General issues

1. General issues • General comment on the information provided in the Data Room: • We consider that the provided information was not complete nor updated. • We have formally requested additional information, but none of it was provided. • These preliminary findings are based upon the provided information and verbal comments made by Mr. Alejandro Harrison, Pramer’s CEO, in a meeting with him at Pramer’s premises. There was no material time to crosscheck the provided information or to audit it.

2. General issues • From the legal point of view, as per the information we received and reviewed, Pramer seems to be an on going business, with the usual kind of problems that an on going business of Pramer’s size may have. • This comment can also be made from both the accounting and tax point of view. • As per what we have seen, the company deserves further analysis in order to accurately determine its actual worth. • We have pointed out in this document the most important issues and contingencies arising from the provided documentation. • We recommend to continue Pramer’s analysis, since we see that there might be a good window of opportunity to Sparrowhawk.

3. Accounting issues:Main issues • Working capital deficit approx. U$M 5 • Important exposition to foreign currency – Liabilities position of U$M 11.4 • Income statements with relevant non recurrent movements, which makes it difficult to standardize it for an adequate analysis • No tax planning with affiliates • Financial statements: Only 2002, 2003 and 2004 were provided • Review was made on last audited Financial Statements, for FY ended by Dec 31, 2004. • Very little information regarding current FY 2005, financial results by June 2005, under US GAAP.

4. Accounting issues: Financial Statements at 31/12/04 • AR arising from services: U$M 28.4 • Relevant issues: • U$M 12.3 are allowancesand U$M 4 are in judicial claims • Uncertain collection of some non-allowances receivables as of Dec 31, 2004, which apparently were allowancedin 2005 according to verbal comments from CEO. • Receivables for U$M 11.6 are with foreign clients, and U$M 7.5 with local (argentine) clients • U$M 4 are shown in written documents • U$M 1.3 are due to barter agreements • Other receivables: U$M 8 • Relevant issues: • U$M 2.7 arising from a sale of the “Cablevisión” trademark to Liberty Latin Program • U$M 4.1 arising from deferred taxand U$M 0.8 to tax credit • U$M 0.4 arising from deferred expenses

5. Accounting issues: Financial Statements at 31/12/04 • Other Assets: U$M 5.7 • Relevant issues: • U$M 3.6 arising from films assets, from which U$M 2.1 are non current • U$M 1.7 arising from satellite programming • U$M 0.4 credited against Statutory Minimum Income Tax • Depreciation percentage is being reviewed in the current fiscal year, as per Mr. Harrison’s comments. • Equipment: U$M 1.2 • Relevant issues: • U$M 1.1 arising from hardware and technical equipment and machines VR • During the current FY there was an important investment in new equipment and hardware, as per CEO’s comments. • During the current FY some reconstruction is being made in the leased office space. • Technical equipment mortgaged as per refinance agreement with Marathon Fund. • Intangible Assets: U$M 2.4 • Relevant issues: • U$M 2.4 arising from the goodwill for the acquisition of Film & Arts made in June 2000 • In FY ´04 an allowancewas made to depreciation of U$M 2, which shall be partially reverted in FY 05, as per CEO’s comments.

6. Accounting issues: Financial Statements at 31/12/04 • Accounts payable: U$M 21 • Relevant issues: • U$M 11.5 arising from debt with usual debtors, of which U$M 6.1 are in ARG$ and U$M 5.4 are in foreign currency • U$M 1.7 arise from films agreements, and U$M 5.4 from satellite and advertisement agreements. • U$M 1.9 arising from expenses allowances • U$M 0.4 arising from services rendered by E-Mind (affiliate), which was later merged during this year. • Accounts payable are 100% current • Financial loans: U$M 13.1 • Relevant issues: • Most of it arises from a loan refinanced at the end of ´04, granted by Marathon Master Found, for U$M 7.5 and Citibank for U$M 4.8 • Payment schedule: • 2005: U$M 0.67 • 2006: U$M 2.43 • 2007: U$M 3.09 • 2008: U$M 4.30

7. Accounting issues: Financial Statements at 31/12/04 • Salaries and social security charges: U$K 890 • Relevant issues • U$K 370 arising from non detailed allowances • Taxes: U$M 1.5 • Relevant issues • U$M 1.1 arising from rescheduled taxes, due to late payment or non payment • U$M 0.4 arising from tax debt coming from the day to day business operation • Other liabilities: U$K 550 • Relevant issues • U$K 370 arising from the acquisition of 49% of the shares of e-Mind, of which, U$K 190 are current

