance with the provisions of the Plan.

D. In the case of any substitution or adjustment in accordance with the
provisions of this Section 13, the option price in each stock option agreement
or certificate for each share covered thereby prior to such substitution or
adjustment shall be the option price for all shares of stock or other securities
which shall have been substituted for such share or to which such share shall
have been adjusted in accordance with the provisions of this Section 13.

E. No adjustment or substitution provided for in this Section 13 shall
require the Company to sell a fractional share under any stock option agreement
or certificate.

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<PAGE>

F. In the event of the dissolution or liquidation of the Company, or a
merger, reorganization or consolidation in which the Company is not the
surviving corporation, then, except as otherwise provided in the second sentence
of this Section 13, each Option, to the extent not theretofore exercised, shall
be immediately exercisable in full.

G. This Section 13 shall apply, pari passu, with respect to Class B Common
Stock.

14. Purchase for Investment, Withholding and Waivers.

Unless the shares to be issued upon the exercise of an Option by a
Participant shall be registered prior to the issuance thereof under the
Securities Act of 1933, as amended, such Participant will, as a condition of the
Company's obligation to issue such shares, be required to give a representation
in writing that he is acquiring such shares for his own account as an investment
and not with a view to, or for sale in connection with, the distribution of any
thereof. In the event of the death of a Participant, a condition of exercising
any Option shall be the delivery to the Company of such tax waivers and other
documents as the Committee shall determine. In the case of each stock option, a
condition of exercising the same shall be the entry by the person exercising the
same into such arrangements with the Company with respect to all federal, state,
local and foreign withholding tax requirements as the Committee may determine.

15. No Stockholder Status.

Neither any Participant nor his legal representatives, legatees or
distributees shall be or be deemed to be the holder of any share of the Class A
Common Stock or Class B Common Stock covered by an Option unless and until a
certificate for such share has been issued. Upon payment of the purchase price
thereof, a share issued upon exercise of an Option shall be fully paid and
non-assessable.

16. No Restrictions on Corporate Acts.

Neither the existence of the Plan nor any Option shall in any way affect
the right or power of the Company or its stockholders to make or authorize any
or all adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or its business, or any merger or consolidation of
the Company, or any issue of bonds, debentures, preferred or prior preference
stock ahead of or affecting the Class A Common Stock or Class B Common Stock or
the rights thereof, or dissolution or liquidation of the Company, or any sale or
transfer of all or any part of its assets or business, or any other corporate
act or proceeding whether of a similar character or otherwise.

17. No Employment Right or Right to Continued Service.

Neither the existence of the Plan nor the grant of any Option shall require
the Company or any Subsidiary to continue any Participant in the employ of the
Company or such Subsidiary, as a nonemployee consultant of the Company or a
Subsidiary or as a director of the Company.

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<PAGE>

18. Termination and Amendment of the Plan.

The Board may at any time terminate the Plan or make such modifications of
the Plan as it shall deem advisable; provided, however, that the Board may not
without further approval of the holders of a majority of the shares of the
Common Stock voting as a single class as provided in the Company's Bye-laws
present in person or by proxy at any special or annual meeting of the
stockholders, increase the number of shares as to which Options may be granted
under the Plan (as adjusted in accordance with the provisions of Section 13
hereof), or change the manner of determining the option prices, or extend the
period during which an Option may be granted or exercised. Except as otherwise
provided in Section 13 hereof, no termination or amendment of the Plan may,
without the consent of the Participant to whom any Option shall theretofore have
been granted, adversely affect the rights of such Participant under such Option.

19. Expiration and Termination of the Plan.

The Plan shall terminate on the business day preceding the tenth
anniversary of its effective date or at such earlier time as the Board may
determine. Options may be granted under the Plan at any time and from time to
time prior to its termination. Any Option outstanding under the Plan at the time
of the termination of the Plan shall remain in effect until such Option shall
have been exercised or shall have expired in accordance with its terms.

20. Options for Outside Directors.

A. A nonemployee director shall be eligible to receive Options. Except as
otherwise provided in this Section 20, each such Option shall be subject to all
of the terms and conditions of the Plan.

B. I. Upon the effective date of the Company's first registration statement
under the Securities Act of 1933, as amended, each nonemployee Director shall be
granted an Option to purchase 10,000 shares of the Class A Common Stock.

II. At each annual meeting of the Company, each nonemployee director who
shall have served as a nonemployee director since the immediately preceding
annual meeting shall be granted a non-incentive stock option to purchase 10,000
shares of the Class A Common Stock or Class B Common Stock.

III. The initial per share option price of each Option granted to a
nonemployee director pursuant to this Section 20.B. shall be equal to either the
fair market value of a share of Class A Common Stock on the date of grant, or
the average fair market value of a share of Class A Common Stock for the ten
(10) consecutive business days immediately following the date the Option is
granted or 105% of the fair market value of a share of Class A Common Stock, or
10 consecutive business day average thereof, in the case of a grant of an option
on shares of Class B Common Stock.

IV. The term of each Option granted to a nonemployee director pursuant to
this Section 20.B. shall be ten years from the date of the granting thereof.

V. All or any portion of the payment required upon the exercise of an
Option granted to a nonemployee director may be made in kind by the delivery of
shares of the Class A Common Stock or Class B Common Stock, as the case may be,
having a fair market value on the date the Option is exercised equal to the
portion of the option price so paid.

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C. The provisions of this Section 20 may not be amended except by the vote
of a majority of the members of the Board and by the vote of a majority of the
members of the Board who are nonemployee directors.

21. Governing Law.

The Plan shall be governed by the laws of Bermuda.

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<PAGE>

Exhibit B

Central European Media Enterprises Ltd.
Director, Officer and Senior Executive Co-Investment Plan

1. Purposes

The purposes of this Central European Media Enterprises Ltd. Director,
Officer and Senior Executive Co- Investment Plan (the "Plan") are (a) to
encourage certain select senior executives of Central European Media Enterprises

Ltd. (the "Company") and its subsidiaries and key station managers to hold a
meaningful amount of their liquid net worth in Common Stock of the Company and
to invest personal capital in the Company, thereby encouraging such executives
to think as owners of the Company with real risk of loss, as well as upside
return, further aligning their interests with those of the Company and its
shareholders and (b) to encourage and facilitate investment in and purchases of
shares of the Company's Common Stock by such executives and key station managers
and by the non-employee directors of the Company.

2. Administration

The Plan shall be administered by the Compensation Committee of the
Company's Board of Directors (the "Board"), or such other committee as shall be
designated by the Board to administer the Plan, which shall consist of at least
two directors of the Company chosen by the Board each of whom is a director of
the Company who is both a "Non-Employee Director" within the meaning of Rule
16b-3 under the Exchange Act and an "outside director" within the meaning of
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Committee"). Subject to the provisions of the Plan, the Committee shall possess
the authority (a) to select the officers, employees and key station managers
eligible to participate in the Plan ("Participants"); (b) to determine the
period or periods during any year within which Participants may purchase stock
from the Company under the Plan; (c) establish rules and procedures under the
Plan requiring prior notice by Participants of the number of shares to be
purchased and the proposed date of such purchase; (d) to determine and to set
the terms and conditions of all loans under the Plan for the purchase of stock
and the loan documentation relating thereto, including any pledges of the Common
Stock acquired under the Plan; (e) to interpret the Plan; (f) to make and amend
rules and regulations relating to the Plan; and (f) to make all other
determinations necessary or advisable for the administration of the Plan. Any
decision or action taken or to be taken by the Committee, arising out of or in
connection with the construction, administration, interpretation and effect of
the Plan and of its rules and regulations, shall, to the maximum extent
permitted by applicable law, be within its absolute discretion (except as
otherwise specifically provided herein) and shall be conclusive and binding upon
all Participants and any person claiming under or through any Participant or any
non-employee director who has purchased shares from the Company pursuant to the
Plan. No member of the Committee shall be liable for any action taken or
decision made in good faith relating to the Plan or any award granted hereunder.

3. Eligible Participants

The most senior corporate executives and key station managers of the
Company and its subsidiaries selected by the Committee shall be eligible (i) for
loans from the Company to facilitate purchases of Class A Common Stock of the
Company pursuant to the Plan and (ii) to purchase shares of the Company's Class
A Common Stock from the Company pursuant to the Plan. The Company's non-employee
directors, for these purposes including the Chairman and Vice Chairman so long
as such person receives no compensation for his services to the Company other
than as

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a non-executive Chairman or Vice Chairman, as the case may be (each, a
"non-employee director") shall be eligible to purchase shares of the Company's
Class A Common Stock from the Company pursuant to the Plan in order than such
non-employee directors might meet any share purchase requirements related to any
option grants the Company may make to such persons, but non-employee directors
shall not be eligible for loans under the Plan to purchase such shares.

4. Maximum Amount of Loans

The maximum aggregate principal amount of all loans made pursuant to the
Plan outstanding at any time may not exceed US$2,000,000. The maximum aggregate
principal amount of all loans outstanding at any time made to any individual may
not exceed such individual's annual base salary at the time any such loan is
made.

