At March 31, 2004, Matav had approximately 265,400 subscribers, compared with approximately 266,700 at March 31, 2003. During first-quarter 2003, the company’s ARPU rose to NIS 207.9 (monthly, including 17% value-added tax) compared with NIS 185.0 in the first quarter of 2003.

The company’s fast Internet access service has attracted more than 74,000 subscribers to date.

First-quarter financing expenses declined to NIS 12.3 million (US$2.7 million) from NIS 14.8 million (US$3.3 million) for the comparable quarter in 2003.

The two numbers are not precisely comparable since, as explained above, the latest quarter’s figure is nominal while the results for a year earlier are adjusted for the CPI. However, a substantial part of the reduction can be attributed to two factors: a reduction in the Company’s net debt and a decrease in interest rate.

Matav’s share in affiliated companies’ profits, (mainly Partner Communications), in the first quarter was NIS 3.6 million (US$0.8 million) compared with NIS 3.4 million (US$0.8 million) in first-quarter 2003.

Matav reported first-quarter net loss of NIS 7 million (US$1.5 million), or NIS 0.23 (US$0.05) per ordinary share, compared with a net loss of NIS 24.5 million (US$5.4 million), or NIS 0.85 (US$0.19), for the year-ago quarter.

Matav’s CEO, Amit Levin, commented: “During the first quarter we took measures to enhance our competitive position by increasing our investment in original TV productions. However, this came at the cost of higher than usual operating expenses in the quarter. Except for these unusually high expenses, the improvement trends that we have seen in previous quarters continued in the present quarter, and once again we successfully increased our revenues. We are continuously diversifying our product offerings and we recently launched a new game service for our subscribers. This new service, which enables subscribers to play against each other, is possible due to our advanced technological and interactive capabilities, abilities that our competitor lacks.

“We have been conducting our fixed-telephony experiment in the Israeli market for the last few months. We are cooperating on this issue with the other two cable companies under the HOT Telecom brand, and we are taking steps to ensure that we will adhere to the timetable that has been set for the experiment. “

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 +972-3-918-0610 internationally, several minutes prior to the start of the conference.

Matav is one of Israel’s three cable television providers, serving roughly 25 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

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MATAV – CABLE SYSTEMS MEDIA LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)

			December 31 2003			March 31,						Convenience translation March 31 2004
						2003			2004
			AUDITED			UNAUDITED			UNAUDITED			UNAUDITED
			Adjusted (2)						Reported (1)
			(NIS In thousands)									U.S. dollars
ASSETS:
CURRENT ASSETS:
Cash and cash equivalents				37,948			1,325			27,242			6,016
Trade receivables				83,151			68,155			83,008			18,332
Other accounts receivables				19,765			20,979			21,361			4,718
Total current assets				140,864			90,459			131,611			29,066
INVESTMENTS AND LONG-TERM LOANS:
Investments in affiliates				66,807			25,594			72,100			15,923
Investments in other company				16,241			16,241			16,241			3,587
Long-term loans granted to employees				-			324			-			-
Investment in limited partnerships				2,057			-			1,597			353
Rights to broadcast movies and programs				34,927			-			45,910			10,139
Other receivables				885			-			885			195
				120,917			42,159			136,733			30,197
FIXED ASSETS:
Cost				2,028,447			2,003,088			2,050,836			452,923
Less - accumulated depreciation and amortization				1,151,622			1,035,322			1,188,156			262,402
				876,825			967,766			862,680			190,521
OTHER ASSETS AND DEFERRED CHARGES
Net of accumulated amortization				3,946			6,209			3,710			819
				1,142,552			1,106,593			1,134,734			250,604

(1)     Nominal financial reporting beginning January 1, 2004.
(2)     Adjusted to the NIS of December 2003.

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MATAV – CABLE SYSTEMS MEDIA LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)

			December 31 2003			March 31,						Convenience translation March 31 2004
						2003			2004
			AUDITED			UNAUDITED			UNAUDITED			UNAUDITED
			Adjusted (2)						Reported (1)
			(NIS In thousands)									U.S. dollars
LIABILITIES AND SHAREHOLDERS' EQUITY:
CURRENT LIABILITIES:
Short-term bank credit and others				435,403			518,031			413,374			91,293
Current maturities of debentures				33,701			33,567			33,634			7,428
Accounts payable and accruals:
Trade				94,699			66,409			108,735			24,014
Jointly controlled entity - current account				17,690			12,902			18,374			4,058
Other				158,982			88,008			167,240			36,935
Total current liabilities				740,475			718,917			741,357			163,727
LONG-TERM LIABILITIES:
Accrued severance pay, net				2,106			880			2,503			553
Loans and debentures (net of current maturities):
Loans from bank and others				127,403			136,035			126,056			27,839
Debentures				66,145			99,091			66,101			14,598
Customers' set-up boxes' deposits, net of
accumulated amortization				25,675			29,057			24,974			5,515
Total long-term liabilities				221,329			265,063			219,634			48,506
Total liabilities				961,804			983,980			960,991			212,233
SHAREHOLDERS' EQUITY:
Share capital				48,882			48,882			48,893			10,798
Share premium				375,538			401,329			375,527			82,934
Retained earnings (loss)				(243,672	)		(262,681	)		(250,677	)		(55,362	)
				180,748			187,530			173,743			38,371
Less-Company's shares held by consolidated company				-			64,917			-			-
Total shareholders' equity				180,748			122,613			173,743			38,371
				1,142,552			1,106,593			1,134,734			250,604

(1)     Nominal financial reporting beginning January 1, 2004.
(2)     Adjusted to the NIS of December 2003.

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MATAV – CABLE SYSTEMS MEDIA LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share and per ADS data)

			Year ended December 31			Three months ended March 31,						Convenience translation Three months ended March 31
			AUDITED			UNAUDITED			UNAUDITED			UNAUDITED
			2003			2003			2004			2004
			Adjusted (2)						Reported (1)
			(NIS In thousands)									U.S. dollars
Revenue				545,480			130,339			147,637			32,605
Depreciation				160,521			40,608			37,068			8,186
Other operating expenses				306,165			76,984			83,197			18,374
Total operating expenses				466,686			117,592			120,265			26,560
Gross profit				78,794			12,747			27,372			6,045
Selling, marketing, general and administrative
expenses:
Selling and marketing				43,954			10,126			14,886			3,288
General and administrative				42,659			11,771			10,115			2,234
				86,613			21,897			25,001			5,521
Operating income (loss)				(7,819	)		(9,150	)		2,371			524
Financial expenses, net				(83,958	)		(14,792	)		(12,257	)		(2,707	)
Other income (expenses), net				80,996			(3,939	)		(758	)		(167	)
Loss before taxes on income				(10,781	)		(27,881	)		(10,644	)		(2,351	)
Taxes on income				35,576			-			-			-
Loss from operations of the Company and its
subsidiaries				(46,357	)		(27,881	)		(10,644	)		(2,351	)
Equity in earnings of affiliated companies, net				40,907			3,422			3,639			804
Net loss				(5,450	)		(24,459	)		(7,005	)		(1,547	)
Loss per ordinary share				(0.19	)		(0.85	)		(0.23	)		(0.05	)
Loss per ADS				(0.38	)		(1.7	)		(0.46	)		(0.1	)
Weighted average number of shares outstanding
in thousands				29,347			28,860			30,215			30,215
Weighted average number of ADSs outstanding in
thousands				14,674			14,430			15,108			15,108
Operating income (loss)				(7,819	)		(9,150	)		2,371			524
Canceling proportional consolidation influence				-			-			(2,044	)		(452	)
Depreciation and amortization (including income
from amortization of set-up boxes' deposits)				154,811			40,608			35,956			7,941
Memo EBITDA(*)				146,992			31,458		(**)	36,283			8,013

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(1)     Nominal financial reporting beginning January 1, 2004. (2)     Adjusted to the NIS of December 2003. (*)     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 period or as an indicator of the operating performance of the Company. Similarly, EBITDA should not be considered as an alternative to cash flow from operating activities or 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 it 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.

(**)     Not including proportional consolidation.

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