8. Accounting issues: Financial Statements at 31/12/04 • Revenues: U$M 36.3 • Relevant issues • U$M 27.6 coming from the sale of channels signal • U$M 5.7 coming from advertisement • U$M 2.2 coming from the sale of time-space • U$M 0.8 other • Operating cost: U$M 37.1 • Relevant issues: • U$M 17.4 coming from channels signal cost • U$M 4.1 coming from advertisement • U$M 3.7 coming from salaries and social security charges • U$M 2.4 coming from advertisement broadcasting • U$M 2.4 coming from taxes and charges • Other income / (expenses): U$M (2.4) • Relevant issues • U$M (2) arising from Film&Arts depreciation • U$M (0.6) arising from restructuring and fraud investigation • U$M 0.19 allowancesrecovery

9. Accounting issues: Financial Statements at 31/12/04 • Financial results: U$M (1.4) • Relevant issues • U$M 0.7 arising from accrued interest • U$M 0.7 arising from foreign exchange rate, coming from exchange rate to foreign currency • Investments results: U$K (150) • Relevant issues • U$K (230) arising from goodwillpaid for the 49% of the e-Mind shares, considered as impairment • U$K 80 arising from Pramer’s share (100%) in e-Mind results.

10. Tax issues • Information available at the data room • Income Tax:Tax return as of FY ended 31/12/04 • Minimum Notional Income Tax :Tax return as of FY ended 31/12/04 • VAT: Tax return as of Sept 2005 • Turnover Tax: Tax return as of Sept 2005 • Social Security: Tax returns as of Jan to Sept 2005 • Information not available at the data room • SICORE:No information was provided regarding withholdings, either to local nor foreign entities. • Seals Tax:Some of the agreements that were not shown (v.gr. Agreements with MSOs) may be subject to this tax. Further analysis must be done in connection with a few agreements that might also be subject to this tax. • Price Transfer: No information was provided on this regard. • Affiliate companies: No information was provided on this regard.

11. Tax issues • Rescheduled payments for non paid taxes: We were provided the detail and amount of both state and national taxes rescheduled payments to which Pramer has enrolled. As per the information provided, debt arising from rescheduled payments is as of U$M 1.1, at November 2005. • Late payments and miscalculations: Several of the tax returns showed late payments or miscalculations that may cause fines and other penalties to be applied to the company. • We do not consider that the information provided as per the tax issues was complete nor updated. • We have requested additional information to complete this report, but it was not provided to us. We had no opportunity to check the information provided by Pramer, or to really audit it.

12. Legal matters – Corporate • Pramer - Corporate type and status: • The foreign shareholders have not completed certain registrations required by the Incorporation’s Office that may affect the company’s decisions; • Corporate type very unusual, chosen due to a specific need of former shareholders, no longer needed. Suggestion to convert the entity into another type. • Corporate books updated • Certain corporate filings being performed • Current shareholders: Liberty Programming South America, Inc; Liberty Latin Programming Ltd.; Liberty South America S.R.L. Two of the shareholders, and the shareholders of the third one too, are foreign entities. We have not received information about them. • We have not received copy of the file before the Incorporation Office • No Shareholders’ Agreements reported, and no agreements affecting shareholders ability to transfer their shares

13. Legal matters – Corporate • LAMD - Corporate type and status: • An entity incorporated in Uruguay to bill and collect outside of Argentina • Based in Uruguay to profit of favorable tax treatment • Other than the corporate information, no other detail was provided to us • Current shareholders: Liberty Uruguay Inc., 99% LMI Programming S. America SA 1% • Minimum operation, only one employee

14. Legal matters – Agreements • We were not provided with complete and updated information on legal matters, so we can not have an accurate idea or confirmation about legal contingencies. • Agreements with MSO were not provided • Agreements with Hearst (Cosmopolitan) was not provided • Barter: little impact compared to other Argentine media companies • Several other agreements not provided due to confidentiality obligations • During 2002, agreements originally made in US dollars were compulsorily converted into Argentine Pesos, by law. The company did not provide us with information on this particular issue.

