Cyfrowy Polsat interim report for the three months ended June 30, 2008

Cyfrowy Polsat (Warsaw:CPS) has released its interim report for the three months ended June 2008.

We are the largest provider of pay DTH satellite television broadcasting services in Poland with 2,287,656 subscribers as of 30 June 2008. Our core business is to provide individual customers with access to television and radio channels grouped into different paid programming packages and transmitted via satellite.

We sell our satellite broadcasting services throughout Poland targeting the Polish viewing public with high-quality programming which is designed to appeal to, and be affordable for, every Polish family. We also offer other services such as signal transmission services for radio and television broadcasters.

We currently offer our customers two introductory packages: the Mini Package (Pakiet Mini) and the Family Package (Pakiet Familijny). The Family Package is our most popular introductory package. Subscribers to our Family Package may also purchase six theme packages: the Film Package (Pakiet Film), the HBO Package (Pakiet HBO), the Sports Package (Pakiet Sport), the Cinemax Movie Package (Pakiet Cinemax), the Cartoon Package (Pakiet Bajeczka) and the Music Package (Pakiet Muzyka) and, in addition, the Playboy channel. The theme packages are available in four premium packages: the Relax Mix Package (Pakiet Relax Mix), the Relax Mix + HBO Package (Pakiet Relax Mix + HBO), the Super Film Package (Pakiet Super Film) and the Relax Mix Film Package (Pakiet Relax Mix Film). The Relax Mix Film Package is only available to customers who subscribed to this package before 11 January 2008. We believe that a combination of our high-quality programming and competitive pricing have enabled us to significantly increase the number of our subscribers, which increased on a compound annual growth rate of 76% between 2004 and 2007.

We believe that the success of our business can be attributed to our extensive high-quality programming, competitive pricing and effective marketing strategy. We were the first pay DTH satellite operator in Poland to introduce a DVR set-top box with an option to record and pause live television programs in November 2006. In November 2007, we successfully launched the Polsat Sport HD channel using HDTV technology. We are considering the introduction of five HDTV channels in four theme categories (sports, entertainment, film and education) by the end of 2008. We are also considering the introduction of video on demand (“VoD”) and internet protocol television (“IPTV”). In addition, we launched the production of our own set-top boxes in November 2007.

Operating results

Three months ended           30 June 2008  30 June 2007   Change
                             ------------  ------------   ------
Family Package Subscribers      1,984,931     1,399,845    41.8%
Mini Package Subscribers          302,725       161,866    87.0%
 Number of Subscribers          2,287,656     1,561,711    46.5%

As at 30 June 2008 we had 2,287,656 subscribers, 46.5% more than as at 30 June 2007, when we had 1,561,711 subscribers. Such a significant increase in our subscriber base was possible due to proper position of our services and process for those services on DTH market. Number of our Family Package subscribers increased by 41.8% to 1,984,931 and the number of our Mini Package subscribers increased by 87% to 302,725 subscribers.

Costs of satellite television receiving equipment sold

We currently offer satellite television receiving equipment purchased from third party vendors at prices which are higher than the retail price for such equipment offered by us to our customers. The purpose of subsidizing these costs is to increase the price attractiveness and, in turn, affordability of our programming packages to make it available to a wide group of prospective customers of pay DTH satellite television services. Despite generating some additional costs, we believe that these subsidies continue to be essential to maintain the growth of our subscriber base and the significant growth in subscription fees. Retail prices of satellite dishes sold to our customers are not subsidized.

To reduce our costs of purchasing satellite television receiving equipment, we launched the production of our own set-top boxes in November 2007. A decrease in the cost of acquisition of set-top boxes will enable us either to offer our subscribers a lower purchase price for set-top boxes, which we expect would positively affect subscriber growth, or to maintain the current prices to subscribers but thereby improve our profitability.