5. Terms and Conditions of Loans

If a Participant purchases shares of the Class A Common Stock of the
Company in the open market or from the Company pursuant to the Plan, other than
pursuant to the exercise of a stock option, (the "Matched Shares"), the Company
may make a matching loan to such Participant not to exceed the Fair Market Value
(as defined below) of the Matched Shares, the proceeds of such loan to be used
to by such Participant to purchase additional shares of Class A Common Stock
(either in the open market or from the Company pursuant to the Plan). Any such
loan shall be subject to any limitations imposed by law. The Committee shall
establish the terms and conditions of the loans, which shall be secured by a
pledge of the shares of Class A Common Stock purchased with the proceeds
thereof. The loans may be non-recourse (other than to the pledged shares) or, if
so determined by the Committee at the time such a loan is made, partially or
fully recourse. Shares purchased with the proceeds of a loan may not be sold
until the Participant's employment with the Company is terminated or after seven
years, whichever period is shorter, unless the Committee shall have consented to
an earlier sale. Any such loans will bear interest at the 7-year Treasury Note
rate in effect at the time of the loan, and interest shall be due at the end of
each calendar year.

Any such loan shall not have a maturity that is later than the earliest of:
(a) the expiration of 7 years from the date the loan is made; (b) termination of
the Participant's employment for any reason other than death or disability; (c)
one year after termination of the Participant's employment by reason of death or
disability; and (d) a Participant's sale of Matched Shares (in which case the
loan shall become due on a pro rata basis with the Matched Shares sold).

A Participant will be required to apply 25% of his or her annual cash
bonus, or such higher figure as the Committee determines, to repay the principal
of any such loan.

Any such loan shall have such other terms and conditions as the Committee
determines, and shall be evidenced by a promissory note and pledge agreement in
form and substance satisfactory to the Committee.

6. Terms and Conditions of Stock Purchases

Participants and non-employee directors shall be eligible to purchase
shares of Class A Common Stock from the Company under the Plan. The Committee
shall determine the maximum number of shares that may be sold under the Plan in
any year to any Participant or non-employee director. Notwithstanding the
foregoing, a non-employee director shall not be eligible to purchase an
aggregate number of shares of Class A Common Stock from the Company under the
Plan that exceeds the sum of (a) the number of shares subject to outstanding
stock options previously granted by the Company to such non-employee director
plus (b) 25,000.

The purchase price for each share of Class A Common Stock to be sold
pursuant to the Plan shall be the average of the Fair Market Value of a share of
Class A Common Stock over the 10 day period following the effective date

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of any notice delivered by such purchaser to so purchase shares of Class A
Common Stock. As used herein, "Fair Market Value" shall be the mean between the
high and the low trading prices of the Company's Class A Common Stock on any
date of determination as reported on the Nasdaq National Market System (or such
other recognized market or quotation system on which the trading prices of the
Class A Common Stock are reported at such time).

7. Adjustment of Shares

In the event of any change in the Class A Common Stock of the Company by
reason of any stock dividend, stock split, recapitalization, reorganization,
merger, consolidation, split-up, combination, or exchange of shares, or rights
offering to purchase Common Stock at a price substantially below fair market
value, or of any similar change affecting the Common Stock, the number and kind
of shares which thereafter are subject to purchase under the Plan shall be
adjusted automatically consistent with such change to prevent substantial
dilution or enlargement of the rights granted to, or available for, participants
in the Plan.

8. No Right to Employment

The Plan and any awards under the Plan shall not confer upon any director
any right with respect to continuance as a director of the Company, nor shall
they interfere in any way with any right the Company or any subsidiary may have
to terminate any individual's service to the Company or such subsidiary at any
time.

9. Term of the Plan; Amendment; Modification

The Plan shall commence on the date it is approved by the Company's
shareholders and shall terminate on the tenth anniversary of such date.
Notwithstanding the foregoing, the Board of Directors may terminate the Plan at
any time. The Plan may be amended or modified by the Board of Directors,
provided that Board shall not be authorized, without the approval of the
Company's shareholders, to (a) increase the number of shares of Class A Common

Stock that can be sold under the Plan, (b) reduce the purchase price of a share
of Class A Common Stock sold under the Plan below its Fair Market Value, or (c)
increase the principal amount of loans that may be outstanding at any time. No
amendment, modification or termination of the Plan shall adversely affect the
right of any participant under any existing loan without the written consent of
the participant.

10. Governing Law

This Plan shall be construed and enforced according to the laws of Bermuda.

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<PAGE>

Exhibit C

STOCK DEPRECIATION PROTECTION PROVISIONS
OF LEONARD M. FERTIG'S
SEVERANCE AGREEMENT

The stock depreciation protection provisions of Leonard M. Fertig's severance
agreement with the Company and two of its wholly-owned subsidiaries, dated March
25, 1998, which are subject to shareholder approval at the Meeting, are as
follows:

"6. Stock Depreciation Protection

(a) Sales During the Initial Period. Executive currently owns 223,805
shares of Common Stock of CME (the "Owned Shares"). Executive agrees that he
will not sell more than 50,000 shares of CME Common Stock prior to the
expiration of the later of (i) May 1, 1998 and (ii) three months after the date
on which Executive ceases to be a member of the Board of Directors of CME (the
"Initial Period").

(b) Payment with Respect to Sales During the Initial Period. If Executive
makes a permitted sale of shares of CME Common Stock in one or more arm's length
transactions during the Initial Period, and the average per share selling price
(before deduction for commissions and other expenses of sale) for all shares of
CME Common Stock sold during the Initial Period is less than $27.625 per share,
then CME will pay Executive an amount equal to the difference between $27.625
and the higher of (i) $20.00 and (ii) the average selling price (before
deduction for commissions and other expenses of sale) for the shares sold.

(c) Sales After the Initial Period and on or Before April 30, 1999. On the
earliest of April 30, 1999, the date that Executive shall have disposed of all
of the Owned Shares and the $30.00 Date, CME will pay Executive an amount equal
to the lesser of (x) $600,000 minus the amount, if any paid pursuant to Section
6(b), and (y) the number of Owned Shares not disposed of during the Initial
Period multiplied by the excess, if any, of A over B, where

A = $23.48, and

B = the sum of (1) the selling price (before commissions and other
expenses of sale) for all of the Owned Shares that have been disposed
of in an arm's length transaction after the end of the Initial Period
and on or before the earlier of April 30, 1999 and the $30.00 Date plus
(2) the average of the closing prices for a share of CME Class A Common
Stock for the 20 consecutive trading days ending on April 30, 1999
multiplied by the number of Owned Shares not disposed of during the
Initial Period or taken into account in clause (1), divided by (3) the
number of Owned Shares not disposed of during the Initial Period;

provided that if the average between the high and low prices for a share of CME
Class A Common Stock for any 20 consecutive trading days commencing after the
expiration of the Initial Period is $30.00 or more, the determination of the

payment due to Executive under this Section 6(c) shall be made as of the last
day of such 20- day period (the "$30.00 Date"), and $30.00 shall be the amount
used in Clause (2) of this Section 6(c).

(d) Time of Payment. Payments under this Section 6 will be made within 30
days after each payment is determined. Notwithstanding the foregoing, CME shall
not be obligated to make any payment provided for in this Section 6 if CME
notifies Executive in writing that Executive has materially breached this
Agreement, and Executive has not cured such breach within 30 days after
receiving such notice.

(e) Capital Adjustments; Effect of Stock Options. In the event that on or
before April 30, 1999, CME shall have effected one or more stock dividends,
stock splits, reorganizations, recapitalizations, combination of shares,

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mergers, consolidations, or other changes on the corporate structure or stock of
CME, the number of shares and the per share prices set forth in this Section 6
shall be equitably adjusted to prevent a diminution or enlargement of
Executive's rights hereunder. If Executive disposes of any shares of CME Common
Stock acquired upon exercise of a stock option on or before April 30, 1999, such
sale shall be deemed to be a sale of Owned Shares if made prior to the
disposition of all of the Owned Shares."

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CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.
PROXY FOR ANNUAL GENERAL MEETING OF SHAREHOLDERS--JUNE 5, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby constitutes and appoints Nicolas G. Trollope,
Michael Ashford, Anthony Whaley and Robert Briant, or any of them acting singly,
with the power of substitution in any of them, the proxies of the undersigned to
vote with the same force and effect as the undersigned all shares of Common
Stock of Central European Media Enterprises Ltd. (the "Company") held of record
by the undersigned on April 27, 1998 at the Annual General Meeting of
Shareholders to be held at the offices of Conyers Dill & Pearman, Clarendon
House, Church Street, Hamilton HM CX, Bermuda on Friday, June 5, 1998, at 10:00
A.M. and at any adjournment or adjournments thereof, hereby revoking any proxy
or proxies heretofore given and ratifying and confirming all that said proxies
may do or cause to be done by virtue thereof with respect to the following
matters:

1. The election of seven directors nominated by the Board of Directors to serve
until the next Annual General Meeting of Shareholders:

/ / FOR all nominees listed below / / WITHHOLD AUTHORITY to vote for
(except as indicated below) the nominees listed below

RONALD S. LAUDER, MICHEL DELLOYE, ROBERT R. GRUSKY, PETER R. GOLDSCHEIDER,
ROBERT A. RAYNE, HERBERT S. SCHLOSSER AND NICOLAS G. TROLLOPE

INSTRUCTION: to withhold authority to vote for any individual nominee, write
that nominee's name on this line:
______________________________________________________________________

2. The approval of a proposal to set the maximum number of directors to serve
on the Board of Directors until the next Annual General Meeting of
Shareholders at ten.