15. Legal matters – Agreements • Satellite feed agreement with New Skies Satellites Argentina BV: We were provided an agreement for a monthly price of U$ 100K, but we were verbally informed by Mr. Harrison that Pramer is paying approx. U$ 240K per month as per satellite feed. We were not provided any amendment or addendum to the agreement that may explain such difference.

16. Legal matters – Agreements • America 2 and CVN: Agreement to distribute open air channel “America” (3.3M subs), and a news channel. Valid until Nov 2003, renewable at Pramer’s option for 3 additional years. Monthly price: U$ 180K. Apparently the agreement was amended several times, but were not provided to us. • Telearte: Agreement to distribute open air channel “Canal 9” (1.8M subs), valid until Dec 2006. Monthly price: U$ 180K until Dec 2005, then may raise depending in the subscription price paid to the main MSOs.

17. Legal matters – Agreements • Production agreement with Promofilm: Valid until Dec 2007. Promofilm produces the programs broadcasted in “ElGourmet.com” channel. Original agreement was provided, as well as certain amendments. Mr. Harrison mentioned this agreement to be renegotiated with Promofilm, in order to get relevant savings to Pramer. • Other agreements with Promofilm: Promofilm also produces or provides services in connection with some other channels, as Magic, Cosmopolitan • Production agreement for Canal (á): Valid until Dec 2005, already notified Tranquilo Producciones that it will not be renewed.

18. Legal matters – Agreements • Several agreements with Premium Media, films provider to be broadcasted in “Films and Arts”, “Magic” and “Cosmopolitan”. No information regarding Pramer’s payments was provided. • Lease agreement for office space: Main agreement valid until Oct 2006. Monthly amount: U$ 50K plus VAT. The agreement was “pesified”, but we have not seen such amendment and we do not have details about how it was “pesified”.

19. Legal matters – Agreements • Bank Boston, Citibank and Marathon Fund refinance agreement: Financial debt of U$ 12M refinanced. Interest rate: LIBO + variable margin. Guaranties: Promissory note and mortgage over the company assets, including the most of its hardware, satellite facilities and technical devices. Contains a “change of control” clause. Pramer did not notify BBoston of the company sale. Waiver needed. • Software licenses: Licenses for PC software was not provided, but the company reported their quantity, that we could not verify. It does not seem to have all the required licenses. ERP software was developed by a local provider, which license was not provided.

20. Legal matters – Agreements • Relevant agreements that were not provided: • All the agreements with MSOs • E-Mind fusion agreement • Hearst (Cosmopolitan) • Reality TV • SoundVision • ERP software (provider Ryaco)

21. Legal matters – Permits and Licenses; Administrative claims; Liens • The company seems to have complete and updated permits in the areas where they are required (satellite operation, telecommunications) • Only a few and non relevant administrative claim was reported from Municipal Authorities, being handled • Technical equipment is subject to mortgage as per the refinance agreement with Marathon. New equipment must be periodically included in the mortgage.

22. Legal matters – Claims • Practically no information at all was provided in connection with judicial claims. We had no way to verify the reported amounts, to check the current status for the listed claims, or to determine if there are some other non reported claims. • Labor claims for an amount of approx U$ 7M • Most important claim from Claudio Bevilacqua, for U$ 4M • We were verbally informed that there is a criminal claim against Mr. Bevilacqua. • Damages claim from ABA Plus Corporation, for U$ 14M, being held in NY, but currently suspended. Other claim from Pramer to ABA Plus, due to breach of agreement. No information was provided about either claim, but we were verbally informed that Pramer started first the claim seeking to terminate the agreement, and then ABA Plus counter-claimed for damages. • Other claims, either as plaintiff or defendant, not relevant as per nature or amount

23. Legal matters – Labor • We were not provided with any information regarding managers (no names, positions, salaries, etc.) • We were provided a list of employees, salary and seniority • Pramer reported that there are no employee benefits beyond what is ruled in the labor regulation • Labor insurance dully accomplished • Quantity of employees: 273 • Average seniority: 4,8 years • Total salaries per month: U$ 215K • Average salary: U$ 800 • Highest seniority: 20 years • Highest salary: U$ 2,600 • All the information according to Pramer’s documents

24. Legal matters – Labor • Severance compensation due to a 10 years employee: approx 24 times the salary • Severance compensation due to a 5 years employee: approx 13 times the salary • Severance compensation due to a 2 years employee: approx 4 times the salary • Severance compensation may decrease during 2006 if “double severance” (currently at 180%) is taken to 150%