Cc8b9ce0-5C88-4Fc3-A701-B74e08b1c399

WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399

MEDIASET S.p.A. - via Paleocapa, 3 - 20121 Milan

Share Capital Euros 614,238,333.28 fully paid up

Tax Code, VAT number and inscription number in the Milan Enterprises Register: 09032310154

Website: www.mediaset.it WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Contents

Notice of call

Consolidated Financial Statements 2010 Director’s report on operations

Corporate Bodies ...... 1

Financial Highlights ...... 2

Directors’ Report on Operations ...... 4

• The general economic situation ...... 8 • Development of the regulatory framework in the television industry ...... 10 • Mediaset shares on the stock market...... 11 • Main corporate operations and equity investments ...... 14 • The Main Group companies ...... 18 • Evolution of operations by sector of activity ...... 19 • Analysis of consolidated results by geographic and operating area Financialc Results ...... 52 Balance Sheet and Financial Position...... 63 Analysis of results of the parent company Financialc Results ...... 67 Balance Sheet and Financial Position...... 69 • Reconciliation between consolidated and parent company net profit and shareholders’ equity ...... 72 • Information regarding the main risks and uncertainties to which the Group is exposed ...... 73 • Human Resources: - Group ...... 84 - Mediaset S.p.A...... 92 • The company’s commitment to the environment and culture...... 96 • Report on corporate governance and ownership ...... 101 • Shares held by directors, statutory auditors, general managers and executives with strategic responsibilities ...... 153 • Information required by article 2428 of the Italian Civil Code...... 154 • Other information ...... 156 • Events subsequent to 31 December 2010 ...... 159 • Foreseeable developments...... 160 • Board of Directors’ Report to the Shareholders’ Meeting ...... 161

WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Mediaset Group 2010 Annual Report

Consolidated Financial Statements • Consolidated statement of financial position...... 185 • Consolidated statement of income...... 187 • Consolidated statement of comprehensive income ...... 188 • Consolidated statement of cash flows...... 189 • Consolidated statement of changes in equity...... 190 •Consolidated statement of financial position and income according to Consob resolution no. 15519 dated 27 July 2006...... 191

Explanatory notes • General information ...... 194 • General drafting criteria and accounting standards for the drafting of the financial statements...... 194 • Summary of the accounting standards and valuation criteria ...... 195 • Main company operations and changes in the consolidation area...... 213 • Business combination ...... 214 • Segment report ...... 216 • Notes on main assets items...... 222 • Notes on main liabilities items...... 239 • Notes on main income statement items ...... 251 • Notes on main cash flow statement items ...... 258 • Additional disclosures on financial instruments and risk management policies ...... 259 • Share-based payments...... 273 • Related party transactions ...... 276 • Commitments...... 278 • Potential liabilities ...... 279 • List of equity investments included in the consolidated financial statement as at 31 December 2010 ...... 281

Attestation of the Group’s Financial Statements in conformity with article 154, part two, of Legislative Decree 58/98 ...... 283

Indipendent Auditors’ Report ...... 287 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Mediaset S.p.A. 2010 Annual Report

Financial statements Statement of financial position as of 31 December 2010...... 292 Statement of income as of 31 December 2010 ...... 294 Statement of comprehensive income as of 31 December 2010 ...... 295 Statement of cash flows as of 31 December 2010...... 296 Statement of changes in equity as of 31 December 2010 and 31 December 2009...... 297 Statement of financial position as per the Consob resolution n° 15519 of 27th July 2006 ...... 298 Statement of income Statement as per the Consob resolution n° 15519 of 27th July 2006 ...... 301

Explanatory Notes General information ...... 303 Adoption of International Accounting Standards...... 303 General drafting criteria and the accounting standards used to prepare the Financial Statements and the valuation criteria ...... 303 Other information...... 316 Comments on the main Asset items ...... 327 Comments on the main Net Equity and Liabilities items...... 337 Comments on the main items in the income statements...... 352 Investment commitments and guarantees ...... 360 Additional information on the financial instruments and risk management policies...... 361 Attachments ...... 371

Table of the relevant equity investments as per Article 125 of the Consob Regulation n. 11971/1999 and successive changes...... 375

Reports of the Statutory Auditors and External Auditors ...... 377

Certification of the Financial Statements pursuant to art. 154-bis, of the Legislative Decree 58/98...... 385

Summary tables of the essential economic and financial data of Mediaset subsidiary companies...... 389

WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399

Ordinary and Extraordinary Shareholders’ Meeting 2011

Notice of call WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399

NOTICE OF CALL

The Shareholders of Mediaset S.p.A. (ticker MS) who hold ordinary shares (ISIN IT0001063210 – Sedol 5077946) or American Depositary Receipts (CUSIP dd584469407) are called to an Ordinary and Extraordinary Shareholders’ Meeting, in Cologno Monzese (Milan), Via Cinelandia 5, on Tuesday 19 April 2011, 10.00 am, at first call, and, if necessary, on Wednesday 20 April 2011, same time and place, at second call, to vote on the following items on the

AGENDA

Ordinary part

A. Financial statements as at 31 December 2010

1. Approval of the Financial Statements at 31 December 2010 and the Board of Directors’ Management Report, the presentation of the reports of the External Auditors and the Statutory Auditors and the presentation of the Consolidated Financial Statements as at 31 December 2010.

2. Approval of the allocation of the operating profit, and any pertinent resolutions.

B. Nomination of a Director

3. Nomination of a Director.

C. Nomination of the Board of Statutory Auditors and establishment of remunerations

4. Nomination of members of the Board of Statutory Auditors.

5. Establishment of annual remuneration for the Board of Statutory Auditors.

D. Authorisation for the board of Directors to buy and dispose of the company’s own shares

6. Authorisation for the Board of Directors to buy and dispose of the company’s own shares, also for the purposes of the Stock Option plans, and any pertinent resolutions.

WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399

Extraordinary part

E. Proposal to modify the company statute

7. Proposal to modify the following articles of the company statute: 6) (Share capital), 9), 10), 11) and 16) (Shareholders’ Meetings), 17), 23), 24) and 26) (Board of Directors), 27) (Board of Statutory Auditors); introduction of a new article, number 27) (Transactions with related parties), with the consequent re-numbering of the entire company statue, and any pertinent and consequent resolutions.

In consideration of the company's ownership situation, it is expected that the General Meeting will meet and vote on resolutions on 20 April 2011.

The share capital comprises 1,181,227,564 ordinary shares with a par value of EUR 0.52 each, although only those ordinary shares that are currently in circulation carry voting rights or in other words 1,136,402,064 shares, excluding the 44,825,500 treasury shares held as of today’s date. This number may vary in the period from today’s date up until the date of the general shareholders’ meeting, in which case any variation in this number will be communicated when the general meeting opens.

The structure of the share capital is illustrated on the company’s website at www.mediaset.it (in the Corporate Governance section).

Nomination of Board of Statutory auditors

As per article 27 of the company statute, statutory auditors are nominated on the basis of lists presented by shareholders, in accordance with the following procedure. The lists must indicate at least one candidate for the position of Active Statutory auditor and one candidate for the position of substitute auditor and may contain up to a maximum of three candidates for the position of Active Statutory auditor and two candidates for the position of substitute auditor. Candidates are listed in numerical order.

Each list is divided into two sections with one being for the candidates for the position of Active Statutory auditor and the other for the position of substitute auditor. Each candidate can only be present on one list, otherwise they will be ineligible for election.

Lists may be presented by all shareholders who hold voting rights that either on their own or together with other shareholders own 1% of the share capital (in accordance with the percentage of shares established in Consob resolution 17633/2011). Each shareholder may not present either individually or together with other shareholders more than one list nor vote for more than one list, either through a third party or through a trust company. Shareholders belonging to the same group – meaning a parent company, subsidiary company or jointly- controlled company – and shareholders that are part of a shareholders group as defined in article 122 of Legislative Decree 58/1998 with the objective of company shares cannot present WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 or join in presenting more than one list nor vote for more than one list, either through a third party or through a trust company.

Ownership of the minimum number of shares required for presenting lists is established on the basis of the shares registered to shareholders on the day the lists are deposited with the company.

Certificates proving the ownership of shares can be produced after the lists are deposited on condition that they are presented in accordance with the terms set out for the publication of the lists by the company by sending the necessary communication referred to in current regulations, in this instance by 29 March 2011.

The lists, including the professional curriculum of the individuals put forward as candidates and signed by the shareholders presenting them, must either be deposited at the company’s registered office (Milan – Via Paleocapa, 3 – open 9:00 - 18:00 weekdays), or sent by email to [email protected] to arrive no later than the twenty-fifth day before the date for the shareholders’ meeting, in this instance by 25 March 2011. The company, and more specifically the corporate affairs department which acts on its behalf, is available to receive the lists. When presenting the lists, they must also be accompanied by (i) the relative information concerning the identity of the shareholders presenting the individual lists, with an indication of the total portion of the share capital held, (ii) a curriculum vita for each of the candidates containing extensive information about the personal and professional characteristics of each candidate, and (iii) any additional information required by current laws. Shareholders who do not hold either personally or collectively a controlling share or majority share must in addition present the declaration required by law stating the absence of relations with those shareholders who do hold such shares. In accordance with the terms referred to above, individual candidates must deposit a declaration accepting the candidacy and stating that no instances of ineligibility or incompatibility as defined by law exists with regard to them and that they have not exceeded the current legal limit on accumulating positions of responsibility and that they fulfil the requisites demanded by current laws, regulations and the company statute for members of the Board of Statutory Auditors, together with a list of the directorships and management positions held by them in other companies.

Shareholders who intend to present lists containing nominations for the Bard of Statutory Auditors are invited to take into account the contents of Consob recommendation DEM/9017893 of 26 February 2009.

Any lists presented that do not comply with the provisions referred to above will not be submitted for voting.

The lists will be made available to the general public at the company’s registered office, at the offices of Borsa Italiana S.p.A. and on the company website at www.mediaset.it (in the Corporate Governance/Shareholders’ Meetings section) at least 21 days before the date set aside for the Shareholders’ Meeting, in this instance by 29 March 2011.

WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399

Attendance at Shareholders’ Meetings

As per article 11 of the company statute, shareholders who have the right to vote may attend Shareholders’ Meetings. Shareholders are eligible to attend and vote at shareholders’ meetings if they provide the company with a statement issued by an intermediary in favour of the individual who has the right to vote and based on the evidence available on the seventh day of the market before the date fixed for the first calling of the shareholders’ meeting (record date), which in in this instance is 8 April 2011. Purchasing or disposing of shares after that date does not make an individual eligible to vote at the shareholders’ meeting. Individuals who become owners of shares after the record date referred to above therefore do not have the right to participate or vote at the shareholders’ meeting.

Intermediaries must provide the company with the statement referred to above in conformity with current regulations.

As per article 12 of the company statute, shareholders who have the right to vote can be represented by proxy, as established by law.

Shareholders may make use of the proxy form available at the company’s registered office and on the company website at www.mediaset.it (in the Corporate Governance/Shareholders’ Meetings section). The proxy form can be sent to the company by registered letter to the following address: Mediaset S.p.A. – Direzione Affari Societari – Viale Europa 48, 20093 Cologno Monzese (MI), or by email to [email protected]. In such cases the proxy form must reach the company by the date and time established for the shareholders’ meeting to commence. If the representative delivers or sends to the company a copy of the proxy form, he or she must declare that the proxy form conforms to the original and also provide evidence of the identity of the delegating party.

Proxy authorisation may be conferred, without any charge to the delegating party, to vote on any or all of the proposals on the agenda by indicating the specific proposal number, on Istifid S.p.A. Società Fiduciaria e di Revisione, Servizio Fiduciario – Viale Jenner n. 51, 20159 Milan, in its role as the designated representative of the company, as per article 135-undecies of Legislative Decree 58/1998, on condition that such authorisation arrives at the representative by the end of the second day the market is open before the date fixed for the first calling of the shareholders’ meeting, in this instance 15 April 2011. The authorisation may be sent to Istifid S.p.A. Società Fiduciaria e di Revisione, Servizio Fiduciario by registered letter to the above address or to that company’s email address at [email protected]. The authorisation will not be valid for agenda proposals where specific instructions on how to vote for those proposals have not been indicated. The authorisation and voting instructions can be revoked using the same method outlined above by the end of the second day the market is open before the date fixed for the first calling of the shareholders’ meeting, in this instance 15 April 2011. The form for conferring authorisation and voting instructions on Istifid S.p.A. as per article 135-undecies of Legislative Decree 58/1998 is available at the company’s registered office and at the company’s website at www.mediaset.it (under the Corporate Governance/shareholders’ Meeting section).

There are no provisions for postal votes or for voting by email. WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399

Shareholders will only be requested to vote separately on those proposals assigned a number in the present agenda.

Attendance at shareholders’ meetings is regulated by the laws and regulations pertaining to such events, in addition to the provisions contained in the current regulations for shareholders’ meetings that are available at the company website at www.mediaset.it (under the Corporate Governance/Shareholders’ Meetings section).

Right to ask questions

Shareholders may ask questions about the subjects on the agenda even before the meeting by sending them to the following email address, [email protected], or by fax to Mediaset S.p.A. – Direzione Affari Societari – Viale Europa n. 48, 20093 Cologno Monzese (MI) at +39 02 25149590. Individuals interested in asking questions must provide information regarding their identity. Questions that arrive before the shareholders’ meeting takes place will be replied to at the latest during the meeting itself. The company has the right to provide a joint answer to questions concerning the same subject.

Additions to the agenda

In accordance with the law, those shareholders who, individually or jointly, represent at least one fortieth of the share capital may apply, within 10 days from the publication of this notice, to include additional items of business to discuss by stating such matters in their application. Such requests must be sent in writing to the company’s registered office and must include details of the shareholders’ legitimate right to take part at shareholders’ meetings. In accordance with the terms described above and using the same method, the proposing shareholders must send a report about the subject to be dealt with to the Board of Directors. Such additions are not permitted for subjects on which the shareholders’ meetings must pass resolution, in accordance with the law, or on proposals made by directors or on subjects connected with a project or report prepared by them.

Documentation

All documentation regarding the items of business on the present agenda are made available to the general public, in accordance with the terms and method outlined in current law, at the company’s registered office, at the offices of Borsa Italiana S.p.A. and on the company’s website at www.mediaset.it (under the Corporate Governance/Shareholders’ Meetings section). Shareholders have the right to obtain a copy of the said documents.

Specifically, as of today, the public is granted access to reports referred to in points 3, 4, 5, 6 and 7 of the agenda of the shareholders’ meeting. WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399

The documents concerning points 1 and 2 on the agenda, including the report on corporate governance and the ownership structure, will be made available to the public by 28 March 2011.

The company statute is available on the company’s website at www.mediaset.it (under the Corporate Governance/Statute section).

The Mediaset corporate Affairs Department is available to provide any further information required on: tel. +39 02 25149588; fax +39 02 25149590 and at the following email address: [email protected]. The Company's registered office (Via Paleocapa 3, Milan) is open to the public for consulting and/or lodging the aforementioned documents on weekdays from Monday to Friday, from 9 am to 6 pm.

Shareholders are invited to make their way to the meeting before the starting time to facilitate registration. The accreditation of meeting attendees will begin one hour before the start of the meeting.

A shuttle service is available from the Cascina Gobba (MM2) underground station to the location of the meeting and in the reverse direction after the conclusion of the Shareholders’ Meeting.

Milan, 8 March 2011

The Chairman Fedele Confalonieri WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399

Consolidated and Statutory Financial Statements 2010

WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399

Consolidated Financial Statements 2010 Directors’ Report on Operations WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399

Corporate Bodies

Board of Directors Chairman Fedele Confalonieri Deputy Chairman Pier Silvio Berlusconi CEO Giuliano Adreani Directors Marina Berlusconi Pasquale Cannatelli Paolo Andrea Colombo Mauro Crippa Bruno Ermolli Luigi Fausti * Marco Giordani Alfredo Messina Gina Nieri Niccolò Querci Carlo Secchi Attilio Ventura

Executive Committee Fedele Confalonieri Pier Silvio Berlusconi Giuliano Adreani Gina Nieri

Internal Control Committee Carlo Secchi (Chairman) Alfredo Messina Attilio Ventura

Remuneration Committee Bruno Ermolli (Chairman) Paolo Andrea Colombo Attilio Ventura

Corporate Governance Committee Attilio Ventura (Chairman) Paolo Andrea Colombo Carlo Secchi

Board of Statutory Auditors Alberto Giussani (Chairman) Francesco Vittadini (Active Statutory Auditor) Silvio Bianchi Martini (Active Statutory Auditor) Mario D’Onofrio (Substitute Statutory Auditor) Antonio Marchesi (Substitute Statutory Auditor)

External Auditors Reconta Ernst & Young S.p.A.

(*) On 1 March 2011 Luigi Fausti, an independent director, resigned

1 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Net Revenues Operating Profit (EBIT) Main Income Statement Data €m €m €m

2006 2007 2008 (1) 2009 2010

3,747.6 4,082.1 4,199.5 3,882.9 4,292.5 1,035.3 1,149.0 983.6 601.5 815.5 Total net Revenues 3,747.6 4,082.1 4,199.5 3,882.9 4,292.5 Italy 2,751.5 3,002.1 3,218.8 3,228.8 3,438.3 4000 1500 Spain 997.6 1,081.6 981.9 656.3 855.1 3000 Operating Profit (2) 1,035.3 1,149.0 983.6 601.5 815.5 1000 Italy 595.7 663.8 596.8 478.7 596.1 2000 Spain 439.6 485.2 386.9 122.8 219.4 500 1000 Profit before Tax and Minority Interest 1,019.6 1,095.5 694.2 448.4 599.6 27.7% 28.1% 15.5% 15.5% 19.0% Net Profit 505.5 506.8 459.0 272.4 352.2

2006 2007 2008 2009 2010 2006 2007 2008 2009 2010 Main Balance Sheet and Financial Data €m EBIT % EBIT/Net Revenues 2006 2007 2008 2009 2010

Net Invested Capital (2) 3,501.7 4,045.5 4,127.5 4,090.3 5,025.2 Total net Shareholders’ Equity 2,933.3 2,836.8 2,755.8 2,538.3 3,435.0 Net Group Shareholders’ Equity 2,634.1 2,543.9 2,482.4 2,331.8 2,617.7 Minorities Shareholders’ Equity 299.2 292.9 273.4 206.5 817.3 Net Financial Position (2) (568.3) (1,208.8) (1,371.7) (1,552.0) (1,590.2) Operating Cash Flow (2) 1,588.4 1,730.7 1,865.0 1,627.2 1,774.3 Investments 1,466.5 953.2 1,122.6 1,319.4 932.8 Net Profit Dividends and Pay out (*) Dividends paid by the Parent Company 489.3 488.8 488.7 431.8 250.0 €m €m Dividends paid by Subsidiaries 144.1 155.9 155.9 102.8 39.9

505.5 506.8 459.0 272.4 352.2 488.8 488.7 431.8 250.0 397.7 Personnel 800 500

2006 2007 2008 2009 2010 600 Mediaset Group Personnel (headcount) 5,839 6,306 6,375 5,834 6,285 400 250 Italy 4,660 5,112 5,212 4,727 4,704 Spain 1,179 1,194 1,163 1,107 1,581 200 Mediaset Group Personnel (average) 5,849 6,260 6,306 6,096 5,796 96.7% 96.4% 94.1% 91.8% 112.9% Italy 13.5% 12.4% 10.9% 7.0% 8.2% 4,665 5,065 5,122 4,956 4,693 Spain 1,184 1,195 1,184 1,139 1,103 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010

Main Indicators Net Profit % Net Profit / Net Revenues Dividends distributed by Mediaset SpA Pay out

(*) Dividends calculated on the basis of the number of shares net of treasury shares 2006 2007 2008 2009 2010

Operating Profit / Net Revenues 27.6% 28.1% 23.4% 15.5% 19.0% Italy 21.7% 22.1% 18.5% 14.8% 17.3% Spain 44.1% 44.9% 39.4% 18.7% 25.7% Pre-Tax and Minority Interest / Net Revenues 27.2% 26.8% 16.5% 11.5% 14.0% Net Profit / Net Revenues 13.5% 12.4% 10.9% 7.0% 8.2% ROI (Return on Net Invested Capital) (3) 30.7% 30.4% 24.1% 14.6% 17.9% ROE (Return on Equity) (4) 19.3% 19.6% 18.3% 11.3% 14.2% N. of Shares (5) 1,138,297,564 1,138,297,564 1,136,402,064 1,136,402,064 1,136,402,064 Consolidated Net Profit per Share (€) 0.44 0.45 0.40 0.24 0.31

Dividend per Share (€) (6) 0.43 0.43 0.38 0.22 0.35

(1) Revenues and costs 2008 for the assets ceded on 30 June 2009 reclassified pursuant to IFRS 5, separately in the net result of discontinued assets (2) Amounts referring to intermediate levels of results and to asset and financial groupings for which there are supplied in the report on operations the criteria used for calculating them, according to what is lad down by the CONSOB Communication n° 6064293 of 28 July 2006 and in the CESR Recommendation of 3 November 2005 regarding alternative performance indicators (non GAAP measures). (3) Group Operating Result (EBIT) / Average Net Capital Invested (4) Group Net Result / Group Average Net Equity. (5) Spot datum at 31/12 net of treasury shares. (6) 2010 datum relative to the distribution proposal of the BOD to the Shareholders’ Meeting. WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Net Revenues Operating Profit (EBIT) Main Income Statement Data €m €m €m

2006 2007 2008 (1) 2009 2010

2006 2007 2008 2009 2010 2006 2007 2008 2009 2010 Main Balance Sheet and Financial Data €m EBIT % EBIT/Net Revenues 2006 2007 2008 2009 2010

505.5 506.8 459.0 272.4 352.2 488.8 488.7 431.8 250.0 397.7 Personnel 800 500

Main Indicators Net Profit % Net Profit / Net Revenues Dividends distributed by Mediaset SpA Pay out

(*) Dividends calculated on the basis of the number of shares net of treasury shares 2006 2007 2008 2009 2010

Dividend per Share (€) (6) 0.43 0.43 0.38 0.22 0.35

Dear shareholders,

The year that has recently finished witnessed an uneven consolidation of the moderate recovery registered in the world’s economy. However, the rate of increase of the GDP and the principal macroeconomic indicators for the main western countries (with the single exception of the United States) had still not allowed to return to the levels registered before the beginning of the crisis, and the economic system remains exposed to uncertainty and volatility due in particular to the weak financial structure of many countries in the EU. In Italy in particular, the expected growth rate would seem to suggest (as told by the main professional observers) that it will take a long time before pro-capita wealth returns to the levels registered before the crisis began.

In this general context and in the specific context of the media sector, now structurally characterised by continuous technological development brought about by the digital revolution, the multiplication of distribution platforms and fragmentation in the consumption of audio-visual content, in 2010 the Mediaset Group continued implementing the strategic policies that were already in place during the crucial and most critical phases of the crisis and in line with the primary objective of safeguarding the growth of long-term structural profitability in order to be able to exploit this position when the economy begins its recovery cycle.

Therefore the Group was mainly concerned with consolidating its competitive advantage and its leading position in the “core” market of commercial television in Italy and Spain, by continuing to invest in strategic assets related to digital terrestrial television and in the anti-cyclical, potentially high-growth segment of pay TV operations. In Spain Telecinco, once it had received the necessary authorisation, completed the purchase at the end of the year of the free-to-air television assets of Cuatro and the equity investment in Digital Plus, with both operations enabling Telecinco to reinforce its position as the leading multi-platform television operator in the country.

As a result of this, the Mediaset Group has a substantially symmetrical business structure in the two different countries where it operates and a unique position compared with the other main European players, based on the centrality of its core business, which is concentrated on general free-to-air television, and a commitment to maintaining and constantly updating both its free-to- air and pay TV multi-channel programmes by exploiting the opportunities and potential offered by digital television and by technological developments, as demonstrated by the latest initiatives launched in the non-linear television sector.

This strategy continued in 2010 and was rewarded by a strong positive increase in economic results, determining an impressive growth in margins, operating profitability and cash flow compared with the previous year, which was badly affected by the worst phase of the economic crisis.

In fact, the Group has obtained a relevant increase in its advertising revenues, taking advantage

4 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations both of a pick-up in the Italian advertising market (even if it has been slow and irregular) and of a new regulatory framework regarding advertising intake in Spain. It has also attained the objective of a break even in Mediaset Premium operations, and improved the overall results in the other operations (mainly due to the extremely successful results of the Italian movies produced and distributed by Medusa Film).

The consolidated financial-economic results for 2010 demonstrate the effects of this situation:

consolidated net revenues amounted to EUR 4,292.5 million, with an increase of 10.5% compared with the figure of EUR 3,882.9 million for the previous year;

EBIT amounted to EUR 815.5 million, a 35.6% increase compared with the figure of EUR 601.5 million for the same period in the previous year, net of depreciations and write-downs of EUR 1,174.0 million (compared with EUR 1,180.6 million in the previous year);

operating profitability amounted to 19.0% compared with 15.5% in the previous year, which once again confirms that Mediaset is one of the top companies for profitability compared with the main European broadcasters;

profits before taxes (EBT) amounted to EUR 599.6 million, compared with EUR 448.4 million in 2009. This results have been affected by the write off made in the third quarter in the investment in Edam as a result of the impairment test carried out in the light of the 2011 budget data and on the business plan, as well as by the write off made in the fourth quarter on the financial assets regarding stakes of the junior debt of Endemol, basing on the approved multi-year business plan. The impact of this write-down on the net result amounted to EUR -83 million due to the net loss of EUR -40.2 million deriving from the impairment of the same equity investment in 2009;

consolidate net profit for the Group reached EUR 352.2 million, compared with EUR 272.4 million in 2009;

the consolidated net debt as at 31 Decembre 2010 has not substantially changed with reference to the same period of 2009, reaching EUR 1,590.2 million (EUR 1,552.0 million as at 31 December 2009) even considering a cash out of 255.8 million spent for purchases made at the end of the year by Telecinco. The free cash flow, calculated gross of income and outgoings connected to dividends, business combinations, investments and disinvestments of shares and treasury shares, amounted to EUR 570.6 million in 2010, registering a sizable increase compared with the amount of EUR 354.1 million of free cash flow registered in the previous year. The placement of seven-year corporate bond for a notional amount of EUR 300 million successfully made by the holding company Mediaset S.p.A. at the beginning of 2010 also helped to increase furtherly the Group’s financial solidity in terms of risk management and increase the debt duration.

5 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations

at 31 December 2010 the Mediaset Group employed 6,285 people in the companies included in the consolidation area, compared with 5,834 at 31 December 2009, which was mainly due to the effects of the purchase by Telecinco of the Spanish company Sociedad General de Television Cuatro SAU;

Mediaset S.p.A., the parent company, closed the financial year at 31 December 2010 with a profit of EUR 213.0 million, from EUR 329.7 million in 2009.

Breakdown of data by geographical area:

In Italy:

consolidated net revenues amounted to EUR 3,438.3 million, a 6.5% increase compared with the previous year. This result was due to the effects of the previously mentioned increase in advertising revenues and also to the excellent performance registered by Mediaset Premium;

gross advertising revenues from the Mediaset network amounted to EUR 2,760.8 million, an increase of 4.8% compared with 2009 and higher than the performance of the overall advertising market, which registered a 3.4% increase. The results of the Group’s advertising revenues were constantly growing during the various quarters in 2010 even though during the second half of the year the growth of the market and of consumption registered a progressive decrease. The total advertising revenues of the two dealer companies of the Group, including the offer of other media (which mainly refers to television, such as free-to-air channels and pay tv) has registered an even higher growth of 6.3%

total television costs have registered a reduced increase of 1.4%, which was lower than inflation and less than the one recorded in the last years. During 2010 the free-to- air television offer of the Group has furtherly grow with the launch of the thematic channels La5 (dedicated to a feminine audience share) and Mediaset Extra (which schedules a selection of the entertainment programmes of Mediaset networks). Taking into consideration a further strong augmentation of television consumptions as well as the consolidation of the stake (76.7%) absorbed by the generalist tv, Mediaset Network, including digital channels, achieved an average audience share of 37.6% for the 24-hour period, 37.5% for primetime and 37.6% for daytime. In particular, the three Mediaset channels confirmed their national leadership in the 24-hour and day time sectors for the commercial target range of 15-64, obtaining a 40.0% share;

in 2010 Mediaset Premium revenues amounted to EUR 700.4 million, an increase of 24.9% compared with the previous year and representing the operational break- even point. At 31 December 2010 there were 3.9 million active cards in circulation compared with 23.7 million in the same period in the previous year;

6 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations EBIT amounted to EUR 596.1 million compared with EUR 478.7 million in 2009, while operating profitability equalled 17.3% compared with 14.8% in the previous year;

net profit amounted to EUR 350.1 million compared with EUR 269.0 million in 2009.

In Spain, as already mentioned, Telecinco benefited during 2010 from the change in regulations introduced during the second half of 2009 that ban the sale of advertising spaces to the public- owned tv broadcaster RTVE. In this context, Telecinco confirmed its leadership between the commercial tv broadcasters in terms of market and audience share both in the commercial target and in the individual totals.

In 2010 Publiespana registered gross advertising revenues of EUR 834.9 million, an increase of 34.8% compared with 2009;

consolidated net revenues amounted to EUR 855.1 million, a 30.3% increase compared with 2009;

overall television costs amounted to EUR 635.6 million compared with EUR 533.5 million in the previous year, with the increase being mainly due to the variable costs item concerning advertising revenues, costs related to movie production and distribution, the contribution envisaged by the industry regulatory framework of 3% of the revenues which finance the public-owned broadcaster RTVE loans, and the investments in new digital channels (La Siete, Factoria De Ficcion and Boing), as well as the acquisition of the main sport event of the year represented by the matches of the FIFA World Cup played by the Spanish national team during the 2010 competion in South Africa;

in 2010 the Telecinco Group held the position of leader between other commercial tv broadcasters in terms of audience figures for the commercial target in the 24 hours, with 18.4% of the overall share, representing 1.7 points more than Antena 3. In particular, the digital channels continued to grow in registering a 3.1% share of the individual total and 3.4% of the commercial target. Thanks to the games played by the Spanish national football team during the FIFA World Cup, Telecinco was the leader both in June and July;

EBIT amounted to EUR 219.4 million compared with EUR 122.8 million in 2009, with operating profitability of 25.7% compared with 18.7% in 2009, conforming Telecinco as one of the most profitable television networks in Europe;

net profit amounted to EUR 70.5 million compared with EUR 48.4 million in the previous year. Net of the accounting impact produced by the amortisation of goodwill and amortisation of intangible assets in terms of PPA concerning the subsidiary Edam, net profit totalled EUR 164.4 million, compared to EUR 112.6 million of 2009.

7 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations THE GENERAL ECONOMIC SITUATION

Two and a half years after the initial critical phase of the world recession, in 2010 the international economic scenario was characterised by positive signs of recovery in some countries and economic areas.

The growth, which up to now has been bolstered by the monetary and fiscal measures introduced in support of demand adopted by the majority of governments, has in most cases had to contend with the necessity of dealing with important structural weaknesses.

The strategy adopted to put an end to the crisis at a global level does appear to be effective in avoiding a double dip, although during 2010 this risk was heightened due to the financial weakness of some countries with high levels of public debt (Greece, Ireland, Portugal and Spain) and to the consequent instability of currency markets and long-term returns, while the growth of countries that consume large quantities of raw materials produced significant pressure on prices (energy and food), particularly in the last part of the year, and increased the fear of inflation.

Inflation, net of energy and food products, was substantially stable at around 1% in the USA and Europe partly as a result of disposable income that was blocked by unemployment, salary moderation and the recovery of productivity.

Economic growth was still strong in emerging countries, which consolidated their role as the driving force behind the world economy in registering average growth of 6.5% (8-10% in china and India and around half that in Brazil and Russia), while other economies registered more moderate levels of growth.

In the main western economies the main macroeconomic parameters (GDP, family consumer spending, fixed investments, industrial production and unemployment) demonstrated that, with the exception of GDP in the USA and unemployment figures in Germany (which actually went down), the levels that existed before the crisis began are still a long way off.

In 2010, the United States registered a 2.9% increase in GDP thanks to the strong support offered by expansive monetary and fiscal policies and to the country’s ability to help itself.

However, in the Euro-zone area growth rates decreased due to different speeds of recovery in the core areas and in particular between Germany and the southern European countries, where there are persistent doubts as to their ability to support high levels of public debt.

Germany registered a 3.35 increase in GDP (compared with 4.9% in the previous year), which was a reward for policies aimed at increasing productivity, stabilising the job market and participating in the modernisation of emerging markets (Asia and Latin America) through investments and the sale of consumer goods.

After an initial promising start to the year, the Italian economy registered an uncertain performance that was lower than the European average. The GDP, which in 2009 registered one of the biggest decreases (-5%) among the major industrialised countries, in 2010 registered an increase of 1.3%, thereby consolidating the forecasts for slow growth in the coming years. The economic data for the last few months of the year confirmed the tendency for a moderate

8 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations expansion of internal demand, with consumer spending registering a weak if fluctuating recovery over the year partly as a result of the incentives for purchasing durable goods in the first quarter. The moderate recovery in consumer spending was, however, offset by the stagnation of disposable income and the weak job market, which was characterized by an unemployment rate of around 8.5% which, while lower than the European average, masked an unemployment rate of 29% among young people.

The Spanish economy under performed compared with the European average, registering a 0.1% decrease in GDP compared with 2009, but the most worrying data referred to the unemployment figures of 20.2% for the active population.

9 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations DEVELOPMENT OF THE REGULATORY FRAMEWORK IN THE TELEVISION INDUSTRY

The main new aspects introduced in the Italian regulatory framework regarding the television industry in 2010 can be summarised as follows:

Resolution 497/10/Cons.

With Resolution 497/10/CONS., published in the Official Gazette of the Italian Republic on 6/12/10, the Broadcasting Authority (Agcom), in concluding the public consultation procedure that began in 2009, defined the “procedures for allocating the available television frequencies for digital terrestrial broadcasting systems and measures aimed at guaranteeing conditions of effective competition”.

It is planned to allocate 5 digital terrestrial multiplexes, with DVB-T technology, that will be divided up into Lot A (3 multiplexes), Lot B (2 multiplexes) and Lot C (1 DVB-T technology), and all existing operators in the sector and all new operators will be able to participate in the allocation process. Once the allocation process has been completed, no single operator may be allocated more than 5 DVB-T multiplexes, and network operators, who before the conversion of the analogical broadcasting network and the rationalisation of digital terrestrial channels held 2 or more national television analogical networks, can only participate in the allocation of Lot B. These operators must also assign at least 40% of the transmitting capacity of the multiplexes allocated to them for a period of five years to providers of independent programmes, with the requisites for these programmes and the validity of the editorial project being approved by the Authority.

On 3 January the Mediaset Group formally informed the Authority, as per article 4 c. 6 of the Resolution referred to above, of its intention to take part in the allocation process for the right to utilize the frequencies in Lot B.

10 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations MEDIASET SHARES ON THE STOCK MARKET

Trends in the Milan Stock Market

In 2010, the performance of Mediaset shares was influenced by the negative performance of the Italian FTSEMIB index (-14%).

The fact that Mediaset’s business is centred on southern Europe (in Italy and Spain), which during the year was considered a high-risk area by the financial sector, had a negative influence on the Group’s stock market performance.

In particular, a number of USA investors and sovereign wealth funds that have for long periods been traditional investors in Mediaset, decided to reduce the capital invested in Europe and, to an even greater extent, in countries such as Spain, Portugal, Greece and Italy.

In the television media sector, factors such as high capitalisation and the high average volume of daily share operations (liquidity) combined to increase the effects of speculation on shares.

All of this took place despite the Group’s solid foundations and its strong cash flow during the year.

However, looked at over a two-year period, at the end of 2010 Mediaset continued to out- perform the FTSEMIB index.

Mediaset shares closed at the end of 2010 at EUR 4.5, a decrease compared with the price of EUR 5.8 at the beginning of the year. In 2010, the average price of Mediaset shares was EUR 5.24, with a minimum of EUR 4.26 on 30 November and a maximum of EUR 6.5 on 6 April.

Mediaset share price 2010 2009 2008 2007 2006 2005

Maximum Price (EUR) 6.5 5.8 6.8 9.5 10.3 11.1 6 aprile 2010 29 dicembre 2009 39449 19 gennaio 2007 21 aprile 2006 31 marzo 2005 Minimum Price (EUR) 4.3 3.1 3.8 6.4 8.5 8.8 30 novembre 2010 39883 10 ottobre 2008 27 novembre 2007 22 settembre 2006 27 ottobre 2005 Opening Price 1/1 (EUR) 5.8 4.1 6.8 9.2 8.9 9.3 Closing Price 31/12 (EUR) 4.5 5.7 4.1 6.9 8.9 8.9 Average Volume (m) 6.7 6.0 8.5 6.6 7.1 8.6 Maximum Volume (m) 35.6 38.7 28.0 43.5 34.8 45.3 13 maggio 2010 39946 14 maggio 2008 39143 10 maggio 2006 13 aprile 2005 Minimum Volume (m) 1.2 1.5 1.7 1.9 0.8 1.6 28 dicembre 2010 16 febbraio 2009 30 dicembre 2008 27 agosto 2007 2 gennaio 2006 8 agosto 2005 Number of ordinary shares (m) * 1,136.4 1,136.4 1,136.4 1,138.3 1,138.3 1,138.3 Capitalisation 31/12 (EUR m) * 5,113.8 6,477.5 4,605.3 7,854.3 10,130.9 10,130.9 * Treasury shares are excluded from the calculation

11 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations Mediaset compared with the main broadcasters (January 2008-December 2010)

Mediaset Share Antena 3 TF1 Prosieben ITV

Mediaset compared with the main indexes (from flotation in 1996 to 2010)

Mediaset Share CCMP Index

FTSEMIB Index SXME Index

12 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations Composition of company’s Share Capital at 31/12/2010

At 31/12/2010 the main shareholder in Mediaset was the stock market, which held approximately 57% of the share capital, while Fininvest continued to be the controlling shareholder with a stake of 38.98%. Mediaset has treasury shares in its portfolio representing 3.79% of the share capital. From the geographic point of view, Mediaset’s stocks on the market (57.2%) are well distributed throughout the different markets, with Italian investors (retail and institutional) holding 21.6% and international investors holding the remaining 35.60%. Among these, the countries where there is greatest attention to Mediaset shares are the USA, Canada and the UK, with respectively 30.2%, 20.5% and 14.5%.

Floating (57.2%) Geografical Breakdown

USA 8.63% RETAIL Canada FININVEST 15.00% 5.85% 38.98%

UK 4. 4 1% Others 17.34% France 2.15% Italy 1. 88% OWN SHARES Netherland 1.02% MARKET 3.79% Germany 0.95% 42.23% Retail 15.0%

13 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations MAIN CORPORATE OPERATIONS AND EQUITY INVESTMENTS

On 21 January 2010, the placement of the unrated debenture loans reserved for qualified investors, authorized by the Board of Directors of Mediaset S.p.A. on 15 December 2009, was concluded for an overall nominal value of EUR 300 million and a duration of 7 years. The requests amounted to approximately EUR 1.3 billion, over 4 times the offer. The placement operation was handled by Banca IMI, BNP Paribas and Deutsche Bank, in their role as joint lead managers. The debentures, negotiated on the Luxembourg Stock Exchange, have the following characteristics:

single denomination of EUR 50,000 and multiple denominations of EUR 1,000 up to EUR 99,000;

expiry date 1February 2017;

gross fixed interest of 5%;

price of issue equal to 99.538%.

The operation made it possible to extend the average expiry period for the Mediaset Group’s debt.

On 15 October 2010 the subsidiary RTI S.p.A. acquired for a countervalue of EUR 48.3 million a stake (previously owned by third parties) of 25% of Med Due S.r.l., which totally owns Medusa Film S.p.A. and Taodue S.r.l. As a consequence of this operation, the stake owned by the Group in this company reach 100% at 31 December 2010.

On 28 December 2010, the go-ahead was given to the company operations referred to in the contract agreements signed on 14 April 2010 between Telecinco, Mediaset and Mediaset Investimenti S.p.A. (controlling shareholders of Telecinco) and Prisa Television for the purchase by Telecinco of the free-to-air television operations of Sogecable (Cuatro) and of a 22% stake in "DTS Distribuidora de Television Digital S.A." ("Digital+"). On 28 October 2010, La Commision Nacional de la Competencia (the Spanish antitrust authority) issued its Expediente de Concentracion C/0230/10TELECINCO/CUATRO authorising the concentration operation, consisting in the purchase by "GESTEVISION TELECINCO, S.A." of the exclusive control of "SOCIEDAD GENERAL DE TELEVISION CUATRO, S.A.U." by the purchase of 100% of its share capital, subject to the following conditions:

- Telecinco agreed not to market in the same commercial package advertising or any other form of commercial television communications on the two free-to-air channels with the highest audience from among the channels it controls (henceforth referred to as the “main channels”). In addition, the combined audience of the channels included in the commercial package must not exceed 22%. When calculating the audience figures for each channel, the average figures for the channel for the previous six-month period is used.

- Telecinco agreed not to develop marketing policies, and in particular prices, which involve, either formally or effectively, the captive sale, either directly or indirectly, to advertisers of separate commercial packages of television channel advertising.

14 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations - Telecinco agreed not to sign any new contracts to handle advertising from third-party operators of DTT free-to-air channels at a national, regional or local levels.

As for contracts signed prior to the concentration operations with third-party operators of DTT free-to-air channels at national, regional and local levels for the handling advertising, Telecinco agreed to limit the duration of such contracts to a maximum period of one year after the present agreement came into force.

Telecinco agreed that the handling of advertising on third-party pay-television channels (including Digital+) will be carried out by a different company from the one that handles advertising on the Telecinco’s free-to-air channels, and that this company will have full functional and commercial independence.

- Should Telecinco jointly hold shares with Prisa and/or Telefonica in Digital+, it agrees not to jointly market advertising on advertising media managed by Prisa and/or Telefonica or by their branch offices or subsidiaries (henceforth referred to as “Prisa and/or Telefonica”).

- Should Telecinco jointly hold shares with Prisa and/or Telefonica in Digital+, it agrees to apply market conditions to Telefonica and Prisa and not grant them preferential or exclusive conditions in advertising negotiations for those companies.

- Telecinco agrees not to sign exclusive purchase agreements for audiovisual content from third parties with a duration of more than three years, and also agrees that such contracts will not include tacit renewal clauses, pre-emptive rights or extension or preferential purchase options for subsequent periods. The only exception to this is that Telecinco is allowed to sign contracts covering the “entire life” of every series and every light-entertainment programme . In the case of film rights, Telecinco is allowed to use every film exclusively for a maximum period of five years.

In the case of contracts for the purchase of exclusive audiovisual rights that are currently in force and exceed the limits outlined above, Telecinco agrees to grant the supplier the right (which can be exercised within six months from the date the agreement comes into force, and subject to the payment of an amount that conforms to objective, proportional criteria) to modify the contracts so that they conform to the limits referred to above and without changing the conditions set out in the contracts themselves. In the same way, Telecinco will expressly renounce its right to exercise at any time any extension mechanisms, options or pre-emptive purchase rights that may be included in those contracts.

For all aspects of the conditions contained in this agreement, any change to or renewal of a contract for the exclusive purchase of audiovisual content that Telecinco has signed will be considered as a new contract and therefore subject to the agreements referred to previously.

- Should Telecinco hold a control stake in Digital+, it agrees to not sign in the same year contracts for the purchase of exclusive rights for free-to-air television channels for the entire production period for films or series with more than three of the following production companies: Paramount, Disney, CBS, Warner, Universal, Sony/Columbia and Fox. In addition, only if Telecinco is the controlling shareholder in Digital+, the company agrees not to purchase more than 60% of the total annual volume of production from all of the production companies referred to above for series and films shown for the first time on television.

15 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations - Should Telecinco hold a control stake in Digital+, it agrees to limit its use of the exclusive rights to sports events broadcast on free-to-air television channels according to the following conditions:

a - Telecinco agrees not to exercise in the same year on free-to-air television the right to broadcast games from the Spanish Premier League and the right to broadcast games from more than one of the other official national or international competitions.

b - Telecinco agrees not to exercise in the same year on free-to-air television the right to broadcast more than two of the following groups of sporting events:

- i – Formula 1 World Championship - ii – Motorcycle world Championship - iii – Official national or international basketball competitions where teams from the Spanish first division or the Spanish national team is participating. - iv – The Tour de France and/or the Vuelta ciclista a España - Telecinco agrees not to rent nor hire out channels hosted on third-party operators’ multiplexes in DTT.

- Should Telecinco hold a control stake in Digital+, it agrees to guarantee the distribution of its free-to-air channels to other pay-television platforms in addition to Digital+ and Telefonica, without asking for economic benefits, as long as (i) at least one of the previously mentioned channels distributes them, (ii) those platforms can guarantee a reliable system for measuring audience share, and (iii) Telecinco is not required to make any form of payment.

- Telecinco agrees not to refuse to grant its authorisation for the launch of new services by or improvements to the broadcasting capacity of the operators it divides the multiplex with, as long as (i) such launches do not prejudice the quality of its own broadcasts and (ii) it receives an identical assurance from the operators it shares the multiplex with.

- Telecinco agrees not to sign contracts that contain the exclusive right or the right to first choice for the purchase of all the production of Spanish programme producers, to renounce expressly to exercise at any time the exclusive right to purchase from producers all the production rights or the right to first choice for more than two programmes that are not created with the support of Telecinco, and not to renew with exclusive terms or with the right to first choice those contracts signed with producers for programmes created with the support of Telecinco.

These agreements have an initial duration of three years, unless otherwise indicated. Once that period has expired, the Comision Nacional de la Competencia will decide if any significant changes have occurred in the structure or in the regulations of the markets in question that justify the continuation, adjustment or elimination of the corresponding conditions for a period of a further two years.

Despite the duration period referred to above, Telecinco can request the Comision Nacional de la Competencia to modify the content or duration of the agreements if any significant modification has been made to the structure or the regulations of the markets in question.

16 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations As a result of the corporate operations (details of which are given in the explanatory notes to the consolidated financial statements n. 4) that were carried out on 29 December 2010, Telecinco purchased from Prisa TV:

- all of the shares in Sociedad General de Television Cuatro S.A.U. (Sogecuatro), which controls the free-to-air television operations in Spain of Cuatro, in exchange for newly issued shares, corresponding to a post-increase share of 17.336% of the capital reserved for Prisa. As a result of this operation, the Mediaset Group’s share in Gestevision Telecinco decreased from 50.51% to 41.552% (from 51.24% to 42.218% net of treasury shares). Mediaset continues to be the controlling shareholder because of the nomination rights of the majority of the members of the company’s Board of Directors;

- a 22% share in DTS Distribuidora de Television Digital S.A.U., which together with its subsidiaries controls the Spanish pay-television operations of Digital Plus, on payment of EUR 488 million. With the objective of financing the purchase of the shares in Digital Plus, on 13 December 2010 Telecinco implemented a paid capital increase for a total amount of EUR 499.2 million, with option rights reserved for shareholders. With reference to this investment, it should be noted that on 4 November 2010, Gestevision Telecinco and Prisa Group subscribed a deal which change the previously subscribed agreements, for which the acquisition of a 22% stake in Digital Plus do not imply an economic concentration. For this reason the approval of Spanish Antitrust Authority is not required. In the framework of this agreement Prisa TV granted Gestevision Telecinco, for a price of EUR 5 million paid at the time, an option that if exercised will allow Gestevision Telecinco to purchase additional governance rights relating to the investment in Digital Plus, thus re-establishing the conditions agreed in a first time. These options can be exercised by Telecinco in the three months after the expiry of 12 months from the date the operation is concluded, on the condition that the Spanish antitrust authority gives its approval and at the pre-determined price of EUR 5 million. In case the approval of the exercise of this option by Telecinco was subjected to limitations, Telecinco and Prisa agreed to cancel the operation regarding the investment of Telecinco in DTS.

The agreements between Prisa TV, majority shareholder in Digital Plus with a 56% stake, and Telecinco and Telefonica, both of which have a 22% stake, stipulate that the Board of Directors is composed of 10 members, with 6 nominated by Prisa and 2 each nominated by the other two partners, granting Telecinco the right to nominate a non-executive deputy chairman. The agreements also state that some of the subjects that are the responsibility of either the Shareholders’ Meeting or the Board of Directors require a qualified majority (90% of the shares and 9 votes respectively). On the basis of these agreements, Telecinco and Telefonica have pre- emptive rights should Prisa decide to sell its controlling share. The Telecinco Group, on condition that it maintains a share of not less than 20% of Digital Plus, also acquires the right to act as the exclusive advertising agency for all the television channels owned by the Digital Plus Group.

Telecinco and Telefonica also have the right to sell their share in Digital Plus should the control of the company change either by disposing of the share to Prisa or by a public share offer, with Prisa having the right to choose between the two options.

17 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations THE MAIN GROUP COMPANIES

MEDIASET SpA

100% 100% 100% 100% Mediaset Mediaset Publitalia ’80 SpA RTI SpA Investimenti SpA Investiment Sarl 41.2% 25% 100% 100% Elettronica 0.33% Gestevision 75% Mediacinco 12% SportsNet Digitalia ’08 Srl Industriale SpA Telecinco SA ** Cartera SL Media Ltd. 100% 33.3% 100% 98.9% EDAM Acquisition 25% Publieurope Ltd. Videotime SpA Publiespana SAU Holding I Nessma SA Cooperatief UA 100% Sociedad General 50% 100% Mediashopping 100% Endemol Group Mediamond SpA SpA de Television Cuatro SAU BV *

100% DTS Distribudora 22% Medusa Film SpA de Television Digital SA

50% 100% Pegaso 43.7% Mediavivere Srl Taodue Srl Television Inc.

30% 51% Ares Film Srl Boing SpA

48% 50% Fascino Tivù Srl Prod. Gestione Teatro Srl

49% 91.6% The Space Capitolosette Srl Entertainment SpA

(*) Indirectly held equity investment (**) Group holdings, calculated without treasury shares, owned by subsidiary companies

18 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations EVOLUTION OF OPERATIONS BY SECTOR OF ACTIVITY

Italy

In Italy, the Mediaset Group operates principally in the following sectors:

Commercial free-to-air television

Pay television

Mediaset Premium

Network Operator

Other activities

Commercial free-to-air television

Advertising

The Mediaset Group operates in Italy through two fully-owned advertising companies, Publitalia ’80 and Digitalia ‘08.

Publitalia operates on an exclusive basis as the advertising company for the Mediaset network.

In 2010, Publitalia had over 1,000 clients, including 274 new clients who generated commission of around EUR 100 million or 4% of the total, and the top 10 clients accounted for approximately 28% of total turnover. Based on Nielsen media research data regarding the advertising market in Italy, in 2010 Publitalia held a 36.3% share of the market compared with 35.7% in 2009.

Digitalia is an advertising company that specialises in advertising sales for digital pay TV and free- to-air digital channels, for sports events and barter operations.

In 2010 the advertising market (relative to the traditional area) registered a 3.4% increase compared with the previous year, although if the contribution from Publitalia were to be excluded the increase would have been 2.5%. The growth of advertising revenues on Mediaset networks amounted to 4.8%. This result is even more significant when compared with the Group’s direct competitor, RAI, which, despite having the rights to 2 events such as the Olympics and the Football World Cup that are very attractive to potential advertisers, registered an increase of 2.8%.

The growth of the market concerned all forms of media with the exception of print media, where the magazine sector registered a 2% decrease after the 16.8% decrease registered in the previous two-year period, and the newspaper sector registered a 5.4% decrease. Among the other sectors radio registered a 7.7% increase, mainly thanks to the contribution from private commercial radio, the cinema sector registered a 12.2% increase and the Internet sector closed the year with a 20.1% increase.

19 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations

Media 2010 2009 Change EUR mshare %EUR mshare %% Press 2,290 28.8% 2,392 31.1% -4.3% Television 4,619 58.2% 4,359 56.8% 6.0% Radio 470 5.9% 436 5.7% 7.7% Outdoors 137 1.7% 135 1.8% 1.4% Cinema 63 0.8% 56 0.7% 12.2% Internet 363 4.6% 302 3.9% 20.1% Total Market 7,941 100.0% 7,680 100.0% 3.4% (classic area*)

(*) Classic area: excluding the free press, cards, direct mail, out of home and transit

The following is a sector-by-sector analysis of advertising investments:

FMCGS: representing 33.8% of the market with investments worth EUR 2,473 million for a 7.3% increase. Mediaset attracted 50.3% of investments in this sector, and increase of 9.7%;

Automobiles: EUR 0.8 billion was invested in this sector, where the Group’s advertising company increased its market share by 2 points to 39.7%;

Telecommunications: Publitalia maintained its market share at 56.4% despite a slight reduction in the sector;

Clothing: this sector was worth EUR 0.5 billion, with Mediaset holding a 24% market share;

Media/Publishing: this sector registered a 0.4% reduction, with the Group holding a 33.6% share;

Finance/Insurance: the general negative trend in this sector continued (-2.7%), where Mediaset attracted 25.9% of investments;

Big Surface Distribution: the year closed with a significant increase of 15.9% thanks in part to the excellent performance by the advertising company, which achieved a growth rate of 24.1% and increased its market share by 1.6 points;

Pharmaceuticals/Health Products: Mediaset registered increases in investments and confirmed its dominant position with a 51.8% share of a market that registered a 5.7% growth;

Real Estate: despite Publitalia’s performance being in line with the overall decline in the market, it continued to attract 29.5% of investments;

Other Sectors: the macro-aggregate that represents 17.6% of the overall market, registered a 5.2% increase. Mediaset itself registered a 6.6% increase with 28% of

20 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations investments, with its market share growing by 0.4 points. In particular, there were positive performances in Industry/Building (+23%), Household Appliances (+21.5%), Personal Products (+11.5%), IT/Photography (+7.2%), Professional Services (+7.2%) and Motorbikes/Vehicles (+0.8%), while there were negative performances in Tourism/Travel (-13%), Toys/School Products (-2.1%), Public Bodies/Institutions (-1.1%) and Leisure Time (-0.6%).

Broadcasting

The free-to-air television offer of Mediaset Group at present is composed by three generalist networks (Canale 5, Italia 1, Rete 4) broadcasted in analog mode and proposed in the areas already covered by DTT signal, also in HD and in the “+1” version (broadcasted 1 hour after the main schedule), as well as by DTT thematic channels (Iris, Boing, La 5, Mediaset Extra and Mediashopping).

The Group’s generalist channels - Canale 5, Italia 1 and Retequattro - are controlled by RTI, which is responsible for the creation and development of the programme schedules, the production of original programmes and the acquisition of the library of television rights. The overall offer of the Mediaset networks is developed in order to attract audiences between the ages of 15 and 64, which is the most interesting target audience for advertisers, and Mediaset is the market leader for this audience segment.

Canale 5 is the main channel and is dedicated to the modern Italian family.

Italia 1is the leading Italian channel for young people.

Rete 4 dedicates its scheduling to a more mature public in terms of age and income.

Beside, this is the structure of the free multi channel offer:

Boing, which has been launched on 20 November 2004, is the first free-to-air thematic channel for children, planned expressly for digital terrestrial. The channel is the result of a joint venture between RTI S.p.A., which holds 51% of the share capital of Boing S.p.A., and Turner Broadcasting System Europe, part of the Time Warner Group, which holds the rights to some of the best-known cartoons in the world. Boing is a completely new concept on the Italian television market, with R.T.I. and Turner together creating the first free-to-air 24-hour channel for children.

Despite increased competition, the channel has been able to capitalise on its advantageous position by increasing and supporting the brand’s popularity and attractiveness. Auditel audience figures certified that in 2010 the channel had average audience figures of 68,044 children per minute (+42% compared with 2009) and an average share of 7.7% (Auditel total for the year, target 4-14 from 7 a.m. to 10 p.m.). These results have ensured that the channel was the leading channel dedicated to children, while the excellent audience figures achieved also for the “individual” target meant that once again the channel was the eighth most popular television channel in Italy.

21 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations Iris is a specialist channel dedicated to art films and culture, with the schedule including some of the best films ever made, documentaries, theatre productions, opera and literature programmes.

In 2010 Iris was the second most popular channel with men over 55, separated by just 0.1 percentage points from the most popular channel.

La5, launched on March 2010, is the most popular channel with women aged 15-44, who make up 0.1 percentage of the share for the 24-hour slot.

Mediaset Extra is the thematic channel launched on 26 November 2010 which schedules an actual and a past selection of the entertainment programmes of Mediaset networks, including sit-com an tv series which made the history of the commercial television and a selection of the best movie of ‘70s ‘80s and ‘90s.

Mediashopping is the company’s teleshopping channel with a catalogue of over 100,000 quality products from all over the world, which are also available, online.

Generalist channels: schedules and audience share

In 2010, each channel broadcast 8,760 hours of scheduled programmes for a total of 26,280 hours, with 45.4% of these being original self-produced programmes.

The following table shows a breakdown of the scheduled programmes for each channel for 2010 and 2009.

22 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations Mediaset Networks - Broadcasted programmes - 2010 Type Canale 5 Italia 1 Retequattro Mediaset Total Film 637 7.3% 1,520 17.4% 2,191 25.0% 4,348 16.5% Tv Movie 504 5.8% 344 3.9% 212 2.4% 1,060 4.0% Mini-series 190 2.2% 18 0.2% 124 1.4% 332 1.3% Telefilm 679 7.8% 2,194 25.0% 2,916 33.3% 5,789 22.0% Tv Romance - 0.0% - 0.0% - 0.0% - 0.0% Sit-com 84 1.0% 689 7.9% 73 0.8% 847 3.2% Soap 263 3.0% - 0.0% 143 1.6% 406 1.5% Telenovelas 85 1.0% 123 1.4% 259 3.0% 467 1.8% Cartoons - 0.0% 1,102 12.6% - 0.0% 1,102 4.2% Total TV Rights 2,442 27.9% 5,990 68.4% 5,918 67.6% 14,350 54.6% News 1,649 18.8% 845 9.6% 864 9.9% 3,358 12.8% Information programmes 1,364 15.6% 144 1.6% 267 3.0% 1,775 6.8% Sport programmes 4 0.0% 89 1.0% 97 1.1% 190 0.7% Event 34 0.4% 223 2.5% 22 0.3% 279 1.1% Entertainment: 3,097 35.4% 957 10.9% 992 11.3% 5,047 19.2% soft entertainment 1,626 18.6% 551 6.3% 264 3.0% 2,440 9.3% talk show 327 3.7% 15 0.2% - 0.0% 343 1.3% music 28 0.3% 15 0.2% 54 0.6% 98 0.4% quiz-game-show 323 3.7% 206 2.4% - 0.0% 530 2.0% reality 231 2.6% 45 0.5% - 0.0% 276 1.1% soft news 562 6.4% 124 1.4% 674 7.7% 1,360 5.2% Culture 44 0.5% 274 3.1% 221 2.5% 538 2.0% Teleshopping 126 1.4% 238 2.7% 379 4.3% 743 2.8% Total in-house productions 6,318 72.1% 2,770 31.6% 2,842 32.4% 11,930 45.4% Total 8,760 100.0% 8,760 100.0% 8,760 100.0% 26,280 100.0%

Mediaset Networks - Broadcasted programmes - 2009 Type Canale 5 Italia 1 Retequattro Mediaset Total Film 562 6.4% 1,465 16.7% 2,229 25.4% 4,257 16.2% Tv Movie 491 5.6% 355 4.1% 224 2.6% 1,069 4.1% Mini-series 175 2.0% 61 0.7% 134 1.5% 370 1.4% Telefilm 715 8.2% 2,015 23.0% 2,669 30.5% 5,399 20.5% Tv Romance 26 0.3% - 0.0% - 0.0% 26 0.1% Sit-com 90 1.0% 709 8.1% 90 1.0% 888 3.4% Soap 266 3.0% - 0.0% 346 3.9% 612 2.3% Telenovelas - 0.0% 136 1.6% 357 4.1% 493 1.9% Cartoons - 0.0% 1,355 15.5% - 0.0% 1,355 5.2% Total TV Rights 2,325 26.5% 6,096 69.6% 6,049 69.1% 14,470 55.1% News 1,697 19.4% 977 11.2% 953 10.9% 3,627 13.8% Information programmes 1,418 16.2% 157 1.8% 287 3.3% 1,863 7.1% Sport programmes - 0.0% 73 0.8% 122 1.4% 195 0.7% Event 29 0.3% 191 2.2% 44 0.5% 263 1.0% Entertainment: 3,048 34.8% 1,009 11.5% 811 9.3% 4,868 18.5% soft entertainment 1,530 17.5% 557 6.4% 215 2.5% 2,302 8.8% talk show 413 4.7% - 0.0% - 0.0% 413 1.6% music 24 0.3% 26 0.3% 52 0.6% 102 0.4% quiz-game-show 317 3.6% 203 2.3% - 0.0% 520 2.0% reality 276 3.2% 195 2.2% - 0.0% 471 1.8% soft news 488 5.6% 28 0.3% 544 6.2% 1,060 4.0% Culture 64 0.7% 49 0.6% 177 2.0% 290 1.1% Teleshopping 179 2.0% 208 2.4% 317 3.6% 705 2.7% Total in-house productions 6,435 73.5% 2,664 30.4% 2,711 30.9% 11,811 44.9% Total 8,760 100.0% 8,760 100.0% 8,760 100.0% 26,280 100.0%

23 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations In 2010, the total audience figures for the 24-hour segment amounted to an average of 9.825 million viewers, representing a slight increase compared with 2009 (+0.6%). The increase was registered across all the time slots, particularly early evening and after the watershed slots (both +0.9%) and the daytime slot (+0.5%), and also all the main age groups.

Trend total audience - 24 hours

9,826

9,445

9,213 9,230 9,211 8,989

2005 2006 2007 2008 2009 2010

In 2010 the Mediaset channels registered a 37.5% share in primetime and a 37.6% share both in 24-hour and daytime. Of particular note was the contribution from the theme channels both on pay and free-to-air channels, which registered positive, results in all the time slots with increases of over 2 percentage points. Boing confirmed that it is the preferred channel for children aged 4-14, La 5 was the leader for women aged 15-44 and Iris was the second favourite channel for men over 55, just 0.1 points behind Rete 4.

Individuals Commercial Target Year 2010 Prime Day Time Prime Day Time 24 Hours 24 Hours Time 7:00-2:00 Time 7:00-2:00 18.8% 18.6% 18.8% 20.1% 20.5% 19.9% 9.1% 8.8% 9.3% 10.8% 10.1% 11.1% 7.3% 7.3% 7.3% 6.5% 6.4% 6.6%

TOTAL TV FREE TO AIR 35.2% 34.7% 35.4% 37.4% 37.0% 37.6%

2.4% 2.8% 2.2% 2.6% 2.8% 2.4%

37.6% 37.5% 37.6% 40.0% 39.8% 40.0%

There were positive results for the commercial target audience (15-64 years), which is the most interesting audience for advertisers, where Mediaset was the leader in both the 24-hour and daytime slots both for the generalist channels and all channels. In addition, Canale 5 was the channel that was watched the most across all the time slots.

In the 24-hour slot Mediaset registered a total audience share of 40.0% (+3.1 percentage points more than RAI), with 40.0% in the daytime slot (with +3.7 percentage points more than RAI) and 39.8% in the primetime slot.

24 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations

YEAR 2010 % SHARE COMMERCIAL TARGET 15-64 years

10.8 11.1 10.5 9.1 8.9 10.1

24 Hours Day Time Prime Time

Italia 1 Rai 2

The guaranteed television seasons

In the guaranteed spring and autumn periods Mediaset registered a total audience share of 38.9% for the prime time slot, 38.7% for the 24-hour slot and 38.6% for day time, while for the commercial target it was leader for all the time slots thanks to the top position achieved by Canale 5 and third position by Italia 1 in the 24-hour and day time slots.

SPRING - AUTUMN 2010 % SHARE COMMERCIAL TARGET 15-64 years

41.4 41.3 41.6 39.6 36.7 36.3

24 Hours Day Time Prime Time

Mediaset RAI

The schedules

Canale 5

Canale 5 broadcast many entertainment programmes during the year: in spring there was Ciao Darwin 6 (29.5%), Io Canto (24.5%), Zelig (24.2%) and Amici (23.2%); in autumn C’è Posta per Te (27.2%), Paperissima (23.4%). Grande Fratello (the last 10 episodes of the 10th edition - which have been broadcasted from January to March – as well as the first 11 episodes of the 11th edition which is currently on air and have been broadcasted from October to December) recorded an audience of 25.2% with a maximum share of more than 30%.

As for television drama, the 6 episodes of Il Peccato e la Vergogna attracted an audience share of 26.2%.

Italia 1

25 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations Apart from the established programmes such as Le Iene (13.2% in the early evening slot and 24.6% in the late night slot on Sundays), Colorado (13.7%), La Pupa e il Secchione…il ritorno (15.5%, the same as the parody Mai dire Pupa), the debutants Fenomenal and Wild (both over 12% for the total audience and 21.5% and 17.8% respectively for the giovani15-34 age group).

Rete 4

In 2010, the channel scheduled the usual appointments with television series and entertainment programmes, together with analysis/investigative programmes such as Quarto Grado (10%) and Top Secret (8%), and evenings dedicated to the cinema with films that attracted more than 11% of the audience, such as Codice Mercury, Banana Joe, The Transporter and Sotto Corte Marziale.

Improvement of television programmes through interactive TV

The entire offering provided by R.T.I S.p.A. on DTT (both free-to-air and pay-to-view) uses interactive TV to provide viewers with innovative services that make watching programmes more appealing.

The Canale 5 Plus, Italia 1 Plus and Rete 4 Plus portals, broadcast on the three generalist networks of the digital terrestrial platform, have offered interactive services to viewers since 2003. These services further improve the most important television programmes and also offer “always on” information services (e.g. news flashes, sports news, weather forecasts and so on).

In addition, during 2010 a new, more powerful “electronic programme guide” was introduced to help viewers get more out of the services on offer.

During the year the overall offer of interactive programmes and services amounted to more than 75 interactive applications, accessible either the normal television programmes or through the Canale 5 Plus, Italia 1 Plus and Rete 4 Plus portals.

R.T.I. S.p.A. is currently considered to be the leading commercial broadcaster in Europe of interactive television services in terms of quality and quantity.

During the year the most popular programmes with viewers were enhanced with interactive applications. These programmes include:

“Chi vuol essere milionario”: the interactive application broadcast at the same time as the programme allows viewers to challenge the studio contestants from their own homes and to take part in a prize competition or be selected to become a studio contestant. This interactive application has shown itself to be very popular, registering the highest approval level and use among all the interactive applications available. In the two editions transmitted during the autumn and spring, more than 160,000 viewers registered to take part in the prize competition;

“Controcampo” interactive: this application gives ample space to the results and comments on the football games in Serie A played on Sundays;

26 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations “Serie A” and “UEFA Champion’s League”: broadcast on Mediaset Premium at the same time as the games, this interactive application offers real-time updates and statistics, in addition to information and news about the teams playing;

“Amici di Maria De Filippi”: the interactive version offers updated news and exclusive information from the most famous school in Italy;

“Grande Fratello”: allows viewers to keep up to date around the clock, with in-depth news, daily updates and additional content (e.g. VIP interviews, features and reports on former house members from previous editions);

“Italia 1 Teen”: dedicated to teenagers with news, gossip and information from the music world, plus the possibility to send SMS messages through one of the sections in the interactive application;

“Prima Serata”: offers information about the plots and characters of films and the main television serials (both self-produced and bought), together with the opportunity to watch them in the original language.

As regards advertising sales and, in particular, interactive advertising sales, R.T.I. S.p.A. has shown itself to be in the forefront both in terms of the quantity and quality of advertisers, who have shown interest in this new form of interactive contact. 15% of applications broadcast were interactive applications, mainly in the “TV-site” form, which is a space that can be surfed by viewers and dedicated exclusively to advertisers: information and analyses, additional images and videos, “advergames” and quizzes, promotional offers and “t-commerce”. These instruments make it possible to expand the communication content in favour of the brand experience, providing viewers with more detailed information about the brands and products, and providing advertisers with the chance to establish and develop an immediate relationship with the viewers and have direct contact with them.

For next year, R.T.I. S.p.A.’s objective is to continue expanding the interactive offer and making it increasingly more attractive, while providing advertisers with new, powerful ways of contacting potential customers.

In particular, there are plans to extend the interactive experience with new hybrid services. Thanks to new reception equipment (TV sets and set-top boxes) equipped with the DGTVi logo and Ethernet ports, it will be possible to integrate the interactive applications broadcast inside programmes through the broadband IP return channel, offering viewers a transparent broadcast-broadband experience. This new technology will make it possible to provide even more content, including A/V (over-the-top television), to stimulate shared, “social” use of television and increase entertainment possibilities (for example, new, innovative interactive games are already available on generalist channels for viewers who have a DTT decoder connected to the internet network).

27 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations Programme production

In 2010, RTI produced 40.7% of the television programmes it broadcast, entrusting their production mainly to its subsidiary, Videotime S.p.A., which for many years has been the leader in the television production sector and has a highly qualified and technologically advanced production structure that guarantees the production of high quality programmes. The company was responsible for producing all the main types of game shows, entertainment programmes, quizzes, news broadcasts and sports events.

The following table shows the number and type of programmes produced in 2010, divided by television programmes, digital terrestrial programmes and commercial programmes:

TypeNumber in-house productions 2010 2009 Change % Prime Day Prime Day Prime Total Total Day Time Total Time Time Time Time Time Programmes TV Entertainment and talk show 35 32 67 39 39 78 -10.3% -17.9% -14.1% Documentaries - - - - 1 1 0.0% 0.0% 0.0% Events - 2 2 - 2 2 0.0% 0.0% 0.0% Cultural and Informative Progr. 17 33 50 8 34 42 112.5% -2.9% 19.0% Soft news 4 20 24 - 15 15 0.0% 33.3% 60.0% News - 4 4 - 4 4 0.0% 0.0% 0.0% Reality - 8 8 4 8 12 0.0% 0.0% -33.3% Promo and Ads - 7 7 - 6 6 0.0% 16.7% 16.7% Sport 3 13 16 2 12 14 50.0% 8.3% 14.3% Game and Quiz show 1 8 9 - 9 9 0.0% -11.1% 0.0% Music 2 4 6 3 4 7 -33.3% 0.0% -14.3% Shopping 20 43 63 16 51 67 25.0% -15.7% -6.0% Serial Fiction 3 - 3 3 3 0.0% 0.0% 0.0% Total programmes TV 85 174 259 75 185 260 13.3% -5.9% -0.4% Soap - 2 2 - 2 2 0.0% 0.0% 0.0% Commercial programmes - 2 2 - 2 2 0.0% 0.0% 0.0% Premium 11 21 32 9 19 28 22.2% 10.5% 14.3% DVB-H 1 1 - 1 1 0.0% 0.0% 0.0% Iris 9 9 - 10 10 0.0% -10.0% -10.0% La 5 2 8 10 - - - 0.0% 0.0% 0.0% Total DTT programmes 13 39 52 9 30 39 44.4% 30.0% 33.3% Mediaset Plus - - 4 4 0.0% -100.0% -100.0% Total 98 215 313 84 221 305 16.7% -2.7% 2.6%

The total number of television programmes produced during the year was substantially the same as the number produced the previous year, while the most significant changes were in the entertainment, cultural, reality, soft news and talk show sectors.

In particular:

Light Entertainment area (-10.0%):

New 2010 programmes: Ciao Darwin, Italia’s got talent, Io canto, Kalispera, Matricole and Meteore.

2009 programmes not continued: Saturday Night Live, Mai dire Candid, Amici Casting and Fattoria pt.

Cultural programme area (+57.0%):

New 2010 programmes: Capogiro, Life, Focus, Apocalypse and Match le diete;

Reality shows (-33.0%):

28 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations New 2010 programmes: Pupa e Secchione and Passion

2009 programmes not continued: Rtv, Fattoria, Cupido and Celebrity Make Over

Soft News (+60.0%):

New 2010 programmes: Bikini, Mitici Anni 80, Cuochi bio, Cotto e mangiato il menù del giorno, Week end Italia and Pianeta Mare Prim.

Talk shows (-50.0%):

New 2010 programmes: Fenomenal

2009 programmes not continued: M. Costanzo show, Bikini, Mitici Anni 80, Cuochi bio, Cotto e mangiato il menù del giorno, Week end Italia and Pianeta Mare Prim.

In 2010 the following programmes were self-produced for Canale 5: the soaps Vivere and 100 Vetrine, and the primetime television series I Cesaroni 4, Ris 6 and Distretto di Polizia 10.

The number of digital terrestrial programmes increased by 36% following the new sports programmes produced for Canale Premium Calcio 24 and the new programmes for La5.

Finished product hours produced in 2010 amounted to 9,894 compared with 9,323 in 2009, as detailed in the following table:

Type Finished Product Hours 2010 % incidence 2009 % incidence Change % Entertainment and talk show 1,531 15.5% 1,655 17.8% -7.5% Documentaries - 0.0% 2 0.0% -100.0% Events 24 0.2% 14 0.2% 71.4% Cultural and Informative Progr. 1,023 10.3% 849 9.1% 20.5% Soft news 769 7.8% 628 6.7% 22.5% News 1,941 19.6% 1,933 20.7% 0.4% Reality 188 1.9% 235 2.5% -20.0% Promo and Ads 51 0.5% 52 0.6% -1.9% Sport 603 6.1% 642 6.9% -6.1% Game and Quiz show 447 4.5% 404 4.3% 10.6% Music 151 1.5% 166 1.8% -9.0% Soap 102 1.0% 96 1.0% 6.3% Serial Fiction 62 0.6% 52 0.6% 19.2% Teleshopping 274 2.8% 205 2.2% 33.7% Total programmes TV 7,165 72.4% 6,932 74.4% 3.4%

Premium 2,376 24.0% 2,246 24.1% 5.8% DVB-H 1 0.0% 1 0.0% 0.0% Iris 142 1.4% 110 1.2% 29.1% La 5 169 1.7% Total DTT programmes 2,687 27.2% 2,357 25.3% 14.0% Mediaset Plus 40 0.4% 33 0.4% 21.2% Total 9,892 100.0% 9,322 100.0% 6.1%

The overall increase of 6.15 compared with 2009 was due to an increase in the hours produced for television programmes (+233 hours) and for digital terrestrial programmes (+330 hours).

29 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations The changes in television programmes was mainly due to:

Game Shows/Quizzes (+10.6%): particularly for the production of Cento per Cento, Trasformat, The Call and Viva Las Vegas;

Cultural Programmes (+179.1%): for Capogiro and Wild;

Reality Shows (-19.9%): for the production of finished product hours for Amici and a lesser number of Grande Fratello episodes;

Soft News (+22.4%): for a higher number of finished product hours for Forum, Bikini, Mitici Anni 80, Cuochi Bio, Cotto e mangiato il menù del giorno and Week end Italia;

Talk shows (-39.5%): for the decision to cancel the M. Costanzo Show and to reclassify Domenica 5 as an entertainment programme.

As for digital terrestrial programmes, there were increases in hours for the production of sports programmes for the new Premium Calcio 24 digital channel, the new productions for the Europa League, to Manchester City TV, for races in the Motorbike World Championship and for the new La5 channel.

News Mediaset The main supporting structure of Mediaset information consists of its TV news programs, Tg5, Studio Aperto and Tg4: 13 daily editions, as well as the breaking news di Tgcom, on the air on the 3 generalist channels from 6.00 a.m. till 2.00 a.m., a factual news system, which is very synergic and able to produce almost 2,000 hours of finished product each year. In 2010, thanks to the brainstorming and creative push of the journalists, there were consolidated a number of infotainment products, which are containers that accompany viewers all through the day, from morning to evening, every day of the week. Mattino 5, Pomeriggio 5, Domenica 5: broadcasting almost 1,000 hours of programs a year in which there are amalgamated journalistic knowledge and the creativity of authors coming from the world of variety. All these programs in R.T.I. S.p.A. report to the Management of Videonews, the header organisation that also produces Verissimo and Matrix. In 2010 the informational publishing organisation was changed with the creation of an internal news agency that works continuously for all the news brands. The News Mediaset agency was started up on 1 March 2010 and it gathers together about one hundred journalists who come from the newsrooms of Studio Aperto, from Tg4 and from the regional newsrooms of Tg5. There also flowed into News Mediaset all the journalists of Tgcom, who presided over the multimedia sector. The News Mediaset agency is already, in fact, an all news integrated system: all the journalists work, equally, on the Internet, on the new media like smart phones, I-pads and tablets, or on the services for TV, assembling in digital format, in Milan the agency does not use analogical studios any longer and they work shifts and no longer in just single services mode.

30 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations Furthermore, all the journalists are following training courses, together with technicians and production staff, in order to introduce a new editorial system, taking the News Mediaset agency and, flowing down from this, the whole production system to the cutting edge of technology and contributing, in a fundamental manner, to “changing the mentality” of the whole news apparatus. This is a system, i.e. Dalet, based on revolutionary technology: in the centre of it there are the digital contents, in file format, which are managed through an ensemble of search engines. There has successfully continued the cooperation of Mediaset with IULM. Together with its university structures each year our company prepares, through organising and managing the degree course of Master in Journalism, about fifteen young professionals who are trained and equipped to answer the needs of all the publishers operating in Italy, whether via press, radio or television. The News Mediaset is enabling a better level of coordination between the local correspondents, with more extended territorial coverage, better human resources management with maximum flexibility to meet the needs of the company and breaking down of the traditional fences of the “belonging areas” of the journalists, and a re-qualifying of the internal resources that have regenerated themselves thanks to their acquisition of the new technologies. From 1 March to 31 December 2010, in spite of all the normal difficulties that are encountered in any huge transformation operation, the agency created 20,000 news services, punctually covering every news and current affairs event and succeeding, in some cases to scoop the competition with the launching of exclusive news and services, In this way it contributed, in an outstanding manner, not only to continued to hold high the informational tradition of the Mediaset TV news programs, in the new competitive context, but also to consolidating the programs of Videonews and affirming the new ones, one prime example of which is Quarto Grado, an early evening program of Rete 4. There is currently ongoing a profound restructuring of the Internet sector which can already benefit, thanks to the breaking down of the fences between the new media and TV, from the intake of notable specialised journalistic contributions, from speedily available information and images that have given an immediate result also in the number of single visitors and of the pages viewed, e.g. Tgcom, in October, recorded more than 9 million single visitors, showing a year to year increase of 50%. A further big growth was recorded in the opening months of 2011. Lastly, in 2011, as a natural consequence of the current production and editorial model, an “all news system” is being worked on, which is based on a free channel dedicated to news, 24 hours a day. For the moment on channel 51 of the free DTT there are shown recordings of the News programs of the Mediaset networks.

Purchase of TV rights

R.T.I. S.p.A. is the owner of Italy’s most important library of television rights, which is also one of the most important in Europe.

The Company’s objective is the management of the Mediaset Group library of television rights for Italy, carrying out the purchase, development and production of rights for use on Italian free-to-air and pay TV channels.

31 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations The following table provides details of the television rights library purchased for the free-to-air and pay TV channels of the Mediaset Group at 31 December 2010:

Mediaset Library at 31 December 2010 Free Tv Pay Tv N. titles Episodes N. titles Episodes Film 4,095 4,095 1,723 1,723 Telefilm 1,016 19,508 316 5,499 Telenovelas 23 3,276 4 1,170 Cartoons 547 21,216 16 756 Mini-series 245 907 46 205 Soap 13 1,918 4 419 Tv movies 1,249 1,288 159 190 Documentaries 201 1,368 38 496 Others (Musicals, Variety, Short, Docum., ecc.) 170 505 236 238 Total 7,559 54,081 2,542 10,696

Free-to-air TV:

Mini-series 3.2%

Cartoons Documentaries 6.2% Soap Opera and 2.7% Telenovelas 0.5% Telefilm 13.4%

Film Tv movies 54.3% 16.5% Others (Musicals, Variety, Short, Docum., ecc..) 2.2%

Pay TV:

Mini-series Soap Opera and 1.8% Telenovelas Cartoons 0.3% 0.6% Documentaries Telefilm 1.5% 12.4%

Tv movies 6.3%

Film 67.8% Others (Musicals, Variety, Short, Docum., ecc..) 9.3%

32 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations The television rights library is constantly being added to from:

American majors

R.T.I. S.p.A. has long-term agreements with the main American producers and distributors (Universal, Twentieth Century Fox, DreamWorks, Walt Disney and Warner Bros. International), for the purchase of rights with the possibility of broadcasting the programmes 5 or 6 times.

In 2010 a three-year agreement was signed with Fox International Channels Italy for the purchase of cinema (5 years and 5 broadcasts) and television products.

International television producers

R.T.I. S.p.A. maintains important, consolidated relations with American and European producers for the purchase of the rights for popular television products (TV movies, soap operas, miniseries and television series).

The serial nature of these products, developed on a seasonal basis, facilitates the establishment of a long-term relationship between the producers and the users and also increases viewer loyalty to the network broadcasting them.

Italian film producers/distributors

Packages are purchased from Italian national operators, containing television rights for films they have produced (which, taken together with the purchases made from European operators, are important in order to adhere to the broadcasting and investment quota regulations for television broadcasting) and rights for international films.

The subsidiary Medusa Film S.p.A., the leading company in the Italian film distribution market, continued to supply free-to-air television rights. In 2009, rights to first-run films for pay TV were also purchased from Medusa Film for the “Premium Gallery” platform.

In 2010 an agreement was signed with RAI Cinema for the purchase of rights for cinema films to be shown on pay TV channels.

In-house production of television drama and series

R.T.I. S.p.A. has the expertise and the organisation to select projects and develop TV movie productions, mini-series and popular TV series. These products are produced both in-house and in collaboration with leading international partners and, in some cases, are also marketed abroad, thus contributing to covering the production costs.

In 2010, the sequels to a number of long-running series (TV films and soap operas) were commissioned, together with high-quality current affairs, action and comedy programmes, and during the year work was completed on filming 8 episodes of the television series “Non smettere di sognare”, which was entirely produced in-house by the Mediaset Group.

In July 2010 has been completed the process of integration into the Mediaset Group of Tadoue S.r.l,. Taodue is the leading Italian company engaged in producing quality television drama and

33 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations series, started producing television products at the end of the 1990s and has been responsible for many successes that have appeared in the schedules of Canale 5, such as Karol, Nassirya, Paolo Borsellino, Maria Montessori, Il capo dei capi, Distretto di polizia, Uno Bianca, Ris and Squadra Antimafia. Taodue’s objective has always been to produce television drama and series with a good deal of realism, and many of the company’s products have been based on factual news stories and historical events that have inspired and continue to inspire projects that have set the company apart in the Italian television market.

Among the productions made in 2010 special note should be made of the sequels to the “Distretto di polizia”, “Squadra Antimafia” e “Ris 2 Roma-delitti imperfetti” series, and of the television drama “Un cane per due”. In September work started on filming a new 6-episode series with the title “13mo Apostolo”.

In 2010 the Mediaset network broadcast 64 hours of products made by Taodue, compared with 94 in the previous year and 74 in 2008.

In 2011, apart from completing the productions already started in 2010, Taodue also began filming a sequel to the “Distretto di Polizia” series (13 100-minute episodes) and a new 8- episode primetime series, “I Casalesi”.

In 2010 Taodue S.r.l. also produced the successful “Ma che bella giornata” with Checco Zalone, distributed by Medusa Film Spa in January 2011. After a brief period, the film became the biggest grossing film and also attracted the most number of spectators.

Mediavivere S.r.l., a company jointly controlled and run by R.T.I. S.p.A. and Endemol Italia S.p.A., develops and produces Italian soap operas exclusively for the Mediaset Group.

During 2010, RTI consolidated its joint production operations with the associate company ARES Film S.r.l, which specialises in making Italian television drama and television series.

Purchase agreements stipulated in 2009 and products purchased

In 2010, R.T.I. S.p.A. continued to focus on developing its library of free-to-air and pay TV rights.

Among the many agreements signed and projects carried out, the following are worthy of mention:

the purchase for free-to-air and pay TV networks, in line with existing agreements, of the rights to the following films: Il Curioso caso di Benjamin Button, Il Cavaliere Oscuro, Una Notte da Leoni, Gran Torino, Harry Potter and il Principe Mezzosangue;

the purchase of over 500 films destined for free-to-air and pay TV networks from Cecchi Gori Group Fin.Ma.Vi. Spa which was declared bankrupt;

the purchase for the free-to-air network, in line with existing agreements, of the rights to the following films: Yes Man, Incredible Hulk, Mamma Mia!, La Mummia, La Tomba dell’Imperatore Dragone, Kung Fu Panda, Simpson il Film, High School Musical 3: Senior

34 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations Year, Il Mistero delle Pagine Perdute, Alien VS. Predator, Lo Spaccacuori, Die Hard 4, Cronache di Narnia and Il Principe Caspian;

the purchase of films for the pay TV network such as Come un Uragano, The Strangers, Duplicity, Fast & Furious 4 and Nemico Pubblico;

the purchase of the rights to the first-runs of the series V, Vampire Diaries and Human Target, destined for free-to-air and pay TV networks;

the purchase of the rights to the first-runs of the series Parenthood, Glee and Lie To Me, destined for the free-to-air network;

the purchase of the rights to the first-run of the series The Event, destined for the pay TV network;

the purchase of the rights for free-to-air and pay TV networks of new episodes of successful television series such as: House, Heroes, Law & Order: Special Victims Unit, Law & Order: Criminal Intent, Smallville, Nip & Tuck, Royal Pains, Gossip Girl and Fringe;

the purchase of the rights for the free-to-air network of new episodes of successful television series such as 24, Simpsons, Tudors, Grey’s Anatomy, C.S.I, C.S.I. Miami and C.S.I. New York;

the purchase of the rights for the pay TV network of new episodes of successful television series such as Closer, Leverage, Friday Night Lights and Skins;

the purchase from Medusa Film S.p.A. for the free-to-air network, for the current television season, of films such as Burn After Reading: A Prova di Spia, No problem, Il Cosmo sul comò, La Fidanzata di papà, Next, Un Estate ai Carabi, L’Allenatore nel Pallone 2 and Scusa ma ti chiamo Amore, and for the pay TV network of Baaria, Baciami Ancora, Cado dalle Nubi, Io & Marylin, Amore 14, La Matassa and La Prima Cosa Bella;

the preference for long-running series has led to the development of sequels of successful series such as Distretto di Polizia, R.I.S and Squadra Antimafia, produced by Taodue S.r.l., since the past series were particularly popular with viewers;

the production of a number of high-profile productions in terms of subject, cast and authors, including A sangue caldo, Viso D’angelo, produced by Ares Film S.r.l., 13° Apostolo, Un amore, una vendetta, Dov’è mia figlia, Anna e i cinque 2, Non smettere di sognare, Come un delfino, Commissario Zagaria, Un cane per due and Area Paradiso;

the production of the tenth series of the Italian soap opera, Centovetrine, made by Mediavivere S.r.l., whose 230 episodes have constantly attracted a large audience. New episodes of the sit-coms Sketch Show and Così fan tutte 2 were also made.

35 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations Pay TV: Mediaset Premium

During the year, R.T.I. S.p.A reinforced its presence in the digital terrestrial sector (DTT), the platform on which the company’s future growth will be based.

In order to be able to respond in an effective manner to the demands of viewers to use television content in various ways, the company is moving towards a multi-platform approach which will be used to feed the various types of platform: terrestrial, satellite, mobile phone and broadband.

In response to the new market challenge, R.T.I. S.p.A. is committed to reinforcing its pay TV service, Mediaset Premium, as a complement to its free-to-air business.

Development focused on improving the linear offer and launching new non-linear offers aimed at increasing the choices available to clients.

Thanks to the rapid progress of the nation-wide plan to turn off the analogical television signal, Mediaset Premium was able to count on a stronger broadcasting capacity in order to offer its content in high definition with the launch in the “All Digital” area of an additional HD channel for football and of a HD version of Premium Cinema, the flagship channel for cinema that broadcasts all the film trailers, blockbusters and most successful and popular films.

As for sports content, during the year considerable sums were invested to ensure that Mediaset was able to improve its already impressive offer of live coverage of all the games involving the main clubs in Series A and all the games in the UEFA Champions League with the exclusive rights to the Europa League and the Club World Cup.

Thanks to the range and competitiveness of the offer, the football package available on Mediaset Premium continued in 2010 to be an important factor in the growth of the client and subscription base.

During 2010 Mediaset Premium’s cinema package, which once again was reinforced, was the most popular pay TV offer with viewers, confirming the strategic priority given to this sector by the company. The range of television serials available as part of the Gallery package was also increased, with the aim of increasing its popularity and attracting a wider client base.. The enrichment of the Mediaset Premium offer will continue during 2011 with the launch of two documentaries channel as shown on the paragraph Significant events after 31 December 2010.

With regard to the new ways of exploiting the pay content, investments in innovations in 2010 were aimed at developing a non-linear multi-device, multi-platform offer.

In 2010, Mediaset Premium improved its non-linear offer of cinema and television series available to IPTV clients (on the Telecom Italia and Fastweb platforms) by adding a non-linear HD offer based on a new generation of digital decoder able to download content from the broadcasting networks (push VOD) and store it on a local disc, offering clients a choice of over 50 films and a wide range of the best first-run television series.

The investments in innovations in 2010 were mainly aimed at developing a new platform of offers available starting from the first months of 2011 (Net TV project) that use the Internet to

36 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations bring thousands of products on-demand to clients equipped with a set-top box or PC hooked up to a broadband connection.

The Premium Net TV project is the natural starting point for a strategy aimed at complementing the linear pay TV offer with a vast choice of non-linear content accessible on either television (OTTV) or PC.

The project will enable Mediaset Premium clients who have a broadband Internet connection from any telephone company to have constant on-demand access, from anywhere, to hundreds of films, television series, cartoons, entertainment programmes, television shows and football matches.

The offer will be included in the subscription and represents a further reason for clients to take out a subscription to Mediaset Premium.

Apart from the vast catalogue of content included in the subscription, clients will have the opportunity to rent films a long way in advance of other sources (transactional VOD).

Net TV is a ground-breaking service that will take Mediaset Premium to the most advanced levels of pay TV innovation in the world, enabling it to provide its clients with this service regardless of their network infrastructure and access equipment. This investment lays the foundations for Mediaset Premium to access a multitude of technological access platforms and tap into a new reservoir of potential customers.

Thanks to a hybrid approach between the DTT platform, which is now the most widespread digital TV platform in Italy, and the broadband Internet platform, which is becoming increasingly popular particularly with pay TV clients, Mediaset Premium will be able to offer its clients a choice of the highest quality channels and a wide range of non-linear content that goes way beyond any limit or restraint.

In line with the publishing policy introduced in 2010, next year Mediaset Premium will continue to develop its schedules, both linear and non-linear, and focus on specific targets.

The growth of Mediaset Premium, which has exceeded all expectations, has confirmed the strategic decisions taken during 2010, which closed with 3.9 million active clients.

Relations with Mediaset Premium clients are based on improving satisfaction for the services on offer, developing promotional programmes for customer retention and increasing the use of services through up selling operations.

Relations with subscription and pre-paid clients are the responsibility of a Client Services department organised on two distinct levels. The first of these is made up of a call centre which, thanks to the support of specialist operators, dealt with approximately 7 million calls in 2010, while the second level of assistance is made up of a back office structure that is responsible for dealing with any problems or technical/administrative questions and is in constant contact with the company’s other internal operational structures.

37 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations In addition, an IVR (interactive voice response) and a special client area on the website allows clients to carry out the simple operations necessary for activating a subscription, registering vision rights and purchasing and topping up pre-paid packages.

Network Operator

The Mediaset Group’s distribution and broadcasting network is owned by the subsidiary Elettronica Industriale, whose main business activities are offering broadcasting capacity to customers on its own digital multiplex, managing the networks necessary for distributing and broadcasting television programmes and managing traffic to and from the various production centres of the parent company R.T.I. S.p.A..

In 2010 work was completed on the third phase of the switch-off process, dealing with the conversion to digital technology of all local/national broadcasting equipment operating in Lombardy, east Piedmont, Veneto, Friuli and Emilia Romagna. This a process will continue in accordance with the timetable issued by the Ministry for Economic Development, which establishes that the conversion of the whole country is to be completed by 2012.

Elettronica Industriale S.p.A. has contributed greatly, including through participation in the various technical discussion meetings set up by the competent authorities, to the preparation and sharing of the frequency allocation plan, aimed at minimising the impact of such a complex and delicate operation. As for the transportation infrastructure, work was completed on implementing an integrated distribution/contribution network, resulting in the construction of a sophisticated hybrid network (Radio Bridge/Optic Fibre) using SDH/IP technology to provide a high-speed (10 Gbit/s) system to connect all the company’s operational centres in Italy, which also, thanks to its special design, guarantees greater reliability for the distribution network to the individual broadcasting centres.

2010 also saw the development of the digital platform’s header system, involving the replacement of all the original equipment with new technology that provides better performance both from the point of view of quality and flexibility.

As far as the network supervision infrastructure is concerned, the new trouble ticketing system for signalling problems and for requesting assistance, which had already been adopted for the DVBH network, came into service for the analogical and DTT networks.

Work continued on operations to consolidate the building structure, plant and towers, as part of the objective to modify them in order to comply with the new regulations governing safety and to prepare them for subsequent developments in digital terrestrial technology.

It should be noted that during 2010 the Group terminated the multi-year agreement relating to the renting of the transmission capacity of the DVB-H signal with the main TLC operators.

Digital terrestrial

The digital terrestrial platform continued to expand in 2010. In November alone, thanks to the analogy switch-off in Lombardy, 2,438,000 TDT receivers were sold, 900,000 more than in October. Of the total number of receivers sold in November, approximately 35% (865,000)

38 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations were integrated receivers, approximately 59% were zapper receivers and 6% were MHP interactive decoders.

The total number of TDT receivers sold from February 2004 up to the end of November 20100 amounted to 43,888,000. Of these, 18.7 million are integrated receivers (43% of total), and the remaining 25.2 million (57%) were external. In the first 11 months of 2010, approximately 15 million TDT receivers were sold.

The average cost of an interactive decoder is EUR 89, while the average cost of a zapper decoder is EUR 29.

2010 was an important year for digital televisions, which accounts for a record 75% of all televisions. 3 out of every 4 Italians watch television on a digital platform, and within this platform digital terrestrial is used to watch television programmes for 58.8% of the total time dedicated to watching television in Italy. The consumption of digital terrestrial increased by 28 percentage points (+88%) from January 2010 to the end of the year, with a 10 point increase (+22%) in December alone thanks to the conversion to digital in Lombardy and east Piedmont (completed at the end of November, while Emilia Romagna, Friuli Venezia Giulia and Veneto transferred over to digital in December). The figures for satellite television also increased, by 16.3%, while the figures for analogical television fell to a minimum of 24.4%.

The switch-off operations planned for 2010 were successfully carried out, giving a strong boost to digital televisions sales. Likewise, the obligation to incorporate a DTT tuner in televisions, which became law for all new televisions sold after April 2009, was a substantial help in promoting the digital terrestrial platform. The spread of iDTV will also give a large boost to the development of digital terrestrial in the next few years. IDTV also has a new hybrid function, which combines the capacity to receive broadcast signals and the capacity to receive audiovisual content via an Internet broadband connection (the so called OTTV or over the top TV) in the same television set.

Therefore the natural process of changing to the new technology in Italian homes has been confirmed, and this process will be completed when the analogical signal is turned off for the last time by the end of 2012. According to the government’s switch-off timetable, by the end of next year 80% of Italian families will be watching digital terrestrial televisions, and in 2011the switch to digital is due to take place in a number of regions including Marche, Abruzzo, Molise, Basilicata and Puglia.

Investment in DGTVi, switch-off support and the interest in Tivù

In 2010 R.T.I. S.p.A., partly though its investment in DGTVi, demonstrated its active support for the process of migration from analogical television to digital television by taking the lead in favour of a swift and effective transition in the interests of the country.

DGTVi maintained its leadership role in promoting and distributing digital terrestrial technology in Italy. The association, which groups together all free-to-air broadcasters in Italy, R.T.I. S.p.A. included, as well as local television federations, renewed its commitment to the definition of open, interoperating standards for digital terrestrial receivers and decoders and to the

39 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations promotion and support of the switch-off process. In this context, DGTVI confirmed its readiness to assist local and national operators in the co-ordination of this delicate and important process.

The “stickers” project, which was launched by DGTVi in 2005 as a way of certifying the quality of DTT receivers, both integrated and external, is now a consolidated instrument that is recognised by the entire consumer electronics market. Almost all the producers of integrated televisions in Italy and the majority of external decoders continued to support the agreement in 2010. The “stickers” play an essential role in easily identifying receivers that are tuned to the correct reception for digital terrestrial, and they have also contributed to the development of an interoperating digital terrestrial platform that benefits all operators in the sector.

In 2010, the communication operations launched by DGTVi concentrated mainly on the technical areas involved in the switchover to the new digital terrestrial signal. East Piedmont, Lombardy, Emilia Romagna, Veneto and Friuli Venezia Giulia were targeted by DGTVi communication operations and in December the switch-off process was successfully completed, with the exception of Liguria where technical reasons forced the process to be postponed until 2011. Operations involved the distribution of information leaflets explaining the TDT receiver equipment and trade-marketing POP material (for example, totems, card-index tabs and pamphlets) at the main electronic and electrical appliance sales outlets, and an ad hoc campaign was launched for the “stickers” project linked to specialist trade magazines.

Tivù S.r.l. also continued its operations in 2010. Founded in 2008 by R.T.I. S.p.A., RAI and Telecom Italia Media with the aim to promote and provide information about digital terrestrial under the “Tivù” brand name, the company’s main communication operations were concentrated on this brand. In the switch-off areas earmarked for 2010, Tivù was involved in producing important communication campaigns that utilised all the local means of communication (print media, radio, direct messages, etc.), in addition to specific information slots broadcast on the national networks by the broadcasters involved in the project.

2010 was another successful year for Tivùsat, the free satellite television service launched in July 2009 by Tivù S.r.l. with the aim of guaranteeing the same television entertainment available on DTT to those people resident in areas not yet covered by the digital terrestrial signal. By the end of 2010, TivùSat reached 670,000 users with over 800,000 active cards, while during the year 12 certified TivuSat decoders were available for picking up the signal (ADB, Humax, Telesystem, Fuba, Zodiac, Irradio and Sagemcom), and SmartCAM TivùSat equipment was available and was compatible with the most popular television sets equipped with satellite tuners (14 iDTV models with satellite tuners under the LG, Samsung and Sony brands were certified). In order to help consumers easily identify the tuners capable of receiving the Tivsat signal, a Tivusat sticker programme was launched.

Other business activities

Media Shopping

Media Shopping, whose business model is based on a multi-channel commercial platform, continued handling the company’s characteristic business activities throughout the year, in

40 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations particular selecting and purchasing products, developing television sales channels and client services, and handling operations designed to support the business activities.

During the year, the web channel was responsible for 38.3% of sales (48.6% net of trading operations), and became the leading channel with a growth rate of 27.1% compared with 2009.

In July 2010 a new e-commerce platform was launched (Enfinity), equipped with highly advanced technology that will make it possible in the future to handle a much larger catalogue of products than the current catalogue. The Media Shopping site was re-designed and re- planned, particularly as far as navigating around it is concerned, and new web marketing tools were integrated and optimised in order to improve the customer experience (e-mail marketing and recommendations).

Movie distribution

Medusa Film SpA is one of the leading film distribution companies in Italy with a market share in 2010 of 16.7% (source: Cientel), confirming the position it held in 2009 as the number one distributor (14.1%). In 2010, Medusa once again distinguished itself for the quality of its own films with 16 titles in the 100 box office successes for the year and 23 films generating takings of more than one million euros. The company produces and distributes Italian and foreign films in Italy and is involved in the entire life cycle of the products, from cinema release to home videos and the marketing of all forms of television rights.

In 2010 the cinema market was characterised by a growth in the market in terms of box office returns (+178% compared with 2009), which was mainly due to the “3D” phenomena and its symbolic leader “Avatar” (EUR 65.5 million), and by an increase in the number of Italian films on the entire market with a share of 29.3%, a 6 point increase compared with 2009 (23.4%) and in line with the average share registered by Italian films in recent years (29% in 2008 and 31.7% in 2007).

Box office takings amounted to EUR 734 million corresponding to 110 million tickets sold, compared with EUR 623 million and 99 million tickets sold in the previous year. Box office takings for 2010 were characterised by the increased presence of 3D films, particularly American films of the “commercial” type (the already mentioned “Avatar” and “Alice in Wonderland”, EUR 30.3 million, were the top 2 box office hits in the year), with ticket prices for these films being EUR 2-3 higher than for ordinary films. This was basically the main reason for the increase in box office takings (+17.8%9 and in ticket sales (+11%).

The biggest grossing Italian film was a Medusa film, “Benvenuti al sud” (EUR 29.7 million), the third highest grossing film overall and the second most popular film in terms of ticket sales (4.9 million, with “Avatar” taking the top spot with 5.8 million), a totally unexpected success for a non-3D film with a young director and cast.

The performance registered in 2010 seems to confirm the fact that the cinema is capable of bucking the trend established by the overall economic crisis, and represents a valid alternative to other forms of leisure-time activities. It would also appear that the data emphasises the importance of having “strong” products and centrally located cinemas able to exploit films to the full and create a value that can also be exploited after the cinema run has finished.

41 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations New Media and Brand Extension

R.T.I. S.p.A. operates in the multimedia sector through its Interactive Media Department. As part of its operations to promote extension content initiatives, it makes the services and contents of its core business available on different platforms (Internet, mobile web, cell phones and teletext).

R.T.I. S.p.A. operates on the web in two different areas:

providing entertainment programmes with the Mediaset.it site (www.mediaset.it), the point of entry for to all the Media set web area.

The Videomediaset site (www.video.mediaset.it) is of particular importance from the strategic and commercial point of view as it allows users to watch the entire episodes of many Mediaset programmes, including the complete version of every newscast on the Mediaset network. Other programmes available in addition to pure entertainment programmes (Grande Fratello and Amici su tutti) include soap operas, in-depth current affairs and sports programmes, which can all be seen in high quality full-screen mode. The contents available on the television portal are also all available on the main social networks, while snack-TV clips (short highlights of the best parts of the television content) can also be watched.

providing information on the TGCOM site (www.tgcom.it). In particular, TGCOM provides journalistic content transmitted on various technological platforms including the Internet, teletext, radio and both analogical and digital television, while sports information is available on the SportMediaset site (www.sportmediaset.it). Mediaset’s sports site is attracting an interesting number of visitors and the recent restyling (with the addition of two new sections for rugby and poker) has improved navigability and layout.

This partnership between television and the Internet has attracted excellent numbers of visitors and has made it possible for advertisers to experiment with new forms of advertising, such as the billboards that open every video.

Another area where RTI Interactive Media operates is the mobile web sector, which provides the possibility of accessing Media set web content from cell phones, smart phones and tablets. To deal with this increasingly important request from users, RTI Interactive Media has launched two main operations:

the optimisation of the web sites to make them available for navigating from mobile terminals and tablets;

the creation of applications dedicated to navigating on Mediaset sites which are available from the main APP stores on the market (Apple, Samsung and Nokia);

The TGCOM and SportMediaset sites are currently available on the mobile platform, while the video portal Videomediaset has also been available since October 2010.

RTI Interactive Media also operates in the mobile phone sector and is aimed at making content and services available on mobile phones through:

42 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations Brand extension, based on brands/formats that are already known to the television public. This category contains the multimedia game from the television show “Chi vuol essere Milionario” (available via SMS messages and on the web), and also info news services such as “TG5 sms” and “TG5 mms”. Another innovation from 2010 which has produced excellent results is applications for smart phones (mainly iPhones and iPads), such as:

Chi vuol essere milionario (an application for iPhones that allows users to experience the emotion of a real game of Milionario in the studio)

Cotto & Mangiato (an application that allows users to consult recipes and suggestions from the television programme of the same name, highly thought of by the public)

Amici (an application with all the news and gossip from the programme)

Grande Fratello (an application that provides all the news and gossip about the inmates and which can also be used to participate in the programme voting)

Interactivity, aimed at creating interaction between users and television programmes (for example, voting). RTI Interactive Media is responsible for handling the tele-voting for 2 of the most famous reality/talent shows on Italian television (Grande Fratello and Amici) both from the point of view of audience numbers and the volume of SMS messages received.

The teletext service provided by Reti R.T.I. S.p.A. (Mediavideo), which has been available since 24 November 1997, is an 800-page multimedia television news source that has an innovative mixture of contents, images and operating modality whose strong points are the fact that it is easy to use, it is always up to date and its contents are extremely varied. Mediavideo is available on both analogical and digital television.

Licensing, Merchandising and publishing products

The intermediary operations carried out by Licensing RTI are concentrated on stipulating contracts for the purchase of brands from licence owners with a medium length of five year and renting out the same licences to clients or sub-licensees for a period of time of about one year and a half. The division is also responsible for exploiting television brands by creating publishing products (books, DVDs and CDs) and merchandising, marketed directly by RTI under the name Fivestore.

A five-year contract was signed with Hasbro for the purchase of popular brands such as Monopoly, Trivial Pursuits and Subbuteo and the cartoon series Transformers should be mentioned.

Some of the most successful products were the recipe books deriving from the “Cotto e mangiato” programme, the music CD linked to the singing competition in “Io Conto” and the first important project linked to Mediaset’s historical archive entitled “Mai dire Story”, which collected together the best of 20 years of programmes from the “Gialappa’s Band”.

The newsstand and Internet channels were joined by the GDO channel, which is responsible for marketing Fivestore publishing products in supermarkets, airports, railway stations and sales outlets on motorways.

43 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations International advertising

In order to develop the international advertising market, which is increasingly characterised by strong concentrations and continual changes in the decision-taking centres, the Mediaset Group has entrusted the responsibility for organising and managing the European market to Publieurope Ltd. since 1996, with the objective of additional sales deriving from:

research into new business in other countries;

constant contact with the headquarters of multinationals.

The main benefits derived from these operations are:

the Group’s television networks, both the traditional generalist channels Canale 5, Italia 1, Rete 4 and Telecinco and the recent free-to-air and pay TV digital and specialist channels;

the magazines from Mondadori Pubblicità;

the Internet sites of Mediamond, which was set up in 2009 and began operating in 2010, for the sale of advertising from the web properties of Mediaset and Mondadori.

Other important European publishing groups have also entrusted Publieurope with selling advertising space on their networks. Over the years Publieurope has developed a portfolio that includes:

a contract with the ProSiebenSat1 Group for the German Pro7, Sat1, Kabel1 networks, which together represent approximately 30% of television audiences in Germany;

the SBS commercial networks that operate in northern Europe (Flemish Belgium, Holland, Sweden, Norway, Denmark and Finland) and also in Rumania and Hungary;

the television network run by the British group Channel 4 Corp, which represents approximately 22% of commercial television audiences in Great Britain.

The commercial operations are carried out from offices in London, Munich, Paris, Lausanne, Milan and Madrid in collaboration with Publitalia’80 and Publiespana.

The results for 2010 are very positive and consolidate the trend of recent years.

Given the nature of the sub-agency activities carried out by Publieurope, the contribution to the Group’s results are not materially significant if considered on their own since of the total volume of orders:

approximately 2/relate to Group networks;

the advertising space sold to international clients is mainly billed directly by the respective agencies.

44 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations Spain

Mediaset is the majority shareholder in Gestevision Telecinco S.A., which is part of the Spanish television group that owns the Telecinco television network that began broadcasting in 1990.

Telecinco is the leading private television group in Spain in terms of audience share and advertising sales, while it is also one of the most profitable television groups in Europe.

The company is listed on the Madrid, Bilbao and Valencia stock exchanges and since 3 January 2005 it has been included on the Ibex 35 index that lists the 35 biggest companies in Spain.

As referred to in the previous section of the report (Important operations and events during the year), at the end of 2010 Telecinco completed the purchase of 100% of the free-to-air television operations of Cuatro and 22% of the pay TV operations of Digital Plus, which is controlled by the Prisa TV Group (56%) and is partly owned by the Telefonica Group (22%).

As a result of these operations, the Telecinco Group aims to consolidate its leadership position in the commercial television market in Spain, where it operates as an integrated television group in the following sectors:

Advertising (Publiespana)

Advertising in Group and third-party non-television media (Publimedia)

Generalist analogical television (Telecinco)

Multi-channel: free-to-air specialist channels (La Siete, Canal Factoria de Ficcion)

Pay tv (stake in Digital Plus)

Press agency (Atlas)

Teleshopping (Publieci Television)

Internet (through Conecta 5)

The Advertising Market

The Spanish television advertising market is the fifth largest in Europe, ranking second behind Italy as far as the percentage of advertising spending on television media compared with total investments on traditional media is concerned (according to Infoadex data this amounted to 41.1% in 2010).

In 2010 the Spanish economy, which was one of the worst affected by the global crisis, continued to feel the consequences of the decrease in internal demand, the large public debt and the high levels of unemployment. This context naturally affected television advertising sales, which despite this registered an increase of approximately 4% for 2010. The private television sector did, however, benefit in 2010 from the new regulations that came into force in the last

45 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations quarter of 2009 which forbad the public television network, RTVE, from selling advertising, and this situation particularly benefited Telecinco, enabling it to maximise its position of market leader from the point of view of audience share and the pricing policy of the advertising agency Publiespana and register a 41% increase in revenues.

Media 2010 2009 Change EUR mshare % EUR mshare % %

Press 1,197 20.5% 1,243 22.1% -3.7% Television 2,401 41.1% 2,319 41.2% 3.5% Other tv Channels 6 0.1% 9 0.2% -39.6% Magazine 398 6.8% 402 7.1% -1.0% Radio 549 9.4% 537 9.5% 2.1% Outdoor 421 7.2% 401 7.1% 4.8% Cinema 24 0.4% 15 0.3% 58.4% Thematic Channels 65 1.1% 50 0.9% 30.0% Internet 790 13.5% 654 11.6% 20.7% Total Market 5,850 100.0% 5,631 100.0% 3.9%

The new regulations for the advertising market naturally modified the competitive scenario in the Spanish television sector, which in recent years has been characterised by a high level of fragmentation, provoking an inevitable consolidation process.

Apart from Telecinco, the following companies also operated in the television market in 2010:

three private commercial channels, Antena 3, Cuatro and La Sexta,

a federation of local broadcasters (autonomicas) trading under the name Forta;

the pay TV digital platform, Digital+, which has approximately 1.8 million subscribers, the cable television channel Ono, with around 1 million subscribers, and Imagenio, the IPTV channel belonging to the Telefonica Group, which has more than half a million subscribers.

Telecinco: Broadcasting and Audience

In 2010, Telecinco was the most popular television channel in Spain with the highest audience share throughout the day and in all the main time slots including primetime, where it registered a 14.4% audience share.

In 2010 Telecinco registered an average individual share of 14.6% for the 24-hour slot, maintaining its position of leading commercial television channel with 2.9 percentage points more than Antena 3 (11.7%). In June and July, the network was leader both for the 24-hour slot and the primetime slot, thanks to its broadcasts of the games played by the Spanish national football team during the World Cup in South Africa.

When the contribution from the digital channels is added, the Group registered a 17.7% share of the 24-hour slot, with 1.9 percentage points more than Antena 3 (15.8%). and a 17.7% share in primetime, maintaining its leadership position among private television networks.

46 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations

PRIME TIME % INDIVIDUAL SHARE

23.1 23.5 21.4 21.4 20.9 21.2 19.5 20.0 21.8 18.1 19.1 16.2 16.816.8 16.2 15.2 14.4 17.4 17.2 16.7 16.9 15.4 15.0 13.9 14.4 13.7 2004 2005 2006 2007 2008 2009 2010

Telecinco Tve1 Antena 3 Forta

The Group was also the market leader for audience share for all three time slots as far as the commercial target was concerned, increasing its advantage compared with its direct competitors.

In the 24-hour slot Telecinco registered a 14.9% share compared with the 11.9% registered by Antena 3, while in the primetime slot it registered a 14.3% share compared with 11.8% registered by Antena 3.

24 hours - COMMERCIAL TARGET % INDIVIDUAL SHARE

25.3 24.7 23.1 22.5 22.2 19.6 21.4 19.9 15.5 14.9 17.4 16.5 18.2 14.7 13.815.3 16.3 13.4 13.5 13.7 15.3 14.9 11.9 12.5 11.6 11.0 10.5 8.6

2004 2005 2006 2007 2008 2009 2010

Telecinco Tve1 Antena 3 Forta

Particular note should be made of the digital network, which in December registered a 2.1% share with Factoria De Ficcion, a 1.6% share with La Siete and a 0.8% share with Boing.

47 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations As can be seen from the table below, in 2010 Telecinco maintained a high level of self-produced products in its programme schedules equal to 88% (85.4% in 2009), compared with 12% of purchases and external productions (14.6% in 2009).

As for the digital channels, self-produced products accounted for 86% of the total for La Siete, while the programme schedules of Factoria De Ficcion and Boing were based on rights purchased from third parties.

Telecinco Broadcasted contents (hours) 2010 2009 Changes Film 374 4.3% 475 5.4% (101) -21.3% TV Movies, Mini-series e Telefilm 382 4.4% 531 6.1% (149) -28.1% Cartoons 299 3.4% 273 3.1% 26 9.5% Total TV Rights 1,054 12.0% 1,279 14.6% (225) -17.6% Quiz-game-show 1,627 18.6% 2,192 25.0% (565) -25.8% Sport 85 1.0% 82 0.9% 3 3.7% Documentaries and others 4,397 50.2% 3,106 35.5% 1,291 41.6% News 1,301 14.9% 1,459 16.7% (158) -10.8% Fiction 244 2.8% 601 6.9% (357) -59.4% Others 52 0.6% 41 0.5% 11 26.8% Total in-house productions 7,706 88.0% 7,481 85.4% 225 3.0% Total 8,760 100.0% 8,760 100.0% - 0.0%

Multi-channel

Thanks to its broadcasting centre, Telecinco is equipped with a digital platform capable of broadcasting and receiving audio-visual material via satellite, optic fibre, mobile networks and ADSL.

With the arrival of digital terrestrial television regulations Telecinco, like the other operators, was awarded licences to broadcast new digital channels, which complement the broadcast on the DTT multiplex of the generalist channel:

- La Siete, generalist channel dedicated to a young audience

- Factoria de Ficcion, which broadcasts Spanish and international television drama and series

- Boing, dedicated to entertainment for young children

Investments in Television Rights

In 2010 Telecinco once again maintained its level of investment in contents and audiovisual rights, with the aim of reinforcing the typical content based on Spanish drama and series in order to increase its library and protect its audience share in the future, and with it the level of advertising sales.

In accordance with Spanish laws obliging Spanish television operators to invest 5% of revenues in the production of Spanish and European cinema films, Telecinco, through its subsidiary Telecinco Cinema SAU, has transformed this legal obligation into a business opportunity and

48 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations has been involved for a number of years in producing important quality films destined for the cinema. In 2010 these planning and production operations continued with the aim of obtaining the same level of results as those obtained in previous years, particularly in 2009 with “Agora” (the most popular film of the year with box office receipts of EUR 21 million), “Celda 211” and “Spanish Movie” (with EUR 12 million and EUR 7.5 million respectively). In particular, “Celda 211” and “Agora” received important recognition at the international films festivals at Cannes, Venice and Toronto, and won 15 of the 28 Goya awards. In 2010 some of the most important films distributed were “El Mal Ajeno”, “Verbo” and “Rabia”, all of which were produced in 2009, while the new film by Juan Anonio Bayons, the director of “El Orfanato” was produced with an exceptional international cast and other films included “No habra paz para los malvados”, “Agnosia” and “Lo mejor de Eva”.

49 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations Investments

Mediaset, through some of its equity investments, is a major player in the television content and format production sector and pursues its strategy of developing some of the international television markets with the highest potential (Maghreb, china and the Spanish-speaking areas of North America).

With reference to the first of these, the most important investment is represented by the stake held in the Endemol Group through the investment in Edam Acquisition Holding 1 Cooperatief UA, an international consortium jointly owned with Cyrte and Goldman Sachs.

Endemol is Europe’s leading independent television production company. In a matter of a few years, the company has become the leading producer of Spanish and international entertainment and drama programmes, responsible for the production of programmes that are regarded as part of world television history. Every year, the company produces more than 15,000 hours of programmes.

Endemol has its headquarters in Holland and affiliate companies and joint ventures in 25 countries around the world throughout all five continents, including France, Italy, Germany, Spain, the United Kingdom, Holland, Denmark, Norway, Belgium, the United States, south Africa, Australia, Argentina, and Brazil (to name but a few).

Thanks to its rights library containing 1,400 formats, Endemol is in a position to satisfy the increasing demand for TV drama products (series, mini-series and soap operas) and entertainment products (reality shows, game shows, talk shows, talent shows, makeover shows, etc.), without overlooking the need to adapt global content to the style and needs of each individual country. Endemol relies on one of the world’s most important creative workshops, where it constantly develops new television products, closely studies how to match programmes with the specific needs of each individual market and carries out market research about selling original products abroad. The company manages the Group’s format catalogue and purchases programmes from the main international markets, while at the same time consistently monitoring the production of international formats and their popularity.

Through the operations that were finalised at the end of the first half-year of 2009 the Mediaset Group also owns an equity investment of 49% in the company Capitolosette S.r.l, a subsidiary company of 21 Partners, a private equity fund belonging to the 21 Investimenti Group, which heads up The Space Cinema Group, market leader in Italy in the sector of multiplex movie theatre management both for number of presences and for invoicing, which in 2010 were about 21 million and 200 million Euros, respectively . In 2010 the movie theatre management market again confirmed the trend seen in previous years of greater and greater concentration carried out by the two main operators in that field. Specifically, The Space group acquired, during the year, the theatre chains of Planet, which has three Multiplexes located in Guidonia (Rome), Grosseto and Terni, and Cinecity, which manages six Multiplexes in Cagliari, Parma, Padova, Trieste, Treviso and Udine and had a new opening in Genoa in the month of December. These operations strengthen the leadership position of The Space Group in the Italian market, due to their strategic locations and their integration with the theatres that are already managed by it. Following these operations the

50 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations number of multiplexes managed went from 24 in 2009, with 242 screens, to 34, with 342 screens at the end of 2010. The UCI Group, on the other hand, acquired the Vis Pathè chain thus arriving at the management of a total of 28 structures. Following these operations, The Space Cinema, consolidated its leadership, with a market share that was more than 18% for presences and more than 19% for cash receipts, well ahead of the UCI Cinemas Group that arrived at a market share of about 13% for presences and of about 14% for cash receipts, while all the other operators have markets shares that are very much lower, falling between about 3% and 4%. The Space Group has also finalised, during 2010, some significant projects that have made a big contribution to the solid affirmation of the image of the brand among which there were, for the first time in Italy, the production and broadcasting in 3D and live of sporting events, from the final of the Tim Cup between Rome and Inter to the most important games of the World Cup in South Africa. Regarding forms of entertainment that are different from showing movies, The Space has offered its audiences diverse musical entertainments which, in many cases, were its exclusives by producing and showing, both live and in 3D, the presentation concerts of the new albums of some Italian and international pop stars and groups and also the first night of La Scala Milan. Because of its commitments to alternative entertainment programs that were carried out during the year, The Space Cinema received a special award at the Hot Bird TV Awards 2010.

51 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations ANALYSIS OF CONSOLIDATED RESULTS BY GEOGRAPHIC AND OPERATING AREA

Below is an analysis of the consolidated income statement, balance sheet and financial situation highlighting the contribution of the two geographic business areas (Italy and Spain) to the Group's results, and providing a breakdown of revenues and operating profits of the main business segments included in those areas.

The form and content of the income statement, balance sheet and cash flow statement below have been reclassified from those contained in subsequent financial statements in order to show certain interim results and the most significant balance sheet and financial groupings for providing an understanding of the operating performance of the Group and individual Business Units. For any amounts not specified, descriptions of the criteria used for their preparation are provided in accordance with the guidelines contained in Consob Communication No. 6064293 of 28 July 2006 and the CESR Recommendation of 3 November 2005 (CESR/o5-178b) concerning alternative performance indicators ("Non-GAAP Measures"), as well as appropriate notes referring to the items contained in the mandatory tables.

After the finalisation of Telecinco's purchase of a 100% interest in Cuatro's free television business held by the company Sogecuatro and its subsidiaries and a 22% interest in Digital Plus (which will be accounted for using the equity method) on 29 December 2010 (these transactions are described in the previous section "Corporate Transactions and Key Events during the Year"), these operations were recorded in the consolidated financial statements starting on that date. Since the effective date of the transfer of control occurred after the end of the year, the assets and liabilities acquired in relation to the Sogecuatro Group were temporarily recorded in the respective accounting entries available on that date, therefore resulting in goodwill based on the difference between the non-cash payment for the transaction and fair value.

Financial results

By its nature, the following consolidated income statement indicates interim results for EBITDA and EBIT.

EBITDA is the difference between consolidated net revenues and operating costs before non- cash expenses for amortisation, depreciation and write-downs (before any recoveries in value) of current and non-current assets.

EBIT is obtained by subtracting non-cash expenses for amortisation, depreciation and write- downs (adjusted for any recoveries) of current and non-current assets from EBITDA.

As already noted in the previous reports, the accounting for the 33.3% stake in Edam using the equity method is incorporated, for the purposes of geographic area reporting, in the income statement of the Spain Area since this equity investment is held by Mediacinco Cartera, a company fully consolidated in Gestevision Telecinco.

52 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations

(EUR million)

Mediaset Group: Income statement 2010 2009 Total consolidated net revenues 4,292.5 3,882.9 Personnel expenses 542.5 507.6 Purchases, services, other costs 1,760.5 1,593.3 Operating costs 2,303.0 2,100.9 EBITDA 1,989.5 1,782.0 Rights amortisations 1,004.4 1,026.8 Other amortisations and depreciations 169.6 153.8 Amortisations and depreciations 1,174.0 1,180.6 EBIT 815.5 601.5 Financial income/(losses) (24.9) (28.8) Income/(expenses) from equity investments (191.0) (124.4) EBT 599.6 448.4 Income taxes (212.9) (142.5) Net profit from continuing operations 386.7 305.8 Net profit from discontinued operations - (0.6) Minority interests in net profit (34.5) (32.8) Group net profit 352.2 272.4

The following table shows several key components of the Group's income statement as a percentage of consolidated net revenues.

2010 2009 Total consolidated net revenues 100.0% 100.0% Operating costs 53.7% 54.1% EBITDA 46.3% 45.9% Amortisation, depreciation and write-downs 27.4% 30.4% EBIT 19.0% 15.5% EBT 14.0% 11.5% Group net profit 8.2% 7.0% Tax rate (EBT %) 35.5% 31.8%

The income statement is broken down below with separate reporting for the economic contribution from operations generated by the businesses in the two different geographic areas, Italy and Spain. For the purposes of a summary of the contribution of the two geographic business areas to Group income, the income statement for these businesses is already reported net of the amount for dividends received from Gestevision Telecinco.

53 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations Analysis of results by geographic areas: Italy

Below is the summary income statement of the Mediaset Group for domestic operations:

(EUR million)

Italy: Income statement 2010 2009 Total consolidated net revenues 3,438.3 3,228.8 Personnel expenses 452.7 426.7 Purchases, services, other costs 1,368.6 1,311.9 Operating costs 1,821.4 1,738.6 EBITDA 1,616.9 1,490.2 Rights amortisations 859.9 865.3 Other amortisations and depreciations 160.9 146.2 Amortisations and depreciations 1,020.8 1,011.5 EBIT 596.1 478.7 Financial income/(losses) (28.0) (32.0) Income/(expenses) from equity investments (5.0) (1.2) EBT 563.1 445.5 Income taxes (212.9) (166.7) Net profit from continuing operations 350.2 278.9 Net profit from discontinued operations - (0.6) Minority interests in net profit (0.1) (9.2) Group net profit 350.1 269.0

The following table shows several key components of the income statement as a percentage of consolidated net revenues.

2010 2009 Total consolidated net revenues 100.0% 100.0% Operating costs 53.0% 53.8% EBITDA 47.0% 46.2% Amortisation, depreciation and write-downs 29.7% 31.3% EBIT 17.3% 14.8% EBT 16.4% 13.8% Group net profit 10.2% 8.3% Tax rate (EBT %) 37.8% 37.4%

For the two years being compared, the following tables provide the usual breakdown of revenues and EBIT of operations in Italy for business segments identified based on the characteristics of products and services offered and their related active and/or internal markets, and also taking into account their relevance in terms of quantity:

Free-to-air Television, the Group’s traditional core business, includes the operations related to advertising sales and programme scheduling for the three national generalist networks, and the non-encrypted channels broadcast in digital terrestrial technology.

Mediaset Premium, relating to the supply of pay television events and programmes identified with the same brand;

54 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations Network Operator, activities linked to the management of the broadcasting network for the transporting and broadcasting of the analogical signal of the owned non- encrypted channels and the digital terrestrial broadcasting platforms (multiplex);

Other activities ancillary to the main business: multimedia, non-television advertising concessions, teleshopping, publishing, licensing and merchandising and movie distribution.

Revenues Business segments breakdown 2010 2009 Changes % Changes

Free-to-air tv 2,462.6 2,369.5 93.1 3.9% Mediaset Premium 700.4 560.6 139.8 24.9% Network Operator 203.7 219.0 (15.3) -7.0% Other 333.4 354.9 (21.6) -6.1% Eliminations (261.7) (275.3) 13.6 4.9% Total 3,438.3 3,228.8 209.6 6.5%

Operating Profit Business segments breakdown 2010 2009 Changes % Changes

Free-to-air tv 581.8 514.8 67.0 13.0% Mediaset Premium (0.3) (70.8) 70.5 99.6% Network Operator (0.5) 22.7 (23.1) -102.1% Other 39.8 35.7 4.1 12% Eliminations and Adjustments (24.8) (23.6) (1.2) -5% Total 596.1 478.7 117.4 24.5%

The Revenues and Results of each sector are shown gross of inter-segment transactions, which are relative to the sale of assets and to the exploitation of services supplied or received, between the various business units. Specifically, inter-sector relations mainly refer to the following areas:

- Revenues generated by the Network Operator business unit (with an offset under costs of the other business units) relative to the exploitation of the analogical broadcasting network by the non-encrypted general TV channels and of the broadcasting capacity of digital multiplexes used for the DTT transmission of Mediaset Premium and of the other non-encrypted channels, whose cost is divided among the various business units as a function of the actual broadcasting capacity used.

- Revenues and operating income generated sales of rights generated by Medusa Films (a business unit included in Other activities) related to the exploitation of free-to-air or pay and by the Free-to-air Business Unit to Medusa for the sale of movie rights produced by Taodue.

In the table reconciling operating profit above, the line Eliminations and Adjustments reflects the elimination of this income as well as the adjustment of amortisation and depreciation allocations applicable to the Group companies acquiring the corresponding assets.

55 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations Starting this year, the assets applicable to Taodue S.r.l., a company specialising in the creation and production of successful fiction and television series, which were previously included under Other assets, will be included in the assets of the main Business Unit consisting of Free-to-air TV. This move reflects the organisational and business development of the industrial project that led to the establishment of Med Due, the company where the controlling interests in Taodue and Medusa Film were placed in 2008. The acquisition by RTI S.p.A. of the remaining 25% stake in Med Due held by the founding shareholders of Taodue, which was finalised in the fourth quarter of the year, and the decision to carry out the merger of Med Due into RTI (approved on 2 December 2010 and finalised on 15 February 2011) strengthen, in the context of the vertical integration of the group's "core" businesses, the prevailing nature of this company as the Group's exclusive executive producer and cost synergies with publisher RTI as compared to pursuing an alternative business model, which was initially more focused on seizing development opportunities related to the integration with Medusa's film and distribution activities.

For the purposes of comparability, this decision made it necessary to revise comparative sector information for the year as indicated in the following reconciliation table.

Taodue Revenues 2009 2009 operations reported restated Business segments breakdown restatement

Free-to-air tv 2,350.9 18.6 2,369.5 Mediaset Premium 560.6 560.6 Network Operator 219.0 219.0 Other 424.6 (69.7) 354.9 Eliminations (326.4) 51.1 (275.3)

Total 3,228.8 - 3,228.8

Taodue Operating Profit 2009 2009 operations reported restated Business segments breakdown restatement

Free-to-air tv 515.8 (1.0) 514.8 Mediaset Premium (70.8) (70.8) Network Operator 22.7 22.7 Other 52.4 (16.7) 35.7 Eliminations and Adjustments (41.3) 17.7 (23.6)

Total 478.7 - 478.7

By means of this restatements:

Revenues mainly generated through the sale of movie rights to Medusa Film (which is included in the Other business unit and which were eliminated at a consolidated level - those revenues in 2009 were instead eliminated into the Other business unit) are conveyed

56 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations into the free-to-air tv segment. By means of this restatement the row Eliminations does not include (as it was on 2009 ) the elimination of the revenues generated by Taodue from RTI referring to free-to-air fictions.

Free-to-air tv EBIT also includes costs related to the operations of Taodue, the consolidation adjustments made on tv rights amortisation (included in 2009 into the eliminations and adjustment item), as well as the amortisation of intangible assets recognized during the PPA process pertaining to Taodue.

Here follow the income staments for each business unit.

Free to Air 2010 2009 Changes % changes

Mediaset Networks gross advertising revenues 2,760.8 2,633.7 127.1 4.8% Digital Networks gross revenues 31.9 10.3 21.6 n.s. Agency discounts (415.1) (392.1) (23.0) -5.9% Other television revenues 75.9 99.8 (23.9) -23.9% Inter-segment revenues 9.0 17.7 (8.7) -49.2% Total Revenues 2,462.6 2,369.5 93.1 3.9%

Personal costs 377.3 353.7 23.7 6.7% Operating costs 782.4 744.5 37.9 5.1% Rights amortisations 565.6 600.1 (34.5) -5.8% Other amortisations and depreciations 58.9 77.4 (18.5) -23.8% Inter-segment operating costs 96.5 79.0 17.5 22.2% Total costs 1,880.7 1,854.7 26.0 1.4%

Operating Profit 581.8 514.8 67.0 13.0% % on revenues 23.6% 21.7%

The profit of the Free-to-air TV Business Unit benefited from growth in advertising sales in generalist channels and in Multi-channel offerings as reported above. Along with this performance came a 1.4% increase in total television costs (including depreciation, amortisation and write-downs).

Inter-sector revenues of 9 million Euros in 2010 were mainly for the sale or sub-licensing of film rights produced by Taodue and distributed by Medusa Film during 2011. Those revenues in 2009 amounted to EUR 17.7 million in force of the higher number of produced items. The inter-segmentr costs of the Free-to-air Business Unit were instead primarily related to the use of the broadcasting network, net of the exploitation for the use of publishing content and technical infrastructures and services provided to other Business Units.

As previously reported, here follow the tables of reconciliation of the income statement for the Free-to-air business unit in 2009, including the impact of Taodue into this segment of activity.

57 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations

Taodue 2009 2009 Free to Air operations REPORTED restated restatement

Mediaset Networks gross advertising revenues 2,633.7 2,633.7 Digital Networks gross revenues 10.3 10.3 Agency discounts (392.1) (392.1) Other television revenues 96.4 3.4 99.8 Inter-segment revenues 2.5 15.2 17.7 Total Revenues 2,350.9 18.6 2,369.5

Personal costs (352.4) (1.3) 353.7 Operating costs (738.5) (6.1) 744.5 Rights amortisations (598.2) (1.9) 600.1 Other amortisations and depreciations (67.3) (10.0) 77.4 Inter-segment operating costs (78.7) (0.4) 79.0 Total costs (1,835.1) (19.6) 1,854.7

Operating Profit 515.8 (1.0) 514.8 % on revenues 21.9% 21.7%

Mediaset Premium 2010 2009 Changes % changes

Smart cards and subscriptions revenues 473.7 311.5 162.2 52.1% Gross advertising revenues 65.5 29.8 35.6 119.5% Other revenues 170.8 223.5 (52.7) -23.6% Agency discounts (9.6) (4.2) (5.4) -129.2% Total Revenues 700.4 560.6 139.8 24.9%

Personal costs 17.7 14.6 3.1 21.3% Operating costs 334.4 300.0 34.4 11.5% Other amortisations and depreciations 314.4 267.0 47.4 17.8% Inter-segment operating costs 34.2 49.9 (15.7) -31.5% Total costs 700.7 631.5 69.3 11.0%

Operating Profit (0.3) (70.8) 70.5 99.6% % on revenues 0.0% -12.6%

As already reported above, at the end of 2010 the Mediaset Premium business achieved a break-even operating profit for the first time.

This goal was achieved mainly due to the further significant growth in ordinary revenues from the sale of cards, recharges and Easy Pay that totalled 473.7 million Euros compared to 311.5 million Euros reported in 2009, as well as a significant increase in advertising sales.

Revenue growth made it possible to absorb increased costs incurred for enhancing product offerings and for bringing in new customers despite the greater percentage of the Easy Pay component and lower income from the resale of content to other platforms. This was in relation to the different way of acquiring rights of the major "Serie A" clubs for football seasons 2010-2011 and 2011-2012 which were negotiated based on agreements entered into by Mediaset and Lega Calcio during the previous year. With regard to the different ways specified

58 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations for negotiating these rights, the purchase of the latter only involved the encrypted DTT right, and as a result, it no longer generates revenues from the resale of other rights as in past seasons.

Network Operator 2010 2009 Changes % changes

Revenues towards third parties 62.5 87.5 (25.0) -28.6% Other revenues 7.4 6.2 1.3 20.8% Inter-segment revenues 133.7 125.4 8.4 6.7% Total Revenues 203.7 219.0 (15.3) -7.0%

Personal costs 37.3 35.9 1.4 4.0% Operating costs 101.2 102.2 (0.9) -0.9% Other amortisations and depreciations 65.7 58.3 7.3 12.6% Total costs 204.2 196.3 7.8 4.0%

Operating Profit (0.5) 22.7 (23.1) -102.1% % on revenues -0.2% 10.3%

As already indicated in previous interim reports, the lower operating profit of the business unit reflects during 2010 the absence of a portion of the revenues generated in the previous year from the rental of the digital multiplex to be used for mobile phone digital terrestrial television.

Other 2010 2009 Changes % changes

Multimedia 19.8 20.5 (0.7) -3.4% Mediashopping 61.7 61.2 0.6 0.9% Movie distribution 102.7 101.2 1.5 1.5% Other revenues 30.0 39.8 (9.8) -24.6% Inter-segment revenues 119.1 132.3() (13.2) -10.0% Total Revenues 333.4 354.9 (21.6) -6.1%

Personal costs 20.4 22.7 (2.3) -10.1% Operating costs 152.1 166.1 (14.0) -8.4% Other amortisations and depreciations 114.0 118.8 (4.8) -4.0% Inter-segment operating costs 7.1 11.6 (4.5) -38.8% Total costs 293.5 319.3 (25.8) -8.1%

Operating Profit 39.8 35.7 4.1 11.6% % on revenues 12.0% 10.1%

The item Other activities refers to revenues from international advertising licences, sports billboards (this activity was sold in June 2010), licensing and merchandising. Inter-segment revenues were for the sale of free-to-air and pay rights by Medusa Film.

The higher profit generated by all these activities was due to the better economic performance of the film distribution business, which falls under Medusa Film, and Multimedia activities. It should also be noted that at 31 December 2010, the profit for these business areas included the 5.6 million Euro write-down of goodwill related to the Mediashopping business as indicated in Note 7.3 below to the consolidated financial statements.

59 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations Analysis of results by geographic areas: Spain

Below is the income statement for Spanish operations, which is the same as the consolidated figures for the Telecinco Group.

(EUR million)

Spain: Income statement 2010 2009 Total consolidated net revenues 855.1 656.3 Personnel expenses 89.9 79.5 Purchases, services, other costs 392.6 284.9 Operating costs 482.5 364.4 EBITDA 372.6 291.8 Rights amortisations 144.5 161.5 Other amortisations and depreciations 8.6 7.6 Amortisations and depreciations 153.2 169.1 EBIT 219.4 122.8 Financial income/(losses) 3.1 3.2 Income/(expenses) from equity investments (186.0) (123.1) EBT 36.5 2.8 Income taxes - 24.1 Net profit from continuing operations 36.5 27.0 Net profit from discontinued operations - - Minority interests in net profit 34.0 21.5 Group net profit 70.5 48.4

The following table shows several key components of the income statement as a percentage of consolidated net revenues of the Spanish operations.

2010 2009 Total consolidated net revenues 100.0% 100.0% Operating costs 56.4% 55.5% EBITDA 43.6% 44.5% Amortisation, depreciation and write-downs 17.9% 25.8% EBIT 25.7% 18.7% EBT 4.3% 0.4% Group net profit 8.2% 7.4% Tax rate (EBT %) 0.1% n.s. Tax rate (EBT %)

60 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations The following table provides a breakdown of revenues of the Telecinco Group highlighting the most significant components:

(EUR million)

2010 2009 Changes % Changes Television advertising revenues 791.8 605.3 186.6 30.8% Other advertising revenues 43.1 14.0 29.0 206.8% Gross advertising revenues 834.9 619.3 215.6 34.8% Agency discounts (40.3) (29.5) (10.8) -36.7% Net advertising revenues 794.6 589.8 204.8 34.7% Other revenues 60.5 66.5 (6.0) -9.0% Total net consolidated revenues 855.1 656.3 198.8 30.3%

Revenue growth reflects the previously reported 30.8% increase in gross advertising revenues related to Telecinco. On the other hand, other gross advertising revenues, which include advertising sales for theme-based channels broadcast in digital terrestrial technology, and non- television media (Internet, Teletext), were up sharply due mainly to the acquisition of new digital channels in 2010.

On the whole, Other revenues were down by 9% mainly due to the absence of film revenues which were significant in 2009 (with titles such as Agora, Celda 211 and Spanish Movie), and a reduction in revenues from SMS messages sent, call TV and merchandising due to the economic crisis that resulted in lower consumption of these items.

2010 2009 Changes % Changes Operating costs 635.6 533.5 102.1 19.1%

Personnel expenses 89.9 79.5 10.4 13.0%

Purchases, services, other costs 392.6 284.9 107.7 37.8%

Rights amortisations 144.5 161.5 -17.0 -10.5%

Other amortisations and depreciations 8.6 7.6 1.0 13.6%

Total costs of the Telecinco Group rose from 533.5 million Euros in 2009 to 635.7 million Euros in 2010. The increase was mainly due to the variable cost component related to advertising sales, film costs, the 3% contribution to TVE and investments in new digital channels (La Siete, Factoria De Ficcion and Boing). Excluding the impact of the reversal of provision of 10.7 million Euros in 2010 and 42.5 million Euros for the previous year, the growth in costs dropped to 10.1%.

At 31 December 2010, operating profit for the Spanish area totalled 219.4 million Euros, up 78.7% over the 122.8 million Euros reported in 2009. Operating profitability was one of the highest among European television groups at a level of 25.7% in 2010 compared to 18.7% in 2009. This improvement was due, on the one hand, to the new advertising market environment created with the elimination of advertising on public television, and on the other hand, to the efficiency of cost containment policies.

61 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations

The breakdown of other components of the income statement below is for the entire Mediaset Group.

2010 2009 Changes % Changes Financial (income)/losses -24.9 -28.8 3.8 13.3%

Lower financial costs during the period under review mainly reflect the improvement in the net balance of exchange gains and losses.

2010 2009 Changes % Changes Income/(expenses) from -191.0 -124.4 -66.6 -53.6% equity investments

The overall loss from equity investments was mainly the result of the write-down of the equity investment in Edam, the holding company that heads operations of the Endemol Group, which, during the period under review, resulted in an income statement charge of 187 million Euros (- 110.3 million Euros in 2009). See Note 7.5 below of the consolidated financial statements for additional details on the performance of this equity investment and the recoverability assessments done with respect to the book value of assets held by the Group in that company.

2010 2009 Changes % Changes EBT 599.6 448.4 151.3 33.7%

Income taxes -212.9 -142.5 -70.4 -49.4% Tax Rate (%) 35.5% 31.8% Net profit from discontinued operations 0.0 -0.6 0.6 100.0% Minority interests in net profit -34.5 -32.8 -1.7 -5.1%

Net profit 352.2 272.4 79.9 29.3%

The increase in the tax rate during the year is mainly due to the Spanish operations which in 2009 recorded tax benefits connected to the deductible nature of investments in audiovisual media carried out pursuant local legislation, generating net tax income facing an EBT substantially at a break even level.

62 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations Balance sheet and financial position

The summary balance sheet tables for the Group and by geographical area, which have been reclassified in order to highlight the two major aggregates of Net invested capital and Net financial position (the latter consisting of Gross financial debt reduced by Cash and other cash equivalents and Other financial assets) are provided below. Details on balance sheet items that contribute to the determination of the Net financial position are provided in Note 11.7 below.

Thus, these tables differ from the balance sheet contained in the mandatory financial statement tables, which were prepared by breaking down the current and non-current portions of assets and liabilities.

The item Equity investments and other financial assets includes assets recognised in the consolidated balance sheet under Equity investments in associated and jointly-controlled companies and Other financial assets (with the latter limited to equity investments and non- current financial receivables, excluding financial assets linked to hedging derivatives, which are included in the item Net Working Capital and Other Assets/Liabilities).

The item Net working capital and other assets and liabilities includes current assets (with the exclusion of cash and cash equivalents and current financial assets included in the Net financial position), deferred tax assets and liabilities, non-current assets held for sale, provisions for risks and charges, payables to suppliers and taxation payables.

(EUR million)

Balance Sheet Summary 31/12/2010 31/12/2009 Film and television rights 2,396.7 2,598.0 Goodwill and differences arising from consolidation 1,043.9 512.4 Other tangible and intangible non current assets 1,027.1 956.8 Equity investments and other financial assets 626.3 233.8 Net working capital and other assets/(liabilities) 28.7 (110.3) Post-employment benefit plans (97.5) (100.4) Net invested capital 5,025.2 4,090.3 Group shareholders' equity 2,617.7 2,331.8 Minority interests 817.3 206.5 Total Shareholders' equity 3,435.0 2,538.3 Net financial position 1,590.2 1,552.0

The details of the balance sheets for the two geographical areas, Italy and Spain, are reported separately for the periods under review.

It should be noted that the balance sheet related to Italian operations includes - under Equity investments and other financial assets - the book value of the controlling interest held in Gestevision Telecinco and the 25% stake held in Mediacinco Cartera, the company holding the 33% equity investment in Edam Acquisition, which is fully consolidated by Telecinco, which holds a controlling interest (75%). These equity investments are then eliminated during the consolidation process. As a result, the Group's shareholders' equity for Italian operations includes dividends received from Telecinco, which, for reporting clarity, are not indicated in the Income Statement by geographical area.

63 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations As previously reported, following the execution of the acquisition transactions finalised by Gestevision Telecinco on 29 December 2010, the consolidated balance sheet at 31 December incorporates the consolidation of assets and liabilities of the Sogecuatro group, which resulted in (as subsequently detailed in Note 4 of the consolidated financial statements) the provisional recording of goodwill equal to 537.1 million Euros and the recording of the 22% equity investment in Digital Plus for a total amount of EUR 488 million .

(EUR million)

Balance Sheet Summary (geographical breakdown) Italy Spain 31/12/2010 31/12/2009 31/12/2010 31/12/2009 Film and television rights 2,174.2 2,419.1 222.5 178.9 Goodwill and differences arising from consolidation 143.6 149.3 537.1 - Other tangible and intangible non current assets 929.9 888.6 97.2 68.1 Equity investments and other financial assets 973.7 714.6 557.8 168.7 Net working capital and other assets/(liabilities) 39.3 (142.2) (10.4) 31.9 Post-employment benefit plans (97.5) (100.4) - - Net invested capital 4,163.2 3,929.0 1,404.2 447.6 Group shareholders' equity 2,600.0 2,471.2 1,412.6 296.8 Minority interests 1.1 61.8 (36.5) (5.2) Total Shareholders' equity 2,601.1 2,533.0 1,376.1 291.6 Net financial position 1,562.2 1,396.0 28.1 156.0

The table below presents the Group's balance sheet at 31 December 2010 broken down in order to indicate the effects noted above from the line-by-line consolidation of the equity investments in the Telecinco Group.

(EUR million)

Eliminations/ Mediaset Balance Sheet Summary (geographical breakdown) Italy Spain Adjustments Group Film and television rights 2,174.2 222.5 2,396.7 Goodwill and differences arising from consolidation 143.6 537.1 363.2 1,043.9 Other tangible and intangible non current assets 929.9 97.2 1,027.1 Equity investments and other financial assets 973.7 557.8 (905.2) 626.3 Net working capital and other assets/(liabilities) 39.3 (10.4) - 28.7 Post-employment benefit plans (97.5) (97.5) Net invested capital 4,163.3 1,404.2 (542.1) 5,025.2 Group shareholders' equity 2,600.0 1,412.6 (1,394.8) 2,617.7 Minority interests 1.1 (36.5) 852.7 817.3 Total Shareholders' equity 2,601.1 1,376.1 (542.1) 3,435.0 Net financial debt 1,562.2 28.1 1,590.2

The following table presents the summary cash flow statement by geographical area in order to assess the contribution of financial movements during the two periods. This table is also reclassified as compared to the statement required by IAS 7, which was used to prepare the

64 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations mandatory cash flow statement, highlighting changes in the net financial position, which for the Group is the most significant indicator of the Group's ability to meet its financial obligations.

Specifically, this table shows the contribution of Free Cash Flow separately from the cash flows generated by business combinations, sales or acquisitions of equity investments, and dividends paid and received.

(EUR million)

Mediaset Group - Cash Flow Statement Mediaset Group Italy Spain 2010 2009 2010 2009 2010 2009 Net financial position at the beginning of the year (1,552.0) (1,371.7) (1,396.0) (1,345.8) (156.0) (25.8)

Free Cash Flow 570.6 354.1 374.0 259.0 196.6 95.2 - Cash Flow from operating activities (*) 1,774.3 1,627.2 1,383.8 1,321.7 390.6 305.5 - Investments in fixed assets (932.8) (1,319.4) (777.8) (1,145.1) (155.0) (174.2) - Disposals of fixed assets 5.1 6.5 1.9 2.2 3.2 4.3 - Changes in net working capital and other current assets/liabilities (276.1) 39.8 (233.9) 80.2 (42.2) (40.4)

Change in consolidation area 37.8 26.7 - 26.7 37.8 - (Re-purchases)/Sales of treasury shares - (2.9) - - - (2.9) Share capital issues 243.5 - - - 499.2 - Cash changes generated by equity investments (603.8) (28.0) (301.3) (14.1) (558.2) (13.8) Dividends received 3.6 4.3 27.4 110.1 1.0 1.8 Dividends paid (289.9) (534.6) (266.3) (431.9) (48.4) (210.3) Financial Surplus/Deficit (38.2) (180.3) (166.2) (50.2) 128.0 (130.2) Net financial position at the end of the period (1,590.2) (1,552.0) (1,562.2) (1,396.0) (28.1) (156.0)

(*): Net profit +/- minority interests + amortisations +/- net provisions +/- valuation of investments recorded using the net equity method + changes in valuation reserves - gains/losses on equity investments

The Group generated a total of 570.6 million Euros in free cash flow, which was a substantial improvement due to the sharp increase in operating cash flow reported in both the Group's key geographical areas compared to that generated last year.

The increase in fixed assets highlighted in the cash flow statement is summarised in the table below:

Mediaset Group Italy Spain 2010 2009 2010 2009 2010 2009 Investments in TV and movie rights (749.8) (1,249.5) (624.9) (1,034.8) (124.9) (214.7) Changes in advances on TV rights (31.8) 58.2 (11.8) 12.5 (20.0) 45.7 TV and movie rights: investments and advances (781.6) (1,191.3) (636.7) (1,022.3) (144.9) (169.0) Investments in other fixed assets (151.2) (128.1) (141.1) (122.9) (10.1) (5.2) Total investments in fixed assets (932.8) (1,319.4) (777.8) (1,145.1) (155.0) (174.2)

In 2009, investments in rights in Italy included investments of approximately 435 million Euros for digital terrestrial pay TV rights for the matches of 12 “Serie A” football clubs during the 2010-11 and 2011-12 seasons with a balancing entry under trade payables.

In 2010 the item Equity investments/other financial assets mainly included the outlay of 488 million Euros incurred by Gestevision Telecinco to acquire an equity interest in Digital Plus. This transaction was funded through a capital increase subscribed on a pro-rata basis by shareholders as reported on the line Share capital issues. In addition, 73.6 million Euros were disbursed during the year to cover purchases of portions of the "senior debt" of the Endemol Group, and a payment of 48.3 million Euros was made to cover the purchase of a 25% stake in Med Due. Also, the receivable of 17.1 million Euros from British Telecommunications was

65 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations collected as stipulated by contracts signed in February 2005 in relation to the sale of the equity investment in Albacom.

In 2009, this item included the equivalent value of purchases, totalling 18.2 million Euros, of portions of financial debt of the Endemol Group and the purchase of a 30% stake in Ares Film S.r.l for 6 million Euros.

In 2010 the item Change in consolidation area was for the cash of the Cuatro Group on the acquisition date. For 2009 this item included net financial debt of 36.5 million Euros from multi- theatre cinema management operations which were sold on 30 June, and net outlays of 800,000 Euros connected with the transaction, in addition to a payment of 9 million Euros to Fininvest S.p.A., as a price adjustment for the purchase of the equity investment in Medusa Film, calculated based on the achievement of performance-linked parameters for the 2008 film season, as envisaged by the relevant agreements stipulated in July 2007 upon acquisition.

66 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations ANALYSIS OF RESULTS OF THE PARENT COMPANY

Financial results

Below is the summary income statement compared, with comments, to results for the previous year:

(EUR million)

2010 2009 Total Revenues 5.6 12.4

Personnel expenses 34.4 31.1 Purchases, services, other costs 29.2 23.8 Sundry operating costs 1.5 7.8 Amortisation, depreciation and write dows 0.3 6.1 Impairment losses and reversal of impairment on fixed assets - - Total costs 65.5 68.8

Gain/(Losses) from disposal from non current equity investments - - EBIT (59.9) (56.4) Dividends and other income/(losses) from equity investments 256.2 369.2 Financial income/(losses) 2.0 3.8 Total income/(losses) from financial activities and equity investments 258.2 373.0 EBT 198.3 316.6 Income taxes (14.7) (13.1) Net Gains/(Losses) from discontinued operations - - -- Net Profit/(Loss) for the period 213.0 329.7

Total revenues

Revenues totalling 5.6 million Euros primarily consisted of services performed by the Central Communications and Information Department for subsidiaries totalling 3.6 million Euros. Operating revenues were down by 6.8 million Euros due to the presence, in the previous year, of revenues totalling 6.0 million Euros paid by the parent company Fininvest S.p.A. to settle all mutual obligations related to disputes still covered by the guarantee of 6 June 1996, which expired on 31 December 2002.

Total costs

Costs decreased from 68.8 million Euros in 2009 to 65.5 million Euros in 2010.

Personnel costs, which totalled 34.4 million Euros, were up by 3.3 million Euros over the 2009 figure due to the increase in average staff levels and normal contract-related changes.

Purchases, services and other operating costs rose by 5.4 million Euros as a result of advisory and professional services required following the M&A operations carried out by the subsidiary Gestevision Telecinco.

In 2010 there was a decrease in amortisation, depreciation, write-downs and provisions totalling 5.8 million Euros. This was due to the fact that in 2009 the company posted a provision related to the risk of restitution to the Italian government of government subsidies on the purchase of

67 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations DTT decoders, which was authorised by the European Commission in decision no. C2006- 6634 of 24 January 2007. Appeals are pending on this matter with the European Court of Justice against the first-level court's decision, which confirmed the above decision, and with the Civil Court of Rome against the payment order of the Ministry of Communications of 12 November 2010.

Operating profit

The decrease in operating revenues, which was only partially offset by the decrease in operating costs, resulted in a decrease in operating profit of 3.5 million Euros.

Financial and equity investment operations

In 2010, financial operations generated a profit totalling 258.2 million Euros representing a decrease of 114.8 million Euros from 2009.

This result is mainly made up of two components:

– income from equity investment operations, which primarily includes dividends received from subsidiaries and associates;

– financial income/(charges) related to financial operations consisting mainly of the centralised treasury function carried out by your company to support the operations of subsidiaries.

Dividends and other income/expenses from equity investments

Operating profit from equity investments totalled 256.2 million Euros, a decrease of 113.0 million Euros from 2009 due to lower dividends received from subsidiaries as detailed below:

– R.T.I. S.p.A. lowered the dividend payment from 269.2 million Euros distributed in 2009 to 192.3 million Euros distributed in 2010;

– Publitalia '80 S.p.A. distributed a dividend of 64.0 million Euros in 2010 compared to 82.0 million Euros in 2009.

Mediaset Investment S.a.r.l. did not distribute dividends compared to 490.0 million Euros for the previous year, of which only 18.0 million Euros was posted directly to the income statement.

During the year, the equity investment in International Media Services L.T.D., which is in liquidation, was completely written down in the amount of 80,000 Euros.

Financial income/(charges)

Financial operations consist of interest and other financial income/(charges) and totalled 2.0 million Euros in 2010, which was a decrease of 1.8 million Euros from 2009 as detailed below.

68 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations The Holding Company's Finance Department provides a centralised financial asset management service through existing current account relationships with the Italian subsidiaries. The primary results of this service are included in the items described below: income and charges related to subsidiaries, associates and joint ventures: this includes accrued interest income and expense on the intra-group current account referenced above; income dropped from 60.0 million Euros in 2009 to 46.1 million Euros in 2010 representing a decrease of 13.9 million Euros, due largely to lower accrued interest on the intra-group current account resulting from a decline in reference rates, while charges totalled 2.0 million Euros, a decline of EUR 0.9 million compared to the previous year. In addition, this item included the interests recognized on the short-term loan to Mediaset Investment S.a.r.l for a total amount of 10.5 million, the unrealised net loss of 2.8 million Euros from the fair value measurement of Telecinco shares held for trading purposes until 30 November 2010, as well as dividends collected from the indirect subsidiary Gestevision Telecinco S.A. totalling EUR 0,2 million; income and charges related to others: interest and other financial income/(charges) related to others recorded a negative trend by augmenting the negative balance from from 28.2 milllions in 2009 to EUR 29.0 million in 2010. This item included interest paid on short-term loans of 3.6 million Euros to credit institutions, interest expense on medium- and long-term loans totalling 2.8 million Euros, IRR interest of 4.5 million Euros and charges on rate hedging derivatives totalling 4.8 million Euros. Lastly, this entry also includes interest expense accrued at year-end on the bond issued on 1 February 2010 with nominal value of 300 million Euros, annual gross fixed interest rate of 5% payable on 1 February each year and a term of 7 years; net profit from foreign exchange operations: this item mainly includes the profit from hedging foreign exchange risk, and at the end of 2010, it was essentially a break-even position.

Earnings before taxes and income taxes

EBT totalled 198.3 million Euros, a decrease of 118.3 million Euros from the previous year.

The positive tax figure of 14.7 million Euros included proceeds from the IRES tax consolidation scheme of 14.9 million Euros, which was offset by net allocations for advance and deferred taxes applicable to the period of 200,000 Euros.

Net profit for the year

Net profit for the year totalled 213.0 million Euros, a decline of 116.7 million Euros from the 329.7 million Euros reported in 2009.

Balance sheet and financial position

Below is the summary balance sheet, which was reclassified from statements contained in financial statement tables prepared by breaking down the current portion and non-current portion of assets and liabilities, in order to highlight the two major aggregates of Net invested capital and Net financial position (the latter consisting of Cash and other cash equivalents and Other financial assets, and reduced by Gross financial debt and Other current liabilities).

69 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations The item Equity investments and other non-current financial assets includes the balance sheet assets under Equity investments in subsidiaries and other companies, receivables and financial assets. The item Net working capital and other assets/(liabilities) includes current assets (with the exclusion of cash and cash equivalents and current financial assets included in the Net financial position), current provisions for risks and charges, trade payables and taxes payable.

A detailed breakdown of the main components of the net financial position is provided in the appropriate note.

(EUR million)

31/12/2010 31/12/2009

Investments in associates and other non current financial assets 1,848.8 1,836.2 Tangible and intangible assets 4.8 4.9 Advanced/(deferred) tax assets 2.4 3.7 Post-employment benefits plans (4.2) (4.3) Provisions for non current risks and charges (0.3) (0.1) Total non current assets/( liabilities) 1,851.6 1,840.4

Net working capital and other current financial assets/(liabilities) 7.5 29.2 Net invested capital 1,859.1 1,869.6 Total Shareholders' equity 2,657.3 2,689.8 Net financial position 798.3 820.2

Below is a summary of the main changes in the balance sheet at 31 December 2010 as compared to 31 December 2009.

Of the increase of 12.6 million Euros in Equity investments and other non-current financial assets, 1.5 million Euros was due to the portion of stock options accrued during the year that are allocated to the employees of direct and indirect subsidiaries, and 11.2 million Euros was the result of reclassifying the shares of Gestevision Telecinco S.A. held for trading until 30 November 2010 in the item "Equity investments in other companies." The increased value also includes 2.0 million Euros as a subscription of the capital increase, and 1.8 million Euros as an unrealised gain posted to shareholders' equity generated from the year-end fair value measurement (bid price of 8.224 Euros).

The decrease in Tangible assets was due to depreciation for the period.

The changes in Shareholders' equity, which are indicated in detail in the Statement of changes in shareholders' equity in the financial statements, were mainly due to net profit for the year, dividends distributed and changes in the reserve incorporating the balancing entry of the cost of stock option plans for the portion accrued starting in the year of assignment, and the collar reserve to hedge the loan obtained from Mediobanca.

70 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations The following table presents the summary Cash flow statement in order to assess the contribution of financial movements during the two periods. This table is also reclassified as compared to the statement required by IAS 7, which was used to prepare the mandatory cash flow statement, highlighting changes in the Net financial position, which is the most significant indicator of the company's ability to meet its financial obligations.

(EUR million)

31/12/2010 31/12/2009

Net financial position at the beginning of the year 820.2 767.6

Free cash flow (28.5) 114.3 Cash flow from operating activities (63.0) (50.5) - Equity investments and other current financial assets (2.1) (350.0) - Changes in net working capital and other assets/liabilities 36.6 514.8 Dividends received 256.5 370.1 Dividends paid (250.0) (431.8) Financial Surplus/Deficit (22.0) 52.6 Net financial position at the end of the year 798.3 820.2

The Free cash flow of Mediaset S.p.A. was a negative figure of 28.5 million Euros representing a decrease of 142.8 million Euros from the same period in 2009, due largely to the decrease in cash flow from operating activities which was offset by the increase in working capital.

Net financial position

The net financial position, which was a positive figure of 798.3 million Euros at 31 December 2010, was down 21.9 million Euros from the positive balance of 820.2 million Euros at 31 December 2009. This was largely the result of outlays related to the payment of dividends totalling 250.0 million Euros and cash flow absorbed by financial operations. These were offset by fund inflows from the collection of dividends from subsidiaries totalling 256.5 million Euros.

71 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations RECONCILIATION BETWEEN CONSOLIDATED AND PARENT COMPANY NET PROFIT AND SHAREHOLDERS' EQUITY

(CONSOB Communication 6064293 of 27 July 2006)

Shareholders' Net profit Shareholders' Net profit equity at 2010 equity at 2009 31/12/2010 31/12/2009

As per balance sheet and income statement of Mediaset S.p.A. 2,657.3 213.0 2,689.8 329.7

Excess of shareholders'equity, including gross income for the period over book value of investments in subsidiary and affiliated companies 1,024.4 604.4 174.1 545.6

Consolidation adjustments arising from:

Eliminations of unrealised intra-group gains/losses (348.5) (9.8) (338.5) (23.6)

Dividend eliminations - (458.1) - (538.8)

Other consolidation adjustment 101.8 37.2 12.9 (7.6)

Total 3,435.0 386.7 2,538.3 305.2 Profit/(loss) attributable to minority interests (817.3) (34.5) (206.5) (32.8)

As per consolidated financial statements 2,617.7 352.2 2,331.8 272.4

72 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations INFORMATION REGARDING THE MAIN RISKS AND UNCERTAINTIES TO WHICH THE GROUP IS EXPOSED

Mediaset Group Enterprise Risk Management System

As an integral part of its own Internal Controls System in Italy and Spain, the Mediaset Group has implemented a Risk Management model in order to better respond to the risks to which it is structurally exposed.

As defined in the Group’s Corporate Governance Code, the Internal Controls System is “a set of rules, procedures and organisational structures aimed at maintaining, through an adequate process of identification, measurement, management and monitoring of the main risks, a sound and proper corporate management consistent with pre-established objectives. An effective Internal Controls system contributes to ensuring the preservation of the company's assets, the effectiveness and efficiency of corporate operations and transactions, the reliability of financial information and the observance of laws and regulations”.

In 2007, the Board of Directors issued the new guidelines for the Internal Controls System, which identified the methods to apply for the purpose of identification, management, measurement and monitoring of the Group's risks (Enterprise Risk Management). Such guidelines were implemented through the definition of a number of operating rules suitable for the identification and regulation of the activities, responsibilities and information flows necessary to manage risks (“Internal Controls System Policy”).

Management and Top Management based the risk identification and evaluation process on a self-assessment of risk. The considerations brought up by the Group’s Management and Top Management highlight that enterprise risks on the whole have been adequately controlled and managed thus far. In recent years, the Group has exhibited a propensity and ability to progressively adjust the strategic and process-linked risk control criteria in relation to both the evolution of the competitive environment and the growth opportunities emerging in the market by managing enterprise, structural and general economic risk.

Main risk factors and uncertainties

A number of potential risk factors and uncertainties impact the Mediaset Group’s pursuit of strategic objectives, as well as its economic and financial position. These are grouped into the following categories:

External and sector-specific risks: these are primarily related to the changing economic cycle, development of intermediate and final reference markets (relating to consumer demand for audiovisual and entertainment product content and the demand for advertising space) and changes in the regulatory and legislative environment;

Risks connected with the implementation of the strategic guidelines and policies (reputation, management of partnerships and alliances) and management of the main operating processes linked to the management, and also the development, of the technical, logistical and publishing conditions under which the factors of production and the strategic assets (managerial resources, content and distribution network) used in

73 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations the typical activities of television production and broadcasting, are coordinated and managed;

Financial risks connected with the management of the requirements and fluctuations of interest and exchange rates;

Risks connected with the management of legal disputes;

Risks connected with environmental policy;

Risks connected with Governance.

A description of the nature of each of the main sources of risk and uncertainty is provided below, along with the risk management and mitigation measures implemented by management.

External and sector-specific risks

Risks related to trends in the economic cycle

The core activities of the Mediaset Group largely depend on trends in advertising investments, a structurally cyclical sector that is closely linked, albeit with differences among the various business segments, to the general economic scenario and development of the final markets in which customer companies operate. The decline in development and growth prospects for the economy, especially in Italy and Spain, the markets in which the Group’s television operations are currently based, can therefore lead to a reduction in the Group’s advertising revenues and in operating margins over the short term. In fact, both Italy and Spain are among Europe’s best- ranking countries in terms of potential growth of the television advertising market, measured as the ratio of advertising investment to gross domestic product.

Mediaset has already demonstrated, in the recent past, its ability to handle phases of cyclical slowdowns, although less intense and probably shorter than the current crisis. During such periods, the Group has pursued a policy aimed at enhancing its capabilities, taking advantage of the traditional trend in advertising investments to concentrate on generalist television during difficult periods, in order to ensure greater visibility in the mass market. In the past, these factors have enabled the Group to consolidate its competitive advantages, by better exploiting the growth opportunities upon recovery of the economic cycle and protecting profitability over the long term.

However, the Group's operating results over the two-year period of 2008-2009 were inevitably negatively affected by the prolonged global recession, and it is likely that the economic environment taking shape in 2010, which is still uncertain and characterised by low growth rates, will probably continue to affect future prospects in the advertising market in the Group's two key geographical areas.

In the current economic scenario, the Mediaset Group is concentrating its efforts in Italy and Spain on effectively counteracting the current uncertainty regarding the possible evolution of

74 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations the advertising market in the short term, with the objective of consolidating its leadership both in terms of advertising market share and publishing results in relation to the relevant commercial targets while maintaining a policy of placing a heavy emphasis on television costs without sacrificing innovation and continuity in programme schedules. In Italy, optimisation and efficiency-oriented actions will continue to guarantee the necessary resources for the execution, including in a “counter-cyclical” manner, of the development strategy established for pay TV activities, a segment that is still projected to experience strong growth in future years.

For more detailed information regarding the analysis of the general trend in the economy and of the main economic and financial indicators for 2010, reference should be made to the comments included in the preceding section of this document under “The general economic situation”.

Risks related to the evolution of the media & communications market

Technological changes, audience fragmentation and increased competition

In recent years, the television sector has been impacted by a structural transformation primarily triggered by the introduction of digital technology.

The main market trends that are currently shaping the new dynamics of competition can be summarised as follows:

Technological advances have progressively changed content use, favouring the introduction of interactive/on-demand media and particularly accelerating the migration of younger viewers towards more “customised” options.

The demand for entertainment products continues to grow both in relation to traditional media as well as the new platforms.

With regard to commercial generalist television, the convergence between distribution platforms has given rise to development opportunities (multi-channel offers and pay TV), but also to potential threats concerning audience fragmentation and an increased number of total platforms available for the exploitation of television content (satellite, internet, mobile, etc.), leading to a more complex competitive scenario.

The increase in the number of distribution platforms has also raised the value of publishing content, strengthening the competitive edge of “traditional” operators, which have the know-how for content design, development and packaging, as well as for the development of programme schedules.

Specifically, the Italian market is characterised by high growth potential in the specific segment of pay television, due to an apparently still uncalculated demand for low cost Premium content. In the Spanish competitive environment, the segment of generalist television, which has, in recent years, been characterised by an increased number of players, which has resulted in an acceleration of the phenomena of audience fragmentation and competition on premium content in 2011, will move toward greater concentration mainly due to the integration of Cuatro's operations into Telecinco as a result of the transaction completed in December 2010.

75 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations Thus, the environment just described could lead to the risk of a possible lower interest in so- called generalist non-encrypted television on the part of the television audience, which has become more discriminating and demanding due to new means of communication, and as a result, the Group runs the risk of not adequately managing opportunities derived from emerging businesses.

Mediaset’s strategic approach to the main risk generated by these competitive forces is to focus on a business model that leverages a high level of vertical integration (content, packaging and distribution), as well as the opportunities offered by multi-channel television, facilitated by the development of digital terrestrial technology. This allows it to maintain, through the highly- rated, free-to-air generalist and theme-based channels, closer monitoring of the audience and, through a model mainly based on pay TV offerings, closer monitoring of the highly fragmented audience. In this context, Mediaset was the first generalist broadcaster to penetrate the pay TV market and explore the sectors of new platforms (DTT, DVB-H) and business models (PPV).

The transaction completed in Spain by the subsidiary Telecinco (full acquisition of Cuatro and equity investment in Digital Plus) is a part of the strategy of strengthening the multi-channel generalist strategy and integrated free TV and pay TV offerings in keeping with market opportunities in both geographical areas covered by the Group.

In implementing this strategy, Mediaset benefits from a competitive edge consisting of its deep- seated culture acquired in the generalist television business. In fact, the Group has access to highly skilled resources with extensive expertise in the various segments of free TV business. These capabilities represent strength in supporting the traditional business, as well as in developing new business models that optimise synergies in the different fields. Moreover, the group is aware of the importance of acquiring new professionals from the market to strengthen its internal capabilities in order to service the most innovative areas with a high growth potential.

Inadequate control of the content market

An additional element characterising the evolution of the media & communication sector is the increased value acquired by content. In order to take advantage of this development, the Group is making considerable investments to acquire content.

Mediaset and its subsidiary RTI own Italy’s - as well as one of Europe’s - most important libraries of television rights, thanks to multi-year contracts entered into with major US producers, such as Universal, Twentieth Century Fox, DreamWorks, Sony Columbia and Warner Bros. International, and independent US and European producers (TV movies, soap operas, miniseries and serials), ensuring that the requirements of the Group’s free and pay businesses are met.

The Mediaset Group has also made key acquisitions of leading content production houses (33% of Endemol, the worldwide leader in the design and marketing of entertainment content, and a majority interest in Medusa Film and TaoDue, two leading Italian operators in the production and distribution of films and TV dramas, respectively) and has entered into important commercial agreements that allow the Group to rely on the availability of film products (Warner and Universal), entertainment products for children (Disney) and sports events (rights

76 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations to the “Serie A” Football Championship Games until the 2011-2012 season for the most important Italian football clubs and rights to the Champions League until the 2011-2012 season) to boost the Premium channel offerings.

Control of the risks associated with content market monitoring also translates into an increased emphasis on content produced in markets that are continuously monitored to identify innovative content.

Risks related to the evolution of the advertising market

Television advertising sales still represent the main source of revenue for the Group, despite the introduction of pay TV activities and the development of diversification initiatives (sale of multi-platform content, teleshopping and film distribution) in recent years.

Though preserving significant growth margins, the advertising sales market is currently suffering from limited visibility, is subject to shorter economic cycles and is extremely sensitive to the general economic situation.

However, the free-to-air generalist television model is expected to continue as the main mass- market communication tool during upcoming years, although it will increasingly target specific audience segments.

Mediaset operates in the Italian and Spanish markets through its exclusive internal licensed distributors Publitalia ‘80 and Publiespana, which have consolidated their leadership over the years by developing management models able to promptly respond to the changing needs of investors and to market changes, attracting new investors and designing commercial policies centred on the optimisation of their capacity, as television publisher, to segment the most attractive targets from a commercial viewpoint and maximise the exploitation of advertising space in the relevant programme schedules.

As an extension of this know-how, by creating specialised licensed distributors Digitalia ‘08 and Publimedia Gestion in Spain, the Group also controls advertising sales on other media developed by the Group (free and pay digital channels, Internet).

Data on the market shares held by the Group’s licensed distributors in their respective reference advertising markets are specified in the relevant sections included in this Report, dedicated to the analysis of Group activities. Data on the customer base are instead specified in the section of the Explanatory Notes to the financial statements dedicated to the management of financial risks.

Risks related to regulatory changes

The Mediaset Group operates in various business that may imply risk in relation to its core business due to the introduction of regulatory changes or non-compliance with the regulations

77 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations governing the television sector, including advertising, communication and the management of radio-electrical space and equipment.

Therefore, the regulatory risks for the Group mainly refer to possible restrictions on the performance of its activities, with particular reference to the regulations on total time/inserts/interruptions as regards advertising, regulations on the protection of minors, unfair competition, the protection of pluralism and equal opportunities, with the consequent economic damages (administrative sanctions) and/or damage to image, and uncertainties related to the transition to television broadcasts using digital technology (switch off).

The different production and management processes, the many players involved in each, the complexity and extensive number of regulations applicable to the different processes, as well as the different possible interpretations of the same regulations make it necessary, in order to limit risks, to monitor regulatory and legislative changes and operational compliance with the regulations.

The overall identification, dissemination and operational monitoring activities can be considered to be well-established and effective in monitoring the risk of non-compliance with the applicable regulations, including as a result of specifically designated corporate functions.

Despite the effectiveness of monitoring activities, elements and situations could still emerge which are not controllable or for which the effects on Group activities or public impact may be difficult to predict.

For more detailed information regarding the regulatory and legislative framework and, specifically, the regulatory amendments/supplements introduced in 2010, reference should be made to the comments included in the preceding section of this document under “Development of the regulatory framework in the television industry”.

Risks related to the implementation of strategies and the main operating processes

Reputation and relationship with stakeholders

One of the key strategic objectives of the Mediaset Group is the ability to maintain and increase content innovation and brand value perception over time, consistently with development of the business model.

With regard to this objective, there exists a risk of defining publishing and communications strategies and initiatives for the financial market and public opinion that have a negative impact on the perception of the Mediaset brand.

The risk of developing publishing and communications initiatives that could have a negative impact on the Mediaset brand is primarily monitored through a constant focus on certain elements and processes. Specifically:

78 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations Programme scheduling is monitored through a daily analysis of television viewers’ behaviour, both in terms of audience share and rating of the programmes broadcast, and, consequently, of viewers’ perception of the editorial orientation adopted by the Networks, as well as through ongoing actions to ensure the protection and respect of minors and attention to socially sensitive topics (for more detailed information on these activities, reference should be made to the next section in this Report);

The communication processes with respect to the financial market and public opinion;

The production processes and the related ability to generate high-quality/innovative products.

Risks related to the policy regarding the establishment of partnerships and alliances

Historically, the Group has pursued a strategy of external growth based on a policy centred on the establishment of highly targeted partnerships and alliances, with the objective of ensuring the compatibility of business integration and/or internationalisation opportunities identified vis- à-vis the return targets of the initial investment. This type of transaction naturally exposes the Group to risks regarding the issuance of authorisations, the implementation of the underlying business models and business projects and the risk of changes in the political and regulatory scenario in sectors and/or geographical areas other than the usual ones, involving a deterioration of the know-how of participants in partnerships and alliances, and thus entailing a possible risk of loss in value of the investments made.

Risks related to business discontinuance

For an integrated television Group, the risk of business discontinuance mainly refers to the categories described below:

Risk that the network infrastructure is not adequate to ensure the level of service in terms of availability;

Risk of a partial coverage failure in the area resulting from a lack of international coordination in the transition to digital technology.

The signal transport and distribution network of the Mediaset Group is owned by subsidiary Elettronica Industriale, which covers 96% of the Italian population with 1,700 technological towers. The company has also obtained from competent authorities the licence of network operator for digital multiplexes on terrestrial frequencies and has stipulated agreements in relation to the DVB-H technology-based broadcasting capacity offerings.

Based on corporate practices, signal transport and distribution systems must meet specific requirements in terms of high availability levels using equipment that ensures a high level of reliability (high availability or Fault Tolerance systems). Moreover, the main signal distribution systems also include backup systems.

79 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations The process regarding the design of the network infrastructure is well-established and based on an architecture that uses various alternative resources (radio bridge network, satellite, fibre optics), ensuring, in this way, increased security in signal transport and an ideal infrastructure in terms of reliability.

In addition, corporate practices provide for constant monitoring by each local station in order to guarantee the quality and availability of the television signal, with remote 24-hour monitoring for the main stations, while the others are monitored 19 hours out of 24. The signal control Station (MCR) located in Cologno Monzese also carries out specific controls based on reports by third party customers leasing the network.

Lastly, corporate operating procedures require preventive maintenance actions, which are periodically performed on the equipment.

The second type of risk indicated above refers to the obligation established in Italy to have the transition to digital technology completed by 2012. Mediaset, through its subsidiary Elettronica Industriale, plays a fundamental role in this conversion process, having made investments since 2003 in the development of the transport infrastructure that supports digital technology (Multiplex).

The switch-off to digital has been planned according to a gradual regional transition schedule, with the ultimate objective of completing it within the pre-established deadline of 2012.

DGTVi, the association grouping all Italian free-to-air broadcasters, local television federations and RTI, has played an important role in the promotion and dissemination of digital terrestrial technology in Italy.

For more detailed information regarding the data on national digital terrestrial distribution and coverage, timing and the implementation criteria for the switch-off process, reference should be made to the appropriate section of this report dedicated to the description of the Group’s activities.

Financial risks

The high level of free cash flow resulting from the core television business in both Italy and in Spain, though increasingly subject to the inevitable ups and downs of the advertising market, has historically enabled the Mediaset Group to rely primarily on its own resources and manage its own growth strategy, both internally and externally, with limited use of debt instruments, thus preserving its financial strength.

The Group’s consolidated net debt is, in fact, significantly lower than the average debt of its European competitors, measured in relation to the traditional parameters for such risk (net financial debt/EBITDA, net financial debt/net equity).

The structure of the Group’s consolidated net debt shows a significant predominance of medium/long-term loans and committed credit lines, with 15% of these falling due within the next 12 months. The Group will cover these through its free cash flow, by requesting the

80 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations renewal of the same lines coming to maturity and through the availability of financial instruments which can be readily converted into liquidity (trade receivables and treasury shares).

Thus, the Group's current financial debt does not represent a special risk factor in the current financial market environment. The Group will assess the need to request new lines of credit in order to ensure that average financial exposure is not greater than 2/3 of the total amount currently provided by lenders as required by the Group's liquidity risk policy.

The presence of variable rate debt and the acquisition of television and film rights in currencies other than the euro (mainly the US dollar) clearly expose the Group to risks related to fluctuations in interest and exchange rates. In accordance with its financial risk management policies, the Group, through derivative contracts entered into with third parties, has adopted a management approach for such risks, aimed at eliminating the effect of the exchange rate fluctuations by establishing in advance the value at which such rights will be recognised once acquired, and pre-establishing or limiting the free cash flow differences due to market changes in interest rates on medium/long-term debt.

More detailed information regarding financial risk management policies, including those relative to sensitivity analyses on exchange rates and interest rates can be found in the specific section of the Explanatory Notes in the Group’s Consolidated Financial Statements under “Additional disclosures about financial instruments and risk management policies”.

Risks connected with the management of legal disputes

Due to the nature of its business, the Group is subject to the risk of legal litigation in the performance of its activities. In view of current obligations relating to past events of a legal or contractual nature or deriving from statements or actions taken by the company that could give rise to well-founded expectations by third parties that the company is responsible for or has to accept responsibility vis-à-vis the fulfilment of any obligation, the Group has made appropriate allocations to risk provisions, recognised under liabilities in the Group’s financial statements.

For more detailed information regarding the main legal disputes that are currently pending, reference should be made to the comments included in the specific section of the Explanatory Notes.

Risks connected with environmental policy

The Group must comply with a number of norms and regulations on environmental protection, the most relevant of which primarily govern electromagnetic fields and the Group’s development and management of television signal broadcasting networks in Italy.

In Italy, exposure to electrical, magnetic and electromagnetic fields is governed by Italian Framework Law no.36 of 2001 and Italian Presidential Decree of the Council of Ministers of 8/7/2003, which establish exposure thresholds for fields and equipment that generate electrical,

81 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations magnetic and electromagnetic fields with a frequency ranging between 100 kHz and 300 GHz, as shown in the table below:

Electric field Magnetic field Power density strength strength E (V/m) H (A/m) D (W/m2) Exposure limit1 20 0.05 1

Attention value2 6 0.016 0.10

3 Quality target 6 0.016 0.10

Exposure limit: this is the value of the electrical, magnetic and electromagnetic field, regarded as the value of reference, defined for the purpose of protecting human health from severe damage, which should not be exceeded under any condition of exposure of the population and workers.

Attention value: this is the value of the electrical, magnetic and electromagnetic field, regarded as the value of reference, which should not be exceeded in residential areas, schools and places of extended stay.

Quality goals are as follows:

Location criteria, urban-planning standards, requirements and incentives for the use of the best available technologies, as indicated in regional laws;

The electrical, magnetic and electromagnetic field values, defined by the government for the purpose of progressive mitigation of exposure to such fields.

Despite extensive concerns linked to the effects of electromagnetic fields, the World Health Organisation and all the latest updates of the scientific literature have concluded that current evidence is not sufficient to prove any health damage deriving from exposure to weak electromagnetic fields. Thus, compliance with the exposure thresholds recommended by domestic and international guidelines makes it possible to monitor the risks of exposure to electromagnetic fields, which may be harmful to human health.

Moreover, the thresholds under Italian regulations are up to 100 times lower than those defined by ICNIRP (International Commission on Non-Ionising Radiation Protection) and applied in the rest of Europe.

The critical factors regarding compliance with legal limits include the following:

The need to emit high power levels;

The difficulty of erecting tall towers for the installation of transmission antennas;

82 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations The proximity of residential properties to the station or the issuance by Municipalities of new permits for the construction of residential units close to the plants;

The presence on the same site of other broadcasters (specifically radio broadcasters), who frequently operate equipment that does not comply with their concessions, exceeding the limits on the total emissions generated.

Mediaset plants are designed, developed and managed in compliance with Italian law. In accordance with the Group’s operating practices, all the necessary measures are taken during the design stage of new sites or modification of existing ones in order to keep electromagnetic pollution within the parameters established by the regulations in force, including:

The construction of tall towers for transmission antennas in order to keep them as far as possible from areas accessible to the population;

Improved orientation of transmission antennas in order to use less power and minimise the portion of emissions detectable at ground level (area accessible to the population);

Identification, where possible, of installation sites far from residential areas;

Submission of the project for the preventive assessment and authorisation of local authorities and Regional Agencies for Environmental Protection, as established by the Code of Electronic Communications (Legislative Decree 259/03).

In addition, specific corporate areas are responsible for mapping plants that risk electromagnetic pollution and for the definition of monitoring plans through the use of internal and external resources (certified external advisors).

Risks connected with Governance

The typical Governance-related risks, such as the risk of non-compliance with the laws and regulations, improper assignment of powers and authorities, and inappropriate remuneration policies, are mitigated by implementation of a strong system of Corporate Governance.

In fact, since the year 2000, Mediaset has implemented the provisions set out in the Corporate Governance Code for Listed Companies and has continued to bring its own Corporate Governance system over time in line with the relative domestic and international best practices, the recommendations of the Corporate Governance Code of Borsa Italiana and the regulatory provisions on this matter. For more detailed information on the Group’s organisational structure and Corporate Governance, reference should be made to the Annual Report on Corporate Governance and the Ownership Structure, included in Mediaset S.p.A.’s financial statements.

83 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations HUMAN RESOURCES

In a constantly changing competitive environment, the Mediaset Group pays particular attention to its internal human resources, who play a fundamental role in interpreting and implementing the changes necessary to maintain its competitive advantage and market leadership.

The human resources management and development activities and support programmes implemented by the company in recent years are aimed at enhancing the value of "human capital" by harmoniously combining workers' personal values and expectations of well-being with the corporate culture and values.

The corporate goal is to develop individuals and their capabilities and skills, and recognise their merits and responsibilities making no distinction for gender, category or corporate level. In this context, the management of processes and tools is aimed at ensuring the proper assessment of human resources from the time they are selected, the constant monitoring of employees during their development in the Group and planned professional and managerial training aimed at developing the company's unique attributes.

Staff composition

At 31 December 2010, the Mediaset Group had a total of 6,285 employees, an increase of 451 employees over the level of 5,834 employees at 31 December 2009, mainly due to the acquisition (made on 28 December 2010) of Cuatro by the subsidiary Gestevision Telecinco.

Number of employees (including temporary staff) ITALY SPAIN 31/12/2010 31/12/2009 31/12/2010 31/12/2009 Managers 354 347 126 98 Journalists 368 356 208 120 Middle managers 891 836 118 72 Office workers 3,087 3,184 1,102 794 Industry workers 4 4 27 23 Total 4,704 4,727 1,581 1,107

Average workforce (including temporary staff) ITALY SPAIN 2010 2009 2010 2009 Managers 351 349 100 100 Journalists 361 368 118 120 Middle managers 864 844 75 74 Office workers 3,114 3,393 787 822 Industry workers 3 3 23 23 Total 4,693 4,957 1,103 1,139

It should be considered that workforce related to the Italian geographical area include in 2010 4,675 employees (4,700 in 2009) pertaining to Group’s companies operating on the Italian area (4,587 of which – 4,622 in 2009 - had a indefinite-term contract), 26 employees mainly concentrated on London headquarters in charge at Publieurope Ltd., as well as 3 employees in charge at Mediaset Investment Sarl in Luxembourg.

84 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations Human resources are distributed throughout Italy with a significant concentration in the Milan area where 68% of staff is employed at offices in Cologno Monzese, Segrate and Lissone.

ITALY: staff breakdown by geographical distribution 2010 % 2009 % (not including temporary staff) Milan 3,122 68.1% 3,119 67.5% Rome 966 21.1% 1,004 21.7% Other 499 10.9% 499 10.8% Total 4,587 100.0% 4,622 100.0%

Age and seniority

The average age and seniority demonstrate the company’s commitment to encouraging human resource loyalty and its focus on retaining people with skills that have been progressively enhanced over time, particularly for jobs in which skill level depends heavily on experience.

ITALY: Staff Breakdown by average age 2010 2009 (not including temporary staff) years years Executives 50 50 Journalists 46 46 Middle managers 46 46 Employees 44 44 Industry workers 37 36 Total 45 44

ITALY: staff breakdown by year range 2010 % 2009 % (not including temporary staff) since 30 years old 218 4.8% 226 4.9% between 30 and 45 years old 1,840 40.1% 2,005 43.4% more than 45 years old 2,529 55.1% 2,391 51.7% Total 4,587 100.0% 4,622 100.0%

ITALY: Staff Breakdown by average seniority 2010 2009 (not including temporary staff) years years Executives 19 18 Journalists 13 12 Middle managers 17 17 Employees 18 16 Industry workers 13 12 Total 17 17

85 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations Equal opportunity

The Group also places the same emphasis on equal opportunities, as confirmed by the large number of women at all levels of responsibility, accounting for 43% of the total number of employees.

ITALY: Staff Breakdown by role and gender 2010 2009 male female % male female % Executives 272 77 22% 270 72 21% Journalists 190 149 44% 184 150 45% Middle managers 477 408 46% 456 374 45% Employees 1,653 1,359 45% 1,678 1,436 46% Industry workers 2 - 0% 2 - 0% Total 2,594 1,993 43% 2,590 2,032 44%

In Spain Telecinco’s resources in charge of television production are mainly concentrated in Madrid. Publiespana’s personnel also operate from the offices located in Barcelona, Alicante, Seville and Bilbao.

The geographical distribution of personnel is as follows:

SPAIN: staff breakdown by geographical distribution 31/12/2010 % 31/12/2009 % Madrid 1,069 96.8% 1,095 96.1% Barcellona 24 2.2% 24 2.1% Other 11 1.0% 21 1.8% Total 1,104 100.0% 1,139 100.0%

The average age and seniority of Telecinco Group employees show a young and dynamic trend. Employee loyalty is very high.

SPAIN: Staff Breakdown by average age and seniority Average Average Age Seniority Executives 44 12 Journalists 37 8 Middle managers 42 13 Employees 40 13 Industry worker 38 7 Total 40 12

Human resources represent one of the key success factors of the Telecinco Group. Consequently, in 2010, the group continued its policy of enhancing individuals promoted from within for the creation and production of television content. Training programmes aimed at developing creative and managerial skills and improving IT knowledge, as well as foreign language courses and courses on the use of new technology and risk prevention in the workplace have been implemented, in addition to support for individual initiatives. The

86 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations numbers confirm the equal opportunity policy in place within the Telecinco Group for 2010 as well, which is in line with the approach adopted in Italy within the Mediaset Group. The company has a significant presence of women at all levels of responsibility.

SPAIN: Staff Breakdown by role and gender 2010 2009 male female % male female % Executives 69 31 31% 70 30 30% Journalists 47 72 61% 47 73 61% Middle managers 34 42 55% 29 45 61% Employees 421 365 46% 440 382 47% Industry worker 21 2 9% 21 2 9% Total 592 512 46% 607 532 47%

Selection and recruitment

In 2010, the Group continued to invest in strengthening the company’s capabilities by hiring key resources to increase the level of expertise in certain areas linked to new business.

The Mediaset Group pays constant attention to recruitment activities, in order to ensure the selection of qualified personnel possessing the skills, attitudes and motivation that are essential to the corporate production environment and to facilitate the internal professional growth process.

The Group has always enjoyed high visibility and attraction power, as demonstrated by the number of unsolicited résumés received, which is steadily rising and, during 2010, amounted to approximately 42,000, in both paper and electronic form.

Over 850 individuals were interviewed in 2010 for specific jobs and to fill internship positions.

The company's steady and ongoing collaboration with Italy's leading universities has allowed a growing number of young people to apply for internships within the company: in 2010, some 200 employees were offered the opportunity to gain professional experience through an internship with an average duration of approximately 4 months.

Training programmes

In 2010, the Group continued to invest in both ordinary and structured training programmes, and new initiatives were launched.

Specifically, the Group continued to invest in managerial development, with training dedicated to the various segments of the company, such as:

Young employees: the Group continued its activities under the three-year plan targeting university graduates and the Young Employee Development project, which is a specific training programme dedicated to a select group of employees for whom experimental teaching methodologies were implemented using a workshop approach.

Middle management: the conference programme for company middle managers continued with a focus on the issue of Convergence, in addition to the seminars of the Academy project, dedicated to a select group of junior managers with a focus on public speaking and leadership in 2010;

87 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations Executives: the Scenari Paralleli conferences were held to encourage executives to think about social values, emerging lifestyles and economic and financial scenarios. Managerial training continued with an emphasis on personal development, leadership, economic and financial measurements and corporate strategy. Also in 2010, training programmes were enhanced with participation in an inter-company training programme with an extensive schedule of seminars, conferences and workshops on management-related topics, and with an experimental new training course on the engagement of individuals.

In terms of professional and technical training, investment in individual areas and professional groups continued. Key projects included the following: the launch of training for all News area staff (production staff and journalists) on the new Dalet Plus system; training on Final Cut, the software used for audio and video editing, for the technical staff of Videotime Production Centres; the conclusion of the training project dedicated to Videotime production staff with a focus on developing critical skills for their positions, and understanding production routines; continued specific technical training on equipment and adopted technologies such as HD Dolby and Harmonic's Headend. In addition, language training is provided in several ways: individual and group courses and e-learning.

In terms of the legal compliance area, there was a significant increase due to training on Legislative Decree 231/01 in the classroom for executives, middle managers and staff employed in critical processes, and using e-learning methods with a course dedicated to all the company's employees. Considerable emphasis was also placed on the training required by Legislative Decree 81/08 on Safety in the Workplace that involved executives with delegated powers and supervisors.

In 2010, the use of resources from the Fondi Paritetici Interprofessionali (Inter-professional Joint Funds): Fondimpresa for the training of managers and employees and Fondirigenti for executives continued in a structural manner, in order to partially finance employee training programmes.

The following specific initiatives were developed for employees of the licensed distributors (Publitalia ’80 and Digitalia ’08):

Training to develop and refine the relational skills necessary for sales activities;

Targeted initiatives aimed at developing and improving personal and management skills and professional expertise with continual updating on management and administrative issues;

Interdisciplinary workshops for executives, with the objective of providing in-depth information and incentives to analyse existing trends in the economic and television areas.

88 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations The main initiatives implemented in 2010 are highlighted below:

Training Hours 2010 Managerial 13,125 Professional 14,235 Fulfilments 5,321 On-line training 5,191 Languages 2,140 Total 40,011

Initiatives for non-employees

Training for non-employees continued in 2010, aimed at developing skills related to the world of commercial television.

Specifically:

Campus Multimedia In.Formazione:

Campus Multimedia In.Formazione is a consortium established in June 2004 as a joint initiative of the Mediaset Group and the “Libera Università di Lingue e Comunicazione IULM” University, representing the founders, with the objective of creating a centre of excellence for university and post-university training and research in the context of Communications, Media, the Digital Economy and Technologies.

All the activities are characterised by the specific integration of university training, applied research and quality enterprise.

Multimedia, communications and economic subjects represent the pillars upon which the masters of the Campus are based.

Learning programme for 2010:

Masters programme in Journalism: a training course for professional journalists, combining the capabilities of IULM University and Mediaset in communications and information. Recognised by the Italian National Council of the Register of Journalists in lieu of apprenticeship, the objective of this masters programme is to provide junior journalists with professional knowledge of cultural and multimedia information, enabling them to access any specialisation in journalism and produce content suitable for the various communication platforms. The course, which is limited to 15 students, lasts two years and comprises classes and workshops, including a multimedia-training programme. The technological workshop organised and managed by the Consortium, using professionals made available by Mediaset is an outstanding, unique component in the array of Italian schools of journalism;

Masters in Management Multimediale (MiMM): this is a one-year masters programme reserved for 20 students, with bachelor’s degrees in any discipline, designed to train managers to work in multimedia companies, a job requiring the mastering of many

89 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations skills. The course uses a multidisciplinary and operational approach; strategic, organisational, marketing, finance, administrative and control skills are integrated with in-depth concepts in the area of technological innovation, communications and law. In addition, exercises, research workshops and company testimonials allow students to apply the interdisciplinary skills learned to specific problems with an emphasis on the development of analytical and decision-making capabilities. Sponsoring companies in 2010 were: Alcatel-Lucent Italia S.p.A., Cinecittà Studios S.p.A., Cisco Systems Italy S.r.l., Fastweb S.p.A., Hewlett Packard Italiana S.r.l., Mailclick S.r.l., Medusa Film S.p.A., Mondadori Pubblicità S.p.A. - R101, Opus Proclama S.p.A., Banca Monte dei Paschi di Siena S.p.A., Qualcomm Europe Inc., Vodafone Omnitel N.V., WeStream StreamZilla Italia and Wind Telecomunicazioni S.p.A..

The Masters courses are developed in collaboration with several renowned Italian and foreign universities. Sponsoring companies in 2009 were: Alcatel-Lucent, BT Italia S.p.A., Bwin Interactive Entertainment AG, Cinecittà Studios S.p.A., Cisco System Italy S.p.A., Fastweb S.p.A., Medusa Film S.p.A., Mondadori S.p.A., Banca Monte dei Paschi di Siena S.p.A., Qualcomm, R101, Siemens, Vodafone, WeStream / StreamZilla Italia and Wind.

Publitalia ’80 Masters programme: Established in 1988, the Publitalia Masters programme has become a tradition in the world of masters for young graduates seeking a career in marketing, sales management and communications, with a special emphasis on the business world and the sector of consumer goods. The training course lasts 13 months on a full-time basis with a limited number of students. The Publitalia Masters course is particularly focused on facilitating the employment of young people in companies, aiming to prepare a group of graduates each year with excellent academic résumés, good knowledge of a foreign language and good managerial skills.

Employee services

Mediacenter has been a well-established company facility for some time. This facility offers a number of services aimed at improving the quality of life of employees and ensuring a better balance between their professional and private lives.

The services offered range from personal care to the activities necessary for family management and include a nursery, bank, post office, book shop, mini-market, travel agency, pharmacy, fitness centre, medical consultation centre, catering (bar, sandwich bar and restaurant), laundry/tailor service and shopping area.

These activities cover an overall area of over 3,000 square metres in the offices of Cologno Monzese in Milan and in the offices of Elios in Rome.

The services are licensed to 15 external operators, selected for their specific competence in the relevant sectors.

In addition to the physical area, there is also a website which contains details and relative updates on a number of agreements entered into with banks, insurance companies and over a hundred retailers near the main offices of the Mediaset Group.

90 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations Safety, accident prevention and health in the workplace

The main initiatives carried out in 2010 with the aim of improving health and safety in the workplace are listed here below:

Adoption at all Mediaset Group companies of a Workplace Health and Safety Management System (S.G.S.S.L.) that complies with British Standard OHSAS 18001/2007 and is certified by the DNV (Det Norske Veritas) Certification Body for the parent company Mediaset S.p.A.;

Development of an IT system to support the management system (S.G.S.S.L.) for "Accident Management" and "Healthcare Supervision";

Implementation of the Health Plan through healthcare supervision providing 891 medical, specialist and ophthalmologic exams for employees working at computer terminals;

Free influenza vaccinations for all Group employees;

On-site inspections carried out by the Heads of the Environmental Protection, Safety and Health Division, workplace physicians of the Mediaset Group and qualified auditors;

Training:

Safety training for executives with delegated powers and supervisors;

For individuals in the Accident Prevention Department;

Performance of fire drills with trial evacuations in the main offices of the Mediaset Group;

Updates of the company intranet site on safety;

Updating the "Risk Assessment Document" based on updates to laws, and the holding of regular meetings (Art. 35);

In the management of the workplace, an ongoing focus on safety and related controls, including the management of contracts;

Environmental analyses of workplace quality, measuring chemical and biological pollutants, the microclimate, electromagnetic fields, radon gas, ionising radiation, noise, light, etc.;

Installation of safety systems at mountain sites (workstations) of Elettronica Industriale, with work carried out throughout Italy. In particular, in 2010 steps were taken to monitor the switch off from analogical to digital terrestrial transmissions.

91 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations HUMAN RESOURCES (MEDIASET SPA)

In a constantly changing competitive environment, Mediaset pays particular attention to its internal human resources, who play a fundamental role in interpreting and implementing the changes necessary to maintain its competitive advantage and market leadership.

The corporate goal is to develop individuals and their capabilities and skills, and recognise their merits and responsibilities making no distinction for gender, category or corporate level. In this context, the management of processes and tools is aimed at ensuring the proper assessment of human resources from the time they are selected, constant monitoring of employees during their development and planned professional and managerial training aimed at developing the company's unique attributes.

Staff composition

Staff numbers and geographical distribution

At the end of 2010, Mediaset's staff totalled 223 employees on permanent contract, which was largely unchanged from the level at year-end 2009 (224 employees).

Most employees are concentrated in the Milan area where 89% of staff works.

Geographical distribution of employed staff in Italy (on permanent contract)

31/12/2010 31/12/2009 Headquarters numbers % numbers %

Milan 199 89% 200 89% Rome 24 11% 24 11% Total 223 100% 224 100%

Age and seniority

The average age and seniority demonstrate the company’s commitment in encouraging human resource loyalty and its focus on retaining people with skills that have been progressively enhanced over time, particularly for jobs in which skill level depends heavily on experience.

92 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations Average age by job title of employed staff (on permanent contract)

2010 2009 Age years years

Executives 51 50 Journalists 54 53 Middle managers 44 44 Employees 41 40 Total 44 43

Employed staff (on permanent contract) by age range

31/12/2010 31/12/2009 Age numbers % numbers %

since 30 years old 15 7% 17 8% between 30 and 45 years old 97 43% 107 47% more than 45 years old 111 50% 100 45% Total 223 100% 224 100%

Average seniority by job title of employed staff (on permanent contract)

2010 2009 Seniority years years

Executives 18 17 Journalists 12 14 Middle managers 15 16 Employees 15 14 Total 15 15

Equal opportunity

Mediaset S.p.A. also places the same emphasis on equal opportunities, as confirmed by the large number of women at all levels of responsibility, accounting for 61% of the total number of employees.

Employed staff (on permanent contract) by title and sex

31/12/2010 31/12/2009 Role numbers % female numbers % female

Executives 35 23% 35 23% Journalists 3 33% 5 20% Middle managers 53 58% 49 57% Employees 132 73% 135 73% Total 223 61% 224 61%

93 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations Selection

Mediaset pays constant attention to recruitment activities, in order to ensure the selection of qualified personnel possessing the skills, attitudes and motivation that are essential to the corporate production environment and to facilitate the internal professional growth process.

Mediaset has always enjoyed high visibility and attraction power, as demonstrated by the number of resumes received in paper and electronic form.

The company's steady and ongoing collaboration with Italy's leading universities has allowed a growing number of young people to apply for internships within the company: in 2010, some 21 employees were offered the opportunity to gain professional experience through an internship with an average duration of approximately 4 months.

Training programmes

Throughout 2010, consolidated training programmes as well as routing training activities continued. Below are the main programmes:

Hours of training by type of programme

2010 2009 Training Hours hours hours Managerial Skills Development 874 1,286 Professional Skills Update 289 209 Foreign Language training 383 204 Law Fulfilments 363 - On-line training 100 28 Total 2,009 1,727

Safety, accident prevention and health in the workplace

The main initiatives carried out in 2010 with the aim of improving health and safety in the workplace are listed here below:

• Adoption at all Mediaset Group companies of a Workplace Health and Safety Management System (S.G.S.S.L.) that complies with British Standard OHSAS 18001/2007 and is certified by the DNV (Det Norske Veritas) Certification Body; • Development of an IT system to support the management system (S.G.S.S.L.) for "Accident Management" and "Healthcare Supervision"; • Implementation of the Health Plan through healthcare supervision providing 22 medical, specialist and ophthalmologic exams for employees working at computer terminals; • Free influenza vaccinations for all employees; • Periodic inspections; • Training updates as required by current regulations;

94 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations • Updates of the company intranet site on safety; • Updating of the Risk Assessment Document based on updates to laws, and the holding of regular meetings (Art. 35); • In the management of the company's workplace, an ongoing focus on safety and related controls; • Environmental analyses of workplace quality, measuring chemical and biological pollutants, the microclimate, electromagnetic fields, radon gas, ionising radiation, noise, light, etc.

Expiring labour contracts

The national private radio and television contract (managers and office workers), which expired on 31 December 2009, was renewed on 16 February 2011 and is valid for three years (2010- 2012).

A lump-sum payment of 240 Euros (using 5th level office workers as a base) was provided to cover the period not covered by a contract.

In addition, three pay increases were agreed to in March 2011, October 2011 and June 2012 in an amount of 100 Euros once the contract is valid (using 5th level office workers as a base).

The supplemental TV contract (managers and office workers), which expired on 31 December 2008, was renewed on 22 December 2010 and is valid for three years (2010-2012).

In 2009 the company entered into amended agreements expiring 31 December 2009 with union representatives.

The pay adjustment was applied retroactively to 1 January 2010, and mainly affected the increase in profit sharing (increases of 300 Euros/year for 5th level office workers, with an increase, once the contract is valid, of 900 Euros in 2012) and the increase in contributions paid by the company for healthcare (Unisalute).

The supplemental journalist contract, which expired on 31 December 2008, was renewed on 10 July 2010 for a period of four years from 1 August 2010 to 31 July 2014.

A lump-sum payment of 2,000 Euros, which was set for the contractual levels involved, was provided to cover the period not covered by a contract.

The main changes with an economic impact were as follows:

- Combined pay increase and change in professional qualification, and realignment of any differences among newspapers; - Increase in profit sharing; - Creation of multimedia benefit; - Increase in publishing benefit.

95 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations THE COMPANY'S COMMITMENT TO THE ENVIRONMENT AND CULTURE

Environment

Even though it is not an industrial processing company, the Mediaset Group believes it is essential to disclose information that increasingly meets stakeholder needs through the reporting of certain environmental performance indicators.

Below are the data relative to the consumption of energy, as well as the main emissions of CO2 produced by the Group in 2010 and 2009.

CO2 emissions were measured using the method specified in the Greenhouse Gas Protocol1 Specifically, considering the nature of the business, only emissions indirectly resulting from energy consumption have been taken into account.

Total Waste 2010 2009 Italy Spain Italy Spain

Electricity (kwh) 139,337,750 16,558,611 143,096,708 16,313,611 Discharge CO (t) 70,889 6,458 72,802 6,362 2

The company's commitment to culture

The Mediaset Group engagement in social activities is summarized into the following activities:

Mediafriends

Mediafriends is an Onlus (Organizzazione Non Lucrativa di Utilità Sociale – Non-Profit Organisation) established in 2003 by Mediaset, Mondadori and Medusa. This Association pursues charitable objectives aimed at raising funds to be used for charity projects and to provide advertising space within its networks for communications by non-profit charitable entities and associations.

In its seven years of activity, Mediafriends has promoted and supported an impressive number of benefits, raising and distributing over 49 million Euros making it possible for 118 associations to implement 190 charity projects in Italy and throughout the world.

The most noteworthy initiatives include: seven productions of LA FABBRICA DEL SORRISO, the MUSIC FOR ASIA concert dedicated to the tsunami victims, the video and photography exhibition UN’ONDA DI SPERANZA, the charity auction VENTI DI STRISCIA at the Triennale of Milan, and the first MEDIAFRIENDS CUP event.

1 The GHG protocol was established in 1998 in association with the World Business Council for Sustainable Development (WBCSD) and the World Resources Institute (WRI). Today, it is the international accounting instrument most frequently used by governments and corporations to understand and manage CO2 emissions. For further information, go to www.ghgprotocol.org.

96 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations Mediafriends also helped out in emergencies, from the flood in Messina to the earthquake in Abruzzo. Some 5.8 million Euros were raised and used to construct two buildings to accommodate 60 families. In addition, Mediafriends set up a Stanzallegra (Happy Room) in Italian paediatric hospitals. This is a multimedia space that gives young patients a place to have fun making their hospital stay less stressful. In 2010 Mediafriends provided substantial support for the first phase of emergency aid provided to Haiti through four associations that have worked on the island for some time: InterSOS, Operation Smile, Save the Children and SOS Italia Villaggi dei Bambini.

In conjunction with the Mediaset Sport Department, the GRAND PRIX MOTO programme was created to finance a medical mission in Bangladesh, and in conjunction with the magazine Focus, two programmes were carried out: the TAK nature notebook, and Obbiettivo Natura, a children's game created for the LIPU.

The following children's books were published with Mondadori: Un Sorriso Grande Come il Mondo, Uno Cento Mille Sorrisi and Tutti i Colori del Sorriso, collections of fables taken from true stories of children helped with the aid of previous initiatives. Proceeds from the books made it possible to finance charitable projects in Vietnam, Ukraine, the Dominican Republic, Sierra Leone and Pakistan.

The third series of STORIE DI CONFINE, a special news report programme under Videonews by Mimmo Lombezzi, was aired on Rete 4. These 25-minute long pieces describe the projects financed by Mediafriends and the context in which associations operate.

Mediaset social communications

In terms of advertising support for charitable associations in 2010, over 6,000 spots for social campaigns were provided free-of-charge on Mediaset networks in order to increase public awareness on civil and social issues.

Many of these campaigns were produced in collaboration with Mediaset's Creative Department, with internal resources and know-how.

With reference to Spain, the increased visibility acquired by Telecinco in the Spanish television market has conveyed an increasingly higher social responsibility onto the Spanish group.

Since December 1999, Telecinco has implemented a unique project to increase viewer awareness in relation to 12 topics of social interest. This initiative, called “12 meses, 12 causas”, has led to Telecinco’s being seen as the Spanish broadcaster most sensitive to social values in the ranking of the Fundacion Empresa y Sociedad, which measures social responsibility in businesses. For “12 meses, 12 causas”, the network provides scheduling, adverts dedicated to the topic of the month and, in various programmes, also provides opinions and in-depth analyses.

97 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations Cultural initiatives

In 1995, Mediaset and Medusa launched a film restoration project called Cinema Forever, dedicated to Carlo Bernasconi, with the objective of preserving Italian film masterpieces, which would otherwise be lost due to their physical deterioration. Cinema Forever gave new life to 21 films directed by famous directors, such as De Sica, Fellini, Pasolini, Rossellini, Antonioni, Bertolucci, Germi and Pietrangeli, who made a significant contribution to the history of film. Mediaset organises hundreds of free showings of these masterpieces all over the world.

Between 1999 and 2002, the Mediaset Group donated fifteen restored films to the Museum of Modern Art of New York, one of the world’s most important museums, contributing to expanding its historical archive with prestigious Italian films.

Also worthy of note is Link, a fiction library managed by the RTI Marketing division.

For over twenty years, Mediaset has been supporting and organising the “Aperitif in concert” festival at the Manzoni theatre in Milan. The series has gained importance at the international level thanks to its commitment to the most innovative and intriguing contemporary creativity, ranging from jazz to experimental music and from ethnic traditions to so-called “Boundary music”.

Guarantees for the protection of minors

Mediaset has always been very sensitive to the protection of minors:

It dedicates special attention to the protected time slot (4:00 pm - 7:00 pm), by monitoring all broadcasts (programmes, adverts, trailers and promotions) and by offering programmes specifically oriented to an audience of minors on at least one of the three networks (Italia 1). In 2004 the DTT channel Boing was added to this group with programming dedicated to children 24 hours a day;

It standardises Prime Time programmes, coordinating the programme schedules so that a suitable offering for the entire family is ensured on at least one of the three networks;

Using coloured symbols that appear on the screen at the beginning of each TV programme and after each commercial break, it indicates the nature and the content of the programme (green: suitable for all family members; yellow: children with adult supervision; red: adult audience only); Since October 2010, in accordance with new laws in effect, the use of symbols was extended in a standard manner throughout the system to all Group's networks including free and pay-per-view digital terrestrial broadcasts.

In addition to the coloured symbols, it consolidates information on the content of programmes (for example, through verbal announcements or captions at the beginning of programmes, rolling credits after every advertising break, and dedicated additions after the news);

98 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations In order to closely analyse the most relevant and topical issues in this area, it promotes research concerning the relationship between television and underage viewers using institutes specialising in this matter.

In Spain, Telecinco participated in Código de Autorregolación, which requires television networks to identify programmes according to the age group of the intended audience. Programmes not recommended for minors between 7 and 13 years of age are identified by a yellow symbol. Those aimed at an adult audience are identified with a red symbol and a sound. Programmes suitable for all age groups do not have a symbol.

99 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations REPORT ON CORPORATE GOVERNANCE AND OWNERSHIP

The Report, drawn up pursuant to article 123, part two, of the CFA, is made available at the registered office of the company, published on its Internet website and transmitted to Borsa Italian with the methodologies and within the timeframes that are laid down by the relative legislation, rules and regulations that currently in force

Issuer: Mediaset S.p.A.

Website: www.mediaset.it

Year-end to which the Report refers: 31st December 2010

Approval date of the Report: 22nd March 2011

101 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations

GLOSSARY

The Executive Director: The Executive Director charged with overseeing the functioning of the Internal Controls system of Mediaset S.p.A.

The Shareholders’ Meeting: Meeting of the Shareholders of Mediaset S.p.A.

The SEC Code: The Self Regulating Code for quoted companies approved in March 2006 by the Corporate Governance Committee and promoted by Borsa Italiana S.p.A. and available on the website www.borsaitaliana.it

The Mediaset Code: The Self Regulating Code put in place by the Issuer and available on the website www.mediaset.it/investor/governance/autodisciplina_it.shtml.

The Italian Civil Code: The Italian Legal Code containing Company Law.

The Board/Board of Directors: The Board of Directors of the Issuer.

The Assigned Executive: The Assigned Executive with the responsibility for the drafting of the company’s accounting documents.

The Issuer/Company: Mediaset S.p.A.

The Financial Year: The financial year of the company to which the Report refers. The Organisational Model: The Organisational, Management and Controls Model, pursuant to the Legislative Decree 231 /2001 and available on the website www.mediaset.it/corporate/impresa/modello231_01_it.shtml. Procedure: The Procedure for the transaction with related parties adopted by the Board of Directors Meeting of Mediaset of 9th November 2010

Issuers’ Regulations: The Regulations issued by the Consob (Italian SEC) with its resolution n° 1 1971 of 1999, as afterwards modified, regarding Issuers. Market Regulations: The Regulations issued by the Consob (Italian SEC) with its resolution n° 16191 of 2007, as afterwards modified, regarding stock markets. Related Parties Regulations: The Regulations issued by Consob (Italian SEC) with its Resolution number 17221 of 12th March 2010 regarding transactions with related parties and available on the website www.mediaset.it/investor/governance/particorrelate_it.shtmlmediaset.it.

Report: The report on Corporate Governance and company ownership structures that companies are obliged to draw up pursuant to article 123, part two, of the CFA.

System: The Internal Controls System.

Articles of Incorporation: The Articles of Incorporation of Mediaset S.p.A and available on the website www.mediaset.it/investor/governance/statuto_it.shtml.

CBA: The Legislative Decree of 1st September 1993, n° 385 (Consolidated Banking Act)

CFA: The Legislative Decree of 24th February 1998, n° 58 (Consolidated Finance Act).

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1. PROFILE OF THE ISSUER

Mediaset and its subsidiaries make up the leading Italian commercial television group, quoted on the Italian Stock Exchange since 1996. The Group ’s main activities are generalist TV, advertising, free and pay Digital TV, managing the transmission network, contents production, Internet and Mobile TV. Abroad, Mediaset is the relative majority shareholder of the Spanish TV Group Telecinco.

Mediaset has put in place the traditional administration and controls system made up of the following company bodies: the Shareholders’ Meeting, the Board of Directors, the Executive Committee e the Board of Statutory Auditors. The accounting controls, in accordance with the relative legislative measures that are currently in force regarding these matters, are assigned to an external auditing company that is inscribed in the special roll kept by the Consob (Italian SEC).

The Board of Directors has set up, among its own members, three committees with proposing and consulting functions: the Compensation Committee, the Internal Controls Committee and the Corporate Governance Committee. The powers and functional methodologies of the company bodies and Committees are governed by Law, by the Articles of Incorporation of the company and by the resolutions passed by the competent bodies. For the purpose of encouraging values that are based on correctness and loyalty an Ethical Code has also been introduced, which defines the whole ensemble of values that the Mediaset Group recognises, accepts and shares, at all levels, in the carrying out of its business activities. The information contained in this Report, except when stated otherwise, refers to that at the date of its approval by the Board of Directors (22nd March 2011).

2. INFORMATION ON THE OWNERSHIP STRUCTURES AT THE DATE OF 22ND MARCH 2011 Structure of the Share Capital The Share Capital of Mediaset S.p.A. amounts to Euros 614,238,333.28 fully subscribed and paid up. The Share Capital only consists of ordinary shares as shown below

N° of shares % on share capital Listed Rights and obligations

Ordinary shares 1181227564 * 100% Borsa Italiana Pursuant to law (nominal value EUR 0.52 each) - Blue Chip segment - and Company By-Laws On 22 rd March 2011, the company holds 44,825,500 of its own shares in its portfolio, amounting to 3.795% of the Share Capital which voting right is suspended pursuant to article 2357, part three, of the Italian Civil Code.

No other financial instruments have been issued that give the right to subscribe to new share issues.

There are not foreseen any share based incentive plans that will give rise to increases, even free of charge ones, of the Share Capital.

103 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations Restrictions on the transfer of securities

Pursuant to the Articles of Incorporation the shares are nominative, indivisible and freely transferable. There are applied all the measures regarding representation, legitimisation and the circulation of company holdings that are laid down for securities traded on regulated stock markets. Relevant holdings in the Share Capital On 22nd March 2011, according to the contents of the communications received pursuant to article 120 of the CFA, the relevant holdings in the Share Capital of Mediaset S.p.A. are the following:

SIGNIFICANT INVESTMENTS IN CAPITAL

Direct shareholder % Owned % Owned up ordinary share capital voting capital Declarant

Berlusconi Silvio Fininvest S.p.A. 38,980 38,980 Blackrock Inc. Blackrock Inc 2,287 2,287 Mackenzie Cundill Mackenzie Cundill Investment Management Ltd. Investment 3,440 3,440 Management Ltd. Mediaset S.p.A. Mediaset S.p.A. 3,795 3,795(*) (*) without voting rights. Securities that confer special rights No securities have been issued that confer special controlling rights. Employee shareholdings: mechanism for exercising voting rights There is no employee shareholding system with a mechanism for exercising voting rights that is different from the one laid down for all of the company’s other shareholders. Restrictions on the voting right They carry the right to vote all those ordinary shares that are currently in circulation, with the exception of the treasury shares that are held by the company itself and regarding which the voting right is suspended pursuant to article 2357, part three, of the Italian Civil Code. Pursuant to the Articles of Incorporation there can take part in the Shareholders’ Meeting all those persons who have the right to vote. The legitimacy of taking part in the Shareholders’ Meeting and exercising the right to vote is attested to by a communication to the company, made by the intermediary, in favour of the person who has the right to vote based on the relative proving details available at the end of the accounting day of the seventh open market trading day before the date that has been fixed for the Shareholders’ Meeting at first call. The debit and credit entries posted to the accounts after this timeframe are not valid for the purposes of legitimising the right to vote in the Shareholders’ Meeting. The communications sent by the intermediary must arrive at the company within the close of the third open market trading day before the date that has been fixed for the Shareholders’ Meeting at first call, or within any other different timeframe that is established by the relative legal measures that are currently in force. There remains the legitimate right to take part and vote whenever the communications arrive at the company after the timeframes laid down in the previous paragraph, as long as they arrive before the Shareholders’ Meeting has actually begun its proceedings. Agreements between shareholders There are no voting pacts concerning the company pursuant to article 122 of the CFA.

104 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations Change of control clauses The company, in the context of its normal business activities, has existing loan and financing contracts, including the contracts relative to the bond issue of 21st January 2010 that foresee, as is custom and usage in financial market practices, specific impacts if a “change of control” takes place such as, for example, their extinction or modification in the case of a change of control of the company. However, none of these contracts can be considered, as of itself, to be significant. The indemnities of the Directors in the cases of resignations, terminations or the ceasing of their relationship with the company following a public purchase offer Currently there are no agreements in force pursuant to article 123, part two, of the Consolidated Finance Act. Rules applicable to the nomination and replacement of the Directors and changes to the Articles of Incorporation Regarding the rules that are applicable to the nominating and replacement of the Directors reference should be made to the section 4) dealing with the Board of Directors. Pursuant to the articles of Incorporation, except for the competencies of the Extraordinary Shareholders’ Meeting, which retains its power to pass resolutions regarding these matters, it is up to the Board of Directors to pass the relative resolutions concerning mergers and split-offs, in those cases that are laid down by articles 2505,2505, part two, and 2506, part three, of the Italian Civil Code, the opening and the closing of secondary sites, the indicating of who among the Directors have the powers to legally represent the company, the reduction of the company’s Share Capital in the case of the withdrawal of a shareholder and the changing and updating of the Articles of Incorporation for legislative and regulatory measures. Mandates for increasing the Share Capital and authorisations for the acquisition of treasury shares There are no mandates for increases of Share Capital pursuant to article 2443 of the Italian Civil Code, or for the issuing of any financial instruments that constitute holdings in the company. The Shareholders’ Meeting of 21st April 2010 passed a resolution giving the Board of Directors the faculty of being able purchase, also through trading in options or financial instruments, also derivatives, on the Mediaset share, up to a maximum number of 118,122,756 ordinary shares of the company with the nominal value of Euro 0.52 each, amounting to 10% of the current Share Capital, in one or more lots, up till the approval of the Financial Statements for the year closed at 31st December 2010 but, in any case, for a period that is no longer than 18 months from the date of the relative resolution of the shareholders’ Meeting. The amount shown above is covered by the available reserves as shown in the last regularly approved set of Financial Statements. The purchase transactions are to be carried out as follows: i) The purchases to be used for the stock option plans for 2003/2005, 2006/2008 and 2009/2011 must be made on the quoted Stock Exchange with the operational methodologies referred to in article 144, part two, letters b) and c) of the Issuer Regulations at a price that is no higher than that between the price of the last independent transaction and the price of the highest independent offer currently on the computerised Stock Exchange managed by Borsa Italiana. ii) Any other purchases must be made on the quoted Stock Exchange with the operational methodologies referred to in article 144, part two, letters b) and c) of the Issuer Regulations at a price that is no higher than that between the price of the last independent transaction and the

105 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations price of the highest independent offer currently on the computerised Stock Exchange managed by Borsa Italiana.

The purchase transactions are carried out while observing article 2357 and the following ones of the Italian Civil Code, article 132 of the Legislative Decree 58/98, article 144, part two, of the Consob (Italian SEC) Regulations that actuates the Legislative Decree of 24th February 1998, n° 58, concerning the disciplining of the Issuers and any other applicable law, rule or regulation including those referred to in the Directive 2003/6 and the relative executive measures both EU and Italian. From the date of the Shareholders’ Meeting until today there have been no purchases of the company’s own shares. Therefore, on 22nd March 2011, the company holds 44,825,500 of its own shares in its portfolio, amounting to 3.795% of the Share Capital. Management and coordination activities (as per article 2497 and the following ones of the Italian Civil Code) Mediaset S.p.A. is subject to the de facto control of Fininvest S.p.A., because that company holds 38.980% of its Share Capital. On 4th May 2004 Fininvest S.p.A. communicated to Mediaset that it does not carry out any management and coordination activities, as per article 2497 and the following ones of the Italian Civil Code, regarding Mediaset. The Company took the communication of Fininvest S.p.A. into consideration at the Board of Directors Meeting of 11th May 2004. What has been declared by Fininvest is continuously confirmed by the fact that Mediaset S.p.A. defines its own strategies independently and that it has total organisational, operational and transactional autonomy, not being subject to absolutely any directional or coordinating actions by Fininvest, regarding its own business activities. Specifically, Fininvest does not issue any directives to Mediaset nor does it carry out any technical, administrative or financial support or coordination activities on behalf of Mediaset and its subsidiaries Mediaset S.p.A. currently exercises management and coordination activities, pursuant to article 2497 and the following ones of the Italian Civil Code, over the following companies within the Mediaset Group: Digitalia ’08 S.r.l., Elettronica Industriale S.p.A., Med Due S.r.l., Media Shopping S.p.A, Mediaset Investimenti S.p.A., Medusa Film S.p.A., Promo Service Italia S.r.l., Publitalia ’80 S.p.A., R.T.I. S.p.A., Taodue S.r.l., Video Time S.p.A. and X Content S.r.l., in liquidation.

3. COMPLIANCE The Board of Directors of Mediaset S.p.A., from March 2000, decided to put in place the measures contained in the SEC Code. The Board of Directors Meeting of 1st March 2007, taking into account the relative legislative and regulatory context and the organisational structure of the Mediaset Group, approved the updating of the Mediaset Code and, in fact, taking into it the standards contained in the new SEC Code of March 2006. The company has continued, over time, to update its own system of corporate governance to align it with best domestic and international practices regarding it, with the recommendations of the SEC Code and with the regulatory measures that have been introduced from time to time, keeping the shareholders and the stock market informed on a yearly basis. The subsidiary company Gestevision Telecinco S.A., quoted on the Stock Exchanges of Madrid, Barcelona, Bilbao and Valencia and on the Spanish Computerised Stock Exchange, and its subsidiary companies, is subject to Spanish Law and the Spanish corporate governance system.

106 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations 4. THE BOARD OF DIRECTORS

4.1 NOMINATIONS AND REPLACEMENT The nominations and the replacements of the Directors are regulated by article 17 of the Articles of Incorporation, which is given in Attachment A to this Report.

It is underlined that, based on the Articles of Incorporation that are currently in force, they only have the right to present the lists of candidates those shareholders who have voting rights and who, either alone or together with other shareholders, represent at least 2.5% of the part of the Share Capital that is made up of shares with voting rights in the Ordinary Shareholders’ Meeting, or any different percentage that is laid down by the relative legal measures that are currently in force and which, from time to time, will be communicated in the Notice calling the Shareholders’ Meeting held to pass resolutions regarding the nomination of the Board of Directors. It is highlighted that pursuant to article 144, part four, and article 144, part seven, of the Issuers’ Regulations, as well as the Consob (Italian SEC) Resolution n° 16779/2009, the shareholding percentage required for the presentation of the list of candidates for membership of the Board of Directors at the Shareholders’ Meeting of 22nd April 2009 was 1.5%. Furthermore, it is pointed out that Mediaset, apart from what is laid down by the CFA, the Issuers Regulations and the Mediaset Code, is not subject to any other legislation, rules and regulations regarding the membership of the Board of Directors.

4.2 MEMBERSHIP

Article 17 of the Articles of Incorporation lays down that the Company be administered by a Board of Directors consisting of five to twenty one Directors.

The Shareholders’ Meeting, with its resolution passed on 22nd April 2009, fixed the number of the Board members at fifteen.

The following persons were elected as members of the Board of Directors: Fedele Confalonieri, Pier Silvio Berlusconi, Giuliano Adreani, Mauro Crippa, Marco Giordani, Gina Nieri, Niccolo’ Querci, Marina Berlusconi, Pasquale Cannatelli, Bruno Ermolli, Alfredo Messina, Paolo Andrea Colombo, Carlo Secchi, Attilio Ventura, Luigi Fausti (resigned on 1st March 2011).

The members of the Board of Directors were elected with 566,281,745 favourable votes or 91.5% of the voting Share Capital, which is 618,859,052 shares or 52.39% of the total Share Capital.

At the Shareholders’ Meeting of 22nd April 2009 there was only presented one list of candidates for positions as Directors by the shareholder Fininvest S.p.A., with a shareholding amounting to 38.62% of the Share Capital, and broken down as follows: Fedele Confalonieri, Pier Silvio Berlusconi, Giuliano Adreani, Mauro Crippa, Marco Giordani, Gina Nieri, Niccolo’ Querci, Marina Berlusconi, Pasquale Cannatelli, Bruno Ermolli, Alfredo Messina, Paolo Andrea Colombo, Carlo Secchi, Independent Director, Attilio Ventura, Independent Director, Luigi Fausti, Independent Director and Danilo Pellegrino.

Together with the list there was also deposited, for each individual candidate, all the necessary documentation that is laid down by law, by the relative regulations and by the Articles of Incorporation for the members of the per Board of Directors.

107 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations The makeup of the list also takes into account the view expressed by the company regarding the maximum accumulation of administration and control offices pursuant to the Mediaset Code. The personal and professional characteristics of each individual Director are given in Attachment B to this Report. Also, relative to what is laid down by the Mediaset Code and based on the information supplied by the parties involved there are given, in the Attachment C to this Report, the memberships of the Board of Directors and of the Committees and the offices held by the current members of the Board of Directors in companies quoted on regulated stock markets, also foreign ones and in financial, banking and insurance companies, or those of relevant dimensions, with the exception of those held in subsidiary companies of Mediaset S.p.A. or in those that it participates in, as well as further information relative to the same persons. The Board of Directors Meeting of 1st March accepted the resignation from his position as a Director, for health reasons, of the Independent Director Luigi Fausti. The Board of Directors Meeting of 22nd March 2011, nominated by cooption, pursuant to article 2386 of the Italian Civil Code and the Articles of Incorporation, to replace Dr. Luigi Fausti, Dr. Michele Perini as a non-executive Independent Director and who shall remain in office until the next Shareholders’ Meeting. The Board of Directors evaluated the independence of this director based on the information supplied to it. DR. Michele Perini was found to possess the independence requisites as per article 148, paragraph 3, of the Consolidated Finance Act and those laid down by the Mediaset Code. Dr. Michele Perini’s curriculum vitae can be viewed on the company’s website.

There are no succession plans for the Directors.

The maximum accumulation of the offices held in other companies In observance of the measures laid down in the Mediaset Code, the Board of Directors, in its meeting of 11th March 2008, expressed the following views regarding the accumulation of the offices of Director and/or Statutory Auditor:

- An Executive Director must not hold any of the following positions: I. The office of Executive Director in any other quoted company, either Italian or foreign, or in a finance, banking or insurance company, or in a large sized one, i.e. with a Net Equity of more than 10 Billion Euros, and II. The office of Non Executive Director or Statutory Auditor, or that of a member of another controls body, in more than five quoted companies, either Italian or foreign, or in finance, banking or insurance companies, or in any large sized ones, i.e. those with a Net Equity of more than 10 Billion Euros. - A Non Executive Director must not hold any of the following: I. The office of Executive Director in more than three quoted companies, either Italian or foreign, or in finance, banking or insurance companies, or in any large sized ones, i.e. those with a Net Equity of more than 10 Billion Euros and the office of Non Executive Director or Statutory Auditor, or that of a member of another controls body, in more than five quoted companies, either Italian or foreign, or in finance, banking or insurance companies, or in any large sized ones, i.e. those with a Net Equity of more than 10 Billion Euros, or

108 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations II. The office of Non Executive Director or Statutory Auditor, or that of a member of another controls body, in more than ten quoted companies, either Italian or foreign, or in finance, banking or insurance companies, or in any large sized ones, i.e. those with a Net Equity of more than 10 Billion Euros. The acceptance of any office, for all the Directors of the company, requires their prior evaluation of their possibility of being able to dedicate the time that is actually necessary in order to be able to diligently carry out the high level tasks entrusted to them and fulfil the consequent responsibilities. This means taking into account, among other things, also the number of the offices of Director and/or of Statutory Director that is held by them in other quoted companies in regulated stock markets, also foreign ones, and in finance, banking or insurance companies, or in any large sized ones.

There remain excluded from the accumulation limit the offices held in Mediaset and in companies of the Mediaset Group.

In the case where the above limits are passed the Directors involved must speedily inform the Board, which will evaluate the situation in the light of the company’s interests and will ask the Director involved to make the consequent decisions.

The Board of Directors picks up yearly, based on the information supplied to it by each individual Director, or on other information in its possession, and inserts into the Report on Corporate Governance the offices of Director and/or Statutory Auditor that are held in the aforesaid companies.

4.3. THE ROLE OF THE BOARD OF DIRECTORS

The Board of Directors is the collegiate body of the company that administers it, playing a central role in the context of the company’s organisation and it heads the functions and the responsibility for the strategic and organisational direction of the company, as well as checking on the existence of the controls that are necessary in order to be able to monitor the progress of the company and the Group. The system used for the delegation of powers is such as to maintain, within the context of the company’s business and organisation, the central role played by the Board of Directors. The Board of Directors has the powers laid down by law and by article 23 of the Articles of Incorporation. The Board of Directors, pursuant to the Articles of Incorporation, can nominate one or more Vice Chairmen and delegate to one or more of its own members, also with the position of Managing Director, all or part of its own powers, except for what is laid down in article 2381 of the Italian Civil Code and in article 23 of the Articles of Incorporation, as well as being able to nominate an Executive Committee to which it can delegate its own powers, except for those which are reserved solely for the Board itself.

Furthermore, the Board of Directors can set up other Committees that can also consist of persons who are not Board members, setting their tasks, powers, compensation, if any, and establishing their membership and functioning methodologies.

The Board meets with regular periodicity, observing the legal due dates and a working calendar and it organises itself in such a way as to ensure that its functions are carried out effectively and efficiently. During the financial year 2010, the Board of Directors met ten times. The average length of each meeting is about 2 hours. The participation percentage of the Directors during the financial year, on a total basis, was 90% and the independent Directors have ensured an average overall 109 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations presence of about 80%. The participation percentage of each individual Director at the Board Meetings is shown in the Attachment C to this Report. For the year 2011 four Board of Directors Meetings have been planned, and communicated to the market, for the approval of the periodic accounting data and, as of today, two of them have been held already.

The speediness and completeness of the pre-meeting information is ensured by the Chairman by means of the distribution to the Directors, in the days immediately before the date fixed for the Board Meeting, of the documentation relative to the matters contained in the Agenda, in order to enable the interested parties to be informed about the Agenda items and to have useful elements that will enable them to participate effectively in the work of the Board.

The Chairman favours the participation in the Board Meetings of the company executives who are responsible for the competent company functions so that they can supply the appropriate in- depth information for the purpose of giving the Directors a fully detailed understanding of the items on the Agenda. During 2010, the Board has carried out the activities that fall within its competencies and this has continued in 2011, specifically concerning the following: It has examined and approved the strategic, industrial and financing plans of the company and the group it heads, the company’s corporate governance and the group ’s structure. It has evaluated the adequacy of the organisational, administrative and general accounting set-ups of the company and of those subsidiary companies that have strategic relevance, with particular reference to the internal controls system and to the proper managing of conflicts of interest. These evaluations, which had a positive outcome, were supported by specific explanatory reports, relative to the different operational and control structures of the companies, drawn up under the care of the delegated bodies. It has positively evaluated the general progress of operations, taking into consideration, specifically, the information received from the Executive Committee, from the Chairman, from the Vice Chairman, from the Managing Director and from the Internal Controls Committee, as well as periodically comparing the actual results with the planned ones. It has examined and approved in advance all those operations that have outstanding strategic, economic, equity and financial significance for the company and the subsidiary companies and, specifically, those with related parties. It approved the necessary changes to update the Articles of Incorporation for the imperative measures of the Legislative Decree number 27 of 27th January 2010 concerning the governing of shareholders’ rights. In conformity with what is laid down by the Related Parties Regulations it put in place the procedure that establishes the rules for the identification, the approval, the execution and the publishing of the transactions with related parties carried out by with Mediaset S.p.A., whether directly or through subsidiary companies. It has evaluated, during the meeting of 22nd March 2010, in light of the reports received from the parties entrusted with overseeing the internal controls system and from the Internal Controls Committee that the internal controls system is suitable, appropriate, operational and effective.

110 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations Self-assessment of the Board of Directors The Board of Directors, taking into account the positive experience of the previous years, also set in motion, for the financial year 2010 the self-assessment process called Board Performance Evaluation entrusting, as usual, the Corporate Governance Committee to set up and drive the process. This process, which was introduced starting from 2006 and carried out yearly has enabled the checking on the dimensions and functioning of the Board on an overall basis and also of its Committees and to be able to evaluate its contributions to the Board of Directors own activities. Also for the year 2010, the Corporate Governance Committee has confirmed the usage of the methodology used by the company in the previous financial year for carrying out the board performance evaluation. This methodology was validated by a specialised consultancy company. In its Report to the Board, the Committee suggested continuing with the use of a list of questions to be submitted to the Directors in order to facilitate the self-assessment process. The Board of Directors, in its meeting of 21st December 2010, carried out the self-assessment process availing itself of a list of questions distributed to each individual Director concerning the following: (i) the structure, membership, role and responsibility of the Board; (II) how the Board Meetings proceed, the relative information flows and the decisional processes employed; (III) the functioning and membership of the Committees set up within the Board. From the relative debate, in which there were involved absolutely all of the Directors, there emerged, yet again, a positive picture in terms of the effectiveness and the efficiency of the work carried out by both the Board and the Committees. Specifically, from among the most positive aspects, there are highlighted the following ones: • That there is an extremely constructive climate existing within the Board of Directors, which favours very open debate that respects the contribution of each individual Director and tends to converge towards decisions featuring an ample consensus. • The decisional process within the context of the Board was fed by information flows that were considered by all the interested parties to be speedy and effective and were the subjects of punctual Minutes. • The structure of the Board of Directors and the number of its meetings were considered to be adequate. Regarding the committees’ set up within the Board of Directors itself, there emerge a very broad agreement regarding their role, the effectiveness of their activities and the appropriateness and adequacy of their relative memberships. Specifically, it is confirmed that the activities of the Board of Directors are carried out in conformity with the recommendations contained in the Code. Specifically, the Directors have expressed their appreciation for the work encounters that have taken place with the top management of the company, which were aimed at gaining in depth knowledge of the different business sectors within which the group operates. The Directors, having valued as positive the activities undertaken, suggested, to carry out the programme for 2011 regarding the new technologies of business and the recent acquisitions in relation to the enlargement of the competitive scenarios. The Chairman and the Executive Directors accepted this proposal favourably.

4.4 DELEGATED BODIES The Chairman Traditionally, the Chairman is nominated by the Shareholders’ Meeting. The Shareholders’ Meeting of 22nd April 2009 confirmed Fedele Confalonieri as Chairman of the company.

111 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations The Board of Directors, in the meeting of 23rd April 2009, confirmed that the Chairman had all the powers of ordinary and extraordinary administration of the company, within the maximum value limit of 13,000,000.00 Euros for each individual operation, but with the exception of those operations that fall, exclusively, within the competencies of the Board of Directors and the Executive Committee. Pursuant to the Articles of Incorporation, the Chairman has the legal representation of the company. The Board members are obliged to know the tasks and the responsibilities that are inherent to the office they hold. The Chairman shall take care to ensure that the Board is constantly updated on the main legislative and regulatory changes that affect the company also with the cooperation and support of the Director of Company Affairs and the Secretary of the Board of Directors. The Chairman coordinates the activities of the Board of Directors and manages the Board Meeting. It is up to the Chairman, or to the person who acts in his place, to call and convene the Board Meetings.

The Vice Chairman

The Board of Directors, in the meeting of 23rd April 2009, confirmed Pier Silvio Berlusconi as Vice Chairman, conferring upon him all the powers of ordinary and extraordinary administration of the company, within the maximum value limit of 10,000,000.00 Euros for each individual operation, but with the exception of those operations that fall, exclusively, within the competencies of the Board of Directors and the Executive Committee. Pursuant to the Articles of Incorporation, the Vice Chairman has the legal representation of the company. The Vice Chairman replaces the Chairman, with legal representation of the company, in the case of his absence or impediment. The actual exercising of the power of legal representation of the company by the Vice Chairman attests, of itself, to the absence or impediment of the Chairman and it exonerates all third parties from the necessity of any ascertainment or responsibility regarding this fact.The Managing Director

The Board of Directors, in the meeting of 23rd April 2009, Giuliano Adreani as Managing Director, conferring upon him all the powers of ordinary administration of the company within the maximum value limit of 5,000,000.00 Euros for each individual operation, but with the exception of those operations that fall, exclusively, within the competencies of the Board of Directors and the Executive Committee. Pursuant to the Articles of Incorporation, the Managing Director has the legal representation of the company.

*** The Board of Directors believes that giving the above mandates to the Chairman, the Vice Chairman and the Managing Director is the best response to the needs for organisational efficiency. Executive Committee

The Board of Directors, in the meeting of 23rd April 2009, nominated the Executive Committee, consisting of four members who will remain in office for the same time period as that of the mandate of the Board of Directors and calling to take part in it the Chairman Fedele Confalonieri, the Vice Chairman Pier Silvio Berlusconi and the Managing Director Giuliano Adreani, as members by right pursuant to the Articles of Incorporation, as well as the Director Gina Nieri.

The Board of Directors has given the Executive Committee all the powers of ordinary and extraordinary administration of the company, within the maximum value limit of 130,000,000.00

112 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations Euros for each individual operation, but with the exception of those operations that fall, exclusively, within the competencies of the Board of Directors. During 2010 the Executive Committee met nine times. The average duration of the meetings of the Executive Committee is about 1 hour. The percentage participation of each individual Director at the meetings of the Committee is shown in the Attachment C to this Report. Eight meetings were planned for the year 2011 of which two have taken place up till now

***

Informational documents to the Board

There are assured, during the Board Meetings, the presence of ample in depth explanations and an exhaustive treatment of all the relative items, in order to enable the Directors to make a knowledgeable decision regarding the matters discussed.

Delegated activities are the constant subject of informational documents supplied to the Board of Directors and the Board of Statutory Auditors by the delegated bodies at the time of the Board Meetings, following the methodologies laid down by the Mediaset Code, by the Articles of In- corporation and by the relative legislative and regulatory measures currently in force

At the time of the first useful Board Meeting the Chairman, the Vice Chairman, the Managing Director, the Executive Committee, the Directors with special assignments and, more in general, delegated bodies report to the Board of Directors and to the Board of Statutory Auditors on the progress status of the projects that have been entrusted to them and of the activities carried out while exercising the mandates that were given to them, as laid down in the Articles of Incorporation.

4.5. OTHER EXECUTIVE DIRECTORS As well as the Chairman, the Vice Chairman and the Managing Director, there are another four Executive Directors, who are listed below, who are members of the Board:

• Mauro Crippa - Director General of Information of Mediaset S.p.A. • Marco Giordani - Chief Financial Officer of Mediaset S.p.A. - Managing Director of R.T.I. S.p.A.

• Gina Nieri -Director of the Institutional, Legal and Strategic Analyses Affairs of Mediaset S.p.A. - Vice Chairman of R.T.I. S.p.A.

• Niccolò Querci - Central Personnel and Organisation Director of Mediaset S.p.A., - Vice Chairman and Managing Director for Human Resources of R.T.I. S.p.A - Vice Chairman Publitalia 80 S.p.A.

4.6. INDEPENDENT DIRECTORS The Directors Paolo Andrea Colombo, Carlo Secchi and Attilio Ventura, as well as was the Director Luigi Fausti for his whole period in office, are in possession of the requisites of independence as specified by law, article 148 of the CFA and by the Mediaset Code as is shown in the Attachment C to this Report.

113 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations Each Independent Director has taken the commitment to speedily communicate to the Board of Directors any situations that arise and make the requisites in question disappear. The Board of Directors evaluates the independence of its non-executive members, looking more at the substance involved than the mere form and bearing in mind that a Director does not normally appear to be independent, in the hypotheses laid down in article 3) of the Mediaset Code.

As far as the relative skills are concerned, it is highlighted that the Board has believed it opportune to add some further criteria laying down that the Independent Directors are required to have an adequate knowledge of the economic environment and of the business of the company and that, preferably, they should have skills within environments and/or sectors that are the same or similar to those in which the company carries out its business activities such as, for example, the following: – Within the television area, either public and/or private, or in that of cinema. – Within the Media and telecommunications sector. – Within the field of advertising and marketing. – Within that of University lecturing in Italian and/or foreign Universities, in subjects that are pertinent to the Group ’s core business or in economics, finance, law/accounting and in the science and techniques of communications. – Within the financial sector. The Board of Directors evaluates the independence of the Directors periodically, also with the support of the Corporate Governance Committee. The Corporate Governance Committee has supported the Board of Directors in evaluating the permanency of the independency requisites of the Independent Directors, which evaluation was attested to in the Board of Directors Meeting of 22nd June 2010. The Board of Statutory Auditors, in the meeting of 3rd December 2010, checked on the correct application of the criteria and the ascertainment procedures used by the Board of Directors in order to evaluate the independence of the Directors in question. The number and the skills of the Independent Directors are suitable and appropriate for both the dimensions of the Board and the activities carried out by Mediaset and they are such as to enable the setting up of the Committees within the Board of Directors and regarding which there will be given ample explanations in the remaining part of this report. For the purpose of enabling the Independent Directors to effectively play their role, as well as the Chairman who operates so that the Board, on an total basis, is constantly updated regarding all the main legislative and regulatory changes that appertain to the company, there are periodically organised specific meetings of the Independent Directors with the Chief Financial Officer and the management of Mediaset and its subsidiary companies so that they may have a vision of the structure of the whole Group, a knowledge of its business and be able to go into depth on specific economic/financial matters. The members of the also Board of Statutory Auditors also habitually take part in these encounters. The Independent Directors, together with the Board of Statutory Auditors, assisted by the Secretary of the Board, have taken part in a number of initiatives aimed at making them highly knowledgeable regarding the main aspects of the company’s total situation and to increase their knowledge of the company’s dynamics such as business, organisation, technology and the market.

114 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations Specifically, it is highlighted that during 2010, the Independent Directors have gone into depth with the Management of the advertising concessionaire company Publitalia ’80 and its subsidiary companies Digitalia ’80 and Publieurope regarding the company missions, the characteristics of the pertinent business areas and the main characteristics of the advertising market. The Independent Directors met among themselves, without any of the other Directors, once during the year, on 19th may 2010. At that meeting the Independent Directors dealt with themes regarding corporate governance and, specifically, as usual, they went into depth regarding the fundamental aspects of the economics of the Group, they followed the process of Self-assessment of the Board of Directors, they looked at the evolution of the legislative aspects and the legal and regulatory frame of reference and the went into depth regarding strategic aspects and critical matters and subjects. The presence of the majority of the Independent Directors, inside of the Committees set up within the Board of Directors, enhances the constant ongoing exchange of opinions and information that takes place between them.

4.7 LEAD INDEPENDENT DIRECTOR The Board of Directors has decided not to follow the recommendation of Borsa Italiana to create the position of a “Lead Independent Director ”, because there do not exist the prerequisites for the nomination of one. It is highlighted that the current structure of corporate governance fully guarantees, as of now, not only constant flows of information to all of the Directors, both executive and non-executive, as well as independent and non independent, but also a very wide ranging proactive and prepositional involvement in the overall management and operations of the company.

5. TREATMENT OF COMPANY INFORMATION

Privileged information In 2006 the Board of Directors approved the updated version of the organisational guideline of the Mediaset Group called “Management and communication of privileged information ”, which regulates the internal management and the communication to the public of privileged information, as well as putting in place and continuous updating of the “Register of the persons who have access to privileged information ”, i.e. the Insider Register, which is referred to in article 115, part two, of the CFA. For privileged information there is meant every piece of information not in the public domain and of a precise nature, which, if it is rendered public, could significantly impact the prices of the financial instruments.

The aforesaid guideline is applicable to the members of the company bodies and the employees of Mediaset S.p.A. and its subsidiary companies that have access to relevant and/or privileged information, with the exception of the quoted company Gestevision Telecinco S.A. and its subsidiary companies in consideration of the fact that Gestevision Telecinco is obliged by law to keep its own specific Insider Register, to fulfil the connected obligations and to communicate the privileged information to the Spanish market, pursuant to all the relative legislation, rules and regulations that are currently in force in that country.

Pursuant to the Mediaset Code the Chairman, the Vice Chairman and the Managing Director, in coordination between themselves, take care to ensure that all the company information is correctly managed.

115 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations The Directors and the Statutory Auditors of Mediaset and, in general, all the other addressees of the aforesaid guideline are bound to keep strictly confidential all the documents and the information that they acquire while carrying out their assigned tasks, with particular reference to privileged information. The communications to the relative authorities and to the public are carried out within the timeframes and with the methodologies that are contained in the relative legislation, rules and regulations that are currently in force, observing proper informational parity and what is laid down by the guideline.

The company has distributed the procedure to its own personnel and to that of its subsidiary companies.

The Chief Financial Officer of Mediaset S.p.A., assigned to do so by the Board of Directors, constantly monitors the application of the procedure and its update status, also in the light of the relative current best practices regarding this matter, for the purpose of ascertaining its effectiveness.

The Insider Register consists of those persons who, because of their working or professional activities, or because of the functions they carry out or the offices they hold, have access to important and/or privileged information of the company and of its subsidiary companies. The setting up, managing and keeping of the Insider Register is regulated by the organisational guideline called “Management and communication of privileged information ”. The company has also identified the Assignee for the keeping and managing of the Insider Register as being the Company Affairs Directorate of Mediaset S.p.A..

Internal dealing Following the acceptance and application in Italy of the EU Directive “Market Abuse”, with the law number 62/2005 and the adoption by Consob (Italian SEC), with its resolution number 15232 of 29 November 2005, of the new Issuers’ Regulations, there was introduced, at legislative level, the obligation to communicate to the public and to Consob those operations, which are carried out by relevant persons and by persons strictly linked to them, regarding the financial instruments of the company. The new measures came into force on 1st April 2006. Therefore, starting from that date, the regulating of internal dealing dealt with by Mediaset S.p.A. with its own Code of Behaviour ceased. The Board of Directors has actuated the relative legal obligations and done the following: – Identified the Assignee for the receipt, managing and diffusion of the communications to the market. For the Mediaset Group this party has been identified as the Company Affairs Directorate of Mediaset S.p.A..

– Identified those relevant subsidiary companies the accounting book value of the holding in which represents more than 50% of the Balance Sheet assets of Mediaset S.p.A. as this results from the last approved set of Financial Statements.

– Put in place a procedure aimed at monitoring the condition of relevancy of its own subsidiary companies and identified, among its own company executives, the persons obliged to issue the relative communications.

- Given the necessary information to the identified persons that their identification has taken place and regarding the connected obligations.

116 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations In conformity with what has been recommended by Consob (Italian SEC) the company has created, within its own website, a specific section called “Market Abuse”.

6. COMMITTEES WITHIN THE BOARD Pursuant to the Articles of Incorporation, the Board of Directors can set up Committees, also consisting of persons who are not members of the Board, setting their tasks, powers, compensation and establishing their membership. The Committees, if they are also composed of persons who are not members of the Board, only have consultation powers

Following the renewal of the Board of Directors, which took place with the Shareholders’ Meeting of 22nd April 2009, the Board, on 23 April 2009, set up, within itself, a Corporate Governance Committee, an Internal Controls Committee and a Compensation Committee, with proposal and consultative functions.

The Committees, who report punctually at Board Meetings regarding their activities, have their own sets of functioning regulations and meetings calendars laid down for the current financial year. The setting up and function of the Committees within the Board of Directors responds to the criteria laid down by the Mediaset Code, i.e. membership, Minutes of the meetings, company information flows, the possibility of availing themselves of the services of external consultants and the participation at the meetings of persons who are not members, at the invitation of the Committee, with reference to specific Agenda items.

6- PART TWO, CORPORATE GOVERNANCE COMMITTEE The Board of Directors Meeting of 23rd April 2009 nominated the Corporate Governance Committee, constituted in 2006, consisting of three Non-executive and Independent Directors, who shall remain in office until the mandate of the whole Board of Directors expires, calling upon the following persons to be its members: Attilio Ventura Chairman – Independent Director Paolo Andrea Colombo Independent Director Carlo Secchi Independent Director During 2010 the Corporate Governance Committee met seven times. The average duration of each meeting was about an hour. The percentage participation of each individual Director at the Committee meetings is given in the Attachment C to this Report. For the year 2011 five meetings were planned, of which two have been held.

There have usually participated at the Committee meetings the Chairman of the Board of Statutory Auditors, or another member of the Board of Statutory Auditors and there were invited to take part, through the Secretary of the Committee, the managers of specific company functions and external consultants in order to illustrate some particular themes.

The functions of the Corporate Governance Committee

The Board of Directors has given the Corporate Governance Committee the competencies laid down by the Mediaset Code and, specifically, it carries out the following tasks: − It evaluates the Self Regulating Code of the company, containing the standards of corporate governance, which the Board of Directors follows in the fulfilment of its own competencies, and it formulates any eventual proposals regarding these matters.

117 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations − It sets in motion the requests and the tasks issued by the Board of Directors, particularly relative to the updating of the Self Regulating Code put in place by the company. − It assists and supports the Board in evaluating the permanency of the independence requisites of the Independent Directors. During 2010 the Committee has carried out the activities that fall within its competencies and this has continued in 2011. Specifically, it has done the following: - Examined the “Annual Report of the Board of Directors on Corporate Governance relative to the financial year 2009”. - Constantly monitored the application status of the Self Regulating Code of the company, put in place in March 2008. Specifically, it examined and carried out the first considerations regarding the new article 7 of the SEC Code regarding the compensation of the Directors and of the company executives with strategic responsibilities. - Supported the Board in the yearly evaluation of the independence of its own Directors. - Elaborated the themes and the methodologies of the Self-assessment of the Board of Directors. - Examined, assigned by the Board of Directors, the “Procedure for transactions with related parties”, which was drawn up pursuant to the Consob related parties Regulations and it issued its own professional opinion, pursuant to the Regulations referred to. - Examined the “Annual Report of the Board of Directors on Corporate Governance relative to the financial year 2009”. The Committee has put in place its own set of functioning regulations and for all the meetings referred to above regular Minutes have been produced. There is present at these meeting the Manager of the Company Affairs Directorate who has been confirmed as the Secretary of the Committee. The Secretary, in agreement with the Chairman of the Committee, in the days before the meetings sends the members of the Corporate Governance Committee all the documentation available, at that time, as support for dealing with the relative Agenda items.

The Corporate Governance Committee has a financing availability of 100 thousand Euros per annum for the expenses linked to fulfilling its tasks.

The members of the Committee receive a presence fee, for participating in each meeting, for the amount that was fixed by the Shareholders’ Meeting of 22nd April 2009. 7. NOMINATIONS COMMITTEE

The Board of Directors has considered that it was not necessary to set up a Nominations Committee within itself because of the fact that there is already laid down by the Articles of Incorporation of the company the lists vote for the nominations to the Board of Directors and the Board of Statutory Auditors.

8. COMPENSATION COMMITTEE The Board of Directors Meeting of 23rd April 2009 nominated the Compensation Committee, constituted in 2006, consisting of three Non-executive Directors, the majority of whom are independent, who shall remain in office until the mandate of the whole Board of Directors expires, calling upon the following persons to be its members: Bruno Ermolli Chairman – Non executive Director Paolo Andrea Colombo Independent Director Attilio Ventura Independent Director No interested Director has taken part in the meetings of the Compensation Committee, during

118 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations which there were formulated the proposals to be made to the Board of Directors regarding his own compensation.

During 2010 the Compensation Committee met five times. The average duration of each meeting is more than one hour. The percentage participation of each individual Director at the Committee meetings is shown in the Attachment C to this Report. For the financial year 2011 six meetings have been planned and one of them has already taken place.

The Chairman of the Board of Statutory Auditors, or his designated replacement, has participated in the Committee meetings and there has been present a Secretary chosen, from time to time, by the Chairman.

Functions of the Compensation Committee

The Board of Directors has given the Compensation Committee the competencies laid down by the Self Regulating Code of the company. Specifically, the Committee formulates proposals it presents to the Board of Directors and it expresses its periodic evaluations regarding the following:

− The compensation of the Directors who hold particular offices within Mediaset S.p.A., also laying down that a part of it be linked to the financial results achieved by the company and/or the achievement of other specific objectives.

− The general criteria regarding the compensation of the executives of the Mediaset Group, i.e. fixed/variable split, the reference parameters for MbO (Management by Objectives) and the valuation and regulating criteria for the emoluments/compensation relative to offices held within the companies of the Group.

− The criteria, the beneficiary categories, the quantities, terms, conditions and methodologies involved in the stock option plans. During 2010 the Committee has carried out the activities that fall within its competencies and this has continued in 2011. Specifically, it has done the following: - Carried out in depth investigations into the whole system of incentives and gaining the loyalty of the Executive Directors and company executives. - Prepared the proposal for the assignment of the option rights for the financial year 2010, relative to the 2009-2011 plan, indicating the categories of the beneficiaries, the respective areas that they belong to and the quantities of options attributable divided by ranges. - In the light of the new legislation and regulations regarding compensation (Article 7 Stock Exchange Code, Consob Regulation number 17221 of 12th March 2010, European Community Law 20096) it carried out further in depth investigations regarding incentives and gaining loyalty for the financial year 2011. Regarding this it examined the domestic and European compensation benchmarks regarding the Executive Directors. It gave the assignment to the Hay Group to carry out benchmarking activities regarding the Directors compensation. - It carried out an exchange of information with the Compensation Committee of the subsidiary company Gestevision Telecinco, specifically focused on the general criteria of the Group’s compensation policy.

The Committee has put in place its own set of functioning Regulations and for all the aforesaid meetings regular Minutes have been produced. 119 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations The Compensation Committee has financing availability of 200 thousand Euros per annum for the expenses linked to the fulfilling of its tasks.

The members of the Committee receive a presence fee, for participating in each meeting, for the amount that was fixed by the Shareholders’ Meeting of 22nd April 2009. 9. COMPENSATION OF THE DIRECTORS

The compensation of the Directors is set at a level that is sufficient to attract, retain and motivate Directors who have all the professional skills and qualities that are required in order to successfully manage the company.

The compensation of the Executive Directors is articulated in such a way as to align their own interests with the pursuit of the priority objective of the creation of value for the shareholders within a medium/long-term timeframe.

The compensation of the Non-executive Directors is in line with the commitment that is asked for from each individual one of them, also taking into account whether they participate in one, or more, Committees. The Shareholders’ Meeting of 22nd April 2009 passed a resolution fixing the overall total gross yearly emoluments due to the Board of Directors at the amount of 248,000.00 Euros to be split in the following manner:

– To the Chairman 24,000.00 Euros. – To each one of the other Directors 16,000.00. They have the faculty of being able to draw upon it, during the year, in a number of instalments. The same Shareholders’ Meeting passed a resolution to pay the Directors a presence fee of 1,000.00 Euros gross, increased by 50% for the Chairman, for taking part in each individual meeting of both the Board of Directors and of the Committees nominated by the Board. Further information regarding the compensation of the Directors is given in the Explanatory Notes to the Financial Statements of the company.

Stock Option Plan 2009/2011(Shareholders’ Meeting of 22nd April 2009)

The Shareholders’ Meeting of 22nd April 2009, also taking into account the experience gained with previous Plans, decided it opportune to promote the creation of a Stock Option Plan, for the purpose of gaining and maintaining fidelity and making the participants in the plan also participants in the added value of the company.

The aforesaid Shareholders’ Meeting approved the setting up of Stock Option Plan based on the company’s own shares, with a duration of three years, starting from 2009, allocated to the Directors, to the employees, i.e. executives, journalists, managers of organisational units and similar persons, and to the collaborators of the company and of its subsidiaries, who are identified under the care of the Board of Directors from among those key people, who carry out functions relevant for the achievement of the strategic results of the Group.

Therefore, the Shareholders’ Meeting has entrusted to the Board of Directors the management of the Stock Option Plan 2009/2011 with the most wide ranging powers for the identification of the participants, for fixing the performance objectives, for the assignment of option rights and for the realisation of the Plan in absolutely all of its aspects. Specifically, the Board of Directors, regarding the financial year 2010, has done the following:

− Identified the number of assignees as 49 employees, between executives and journalists. 120 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations − Assigned the total overall number of 3,420,000 option rights, which are personal and not transferable, amounting to 0.29% of the Share Capital of the company.

− Defined, as the criterion for setting the exercising price of the options, the value of the ordinary shares of Mediaset coming from the arithmetical average of the reference prices recorded by Borsa Italiana S.p.A., within the period between the date of assignment and the same day of the preceding calendar month, in conformity with the relative fiscal legislation that is currently in force. Therefore, the exercising unit price equals 4.92 Euros.

− Identified, as conditions for being able to exercise the options, the achievement of the company performance parameters of an economic/financial nature and on a yearly basis of “ROE” (Return On Equity) and “Free Cash Flow”. The two performance goals were given a weight of 50% each so that if only one of the goals is achieved the options will be assigned according to a quantitative scale that is commensurate with the level achieved regarding each individual goal. That these exercising conditions have, in fact, taken place will be checked by the Board, within the first half-year of the following financial year from that of the assignment of the Options, which means within the first half-year of 2010.

− Established that the options assigned for the year 2010 can only be exercised after the period of 36 months from the date of their assignment, subject to the fact that there actually do exist the aforesaid conditions for being able to exercise. Therefore, the exercising period will start from 23rd June 2013 and it will end on 22nd June 2016. Further information regarding all the Stock Option Plans is given in the Explanatory Notes to the Financial Statements of the company. In the case of the dissolution of an employment relationship, whether employee or not, for voluntary resignation, or termination for just cause, or for any subjectively justified reason the plan assignees lose all their relative rights. In the case of the dissolution of an employment relationship, whether employee or not, for different reasons that those referred to above the Board of Directors shall, from time to time, decide upon what system is applicable to the options that are exercisable at that date.

10. INTERNAL CONTROLS COMMITTEE The Board of Directors Meeting of 23rd April 2009 nominated the Internal Controls Committee, constituted in 2006, consisting of three Non-executive Directors, who are experts in accounting and financial matters and the majority of whom are independent, who will remain in office until the mandate of the whole Board of Directors expires and calling upon the following persons to form part of it: Carlo Secchi Chairman – Independent Director Alfredo Messina Non executive Director Attilio Ventura Independent Director During 2010 nine meetings of the Internal Controls Committee were held in which, at the invitation of the Committee itself and regarding individual items contained in the Agenda, there participated and presented reports persons who are not members of it and, specifically, according to their respective competencies, the Internal Controls Manager, the Surveillance and Control Body, the Assigned Executive, persons from the External Auditing Company, the managers of specific company functions of the company and/or of the Group, as well as, where this was considered to be opportune, outside consultants. The average duration of each meeting was about two hours. Eight meetings have been planned for the financial year 2011.

121 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations Usually the whole Board of Statutory Auditors participates in the Committee Meetings.

The percentage participation of each individual Director at the Committee Meetings is shown in the Attachment C to this Report. Functions of the Internal Controls Committee

The Internal Controls Committee, as well as assisting the Board of Directors in carrying out the tasks that have been entrusted to this latter regarding internal controls matters, which are referred to in article 10.5 of the Self Regulating Code of the company, exercises the functions that are listed in the SEC Code.

During the financial year 2010 the Committee held a total of nine meetings during which it did the following:

• It took into account the informational document relative the “Mediatrade” criminal law proceedings.

• It took into account the “Work Plan for the year 2010” prepared by the Internal Controls Manager and the relative Periodic Reports regarding the “Internal Controls System of the Mediaset Group”.

• It examined and judged positive the “Work Plan 2009/2010” and the “Audit Plan 2010” of the Auditing Company Reconta Ernst & Young S.p.A.

• It examined the “Letter of Suggestions” prepared and presented by the Auditing Company Reconta Ernst & Young S.p.A. and judged positive the findings that were made and the relative suggestions, as well as the a actions that were finalised and/or have been undertaken by the company in order to actuate them.

• It took into account the “Audit Plan 2010” of the Spanish subsidiary company Gestevision Telecinco S.A. and the updates on the audit activities that were carried out during 2010. Specifically, the company, during the financial year has carried out the activities pursuant to the Law 262/05 and the “Telecinco – Cuatro” due diligence that was foreseen in the context of the agreement between the company itself and Promotora De Informaciones S.A. (Prisa).

• It evaluated, together with the Company Executive responsible for the drafting of the company’s accounting documents, with the Auditing Company Reconta Ernst & Young S.p.A. and with the Board of Statutory Auditors, the accounting standards applied in the Mediaset Group and their homogeneousness for the purposes of the drafting of the Consolidated Financial Statements, believing them to be properly and correctly applied.

• It took into account the updates of the activities carried out by the Company Executive responsible for the drafting of the company’s accounting documents for the purpose of issuing the attestation relative to the Company Financial Statements and the Consolidated Financial Statements at 31st December 2006 that is asked for by article 154, part two, paragraph 5 of the CFA.

• It took into account the new legislation introduced with the Legislative Decree 36/2010 regarding the legal auditing of accounts. Regarding this matter the Committee stated that the current functioning of the Committee itself that foresees the participation at its meetings of the Board of Statutory Auditors was well set up. This participation actually

122 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations takes place at each and every meeting, thus highly favouring coordination regarding all matters of common interest.

• It took into account the issue of the Regulations regarding transactions with related parties by Consob (Italian SEC) and the relative and constant updates supplied by the company regarding the preparation and adoption of the “Procedure for transactions with related parties”.

• It took into account the periodic updates of the “Rights Suppliers List”, which is prepared and presented by the Rights Management Department of RTI S.p.A., for the purposes of the completion of the company procedure for the planning, the acquisition and the managing of the rights, judging them to be positive.

• It took into account the periodic Reports prepared and presented by the Internal Audit Department.

• It took into account the update on the progress status of the project called Quality Assurance Review (QAR) contained in the Internal Auditing Department’s activities. The project is forecasted to be finalised within the financial year 2011.

• It took into account the periodic Reports prepared and presented by the Surveillance and Controls Body of Mediaset regarding the outcome of the checks that were carried out and the initiatives that were undertaken, pursuant to the Legislative Decree 231/01.

• It took into account the annual update by the Risk Officer regarding the evaluation and the methodologies of managing the main company, strategic and process risks of the Mediaset Group according to the “Enterprise Risk Management” methodology.

Lastly, the Board of Directors asked for the support of the Internal Controls Committee in the examination of some transactions with related parties for the purpose of being able to formulate an opinion regarding the financial conditions, and/or the executive methodologies, and/or any of the technical aspects, and/or regarding the legitimacy of the transactions themselves. Regarding this the Committee, after having carried out all the necessary, and/or opportune in depth investigations formulated and then expressed to the Committee its favourable opinion regarding the finalising of the aforesaid transactions. The examination was carried out in order to observe the contents of “The Guidelines regarding significant operations and transactions with related parties” of the Mediaset Group, approved on 185th December 2007, which is still in force in 2010.

During the opening months of 2011 its activities continued and, specifically, there were held two meeting during which the Internal Controls Committee did the following:

• It took into account the “Audit Plan 2010” of the of the Spanish subsidiary company Gestevision Telecinco S.A.

• It examined and judged positive the “Work Plan 2010/201” of the Auditing Company Reconta Ernst & Young S.p.A.

• It examined the request for the addition to the fees for the accounting audit of Medaiset S.p.A. for the period from 2010 to 2016 asked for by Reconta Ernst & Young S.p.A. and judged them to be acceptable.

• It expressed its favourable opinion regarding the changes made to the “Policy for managing the financial risk” of the Mediaset Group.

123 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations • It took into account the “Work Plan for the year 2011” prepared by the Internal Controls Manager.

• It took into account the “Actual Results of the Audit Plan 2010” prepared and presented by the Internal Audit Department.

• It took into account the update of the activities carried out by the Assigned Executive for the drafting of the company’s accounting documents as per Law 262/2005 regarding the safeguarding of Savings, for the purpose of issuing the Attestation regarding the Yearly Financial Statements and the Consolidated Financial Statements at 31st December 2010 laid down by article 154, second part, paragraph 5, of the Consolidated Finance Act.

• It evaluated, together with the Assigned Executive for the drafting of the company’s accounting documents, with the auditing company Reconta Ernst & Young S.p.A. and with the Board of Statutory Auditors, the accounting standards applied within the Mediaset Group and their homogeneousness for the purpose of drafting the Consolidated Financial Statements, judging them to have been correctly applied.

• It took into account the Report prepared by the Internal Controls Manager regarding the Internal Controls System of the Mediaset Group relative to the financial year 2010. During the activities described above and based on the reports it received from the Internal Controls Manager the Committee has judged the internal controls system to be suitable and appropriate.

Furthermore, the Committee, in the light of the checks that were carried out by the same Internal Controls Manager, on the ‘Policy for the management of the internal controls system” adopted by the Executive Director based on the guidelines issued by the Board of Directors in the meeting of 28th June 2007, proposed to the Board of Directors that it should evaluate, pursuant to the Self Regulating Code, the internal controls system as being both operational and effective.

The Committee, as has already been said, has put in place its own set of functioning regulations and all the aforesaid meetings have been the subjects of regular Minutes. At the meetings there is present the manager of the Company Affairs Directorate who holds the office of Secretary of the Committee. The Secretary, in agreement with the Chairman of the Committee, in the days preceding the meetings, sees to it that there is sent to the members of the Internal Controls Committee all the documentation available at that time as support for dealing with the items contained in the Agenda.

In carrying out its functions the Internal Controls Committee has had complete access to all the information and functions of the company and/or of the Group that were necessary for its purposes and/or it has availed itself of the services of outside consultants. The Internal Controls Committee has been given the financing availability of 350 thousand Euros per annum for the expenses for fulfilling its tasks.

The members of the Committee receive a presence fee, for participating in each meeting, for the amount that was fixed by the Shareholders’ Meeting of 22nd April 2009.

11. INTERNAL CONTROLS SYSTEM

The internal controls system is made up of an ensemble of rules, procedures and organisational structures aimed at enabling, through using a suitable and appropriate process of identification,

124 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations measurement, management and monitoring of the main risks, the healthy and correct running of the enterprise that is also coherent with its forecasted objectives.

According to what is laid down by the Mediaset Code, the Board of Directors, with the assistance of the Internal Controls Committee does the following: a) Defines the guidelines of the internal controls system, in such a way that the main risks that could impact the company and its subsidiaries are correctly identified, as well as being properly measured, managed and monitored, while also calculating the criteria of compatibility of these risks with a healthy, proper and correct management of the enterprise. b) Identifies an Executive Director assigned to oversee the functionality of the internal controls system. c) Evaluates, at least yearly, the adequacy, effectiveness and the actual functioning of the internal controls system. d) Describes, relative to corporate governance, the essential elements of the internal controls system, expressing its own evaluation regarding its overall adequacy.

Furthermore, the Board of Directors exercises its own functions relative to the internal controls system taking into proper consideration the reference models and the best practices that exist in both a domestic and international context. Specific attention has been focused on the organisational and managerial models that have been put in place pursuant to the Legislative Decree 231/2001.

As laid down by article 10.5 a) of the Mediaset Code, the Board of Directors, with the favourable opinion of the Internal Controls Committee, define during the meeting of 28th June 2007 the guidelines of the internal controls system in such a way that the main risks that could impact the company and its subsidiaries are correctly identified, as well as being properly measured, managed and monitored, while also calculating the criteria of compatibility of these risks with a healthy, proper and correct management of the enterprise.

These Guidelines, that identify the Enterprise Risk Management Framework as the reference model for presiding over the internal controls system, have been actuated, by the Executive Director, in the “Policy for the management of the internal controls system”, which defines the main methodological aspects linked to the management of risks, as well as the roles, responsibilities and main activities linked to risk management.

According to the Enterprise Risk Management methodology, the internal controls system is traced down starting from the definition of the company’s strategy. The company’s objectives are taken into consideration by the methodology according to the following categories: Strategic objectives: high-level objectives that are aligned with and support the company’s mission. Operational objectives: objectives that are linked to the efficient and effect use of resources. Reporting objectives: objectives that are linked to the trustworthiness of the company’s internal and external reporting. Compliance objectives: objectives that are linked to conformity with the applicable laws and regulations.

The internal controls system of the Mediaset Group is able to identify and measure the main company risks that could undermine the achievement of the objectives that have been defined 125 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations above, taking into account the specific characteristics of the business activities that are carried out by Mediaset S.p.A. and by its subsidiary companies, based on the following criteria: The nature of the risk, with reference to the risks of a strategic, operational, reporting and compliance nature. The possibility of the risk to prejudice the ability to achieve the company’s objectives. The organisation’s ability to properly manage the identified risk.

The correct and proper monitoring of the company’s risks is carried out through checking on the suitability of the internal controls system to deliver an acceptable overall risk profile. Specifically, the internal controls system of the Mediaset Group foresees the following: The systematic monitoring by management of the main company risks, which is aimed at the identification and implementation of eventual corrections to be made to the existing controls processes and procedures. Doing periodic independent checks on the adequacy and effectiveness of the internal controls system, as well as the speedy activating of specific corrective interventions in those cases where weaknesses in it are flagged. Rules for reporting on the adequacy and effectiveness of the internal controls system. For this purpose, the Executive Director takes care of the managing of the internal controls system of the Mediaset Group in order that it is suitable to do the following: To speedily react to significant risk situations, foreseeing that adequate control overviews are in place. To ensure, within the context of company processes and procedures, a suitable level of separation between the operational and control functions, thus avoiding that conflicts of interest arise regarding the assigned competencies. To ensure, within the context of the operational and administrative/accounting activities, the use of systems and procedures that guarantee the accurate recording of company phenomena and of the operational facts, as well as the putting in place of trustworthy, dependable and timely informational flows both inside and outside of the Group; To put in place methodologies for the speedy communication of the significant risks and of the control anomalies that emerge to appropriate levels within the Group, thus enable the identification and the speedy carrying out of the necessary corrective actions.

With particular reference to the financial information systems, below there is given the description of the risks management system and the internal controls inherent to it pursuant to article 123, part two, paragraph 2, letter b) of the CFA.

Main characteristics of the existing risks management and internal controls systems in relation to the financial informational system The System of risk management and internal controls relative to the financial informational process (2), developed within the Mediaset Group, is aimed at guaranteeing the dependability, accuracy, trustworthiness and speediness of the supply of financial information.

2 For financial informational process, as examples, reference should be made to: periodic accounting information, yearly and half-yearly financial report, interim operational statement, also consolidated, continuous informational disclosures and press releases.

126 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations Mediaset, in defining its own system has aligned itself with the existing indications given in the reference legislation and regulations in force. Because the reference legislation and regulations do not explicitly establish specific criteria for the design, planning, implementation, evaluation and monitoring of the Risks Management and Internal Controls System relative to the process of financial informational documentation, Mediaset applies a model that is universally recognised as being among the most highly regarded ones, the CoSO (Committee of Sponsoring Organizations) Framework. Furthermore, the implementation of the System has taken into account the guidelines supplied by some category bodies regarding the activities of the Assigned Executive such as the Italian Confederation of Industry and the National Association of Finance and Administration Managers (Confindustria and Andaf). Article 154, part two, of the CFA laid down that that there be introduced, within the company organisation of companies that issue shares on regulated markets, the position of the Assigned Executive, to whom there are given specific responsibilities regarding the company’s informational documentation. The Assigned Executive, among his other activities is responsible, in cooperation with the functions involved, for the putting in place adequate administration and accounting procedures for the preparation of the Yearly Financial Statements, of the Consolidated Financial Statements and of the Half-Yearly Financial Statements, as well as any other information supplied to the market and relative to accounting informational documentation, and for the issuing of the specific attestations. The Assigned Executive, in order to fulfil the requirements laid down by the legislation and regulations, avails himself of a company structure that has been specifically set up. This structure ’s role is to support the Assigned Executive in designing, implementing and maintaining adequate administrative and accounting procedures aimed at the drafting of the Yearly Financial Statements and of the Consolidated Financial Statements and supplying the Assigned Executive with the elements in order to be able to evaluate their adequacy and effective functioning. The Assigned Executive’s support structure, in its turn, cooperates with the process owners for the speedy identification of any events that can impact or change the frame of reference, for the updating of the administrative and accounting procedures, for the implementation of new controls and the carrying out of any improvement plans within their own processes. The Assigned Executive, in order to fulfil the requirements laid down by the legislation and regulations, avails himself of a company structure that has been specifically set up. This structure ’s role is to support the Assigned Executive in designing, implementing and maintaining adequate administrative and accounting procedures aimed at the drafting of the Yearly Financial Statements and of the Consolidated Financial Statements and supplying the Assigned Executive with the elements in order to be able to evaluate their adequacy and effective functioning. The Internal Auditing Department periodically carries out independent checks on the adequacy and effective functioning of the controls model used by the company in order to properly observe the requisites identified by the Law for Safeguarding Savings relative to the fulfilment of obligations related to the position of Assigned Executive. The Risks Management and Internal Controls System relative to the financial informational documentation process is basically an ensemble of administrative and accounting procedures and of evaluation tools regarding their adequacy and effective functioning, that contribute to form an internal controls model that is maintained, updated over time and, where there are identified concrete opportunities for rationalisation and optimisation, developed further. The model contains three analyses points:

127 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations a) The definition of the analysis context with the identification and evaluation of the risks. b) The findings and documentation of the controls. c) The evaluation of the adequacy and the effective application of the administrative and accounting procedures and the relative controls. a) The definition of the analysis context with the identification and evaluation of the risks

For the purpose of determining and planning the activities of checking on the adequacy and the effective application of the administrative and accounting procedures of the Group, the definition of the analysis context describes the path that must be followed in determining the level of complexity, for the identification and evaluation of the risks and for evaluating the materiality of the various areas of the Financial Statements. This path is aimed at evaluating the controls on the transactions generated by those company processes that feed the accounting data and their transposition into the financial reporting.

The identification of significant processes that are representative of the business takes place through a quantitative analysis of the items in the Financial Statements, applying the concept of materiality on the aggregated items contained in the Consolidated Financial Statements of the Mediaset Group and a qualitative analysis of the process based on their level of complexity. For each process that has been identified as relevant there are then defined the “generic ” risks of untrustworthiness of the inherent in the process itself, making reference to the, so-called, Financial Statements assertions, i.e. existence and occurrence, completeness, rights and obligations valuation and recording, presentation and informational documentation, which constitute the controls objectives. The Assigned Executive reviews the definition of the reference context at least yearly and whenever there show themselves any elements that can change the analysis that has been carried out in a relevant manner. b) The findings and documentation of the controls The identification of the controls takes place through the process of putting in place the administrative and accounting procedures and these answer different control assertions (3) The controls that have been identified are formalised within a specific matrix called the “Risks and Controls Matrix” in the area of the administrative and accounting procedures. This matrix is the detailed document within which there are identified the “generic” risks of untrustworthiness relative to the Financial Reporting and the “specific” controls that have been identified and applied when carrying out the activities. The administrative and accounting procedures and the relative controls are periodically monitored and updated through a process that involves the Assigned Executive, his support structure and the process owners. Specifically, the process owners communicate, on a regular basis, to the Assigned Executive’s support structure the events that can impact and change the frame of reference of the relevant processes and, each year, the Assigned Executive’s support structure go through and

3 The reference control assertions are: accuracy: the control ensures that all the details of the individual transaction have been properly processed completeness: the control ensures that all the transactions are processed and that they are only processed once. validity: the control ensures that the processed transaction is subject to appropriate and proper authorisation levels and that it is actually pertinent to the reality of the company. restricted access: the control ensures that all access to information and transactions is properly configured in function of the roles and responsibilities that are recognised by the company.

128 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations validate the whole controls model, involving all the process owners in the revisiting of the process that fall within their competencies. c) The evaluation of the adequacy and of the effective application of the administrative and accounting procedures and of the relative controls The evaluation of the adequacy and the effective application of the administrative and accounting procedures, carried out through specific testing activities is aimed at ensuring that both the design and the operational ability of the identified controls are valid. The Mediaset Group has put in place a testing strategy, which is basically the definition of the approach and the criteria used for carrying out these tests and consist of the periodicity of the analyses, the sizing of the sample, the types of tests to carry out, the formalising of the tests that that have been carried out and the information flows for communicating the outcomes of the tests that were made. Test activities are carried out for the purpose of guaranteeing the effective application of the controls put in place in observance of the defined testing strategy. Each test, with its relative outcome, is documented through formalising of a test sheet and the filing of the documentary evidence gathered. On a six-monthly basis the Assigned Executive’s support structure prepares a report in which there are explained the activities carried out and the outcomes of the tests made. Based on the result of the testing the Assigned Executive, with the cooperation of his support structure, defines a remedial plan for the purpose of rectifying any deficiencies that can have a negative impact on the effectiveness on the Risks Management and Internal Controls System relative to the financial informational documentation. The Assigned Executive’s support structure, in cooperation with the process owners for their respective competency areas, has the task of coordinating the carrying out of any improvement plans and ensuring that they are correctly implemented. At least yearly, the Assigned Executive reports to the Internal Controls Committee, to Board of Statutory Auditors and reports to the Internal Controls Manager and to the company’s Surveillance Bodies of the Mediaset Group, with reference to the methodologies with which there has been conducted the evaluation of the adequacy and the effective application of the controls and the administrative/accounting procedures, as well as on the observance of the defined remedial plans and he expresses his valuation regarding the adequacy of the accounting and administrative controls systems.

11.1. THE EXECUTIVE DIRECTOR ENTRUSTED TO OVERSEE THE FUNCTIONALITY OF THE INTERNAL CONTROLS SYSTEM

The Board of Directors, following its renewal, in its meeting of 23rd April 2009, with the favourable opinion of the Internal Controls Committee, confirmed the Chairman, already nominated in 2007, as the Executive Director assigned to supervising the function of the internal controls system. The Executive Director has done the following during 2010: – Set in motion the guidelines issued by the Board of Directors. – Overseen the adapting of this system to the dynamics of the operational conditions and to the relative legislative and regulatory situations. 129 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations

– Taken care of the identification of the main company risks, i.e. strategic, operational, financial and of compliance, taking into account the characteristics of the company’s and its subsidiaries’ business activities, following the definition by the Board of Directors of the guidelines of the internal controls system. The analyses and evaluation of the main business processes and those of business support, with the involvement of the management of the Group, of the Internal Auditing Department and the Risk Officer has enabled, the ability to express an overall evaluation regarding the state of the internal controls system and was finalised with the presentation at the Board of Directors Meeting of 21st December 2010 of the specific Report by the Executive Director.

11.2. INTERNAL CONTROLS MANAGER The Board of Directors in the meeting of 23rd April 2009, confirmed, as Internal Controls Manager, Mr. Aldo Tani, Manager of the Internal Auditing Department of the Mediaset Group, based on the proposal of the Executive Director and with the favourable opinion of the Internal Controls Committee, following what is laid down by the Mediaset Code. Mr. Aldo Tani, Manager of the Internal Auditing Department of the Mediaset Group until July 2010 has kept the position of Internal Controls Manager.

Pursuant to article 13 of the Mediaset Code, the Internal Controls Manager: a) Is entrusted with checking that the internal controls system is always adequate, fully operational and functioning. b) Is not responsible for any operational area, whatsoever, and does not hierarchically depend on any manager of operational areas, whomsoever. c) Has direct access to all the information that is useful for carrying out his assignment. d) Has available all the adequate means in order to be able to carry out the function assigned to him. e) Reports, regarding his work, to the Internal Controls Committee, to the Board of Statutory Auditors and to Executive Director. Specifically, he reports regarding the methodologies with which the management of the risks is conducted, as well as on the observance of the plans defined for limiting them and expresses his evaluation on the suitability of the internal controls system to achieve an acceptable overall total risk profile.

There have not been specifically quantified the financial resources to be made available to the Internal Controls Manager for carrying out the tasks related to his position, because he avails himself of the resources of the Internal Auditing Department for carrying out the relative activities.

In support of his technical opinion expressed regarding the adequacy of the internal controls system, the Internal Controls Manager shares and agrees the following in advance: - The findings from the Audit Plan with the Internal Auditing Department. - The results of the evaluation and management of the risks with the Risk Officer and the Assigned Executive, for the purpose of identifying the main company risk areas. The Internal Controls Manager also maintains periodic information flows with the company personnel, bodies and structures that have the function of surveillance or monitoring of the internal controls system such as, for example, the Assigned Executive, the external auditing

130 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations company, the Board of Statutory Auditors and the Surveillance and Control Bodies as per the Legislative Decree 231 /01, regarding the individual responsibilities of each one of them. The Internal Controls Manager, Internal Auditing and the External Auditing Company have completely free access to the data, documentation and information that is necessary and useful for carrying out their activities.

11.3. THE ORGANISATIONAL MODEL as per the Legislative Decree 231 /2001 The system of the Organisation, Management and Control Model, pursuant to the Legislative Decree 231/2001, approved by the Board of Directors of Mediaset S.p.A. on 29th July 2003 and afterwards added to following the evolution of the relative legislation and regulations, the last addition being made with the resolution passed by the Board of Directors Meeting of 21st December 2010.

With the putting in place of its own Organisational Model, understood as being an ensemble of rules of a general and operational nature, Mediaset S.p.A. set itself the goal of furnishing itself with an overall complex of behavioural principles, as well as of procedures, which responds to the purposes and prescriptions of the Legislative Decree 231/01, both in terms of the prevention of offences and illegal administrative acts as well as in terms of the control of the its actuation and the eventual issuing of sanctions.

The Organisational Model, in fact, is made up of an organic ensemble of principles, standards, rules, measures and organisational frameworks relative to the management and control of the company’s activities and consists, among other things, of an illustrative summary document, containing all the general rules and regulations suitable for preventing the committing of the illegal actions that are referred to by the Legislative Decree 231/01.

The updates of the Organisational Model have mainly taken into account the legislative innovations that occur from time to time, as well as the progressive juridical interventions regarding the organisational, management and controls models.

Surveillance and Controls Body The Surveillance and Controls Body nominated by the Board of Directors Meeting of 23rd April 2009, subject to the prior ascertainment of the existence of the prerequisites of honourableness, the same as those that are asked for from the Directors of the company, and of the professionalism that is suitable and appropriate for the role to be played and the exemption for reasons of incompatibility and due to conflicts of interest with other company functions and/or assignments that are such as to undermine the freedom of action and judgement, its mandate will expire at the approval of the Financial Statements at 31 December 2011. It consists of three members who are the following persons: Sergio Beretta Chairman – External consultant Aldo Tani Person in charge for internal control Michele Pirotta External consultant In carrying out its activities the Surveillance and Controls Body under its direct surveillance and responsibility is mainly supported by the Internal Auditing Department and it can avail itself, where necessary, of the support of other company functions or of that of external consultants. The Surveillance and Controls Body carries out the tasks and exercises the powers laid down in the Model.

131 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations For the purpose of fulfilling its own responsibilities the Surveillance and Controls Body can, at any time whatsoever, within the context of its own independence and discretional faculties, go ahead with checks regarding the application of the Model and of the procedures that are linked to it and these checks can be carried out singly by each individual one of its members.

Based on the checks carried out the Surveillance and Controls Body also has the task of highlighting to the company whether it is opportune to go ahead with the relative adjustments and updates of the Organisational Model and/or of the relative procedures as a consequence of legislative and regulatory and/or organisational changes that have taken place, where there have been significant violations of the prescriptions laid down by the Organisational Model and/or of the company procedures that are linked to it, or when there has been ascertained the existence of new areas of activity that are at risk. By means of successive follow-up activities, the Surveillance and Controls Body then satisfies itself that any recommended corrective actions have actually been carried out by the competent functions of the company. During 2010 the Surveillance and Controls Body met 8 times has reported, half-yearly, to the Board of Directors, the Internal Controls Committee and the Board of Statutory Auditors of the company. Similar initiatives of updating and implementing their own Organisational Models have been put in place by the subsidiary companies.

11.4. THE EXTERNAL AUDITING COMPANY The Shareholders’ Meeting of 16th April 2008 entrusted the auditing company Reconta Ernst & Young S.p.A. with the audit of the Yearly and Consolidated Financial Statements, as well as the limited accounting review of the Half-Yearly Financial Statements for the financial years 2008/2016, pursuant to the combination of measures laid down by articles 156 to 159 of the CFA. The Financial Statements of the subsidiary companies are subject to accounting audits which have been entrusted to Reconta Ernst & Young S.p.A. 11.5. THE ASSIGNED EXECUTIVE FOR THE DRAFTING OF THE COMPANY’S ACCOUNTING DOCUMENTS

Pursuant to article 28 of the Articles of Incorporation and article 154, part two, of the CFA, the Board of Directors Meeting of 23rd April 2009 has confirmed, subject to the prior ascertainment of the requisites laid down by the Articles of Incorporation and by Law, Mr. Andrea Goretti, previously nominated in 2007, who is the Manager of the Foreign Holdings Administration and Controls Department of the company, as the Assigned Executive who shall hold the position until the Shareholders’ Meeting that approves the Financial Statements for the year ended at 31 December 2011. The Assigned Executive has been given all the powers and the responsibilities for carrying out the assignment and the relative tasks established by article 154, part two, of the CFA.

For the financial year 2010 the Assigned Executive, availing himself of the services of the Risk Office function, which was assisted by outside consultants, actuated, relative to the main processes within the operating companies of the Group, the activities laid down for the evaluation, updating and documentation of the internal controls system for the purposes of the Law 262/05. Specifically, the following were carried out:

- The identification and evaluation of the company processes and of the relative risks. 132 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations – The updating, where necessary following the evolution of the operational methodologies of the Group, of the processes and of the controls found during prior years. - The analysis of the adequacy of controls that have been put in place relative to the administrative/accounting and financial aspects of the company. - The carrying out of the tests and the relative documentation of the controls for checking on the administrative/accounting procedures. - The formalising of the remediation plan aimed at removing any deficiencies in the controls. - The monitoring of the state of the defined remediation activities and the definite and testing of the relative controls activities that have been implemented.

To the Yearly Financial Statements 2010 and the Consolidated Financial Statements 2010 of the company there were attached the attestations, stated according to the model that is laid down by the Consob (Italian SEC) regulations, regarding the adequacy and the effective application of the procedures, as well as the fact that they truly reflect the contents of the accounting books and postings and their suitability and to provide a true and fair view of the Balance Sheet, Income Statement and Financial situations of the company and of the whole group of the enterprises that are included in the consolidation, signed by the Assigned Executive and by the Chairman of the company.

It is to be remembered that, pursuant to the Mediaset Code, the Assigned Executive evaluates, together with the Internal Controls Committee and with the auditors, the correct usage of the accounting standards and, in the case of the group, their homogeneousness for the purpose of drawing up the Consolidated Financial Statements, an activity that is physically carried out during the first few opening months of each financial year.

The Board of Directors, in the meeting of 22nd June 2010, within the limits of the budget approved by the Board itself, gave the Assigned Executive available financing of the amount of 400,000 Euros for the expenses for fulfilling his tasks.

12. INTERESTS OF THE DIRECTORS AND TRANSACTIONS WITH CORRELATED PARTIES Procedure for the transactions with related parties

The Board of Directors Meeting of 9th November 2010 approved the “Procedure for the transactions with related parties” in actuation of what is laid down in the “Regulations containing measures for transactions with related parties” adopted by Consob (Italian SEC) with its resolution number 17221 of 12th March 2010, as afterwards modified with its resolution number 17389 of 23rd June 2010.

The Procedure was submitted for the prior examination of the of the Governance Committee that gave its unanimous favourable opinion on it on 4th November 2010. The Board of Directors Meeting of 29th July 2010 had already conferred upon that Committee the mandate to express its prior opinion at the time of the adoption of the procedure. The Board of Directors Meeting of 9th November 2010 created the Committee of Independents, consisting only of Independent Directors.

The Procedure, applicable from 1st January 2011 and viewable on the website, sets the rules for the identification, approval, execution and publishing of the transactions with related parties carried out by Mediaset S.p.A., either directly or through subsidiary companies, for the purpose of

133 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations ensuring both the substantial and procedural transparency and correctness of the transactions themselves, as well as the cases of exclusion from the application of these rules.

The Procedure identified the following categories of transactions transactions of major and minor relevance establishing the rules for carrying them out and identifying the transactions to which the foregoing rules are not applied. Among the operations excluded there are, specifically, the minimal transactions those with a total value of less than 500,000.00 Euros. The transactions with, or between subsidiary and affiliated companies and the normal transactions.

The Procedure adopted has replaced, with effect from the date of its entry into force, the “Guidelines relative to significantly big transactions and those with related parties”, which was adopted by the Board of Directors on 18th December 2007.

Committee of Independents

The Committee of Independents consists of three non-executive and independent Directors, who remain in office until the mandate of the whole Board of Directors expires:

Attilio Ventura Chairman – Independent Director Paolo Andrea Colombo Independent Director Carlo Secchi Independent Director The Committee of Independents carries out the tasks laid down by the Related Parties Regulations and by the procedure. Specifically, with regards to the transactions of minor relevance it expresses non-binding opinions while for those of major relevance it expresses binding opinions.

During 2010, the Committee of Independents met once in order to approve its own functional regulations. The percentage participation of each individual Director at the Committee meetings is given in Attachment C to this Report. In 2011 one meeting was held during which the Committee examined and gave its favourable opinion on the changes to the Articles of Incorporation, consequent to the introduction of the Procedure.

The Board of Directors, in its meeting of 9th November 2010, within the limits of the budget approved by the Board itself, gave the Committee of Independents financial availability of 100 thousand Euros per annum for the expenses linked to the fulfilment of its tasks and duties.

The members of the Committee receive a presence fee for their attendance at each individual meeting for the amount that was approved by the Shareholders’ Meeting of 22nd April 2009. Directors having interests Before dealing with the subject, the Director must give exhaustive information, to the other Directors and to the Board of Statutory Auditors of any interest, even a potential one, which, on his own behalf or that of third parties, independently of any situation of conflict regarding it, that he has in a specific transaction of the company detailing its nature, terms, origin and dimensions. If the Director involved is a Managing Director, he must also abstain from carrying out the transaction.

13. NOMINATION OF THE STATUTORY AUDITORS The nomination of the statutory Auditors is governed by article 27 of the Articles of Incorporation given in Attachment D to this Report.

The Shareholders’ Meeting elects the Board of Statutory Auditors, consisting of three Active Statutory Auditors and two Substitute Statutory Auditors, who remain in office for three financial

134 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations years, and whose mandates expire with the Shareholders’ Meeting called to approve the Financial Statements relative to the third financial year of their period of office and they can be re-elected.

All the Statutory Auditors must be inscribed in the Register of Accounting Auditors set up within the Ministry of Justice and must have carried out the legal auditing of accounts for a period of not less than three years.

Furthermore, the Statutory Auditors must possess the necessary requisites laid down by the relative legislation and regulations that are currently in force and the Board of Directors must ascertain that these actually exist.

It is underlined that, based on the contents of the Articles of Incorporation that are currently in force, there have the right to present the lists of candidates those shareholders who have voting rights and who, either on their own or together, are totally the owners of the shareholding asked for by the Articles of Incorporation for the presentation of the lists regarding the nomination of the members of the Board of Directors. Regarding this it is highlighted that, pursuant to the Consob (Italian SEC) Resolution, n° 16319/2008, the percentage shareholding required for the presentation of lists of candidates for membership of the Board of Statutory Auditors at the Shareholders’ Meeting of 16th April 2008 was 1%. Article 144, part six, of the Issuers Regulations, lays down that whenever, 25 days before the one fixed for the Shareholders’ Meeting, only one list is presented, other lists can be presented until the third day after that date. In this case the thresholds are reduced to half.

14. STATUTORY AUDITORS The Board of Statutory Auditors, pursuant to article 149 of the CFA watches over the observance of the relative legislation and the contents of the Articles of Incorporation, over the observance of the principles of a correct and proper administration, over the appropriateness of the organisational structure of the company for all the aspects that fall within its own competencies, over the internal controls system and the administrative/accounting system, as well as regarding the dependability and trustworthiness of this latter in correctly recording and present operations. It watches over the methodologies of the practical actuation of the rules of corporate governance laid down by the behavioural codes drawn up by companies that manage regulated markets, or issued by category associations, regarding which the company, through its public disclosures, declares its observance and also regarding the appropriateness and adequacy of the measures imparted by the company to its subsidiary companies. Furthermore, the Legislative Decree of 27th January 2010 number 39 assigned the Board of Statutory Auditors specific tasks of surveillance regarding the following matters: a) The financial informational process. b) The effectiveness of the systems of internal controls, of internal auditing, if applicable, and that of risk management. The legal audit of the annual accounts and the consolidated accounts. c) The independence of the legal auditor or of the company that carries out the legal audit.

The Board of Statutory Auditors was nominated by the Shareholders’ Meeting of 16th April 2008 and its mandate will expire with the Shareholders’ Meeting called to approve the Financial Statements for the year closed at 31 December 2010 and it consists of the following persons: Alberto Giussani, Silvio Bianchi Martini, Francesco Vittadini, Antonio Marchesi and Mario d ’Onofrio. Attachment E to this Report gives the membership of the Board of Statutory Auditors.

135 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations The Chairman of the Board of Statutory Auditors is Alberto Giussani, listed at first place in the minority list.

The nomination takes place through the mechanism of list voting. At the Shareholders’ Meeting of 16th April two lists were presented. The first by the shareholder Fininvest S.p.A. with a holding amounting to 37.04% of the Share Capital, consisting of the candidates Francesco Vittadini, Silvio Bianchi Martini and Ezio Maria Simonelli to the office of Active Statutory Auditors and Antonio Marchesi and Giancarlo Povoleri to the office of Substitute Statutory Auditor. According to article 144, part six, of the Issuers Regulations, a second list was deposited by the shareholders (4) who owned, on a total basis 0.56 % of the Share Capital. The list consisted of the candidates Alberto Giussani to the office of Active Statutory Auditor and Mario d ’Onofrio to the office of Substitute Statutory Auditor. Together with the lists there was deposited, for each individual candidate, all the documentation laid down by the relative legislation and regulations and by the Articles of Incorporation for the of the Board of Statutory Auditors. For the list presented by the minority shareholders there was also deposited the declaration attesting the absence of any linking relationships with the relative majority shareholder Fininvest S.p.A. The curricula vitae of the Board of Statutory Auditors can be consulted on the company’s website and are given in Attachment F to this. ***

No change in the current membership of the Board of Statutory Auditors has taken place since the closing date of the financial year.

During 2010 fifteen meetings of the Board of Statutory Auditors were held. The average duration of each meeting was about 1 hour. For the year 2011 about 14 meetings were planned and, as of today, 2 have been held.

On 3rd December 2010 the Board of Statutory Auditors, in observance of the Mediaset Code, aimed at ensuring that the Statutory Auditors had the necessary independence requisites, among other things, also evaluated the continuance of the requisites of independence of its members and it checked on the correct application of the criteria and the ascertainment procedures used by the Board to evaluate the independence of the Directors.

Before the Board Meetings the Statutory Auditors are supplied with the documentation regarding the matters to be evaluated and resolved upon.

It also watched over the independence of the external auditing company, checking both the observance of the relative legislative measures and the nature and entity of the different services supplied to Mediaset and its subsidiary companies by the same external auditing company and by the entities belonging to retail. Regarding this the Board of Statutory Auditors had no findings that required to be highlighted.

The Statutory Auditor who, on his own behalf or on that of third parties, has an interest in a specific transaction of the company must speedily and exhaustively inform the other Statutory

4 Arca S.G.R. S.p.A. (Rubrica Fondo Azioni Italia -Rubrica Fondo Arca Bb), UBI Pramerica S.G.R. S.p.A. (Ubi Pramerica Azioni Italia -Capitalgest Italia), Monte Paschi Asset Management S.G.R. S.p.A. (Ducato Geo Italia), Eurizon Investimenti S.G.R. S.p.A. (Nextra Azioni Italia), Pioneer Investment Management S.G.R. S.p.A. (Pioneer Azionario Crescita), Pioneer Asset Management S.A. (Pioneer Asset Management SA), Eurizon CapitaI S.G.R. S.p.A. (Eurizon CapitaI Sgr Sanpaolo Azioni Italia -Eurizon CapitaI Sgr Sanpaolo Italian Equity Risk -Eurizon CapitaI Sgr Sanpaolo Opportunità Italia -Eurizon CapitaI Sgr Sanpaolo Euro Eurizon CapitaI Sgr Sanpaolo Soluzione 3 -Eurizon CapitaI Sgr Sanpaolo Soluzione 4 -Eurizon CapitaI Sgr Sanpaolo Soluzione 5 -Eurizon CapitaI Sgr Sanpaolo Soluzione 6 -Eurizon CapitaI Sgr Sanpaolo Soluzione 7), Eurizon CapitaI S.A. (Eurizon Easy Fund Equity Italy -Eurizon Easy Fund Equity Euro -Eurizon Easy Fund Equity Europe -Eurizon Easy Fund Equity Media), Fideuram Gestions S.A. (Fonditalia Global -Fonditalia Euro T.M.T. -Fideuram Fund Europe Listed Consumer Discretionary Equity) and Interfund Sicav (Interfund Equity Europe Interfund Equity Europe Consumer Discretionary) 136 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations Auditors the Chairman of the Board of Directors regarding the nature, terms, origin and dimensions of his interest.

Regarding the necessary requisites of the members of the Board of Statutory Auditors, it is highlighted that the current Board of Statutory Auditors possesses all the necessary legal requisites.

The Board of Statutory Auditors, in carrying out its own activities, also worked in coordination with the Internal Audit Function and it also coordinated with the Internal Controls Committee, taking part in the Committee’s meetings.

15. RELATIONS WITH THE SHAREHOLDERS

On the company’s website there can be found both the information of an economic/financial nature such as Financial Statements, Half-Yearly and Quarterly Reports, presentations to the financial community and the trend of the Stock Exchange transactions involving the financial instruments issued by the company and the data and documents that are of interest to all the shareholders such as press releases, the membership of the Bodies and Committees of the company, the Articles of Incorporation of the company, the Regulations of the Shareholders’ Meetings and the Minutes of the Shareholders’ Meetings, as well as documents and information regarding corporate governance and the organisational model, pursuant to the Legislative Decree N° 231/2001.

For the purpose of putting in place a continuous ongoing relationship with the shareholders based on the understanding of their reciprocal roles, the Board of Directors of Mediaset has identified, in the person of the Chief Financial Officer of the Group, Marco Giordani, who reports directly to the Chairman of the company, the Manager entrusted with managing the relations with the shareholders. For this purpose the Chief Financial Officer avails himself of the services of the following two functions that report directly to him:

The Company Affairs Directorate, which presides over the relationships with the Retail Investors and the Institutional Entities like Consob (Italian SEC) and Borsa Italiana (the company that runs the Italian Stock Exchange.

The Investor Relations Directorate, which presides over the relationships with the Financial Community, i.e. Financial Analysts, Institutional Investors and Rating Companies.

Within the month of January there will be supplied to the market and published on the company’s website the financial calendar with the detail of the main financial events.

The addresses and telephone numbers of the Company Affairs Directorate and the Investor Relations Directorate can be found on the website of the company.

The Board of Directors, pursuant to what is laid down by the Self Regulating Code of the company evaluated, during the meeting of 21st December 2010, that the company structures entrusted with these functions are adequate for carrying out these tasks that ensure effective and continuous relations with the Financial Community and with the competent Authorities involved.

137 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations 16. SHAREHOLDERS’ MEETINGS

The Shareholders’ Meeting is the time of the institutional encounter between the management of the company and its Shareholders.

In calling, convening, planning and managing the Shareholders’ Meetings particular attention is given to favouring the participation by the Shareholders, as well as ensuring the maximum quality level of the information provided to them on those occasions, while the observing the limitations and the methodologies of broadcasting inherent to the price sensitive information. The Shareholders’ Meeting, when regularly constituted, represents all of the shareholders and its resolutions, passed in conformity with the law, are binding on all of them, even if absent or dissenting. The Ordinary and Extraordinary Shareholders’ Meetings, meet in the cases and in the ways laid down by law, within the registered office of the company or elsewhere, as long as the place is in Italy. As laid down by article 9 of the Articles of Incorporation the Shareholders’ Meeting must be called by means of a notice that is published according to the legal timeframes and containing the date, the time and the place of the gathering, the details to be dealt with, as well as any other information that is required by the relative legislation that is currently in force. The notice calling the meeting must be published, within the legal timeframes, on the company’s Internet site and with the other methodologies required by the relative legislation that is currently in force. The company makes available to the public the documentation relative to the matters contained in the Agenda by depositing it at the company’s registered office, sending it to Borsa Italiana by means of NIS (Network Information Service) and publishing it on its website. The Board of Directors promotes initiatives aimed at favouring the biggest participation possible of the shareholders at the Shareholders’ Meetings and to facilitate their exercising of their rights and in order to reduce the limitations and the fulfilment of obligations that make it difficult or burdensome to take part in Shareholders’ Meetings and exercising the right to vote that is regulated by article 11 of the Articles of Incorporation. Each shareholder who has the right to take part in the Shareholders’ Meeting can have themselves represented at it, by means of a written proxy, pursuant to law. Normally all of the Directors of the company are present at the Shareholders’ Meetings. The Shareholders’ Meetings are also an occasion for communicating information regarding the company to the shareholders, while observing the rules governing privileged information. The Shareholders’ Meeting is presided over by the Chairman of the Board of Directors and, in his absence, by the Vice Chairman.

The Shareholders’ Meeting has all the powers laid down by law regarding it. Pursuant to the Articles of Incorporation the giving to the administration body of the company the competencies and pass resolutions on matters, such as resolutions regarding mergers and split-offs in those cases laid down by the articles 2505, 2505, part two, and 2506, part three, of the Italian Civil Code, the opening or closing of secondary sites, indicating who among the Directors have the legal representation of the company, the reduction of the Share Capital in the case of the withdrawal of a shareholder and the updating of the Articles of Incorporation for legislative and regulatory measures, which belong by law to the Extraordinary Shareholders’ Meeting, does not lessen the competency of the Shareholders’ Meeting, which maintains the power to pass resolutions regarding such matters. Regarding the constitution and resolutions of the Shareholders’ Meetings, both Ordinary and Extraordinary, at the first and the successive calls, the relative legal measures are applied.

138 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations The Ordinary Shareholders’ Meeting of 9th April 2001 put in place the “Shareholders’ Meeting Regulations”, available on the company’s website, which regulates the proceedings of the Ordinary and Extraordinary Shareholders’ Meetings of the company.

17. CHANGES SINCE THE CLOSING DATE OF THE FINANCIAL YEAR Since the closing date of the financial there have been no changes in the corporate governance structure of the company, except for the resignation, for health reasons, of the Independent Director Luigi Fausti on 1st March 2011. The Board of Directors Meeting of 22nd March 2011, nominated by cooption, pursuant to article 2386 of the Italian Civil Code and the Articles of Incorporation, to replace Dr. Luigi Fausti, Dr. Michele Perini as a non-executive Independent Director and who shall remain in office until the next Shareholders’ Meeting.

139 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations ATTACHMENT A

Article 17 of the Articles of Incorporation of the company

1. The company is administered by a Board of Directors, consisting of from five to Directors, and they can be re-elected.

2. The Shareholders’ Meeting, before going ahead with their nomination, fixes the number of members of the Board and their duration in office, while observing the time limits that are laid down by law.

3. The Board of Directors is nominated by the Shareholders’ Meeting based on lists, within which there cannot be more than twenty one candidates, each one of them numbered progressively.

Each candidate can only present himself or herself in a single list, under pain of not being eligible for election.

Each shareholder cannot present, or take part in presenting, or vote for more than one list even through an intermediary person or a trust company. The shareholders belonging to the same group, for which there is meant the parent company, the subsidiary companies and the companies subject to joint control, and the shareholders that take part in a voting pact pursuant to article 122 of the Legislative Decree N° 58/1998, which has as its subject the shares of the company, cannot present, or take part in presenting, or vote for more than one list even through an intermediary person or a trust company. There can only present the lists those shareholders who have the right to vote and who, on their own, or together with other shareholders, represent at least 2.5% (two point five percent) of the Share Capital made up of shares that have the right to vote in the Ordinary Shareholders’ Meeting or the different percentage laid down by the relative legal measures that are currently in force and that will be communicated, from time to time, in the notice of call of the Shareholders’ Meeting to be convened for the nomination of the Board of Directors. The ownership of the minimum amount of the equity investment, which is referred to in the previous paragraph, required for the presentation of the lists is calculated by taking into account the shares that are registered in the name of the shareholder at the date when the lists are deposited at the company. The certification that proves the ownership of the said shareholding can also be presented after the depositing, as long as this is within the timeframes laid down for the publication of the lists by the company. For the purpose of deciding upon the Directors to be elected, there will not be taken into account those lists that have not had a percentage of votes equal to at least half of the one asked for by the Articles of Incorporation or by the relative legal measures that are currently in force for the presentation of the lists themselves. Each list must include at least two candidates who possess the requisites of independency laid down by the relative legal measures that are currently in force, indicating them separately. The lists, together with the professional curricula of the candidates, containing exhaustive information regarding the personal and professional characteristics of the candidates themselves and the attestation the suitability to be able to qualify themselves as independent pursuant to the relative legal measures currently in force and signed by the shareholders that have presented them must be deposited at the company’s registered office, within the twenty-fifth day before the one

140 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations fixed for the Shareholders’ Meeting and made available to the public according to the relative legal measures that are currently in force.

At the time of the presentation of the list, there must be deposited the information relative to the identities of the shareholders who have presented the list, giving the total percentage shareholding owned by all of them. The shareholders different from those that hold, also jointly, a controlling or relative majority shareholding must also present a declaration attesting to the absence of any linking relationships, foreseen by legal measures, with these latter. Within the same timeframe there must be deposited the declarations with which the individual candidates accept their candidature and declare, under their own responsibility, that there do not exist any reasons for inability to be elected or of incompatibility laid down by law, that there do exist any requisites that may be prescribed by the relative legislation or regulations for the members of the Board of Directors. Together with each list, within the timeframes given above, there must also be deposited the further information asked for by the relative legal measures currently in force, which will be indicated in the notice of call.

The lists presented without the observance of the measures described above are understood as being not presented and they will not be put to a vote.

4. At the end of the voting, the votes obtained by the lists are divided by whole numbers progressive from one to the number of the Directors to be elected.

The quotients obtained in this way are attributed to the candidates of each list following the order foreseen by it.

Then the quotients attributed to the candidates of the various lists are arranged in a single decreasing ranking. There result as being elected, until there is arrived at the total number of Directors fixed by the Shareholders’ Meeting, those who have obtained the highest quotients, while there remains in force the fact that there must be nominated as a Director, in any case, the candidate listed at the first place in the second list that has obtained the highest number of votes and that is not linked, in any way, with the shareholders who have presented or voted for the list that was first for number of votes. Therefore, whenever the aforesaid candidate has not obtained the quotient that is necessary to be elected,there shall not be elected the candidate who, in the first list, has obtained the lowest quotient and the Board will be completed with the nomination of the candidate listed at first place in the second list that has obtained the highest number of votes.

5. Whenever, after having followed the procedure referred to in paragraph 4 above, there has not been nominated the number of Directors, who possess the requisites of independence, prescribed by the relative legal measures currently in force, the following procedure will be followed.

Whenever the Board consists of seven or less members there shall be nominated as an Independent Director, replacing the non-independent candidate who, in the first list, obtained the lowest quotient, or the second last one if the last one was replaced by the minority Director pursuant to the preceding paragraph 4, the first independent candidate not elected who is listed afterwards in the same list. When the Board consists of more than seven members and, after having followed the procedure referred to in paragraph 4 above, only one Independent Director has been nominated, a second Independent Director will be nominated, replacing the non- independent candidate who, in the first list, obtained the lowest quotient, or the second last one if the last one was replaced by the minority Director pursuant to the preceding paragraph 4, the first independent candidate not elected who is listed afterwards in the same list.

141 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations When the Board consists of more than seven members and, after having followed the procedure referred to in paragraph 4 above, no Independent Director has been nominated, there will be nominated as Independent Directors (i) replacing the candidate who, in the first list, obtained the lowest quotient, or the second last one if the last one was replaced by the minority Director pursuant to the preceding paragraph 4, the first independent candidate not elected who is listed afterwards in the same list and (ii) replacing the non-independent candidate elected with the lowest quotient in the second list that has had the highest number of votes, the first independent candidate not elected who is listed afterwards in the same list. Whenever all the Directors are drawn from a single list also the second Independent Director will be drawn from that list following the aforesaid criteria.

6. The candidate listed at first place in the list that has obtained the highest number of votes shall be elected to the office of Chairman of the Board of Directors.

7. In the case where it is necessary to complete the full Board of Directors and a number of candidates have obtained the same quotient, there shall be considered elected the candidate of the list that not yet elected any Director or that has elected the lowest number of Directors.

In the case where none of these lists has elected a Director or all of them have elected the same number of Directors, in the context of these lists there shall be elected the candidate of the list that has obtained the highest number of votes. In the case of a tied vote between lists and always with quotient parity, new voting by the Shareholders’ Meeting will take place, observing the relative legal measures currently in force, and there will elected the candidate who obtains the simple majority of the votes.

8. Whenever only one list is presented, the Shareholders’ Meeting votes on it and if it obtains the relative majority, there shall be elected as Directors the candidates listed in progressive numerical order, until the number of members fixed by the Shareholders’ Meeting is reached, while there remains the fact that there must be elected a number of Independent Directors that is at least equal to the one laid down by the relative legal measures currently in force. The candidate in first place on the list shall be elected Chairman of the Board of Directors.

9. The list voting procedure is only applied in the case of the renewal of the whole Board of Directors.

10. Where there are no lists and also in the case where the list voting mechanism produces a number of elected candidates lower than the number of Board members fixed by the Shareholders’ Meeting, the Board of Directors is by the Shareholders’ Meeting with the relative legal majorities in such a way as to ensure, in any case, the presence of the necessary number of Directors in possession of the independence requisites laid down by the relative legal measures currently in force. In the case of the leaving of their office for any reason, whatsoever, of one or more Directors, those remaining in office shall replace them by the process of co-opting, ensuring, in any case, the presence of the necessary number of Directors in possession of the independence requisites laid down by the relative legal measures currently in force.

11. The election of Directors, nominated pursuant to article 2386 of the Italian Civil Code, is carried out by the Shareholders’ Meeting with the relative legal majorities. The mandates of the Directors nominated in this way expire together with the mandates of those in office at the time of their nomination.

142 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations ATTACHMENT B

Personal and professional characteristics of the Directors

FEDELE CONFALONIERI - Born in Milan on 6th August 1937. Graduated with a Law Degree from the State University of Milan. He is a member of the Directive Board and the Junta of Confindustria (Italian Confederation of Industry) and of Assolombarda (Lombardy Trade Association) and in the context of the Radio Televisions Federation he is the Chairman of the National Televisions Associa- tion. He is a member of the Directive Junta of Assonime, the Italian Joint Stock Companies Association. He is a Director of the daily newspaper “Il Giornale ”. He is also Vice Chairman of the Board of Directors of Gestevision Telecinco S.A.

PIER SILVIO BERLUSCONI - Born in Milan on 28th April 1969. He began his professional experience in '92 in the marketing area Publitalia, passing afterwards to the television network Italia 1. In November 1996 he became the manager for the coordination of the contents and programmes area of the Mediaset networks. In 1999 he was nominated Vice Director General Contents R.T.I. From April 2000 he has been Vice Chairman of the Mediaset Group, as well as the Chairman and Managing Director of R.T.I. He is also a member of the Boards of Directors of the following companies: Fininvest S.p.A., Gestevision Telecinco S.A, Medusa Film S.p.A., Arnoldo Mondadori Edi- tore S.p.A. and Publitalia ’80 S.p.A.. GIULIANO ADREANI - Born in Rome on 27th August 1942. He is Managing Director of Mediaset S.p.A., Chairman and Managing Director of Publitalia 80 S.p.A., Chairman of Digitalia 08 S.r.l., a Director of R.T.I. S.p.A., of Gestevision Telecinco S.A., of Medusa Film S.p.A., of Auditel S.r.l. and a Director of Publiespana. In 2003 he was nominated a Knight of Labour by the President of the Italian Republic. In February of 2009 there was conferred upon him a Honoris Causa Degree in Communications Sciences by the University Suor Orsola Benincasa of Naples. Before the Mediaset Group, which he entered in 1994, from 1962 he was in Sipra, the Advertising Concessionaire of R.A.I. (Italian State Radio and Television), where he guided all the commercial and creative sectors of Communications, both of dailies and periodicals and of radio and television until his nomination, in 1991, as Director General. In 2010 he was in first place among the Italians and fifth among the Europeans in the classification of the CEO of the best media groups drawn up by Thomson Reuters, the prestigious economic/financial information company quoted on the New York Stock Exchange.

MARINA BERLUSCONI - Born in Milan on 10th August 1966. She came into the company when she was very young and she has always been deeply interested in the management and the development of the economic/financial strategies of the Group. In July 1996 she took the office of Vice Chairman of Fininvest S.p.A., a role she filled until October 2005, when she was nominated Chairman of the holding company. Since February 2003 she has been Chairwoman of Arnoldo Mondadori Editore S.p.A. She is a Director of Mediobanca S.p.A..

PASQUALE CANNATELLI - Born on 8th September 1947. He took his Degree in Economics and Commerce at the Catholic University of Milan and began his work experience in 1972 at Rank Xerox. In 1985 he entered Farmitalia Carlo Erba as Group Controller. There followed his experiences in Alitalia, first as Administrative Director and then as Controller and, again, in Farmitalia where he was Finance Administration and Controls Director of the Erbamont Group. In July 1997 he became a Director of Mediaset S.p.A. and Central Director for Planning and Controls. Since May 2003 he has been Managing Director of Fininvest S.p.A.. He is a Director of Arnoldo Mondadori Editore S.p.A., Mediolanum S.p.A. and AC Milan S.p.A.. 143 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations PAOLO ANDREA COLOMBO - Born in Milan on 12th April 1960. Took a Degree in Company Economics at the University “L. Bocconi” of Milan. He is a Certified Public Accountant and Accounting Auditor. He is a Director of Eni S.p.A., Carlo Tassara S.p.A., Chairman of the Board of Statutory Auditors of Aviva Vita S.p.A., GE Capital Interbanca S.p.A., a Director of Ceresio Sim and an Active Statutory Auditor of Angelo Moratti S.p.A. and Credit Agricole Assicurazioni Italia Holding S.p.A..

MAURO CRIPPA - Born in Rome on 26th April of 1959. He is a Professional Journalist. He is also a Director of the company Europea Editrice of “Il Giornale ” since 1998, of R.T.I. S.p.A. since 1999 and of Class CNBC S.p.A. since 2000. In 1987 he has been the manager of the Institutional Print and Product Office of Arnoldo Mondadori Editore S.p.A. In 1994 he entered the Fininvest Group with the office of Press Relations Director. In 1996 he took the office of Central Communications Management and Press Relations in Mediaset. Currently he has the position in Mediaset of Information General Manager of Mediaset. BRUNO ERMOLLI - Born in Varese on 6th March 1939. He has been an entrepreneur for more than thirty years of Professional Services for Management and Organisational Consultancy. He lectures at courses and seminars for entrepreneurs and managers. He is often called upon to collaborate with the Presidency of the Council of Ministers as an expert in Public Management and Public Administration Organisation. From 1985 to 1989 he was Promoter and Chairman of the National Federation for the Advanced Services Industries Sector. From 1980 to 1982 he was Chairman of the National Association of Management and Organisational Consultancy Companies. In 1970 he set up, and still today presides over Sin&rgetica, the leading Italian Management Consultancy Company for Private Enterprises, Banks, Insurance Companies, Public Entities and Public Administrations. The President of the Italian Republic nominated him a Knight of Labour. Currently he is Vice Chairman of the La Scala Theatre Foundation, a Director of Arnoldo Mondadori Editore S.p.A., Mediolanum S.p.A. Mondadori France, Fininvest S.p.A., and Fondazione Cariplo and a Senior Advisor and Member of the European Advisory Council of JP Morgan.

LUIGI FAUSTI - Born in Ancona in 1929. He did classical studies at the C. Tacito Grammar School of Terni and legal studies at the University of Rome. Hired as a clerical worker by the Banca Commerciale Italiana in 1947 he has had 51 years of uninterrupted professional activity passing upward through various career levels in different offices of the Bank in Italy. In 1984 he was called upon to enter its Central Management, in Italian Credit Services, firstly with the position of Central Joint Director and then, from 1987, with that of Central Director, with “supervisor ” functions for that same Service. In May 1990 he was nominated Managing Director. In April 1994 he was nominated Vice Chairman and Managing Director. In June 1996 there was conferred upon him, by the Second Studies University of Naples a Honoris Causa Degree in Economics. In April 1997 he was nominated Chairman. In 1999 he was nominated Honorary Chairman by acclamation, an office that he resigned from in June of the same year because of disagreements over the business choices that were being made by the Bank.

MARCO GIORDANI - Born in Milan on 30th November del 1961. He is a graduate in Economics and Commerce of the University “L. Bocconi ” of Milan. From 2000 he has been Chief Financial Officer of the Mediaset Group. He is a Director of Gestevision Telecinco S.A., Publitalia ’80 S.p.A., Med Due S.r.l, and Mediamond S.p.A. Edam Acquisition Holding I Cooperatief U.A. and Medusa Film S.p.A. and Managing Director of R.T.I. S.p.A. From 1998 to 2000 he was in IFIL S.p.A., in Shareholdings Controls Management and afterwards nominated as A Director and a member of the Executive Committee of LA RINASCENTE S.p.A., as well as a Director of S.I.B. (Società Italiana Bricolage). In

144 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations 1991 he was Finance Manager of the RINASCENTE Group within which, in 1997 he took the position of Chief Financial Officer. ALFREDO MESSINA - Born in Colleferro (Rome) on 8th September 1935. A Graduate in Economics and Commerce he began his career filling various positions of an administrative type in a number of companies. After experiences in Olivetti, as Controller of Group Production and in Alitalia, as Manager for Central Administration, Finance, Planning and Controls, in 1989 he was at IRI (Institute for Industrial Reconstruction) as Central Planning and Controls Manager. In January 1990 he entered Fininvest S.p.A. as Director General and in 1996 was nominated Managing Director for the administration and controls area of the Group, overseeing the sectors of Large Scale Distribution and Insurance and Financial Products. Currently he is Deputy Vice Chairman of Mediolanum S.p.A., Chairman of Mediolanum Assicurazioni S.p.A. and of Mediolanum Vita S.p.A.. He is a Director of Gestevision Telecinco SA and of Molmed S.p.A.

GINA NIERI - Born in Lucca on 2nd December 1953. A Graduate in Political Sciences at the University of Pisa, she obtained the specialisation in Journalism and Mass Communications at the Luiss of Rome (Free University of Social Studies). From 1977 she has worked in the area of commercial television, which she entered with her nomination as Secretary General of FIEL, the first association of the “free” broadcasters. She then went to FRT - Radio Television Federation – as Director until 1990, when she entered the FININVEST GROUP as Manager for Relations with the Enterprise Associations. From June 2007 she has been Vice Chairwoman of R.T.I. S.p.A., in which she has been a member of the Board of Directors since 1999. She is a member of the Junta of ASSOLOMBARDA (Lombardy Trade Association) and the Junta of CONFINDUSTRIA (Italian Confederation of Industry). From 21st June 2004 she has been Vice Chairwoman of the Campus Multimedia Consortium, a Consortium set up by Mediaset and the Free University for Languages and Communications (IULM). Currently, in MEDIASET she holds the position of Director of Institutional and Legal Affairs and Strategic Analyses. Since November 2010 she has been Vice Chairwoman of A.C.T. (European Association of Commercial Television).

NICCOLO ’ QUERCI – Born in Florence on 10th May 1961. A Law Graduate of the University of Siena in 1988 he took a Master in Enterprise Communications. Since 2007 he has been Central Personnel and Organisation Director of the Mediaset Group and Vice Chairman of Publitalia ’80 S.p.A.. From 2006 to 2010 he was Chairman of the company Mediashopping. From 2003 Managing Director of R.T.I. for Human Resources, General Services and Safety and from 2001 Vice Chairman of R.T.I. S.p.A.. From 1999 to 2006 he was Director of artistic resources, productions, entertainment and sport and, until 2008, Manager for the diversified activities and new business of the Group. From 1992 to 1999 he was the Assistant and Head of the Secretariat of Silvio Berlusconi, filling various organisational positions over the years. From 1989 to 1992 in Publitalia ’80 he was Account Manager Large Customers and assistant Chairman and Managing Director and from 1987 to 1988 an Account Executive in P. T. Needham.

CARLO SECCHI – Born on 4th February 1944 is professor of European Political Economy at the Bocconi University of Milan, of which he was Rector in the period 2000-2004. He is Director of the Institute of Latin American Studies and of the Countries in Transition. He was a Member of the European Parliament during the 4th legislature (1994-1999), where he was Vice Chairman of the Economic and Monetary Commission. He was a Senator of the Italian Republic during the 12th legislature (1994-96). He is a member of the governing bodies of Foundations and Institutes of a technical/scientific nature and is Chairman of the Scientific Didactic Committee of the Multimedia Campus In.Formazione. He is Vice Chairman of ISPI (Institute for International Political Studies of

145 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations Milan), Chairman of the Italian Group of the Trilateral Commission. He is currently a member of the Board of Directors of a number of Italian companies and of the Veneranda Fabbrica del Duomo (the Milan Cathedral Conservation Body). He is currently a Director of Pirelli & C. S.p.A., Parmalat S.p.A., Italcementi S.p.A., Allianz S.p.A. and of Expo 2015 S.p.A. Since July 2009 he has been European Coordinator of the TEN-T Priority Projects (High Speed Trains France – Spain – Portugal). He is the author of books and numerous articles on international commerce and economy, on economic integration and on European themes.

ATTILIO VENTURA – Born on 6th February 1936. A Graduate in Economy and Commerce from the Catholic University of the Sacred Heart of Milan. He has taken specialisation courses in Economy and Finance at the Seton Hall University of South Orange (United States) and Merrill Lynch of New York. From 1967 he was a Stockbroker and from 1981 a member of the Stockbrokers’ Management Committee. From 1985 to 1988 he was Vice Chairman of the Stock Exchange Management Committee, from 1988 to 1992 Chairman of the Stock Exchange Management Committee and from 1992 al 1995 Chairman of the Board of the Stock Exchange. From 1996 to 1998 he was a Director of the Banca Nazionale del Lavoro S.p.A. From 2004 until today he has been Vice Chairman of the “Fondazione Aretè ” of the San Raffaele Hospital of Milan. Currently he is a Director of Ceresio Sim.

The companies Arnoldo Mondadori Editore S.p.A. and Mediolanum S.p.A. belong to the Fininvest Group of which Mediaset is a part.

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ATTACHMENT C Table 2 - Format Borsa Italiana Internal Controls Compensation Governance Independents Board of Directors Executive Committee Committee Committee Committee Committee

In office List Number Non Indep. Indep. (%) Office Members In office since till approval of (M/m) Exec. other **** ** **** ** **** ** **** ** ***** ** exec. per Code per CFA ** F. S. at * offices *** Chairman Confalonieri Fedele 22/04/2009 31/12/2011 M X 100 X 100 (=) Vice Chairman Berlusconi Pier Silvio 22/04/2009 31/12/2011 M X 90 2 X 44,4 (=) Director Adreani Giuliano Delegato 22/04/2009 31/12/2011 M X 100 X 100 Director Berlusconi Marina 22/04/2009 31/12/2011 M X 70 3 Director Cannatelli Pasquale 22/04/2009 31/12/2011 M X 100 3 Director Colombo Paolo Andrea 22/04/2009 31/12/2011 M X X X 100 4 X 80 X 100 X 100 Director Crippa Mauro 22/04/2009 31/12/2011 M X 90 Director Ermolli Bruno 22/04/2009 31/12/2011 M X 100 3 X100 Director Fausti Luigi (1) 22/04/2009 01/03/2011 M X X X 30 Director Giordani Marco 22/04/2009 31/12/2011 M X 100 Director Messina Alfredo 22/04/2009 31/12/2011 M X 80 4 X 77,7 Director Nieri Gina 22/04/2009 31/12/2011 M X 90 X 100 Director Querci Niccolò 22/04/2009 31/12/2011 M X 100 Director Secchi Carlo 22/04/2009 31/12/2011 M X X X 100 5 X 100 X 100 100 Director Ventura Attilio 22/04/2009 31/12/2011 M X X X 90 X 100 X 100 X 100 100 DIRECTORS WHO CEASED DURING THE REFERENCE YEAR

Give the quorum required for the presentation of the lists at the time of the last nomination: 1,5%

Number of meetings held in the reference year: BOD:10 ICC:9 CC:5 GC:7 EC:9 IC:1

NOTES * In this column is shown M/m according to whether the member was elected by the list voted by the majority (M) or by a minority (m) ** In this column is shown the percetage presence at the BOD and the Committee meetings (n° of presences/n° of meetings during the actual period of office of the party in question). *** In this column is shown the number of offices held by the director or statutory auditor in other companies, also foreign, i n finance, banking, insurance or large companies. There is attached to the Report the list of these companies with reference to each individual Director,sating if the company in which they hold office is part, or not, of the group that the Issuer reports to or that it is part of.

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ATTACHMENT D

Article 27 of the Articles of Incorporation of the company 1. The Ordinary Shareholders’ Meeting elects the Board of Statutory Auditors, consisting of three Active Statutory Auditor and two Substitute Statutory Auditors, who remain in office for three financial years and whose mandates expire with the Shareholders’ Meeting called to approve the Financial Statements relative to the third financial year of their period in office and they can be re-elected.

All the Statutory Auditors must be inscribed in the Register set up according to law and must have carried out the legal auditing of accounts for a period of not less than three years.

2. The nomination of the Statutory Auditors takes place based on lists presented by the shareholders, with the procedure shown below. The lists must indicate at least one candidate to the office of Active Statutory Auditor and one candidate to the office of Substitute Statutory Auditor and they can contain up to a maximum of three candidates to the office of Active Statutory Auditor and a maximum of two candidates to the office of Substitute Statutory Auditor. The candidates are listed in progressive numerical order.

Each list consists of two sections. One is for the candidates for the office of Active Statutory Auditor and the other is for the candidates for the office of Substitute Statutory Auditor. Each candidate can only be present in one list, under pain of not being eligible for election

3. There have the right to present the lists the shareholders who have voting rights who alone or jointly are the overall owners of the amount of the shareholding that is asked for by the Articles of Incorporation for the presentation of the lists for the nominations of the members of the Board of Directors. Each shareholder cannot present, or take part in presenting, or vote for more than one list even through an intermediary person or a trust company. The shareholders belonging to the same group, for which there is meant the parent company, the subsidiary companies and the companies subject to joint control, and the shareholders that take part in a voting pact pursuant to article 122 of the Legislative Decree N° 58/1998, which has as its subject the shares of the company, cannot present, or take part in presenting, or vote for more than one list even through an intermediary person or a trust company.

4. The ownership of the minimum amount of the equity investment required for the presentation of the lists is calculated by taking into account the shares that are registered in the name of the shareholder at the date when the lists are deposited at the company.

5. The certification that proves the ownership of the said shareholding can also be presented after the depositing, as long as this is within the timeframes laid down for the publication of the lists by the company.

6. The lists, together with the professional curricula of the persons designated, and signed by the shareholders who have presented them must be deposited at the company’s registered office within the twenty-fifth day before the one fixed for the Shareholders’ Meeting and made

148 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations available to the public according to the relative legal measures that are currently in force. At the time of the presentation of the list, there must also be deposited (i) the information relative to the identities of the shareholders who have presented the list, giving the overall percentage of the shareholding owned by them, (ii) a curriculum vitae for each candidate containing exhaustive information regarding the personal and professional characteristics of the candidates and (iii) the further information, asked for by the relative legal measures currently in force, that will be indicated in the notice calling the Shareholders’ Meeting. The shareholders different from those that hold, also jointly, a controlling or relative majority shareholding must also present a declaration attesting to the absence of any linking relationships, foreseen by legal measures, with these latter. Within the same timeframe there must be deposited the declarations with which the individual candidates accept their candidature and declare, under their own responsibility, that there do not exist any reasons for inability to be elected or of incompatibility laid down by law and that there is observe the limit of the accumulation of offices referred to in the following paragraph and also that there do exist any requisites that may be prescribed by the relative legislation, by the regulations and by the Articles of Incorporation for members of the Board of Statutory Auditors, as well as the list of the other administration and controls offices they hold in other companies.

7. There cannot be elected as Statutory Auditors those persons who hold administration and controls offices that surpass the limits that are laid down by the relative legislative measures that are currently in force.

8. The lists presented without observing the foregoing measures shall not be considered to have been presented and they will not be voted on.

9. The election of the Statutory Auditors goes ahead as follows: a) From the list, which has obtained the highest number of votes in the Shareholders’ Meeting, there are drawn, based on the progressive numerical order with which they are listed within the specific sections of the list, two Active Statutory Auditors and one Substitute Statutory Auditor. b) From the second list, which has obtained the highest number of votes in the Shareholders’ Meeting, among the lists presented and voted by the shareholders who are not linked to reference shareholders, pursuant to article 148, paragraph 2, of the relative Consolidated Act, there are drawn, based on the progressive numerical order with which they are listed within the specific sections of the list, the remaining Active Statutory Auditor and the other Substitute Statutory Auditor. In the case where a number of lists have obtained the same number of votes there shall take place a new ballot between these lists, in observance of the relative legal measures currently in force, and there shall be elected those candidates of the list that obtains the simple majority of the votes.

8. There shall be elected to the office of Chairman of the Board of Statutory Auditors the candidate at first place in the section of the candidates to the office of Active Statutory Auditor elected pursuant to the preceding paragraph 7. b).

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9. Whenever there is only presented one list, the Shareholders’ Meeting votes on it. Whenever the list obtains the relative majority, there shall be elected as Active Statutory Auditors the three candidates indicated in progressive numerical order in the relative section and as Substitute Statutory Auditors the two candidates indicated in progressive numerical order in the relative section. The Chairmanship of the Board of Statutory Auditors belongs to the person indicated at first place in the section of the candidates for the office of Active Statutory Auditor in the list presented.

In the case of the death, renunciation or the expiry of the mandate of an Active Statutory Auditor, there enters into the office the Substitute Statutory Auditor elected at first place. In the hypothesis of the replacement of the Chairman, the Board of Statutory Auditors chooses and nominates a new Chairman from among its own members, who remains in office until the first successive Shareholders’ Meeting, which must take care of the integration of the Board of Statutory Auditors.

10. Where there are no lists, the Board of Statutory Auditors and its Chairman are nominated by the Shareholders’ Meeting with the relative legal majorities.

Whenever a number of lists are presented, in the case of the death, renunciation or the expiry of the mandate of a Statutory Auditor, there enters into the office the Substitute Statutory Auditor belonging to the same list as the one who ceased, positioned in the first place. In this case in order to deal with the nomination of the Statutory Auditors necessary in order to be able to integrate the Board of Statutory Auditors the procedure is as follows: when it is necessary to go ahead with the replacement of the Statutory Auditors elected in the majority lists, the nomination takes place with a relative majority vote, without the necessity for a list. When, on the other hand, the Shareholders’ Meeting must nominate Active Statutory Auditors or Substitute Statutory Auditors, for the purpose of integrating the Board of Statutory Auditors, replacing Active Statutory Auditors or Substitute Statutory Auditors elected in the minority list, it passes resolutions with a relative majority vote, choosing from among the candidates indicated in the list where there was the Statutory Auditor to be replace or, next in order to this, choosing from among the candidates positioned in any further minority lists. Where there are no candidates of the majority list or the minority lists, the nomination takes place through the voting of one or more lists, consisting of a number of candidates no greater than the number of those to be elected, presented before the date of the Shareholders’ Meeting, observing the measures laid down by this article for the nomination of the Board of Statutory Auditors, while there remains the fact that there cannot be presented any lists, and if they are presented they will be totally without effect, by reference shareholders or by the shareholders who are linked to them, as these are defined by the relative legislative and regulatory measures that are currently in force regarding them. There shall be elected the candidates contained in the list that obtains the highest number of votes.

12. The Shareholders’ Meeting sets the compensation of the Statutory Auditors, as well as the reimbursement of the expense incurred by them in order to carry out their assignment.

13. The powers and the duties of the Statutory Auditors are those that are laid down by law.

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ATTACHMENT E Table 3 – Format Borsa Italiana

Board of Statutory Auditors

In office till approval of ** Office Members In office since List (M/m)* Independence by Code Number of other offices *** the F. S. at (%) Giussani Chairman 16 April 2008 31 December 2010 m X 100 6 Alberto Bianchi Martini Active Auditor 16 April 2008 31 December 2010 M X 93,33 7 Silvio Vittadini Active Auditor 16 April 2008 31 December 2010 M X 86,67 26 Francesco Substitute D'Onofrio 16 April 2008 31 December 2010 m X 12 Auditor Mario Substitute Marchesi 16 April 2008 31 December 2010 M X 2 Auditor Antonio AUDITORS THAT CEASED DURING THE REFERENCE YEAR

Shoe the required quorum for the presentation of the lists at the time of the last nomination: majority list 1% - minority list 0.50% of the Share Capital.

Number of meetings held during the reference year: 15

NOTES * in this column is shown M/m according to whether the member was elected from the list voted by the majority (M) or by aminority (m)

** in this column is shown the percentage aprticipation of the auditors at the meetings of the BSA (n° of presences/n° of meetings held during the actual period in office of the interested party).

***in this column is shown the number of offices of director or statutory auditor held by the interested party shown pursuant to article 148, part two. of the CFA.

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ATTACHMENT F

PERSONAL AND PROFESSIONAL CHARACTERISTICS OF THE MEMBERS OF THE BOARD OF STATUTORY AUDITORS

ALBERTO GIUSSANI – Born in Varese on 23rd August 1946. A Graduate in Economy and Commerce at the Catholic University of the Sacred Heart of Milan. He is inscribed in the Roll of Certified Public Accountants since 1979 and in the Register of Accounting Auditors since 1995. He holds the courses in Accounts Analysis and International Accounting at the Catholic University of Milan. He holds the office of Vice Chairman of the Technical/Scientific Committee of the Italian Accounting Body, is a Director in Credito Artigiano S.p.A., in Fastweb S.p.A., in Seat Pagine Gialle S.p.A., in Istifid S.p.A. and in Finanziaria Canova S.p.A. He is an Active Statutory Auditor in the Luxottica Group S.p.A. and in Carlo Tassara S.p.A.. He is a member of a number of Associations and Foundations. His is the author of publications regarding Financial Statements and is a lecturer at numerous conventions.

SILVIO BIANCHI MARTINI – Born in Lucca on 12th January 1962. He is an Ordinary Professor of Company Economy in the Economics Faculty of the University of Pisa and Director of the Doctorate School “Fibonacci” of the same Faculty. He taught Company Strategy and Policies for more than a decade at the Bocconi University of Milan. He is authorised to exercise the profession of Certified Public Ac- countant and is inscribed in the Order of Certified Public Accountants accredited to the circumscription of the Court of Lucca since 1998. Furthermore, he has been inscribed in the Register of Accounting Auditors since its inception. He is a member of the corporate governance and controls bodies of a number of industrial and services companies among which there are highlighted Dada S.p.A., Molecular Medicine S.p.A., Banco di Lucca e del Tirreno S.p.A. and Sofidel S.p.A..

FRANCESCO VITTADINI - Born in Bellano on 25th May 1943. He took a Degree in Economy and Commerce at the Luigi Bocconi Commercial University. He has been inscribed in the Roll of Certified Public Accountants of Monza since 1971. He holds the office of Statutory Auditor in industrial, financial, insurance, communications and media companies among which there are highlighted as DMT S.p.A. and Mediolanum S.p.A.

MARIO D ’ONOFRIO – Born in Naples on 9th September 1947. He graduated in Economy and Commerce in 1972. He has been inscribed in the Roll of Certified Public Accountants since 1978 and in the Register of Accounting Auditors since 1995. He is the Chairman of Boards of Statutory Auditors of national relevancy,among which there are highlighted F.lli Averna, Atlantica (Grimaldi Group) and Pernigotti.

He is Chairman of the Surveillance Body of Ferrarelle S.p.A.. He is Professor of Company Auditing at the Parthenope University of Naples.

ANTONIO MARCHESI – Born in Milan on 6th June 1946. He is a member of the Order of Certified Public Accountants and Accounting Experts of Varese since 9th February 1978 and he is inscribed in the Register of Accounting Auditors. He was formerly Professor in Sport Management in the Department of Company Economy of the University of Turin. Currently he is an Active Statutory Auditor of Basf Italia S.r.l and Mediolanum Assicurazioni S.p.A., a Substitute Statutory Auditor of Mol Med and the sole member of the Surveillance Body of the Milan Group. ***

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SHARES HELD BY DIRECTORS, STATUTORY AUDITORS, GENERAL MANAGERS AND EXECUTIVES WITH STRATEGIC RESPONSIBILITIES

In relation to Consob Regulations 11971 dated 14 May 1999, Article 79 and subsequent amendments, here below is the required information on the shares held by Directors, Statutory Auditors, General Managers and Executives with strategic responsibilities in the Company and in its subsidiaries, in accordance with the criteria contained in SCHEME 3) as required by Annex 3C) of the afore mentioned regulations.

Mediaset S.p.A.

Shares held by Directors, Statutory Auditors, General Managers and Executives with strategic responsibilities (*)

Full name Invested Number of shares Number of Number of Number of shares Company held at the end of the shares purchased shares sold held at the end of the previous year current year

(31/12/2009) (31/12/2010)

Confalonieri Fedele Director Mediaset S.p.A. 1,077,000 - - 1,077,000 Adreani Giuliano Director Mediaset S.p.A. 329.100 (1) - - 329.100 (1) Berlusconi Marina Director Mediaset S.p.A. 570.000 (2) 70.000 (2) - 640.000 (2) Berlusconi Pier Silvio Director - - - - Cannatelli Pasquale Director Mediaset S.p.A. 76,500 - - 76,500 Colombo Paolo Andrea Director Mediaset S.p.A. 1.000 (3) - - 1.000 (3) Crippa Mauro Director Mediaset S.p.A. 3,595 - - 3,595 Ermolli Bruno Director Mediaset S.p.A. 19,000 - - 19,000 Fausti Luigi (4) Director - - - - Giordani Marco Director - - - - