Matav Reports Financial Results for the Fourth Quarter and Full-Year 2004

Matav Reports Financial Results for the Fourth Quarter and Full-Year 2004

NETANYA, Israel, March 21/PRNewswire-FirstCall/ -- Matav-Cable Systems Media Ltd. (Nasdaq: MATV), a leading Israeli provider
of digital cable television services, today reported fourth-quarter and
full-year 2004 financial results. In this quarter, as in the previous three
quarters, Matav's financial results are proportionally consolidated with HOT
Vision Ltd. (formerly ICP Ltd). The consolidation has no substantial effect
on Matav's financial results. Since the results for the year 2003 do not
include proportional consolidation with HOT Vision, for comparison reasons
the figures below will be presented assuming no consolidation with HOT
Vision.

Revenues for the full-year 2004 reached NIS 578.7 million
(US$134.3 million) compared with NIS 545.5 million (US$126.6 million) for
2003. Revenues for the fourth-quarter reached NIS 138.5 million
(US$32.1 million) compared with NIS 142.9 million (US$33.2 million) for the
fourth quarter of 2003. The fourth quarter year- over- year decrease in
revenues is a result of increased competition in the Israeli multi-channel
market as evident in Matav's certain subscriber loss in the period. However,
the decrease in revenues was partially off-set by the increase in Matav's
broadband Internet access revenues.

As of December 31, 2004, Matav had approximately 257,300 subscribers,
compared with approximately 259,300 at September 30, 2004. During
fourth-quarter 2004, the company's ARPU increased to NIS 202.7 (monthly,
including 17% value-added tax) from NIS 204.1 in the fourth quarter of 2003.
The company's broadband Internet access service has attracted more than
92,000 subscribers to date.

Operating expenses for the year 2004 totaled NIS 474.2 million
(US$110 million) compared with NIS 466.7 million (US$108.3 million) for the
year 2003. The increase in operating expenses is mainly due to an increase in
content expenses related to increased tiering services as well as an increase
in operating expenses associated with its broadband Internet services. This
increase was slightly off-set by a decrease in depreciation costs.
Fourth-quarter operating expenses totaled NIS 115.3 million (US$26.8 million)
compared with NIS 116.6 million (US$27 million) in the year-earlier period.

Gross profit for the year 2004 reached NIS 104.5 million
(US$24.3 million) compared with NIS 78.8 million (US$18.3 million) for the
year 2003. Fourth-quarter gross profit reached NIS 23.2 million
(US$5.4 million) compared with NIS 26.3 million (US$6.1 million) in
fourth-quarter 2003.

Selling and marketing expenses for the year 2004 reached NIS 60.4 million
(US$14 million) compared with NIS 44.0 million (US$10 million) for the year
2003. The increase is due mainly to higher marketing expenses associated with
the penetration of the "HOT" brand in the Israeli market and due to higher
marketing expenses related to its broadband Internet services. Fourth-quarter
selling and marketing expenses totaled NIS 12.9 million (US$3 million),
compared with NIS 14.5 million (US$3.4 million) for fourth-quarter 2003

G&A expenses for the year 2004 totaled NIS 43.3 million
(US$10.1 million), compared with NIS 42.7 million (US$9.9 million) for the
year 2003. Fourth-quarter G&A expenses totaled NIS 13.2 million
(US$3.1 million), compared with NIS 8.8 million (US$2 million) in
fourth-quarter 2003. The fourth-quarter increase is due to one time expenses
relating to the operational merger.

EBITDA for the year 2004 totaled NIS 139.6 million (US$32.4 million),
compared with NIS 147 million (US$34.1 million) for the year 2003.
Fourth-quarter EBITDA reached NIS 30.9 million (US$7.2 million) compared with
NIS 40.1 million (US$9.3 million) in fourth-quarter 2003.

Financing expenses for the year 2004 decreased to NIS 48.5 million
(US$11.2 million) from NIS 84 million (US$19.5 million) in the year 2003.
Fourth-quarter financing expenses declined to NIS 11 million (US$2.6 million)
from NIS 16.7 million (US$3.9 million) in the comparable quarter of 2003. The
numbers are not precisely comparable since this year's figures are nominal
while the results for the year earlier are adjusted for the CPI. However, a
substantial part of the reduction could be attributed to two factors: a
reduction in the Company's net debt and a decrease in interest rates.

Other expenses for the year 2004 reached NIS 42.2 million
(US$9.8 million) compared with other revenues of NIS 81 million (US$18.8
million) for the year 2003. The expenses for the year 2004 are mainly
attributed to Matav's allocation of NIS 23.5 million related to the Warner
Bros. International lawsuit and to the NIS 16.2 million Barak investment
write-off. Other revenues in 2003 resulted from the sale of part of Matav's
holding in Partner.

Matav's share in affiliated companies' profits for the year 2004 totaled
NIS 14.3 million (US$3.3 million). This includes Matav's share in Partner
Communications' profits totaling NIS 17.6 million which was off-set by
Matav's share in Hot Telecom's losses totaling NIS 3.2 million. For the year
2003 Matav's share in affiliated companies' profits totaled NIS 40.9 million
(US$ 9.5 million). This is mainly attributed to Matav's share in Partner
Communications' profits.

The net loss for the year 2004 was NIS 83 million (US$19.3 million), or
NIS 2.83 (US$0.66) per ordinary share, compared with net loss of NIS 5.5
million (US$1.3 million), or NIS 0.19 (US$0.04) per ordinary share, in 2003.
Matav reported fourth-quarter net loss of NIS 6.6 million (US$1.5 million),
or NIS 0.22 (US$0.05) per ordinary share, compared with a net profit of NIS
61.3 million (US$14.2 million), or NIS 2.04 (US$0.5) per ordinary share, for
the year-ago quarter.

Matav's CEO, Amit Levin, commented "The second half of 2004 was
characterized by intense competition in the Israeli multi-channel television
market. During this period, along with the other two Israeli cable companies,
we allocated substantial resources in order to realize our operational
merger. The result was the successful integration of the operations,
engineering, selling & marketing and customer service systems of all three
cable companies. Also in 2004, we allocated both managerial and financial
resources for the following operations: our launch of fixed telephone
services in 2005, our new television services such as VOD, and our
preparation for broadcasting new TV channels.

"Looking forward to 2005, I foresee the continued broadening of our
services, in addition to the continued launch of our new IP fixed telephone
services to the entire Israeli public. We believe that in 2005 the
competition in the multi-channel television market will cease to be focused
on price and instead will be based on content and brand value. In addition,
we foresee that we will succeed in providing our subscribers with innovative
products and top quality service in all our lines of business".

Management will conduct a teleconference today at 10:00 a.m. U.S. Eastern
Time. To participate, please dial +1-866-860-9642 in the United States and
+972-3-9180610 internationally, several minutes prior to the start of the
conference.

Matav is one of Israel's three cable television providers,
serving roughly 26 percent of the population. Matav's investments include
5.3 percent of Partner Communications Ltd., a GSM mobile phone company, and
10 percent of Barak I.T.C. (1995), one of the three international
telephony-service providers in Israel.

(This press release contains forward-looking statements with respect to
the Company's business, financial condition and results of operations. These
forward-looking statements are based on the current expectations of the
management of Matav Cable only, and are subject to risk and uncertainties,
including but not limited to changes in technology and market requirements,
decline in demand for the Company's products, inability to timely develop and
introduce new technologies, products and applications, loss of market share
and pressure on pricing resulting from competition, which could cause the
actual results or performance of the Company to differ materially from those
contemplated in such forward-looking statements. The Company undertakes no
obligation to publicly release any revisions to these forward-looking
statements to reflect events or circumstances after the date hereof or to
reflect the occurrence of unanticipated events. For a more detailed
description of the risk and uncertainties affecting the Company, reference is
made to the Company's reports filed from time to time with the Securities and
Exchange Commission.)

Contacts:
Ori Gur-Arieh, Counsel
Matav Cable Systems
Telephone: +972-9-860-2261

Ayelet Shaked Shiloni
Integrated IR
Telephone US: +1-866-447-8633 / Israel: +972-3-635-6790
E-Mail: ayelet@integratedir.com

MATAV - CABLE SYSTEMS MEDIA LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)

Convenience
translation
December 31, December 31,
2003 2004 2004
Adjusted(2) Reported(1)

NIS In thousands U.S. dollars
ASSETS:

CURRENT ASSETS:
Cash and cash equivalents 37,948 24,250 5,629
Short term deposit - 50 12
Accounts Receivables: Trade 83,151 75,458 17,516
Other 19,765 20,010 4,645
Total current assets 140,864 119,768 27,802

INVESTMENTS AND LONG-TERM LOANS:
Investments in affiliates 66,807 101,736 23,616
Investments in other company 16,241 - -
Investment in limited partnerships 2,057 1,656 384
Rights to broadcast movies and
programs 34,927 26,509 6,153
Other receivables 885 601 140
120,917 130,502 30,293

FIXED ASSETS:
Cost 2,028,447 2,119,060 491,890
Less - accumulated depreciation 1,151,622 1,293,549 300,267
876,825 825,511 191,623

OTHER ASSETS AND DEFERRED CHARGES
Net of accumulated amortization 3,946 3,101 720

1,142,552 1,078,882 250,438

(1) Nominal financial reporting beginning January 1, 2004.

(2) Adjusted to the NIS of December 2003.

MATAV - CABLE SYSTEMS MEDIA LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)

Convenience
translation
December 31, December 31,
2003 2004 2004
Adjusted(2) Reported(1)
NIS In thousands U.S. dollars
LIABILITIES AND
SHAREHOLDERS' EQUITY:

CURRENT LIABILITIES:
Bank credit 435,403 465,339 108,017
Current maturities of
debentures 33,701 34,005 7,893
Accounts payable and
accruals:
Trade 94,699 104,282 24,207
Jointly controlled entity 17,690 18,112 4,204
Other 158,982 201,943 46,876
Total current liabilities 740,475 823,681 191,197

LONG-TERM LIABILITIES:
Severance pay liability, net 2,106 2,483 577
Loans and debentures (net
of current maturities):
Loans from bank and others 127,403 101,457 23,551
Debentures 66,145 33,201 7,707
Customers' deposits for
converters, net of
accumulated amortization 25,675 20,279 4,708
Total long-term liabilities 221,329 157,420 36,543

Total liabilities 961,804 981,101 227,738

SHAREHOLDERS' EQUITY:
Share capital 48,882 48,899 11,351
Additional paid-in capital 375,538 375,538 87,172
Accumulated deficit (243,672) (326,656) (75,825)

Total shareholders'
equity 180,748 97,781 22,698

1,142,552 1,078,882 250,438

(1) Nominal financial reporting beginning January 1, 2004.

(2) Adjusted to the NIS of December 2003.

MATAV - CABLE SYSTEMS MEDIA LTD.
(An Israeli Corporation)
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share and per ADS data)

Convenience
translation
Three months
Three months ended Year ended ended
December 31, December 31, December 31,
2003 2004 2003 2004 2004
Adjusted Reported Adjusted Reported U.S. dollars
(2) (1) (2) (1)
Revenue 142,948 140,424 545,480 584,564 32,596

operating
expenses 116,612 119,105 466,686 472,488 27,647

Gross profit 26,336 21,319 78,794 112,076 4,949

Selling, marketing,
general and
administrative
expenses:
Selling and
marketing 14,508 13,621 43,954 63,676 3,162
General and
administrative 8,818 11,255 42,659 45,391 2,613
23,326 24,876 86,613 109,067 5,775

Operating
profit (loss) 3,010 (3,557) (7,819) 3,009 (826)
Financial
expenses, net (16,659) (9,869) (83,958) (50,333) (2,291)
Other income
(expenses), net 85,420 3,914 80,996 (42,680) 909

Income (loss)
before taxes
on income 71,771 (9,512) (10,781) (90,004) (2,208)

Taxes on income 35,576 393 35,576 7,281 91
Income (loss) from
operations of the
Company and its
subsidiaries 36,195 (9,905) (46,357) (97,285) (2,299)
Equity in earnings
of affiliated
companies, net 25,108 3,318 40,907 14,301 770

Net income (loss) 61,303 (6,587) (5,450) (82,984) (1,529)

Earnings (loss)
per ordinary
share 2.04 (0.22) (0.19) (2.83) (0.05)

Earnings
(loss) per ADS 4.08 (0.44) (0.37) (5.66) (0.10)
Weighted
average number
of shares
outstanding in
thousands 30,109 29,364 29,347 29,360 29,364
Weighted
average number
of ADSs
outstanding in
thousands 15,055 14,682 14,674 14,680 14,682

Operating
profit (loss) 3,010 (3,557) (7,819) 3,009 (826)
Net of the
effect of
proportional
consolidation 657 (2,280) 153
Depreciation and
amortization
(included
Income from
amortization
of deposits
for converters) 37,084 33,804 154,811 138,915 7,847

Memo EBITDA(3)-
not including
proportional
consolidation 40,094 30,904 146,992 139,644 7,174

(1) Nominal financial reporting beginning January 1, 2004.

(2) Adjusted to the NIS of December 2003.

(3) EBITDA is presented because it is a measure commonly used in the
telecommunications industry and is presented solely in order to improve the
understanding of the Company's operating results and to provide further a
perspective regarding these results. EBITDA, however, should not be
considered as an alternative to operating income or income for the year as an
indicator of the operating performance of the Company. Similarly, EBITDA
should not be considered as an alternative to cash flows from operating
activities as a measure of liquidity. EBITDA is not a measure of financial
performance under generally accepted accounting principles and may not be
comparable to other similarly titled measures for other companies.

EBITDA may not be indicative of the historic operating results of the
Company nor is meant to be predictive of potential future results.

Reconciliation between the operating profit in the financial statements
and EBIDTA is presented in the attached summary financial statements.

Source: Matav - Cable Systems Media Ltd.

Ori Gur-Arieh, Counsel, Matav Cable Systems, Telephone: +972-9-860-2261, Ayelet Shaked Shiloni, Integrated IR, Telephone US: +1-866-447-8633, Israel: +972-3-635-6790, E-Mail: ayelet@integratedir.com

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