6-K

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN ISSUER

Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934

For the month of August 2004

Matav Cable Systems Media Ltd.
(Translation of registrant’s name into English)

42 Pinkas Street
North Industrial Park
P.O. Box 13600
Netanya 42134
Israel
(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F x    Form 40-F o

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes o  No x

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

26 August 2003 Matav - Cable Systems Media Ltd.
(Registrant)

BY: /S/ Amit Levin
——————————————
Amit Levin
Chief Executive Officer

Print the name and title of the signing officer under his signature

FOR IMMEDIATE RELEASE

Matav Reports Increased Revenues of NIS 150.9 Million in Q2 2004-
12% Increase Compared to Q2 2003

NETANYA, Israel, August 26, 2004 – Matav-Cable Systems Media Ltd. (Nasdaq: MATV), a leading Israeli provider of digital cable television services, today reported second-quarter 2004 financial results. In this quarter, as in the previous quarter, 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.

Revenues for the second-quarter increased to NIS 150.9 million (US$33.6 million) from NIS 134.4 million (US$29.9 million) in second-quarter 2003. The increased revenues stem mainly from higher ARPU as well as from higher sales of fast Internet access services. Revenues for the six-month period increased to NIS 298.5 million (US$66.4 million) from NIS 264.7 million (US$58.9 million) in the comparable period in 2003.

At June 30, 2004, Matav had approximately 263,200 subscribers, compared with approximately 265,400 at March 31, 2004. During second-quarter 2004, the company’s ARPU rose to NIS 212.4 (monthly, including 17% value-added tax) compared with NIS 191.0 in the second quarter of 2003. The company’s fast Internet access service has attracted more than 80,000 subscribers to date.

Second-quarter operating expenses totaled NIS 120.6 million (US$26.8 million) compared with NIS 115.9 million (US$25.8 million) in the year-earlier period. The increase in operating expenses is mainly due to increased content expenses as a result of increased demand for tiering services as well as increased expenses related to the Company’s fast Internet service. This increase was slightly offset by a decrease in the Company’s depreciation costs. Operating expenses for the six-month period totaled NIS 240.9 million (US$53.6 million) compared with 233.5 million (US$51.9 million) for the comparable period in 2003.

Second-quarter gross profit improved 63.8% to NIS 30.3 million (US$6.7 million) from 18.5 million (US$4.1 million) in second-quarter 2003. Gross profit for the six-month period increased to NIS 57.6 million (US$12.8 million) from 31.2 million (US$6.9 million) in the comparable period in 2003.

Second-quarter selling and marketing expenses totaled NIS 16.5 million (US$3.7 million), compared with NIS 9.4 million (US$2.1 million) for second-quarter 2003. The increase is due mainly to higher advertising expenses associated with the continued penetration of the “HOT” brand in the Israeli market, as well as due to increased marketing expenses associated with the fast Internet service. Selling and marketing expenses for the six-month period reached NIS 31.4 million (US$7 million) compared with 19.5 million (US$4.3 million) for the comparable period in 2003.

Second-quarter G&A expenses totaled NIS 10.4 million (US$2.3 million), compared with NIS 11.3 million (US$2.5 million) for second-quarter 2003. G&A expenses for the six-month period totaled NIS 20.5 million (US$4.6 million), compared with 23.1 million (US$5.1 million) for the comparable period in 2003.

Second-quarter operating profit totaled NIS 3.3 million (US$0.7 million), compared with an operating loss of NIS 2.2 million (US$0.5 million) for second-quarter 2003. Operating profit for the six-month period totaled NIS 5.7 million (US$1.3 million), compared with an operating loss of 11.4 million (US$2.5 million) for the comparable period in 2003.

Second-quarter EBITDA improved 3.3% to NIS 37.8 million (US$8.4 million) from NIS 36.6 million (US$8.1 million) in second-quarter 2003. EBITDA for the six-month period totaled NIS 74.1 million (US$16.4 million), compared with NIS 68.0 million (US$15.1 million) in the comparable period in 2003.

Second-quarter financing expenses declined to NIS 16.2 million (US$3.6 million) from NIS 30.7 million (US$6.8 million) for the comparable quarter in 2003. The two numbers are not precisely comparable since 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 could be attributed to two factors: a reduction in the Company’s net debt and a decrease in interest rates. Financing expenses for the six-month period decreased to NIS 28.5 million (US$6.3 million) from NIS 45.5 million (US$10.1 million) in the comparable period in 2003.

Matav’s share in affiliated companies’ profits in the second quarter was NIS 2.6 million (US$0.6 million) compared with NIS 7.8 million (US$1.7 million) in second-quarter 2003. The decrease is due mainly to a decline in Matav’s share in Partner Communications’ profits and due to Matav’s share in Hot Telecom’s losses. Hot Telecom was established as a limited partnership between the three cable companies in order to offer communication services over the cable infrastructure in Israel. Matav’s share in affiliated companies’ profits for the six-month period totaled NIS 6.3 million (US$1.4 million) compared with NIS 11.2 million (US$2.5 million) in second-quarter 2003

Matav reported second-quarter net loss of NIS 28.2 million (US$6.3 million), or NIS 0.96 (US$0.21) per ordinary share, compared with a net loss of NIS 22.6 million (US$5 million), or NIS 0.78 (US$0.17), for the year-ago quarter. Net loss for the six-month period reached NIS 35.2 million (US$7.8 million), or NIS 1.2 (US$0.27) per ordinary share, compared with a net loss of NIS 47.1 million (US$10.5 million), or NIS 1.63 (US$0.36), for the year-ago period.

Matav’s CEO, Amit Levin, commented: “Most of the improvement trends that we have seen in previous quarters continued in the present quarter, and once again we successfully increased our revenues. However, since the Israeli international telephony market has recently opened up for competition and since Barak is facing financial difficulties, we decided to perform a re-valuation of our investment in Barak Ltd. As a result of Barak’s re-valuation, we decided to write-off our investment in Barak and therefore incurred a one-time other expense charge of NIS 16.2 million in this quarter.”

“We are currently in the midst of an operational merger with the two other cable companies. The merger will enable us to achieve higher levels of efficiency and uniformity in all aspects of our operations as well as improve our competitive positioning. We are also progressing towards operating our fixed-telephony services in the Israeli market, through HOT Telecom, by year-end. This new line of business will demand total investments of between US$80 million and US$100 million over the next three years, and our share in it will be 26 percent.”

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

MATAV – CABLE SYSTEMS MEDIA LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)

Convenience
translation
December 31,
 June 30,
 June 30,
2003
 2003
 2004
 2004
AUDITED
 UNAUDITED
 UNAUDITED
 UNAUDITED
Adjusted (2)
 Reported (1)
NIS In thousands
 U.S. dollars
 ASSETS:                    
   
 CURRENT ASSETS:   
 Cash and cash equivalents    37,948    711    29,130    6,478  
 Trade receivables    83,151    69,043    81,122    18,039  
 Other accounts receivables    19,765    14,129    15,242    3,389  
 Total current assets    140,864    83,883    125,494    27,906  
   
 INVESTMENTS AND LONG-TERM LOANS:   
 Investments in affiliates and partnership    66,807    33,526    77,722    17,283  
 Investments in other companies    16,241    16,241    -    -  
 Long-term loans granted to employees    -    40    -    -  
 Investment in limited partnerships    2,057    -    1,597    355  
 Rights to broadcast movies and programs    34,927    -    36,848    8,194  
 Other receivables    885    -    607    135  
     120,917    49,807    116,774    25,967  
   
 FIXED ASSETS:   
 Cost    2,028,447    2,017,673    2,066,478    459,524  
 Less - accumulated depreciation and amortization    1,151,622    1,076,096    1,223,984    272,178  
   
     876,825    941,577    842,494    187,346  
   
 OTHER ASSETS AND DEFERRED CHARGES   
 Net of accumulated amortization    3,946    5,366    3,477    773  
   
     1,142,552    1,080,633    1,088,239    241,992  

(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)

Convenience
translation
December 31,
 June 30,
 June 30,
2003
 2003
 2004
 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    435,403    519,197    422,277    93,902  
 Current maturities of debentures    33,701    33,833    34,107    7,584  
 Accounts payable and accruals:  
   Trade    94,699    63,577    97,617    21,707  
   Jointly controlled entity - current account    17,690    13,014    10,993    2,445  
   Other    158,982    99,116    170,847    37,991  
   
 Total current liabilities    740,475    728,737    735,841    163,629  
   
 LONG-TERM LIABILITIES:   
 Accrued severance pay, net    2,106    767    2,276    506  
 Loans and debentures (net of current maturities):  
 Loans from bank and others    127,403    118,237    113,904    25,329  
 Debentures    66,145    100,009    67,170    14,937  
 Customers' deposits for converters, net of  
   accumulated amortization    25,675    28,341    23,529    5,232  
   
 Total long-term liabilities    221,329    247,354    206,879    46,004  
   
 Total liabilities    961,804    976,091    942,720    209,633  
   
 SHAREHOLDERS' EQUITY:   
    Share capital    48,882    48,882    48,899    10,874  
    Share premium    375,538    401,329    375,538    83,509  
    Retained earnings (loss)    (243,672 )  (288,020 )  (278,918 )  (62,023 )
     180,748    162,191    145,519    32,359  
 Less-Company's shares held by consolidated company    -    57,649    -    -  
   
 Total shareholders' equity    180,748    104,542    145,519    32,359  
   
     1,142,552    1,080,633    1,088,239    241,992  

(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 STATEMENT OF OPERATIONS
(In thousands, except per share and per ADS data)

Three months ended
June 30,
 Six months ended
June 30,
 Convenience
translation
Six months
ended
June 30,
2004
2003
 2004
 2003
 2004
Adjusted (2)
 Reported (1)
 Adjusted (2)
 Reported (1)
NIS In thousands
 U.S. dollars
 
UNAUDITED UNAUDITED UNAUDITED UNAUDITED UNAUDITED
 
 Revenue      134,374    150,891    264,712    298,528    66,384  
   
 Operating expenses    115,882    120,639    233,474    240,904    53,570  
   
 Gross profit    18,492    30,252    31,238    57,624    12,814  
   
 Selling, marketing, general and  
   administrative expenses:  
 Selling and marketing    9,398    16,496    19,524    31,382    6,978  
 General and administrative    11,343    10,415    23,114    20,530    4,566  
     20,741    26,911    42,638    51,912    11,544  
   
 Operating profit (loss)    (2,249 )  3,341    (11,400 )  5,712    1,270  
 Financial expenses, net    (30,741 )  (16,234 )  (45,534 )  (28,491 )  (6,336 )
 Other income (expenses), net    2,598    (17,968 )  (1,339 )  (18,726 )  (4,164 )
   
 Loss before taxes on income    (30,392 )  (30,861 )  (58,273 )  (41,505 )  (9,230 )
   
 Taxes on income    -    -    -    -    -  
   
 Loss from operations of the Company and  
   its subsidiaries    (30,392 )  (30,861 )  (58,273 )  (41,505 )  (9,230 )
 Equity in earnings of affiliated companies  
   and partnership, net    7,773    2,620    11,194    6,259    1,392  
   
 Net loss    (22,619 )  (28,241 )  (47,079 )  (35,246 )  (7,838 )
   
 Loss per ordinary share    (0.78 )  (0.96 )  (1.63 )  (1.2 )  (0.27 )
   
 Loss per ADS    (1.56 )  (1.92 )  (3.26 )  (2.4 )  (0.54 )
   
 Weighted average number of shares  
   outstanding in thousands    28,885    29,361    28,873    29,357    29,357  
   
 Weighted average number of ADSs  
   outstanding in thousands    14,443    14,681    14,436    14,679    14,679  
   
 EBITDA calculation:   
 Operating profit (loss)    (2,249 )  3,341    (11,400 )  5,712    1,270  
 Net of the effect of proportional  
   consolidation    -    (254 )  -    (2,298 )  (511 )
 Depreciation and amortization (included  
   Income from amortization of deposits for  
   converters)    38,833    34,746    79,441    70,702    15,722  
 Memo EBITDA(*)    36,584   (**) 37,833  68,041   (**) 74,116 (**) 16,481

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

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(*) 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.

(**) Not including proportional consolidation.

4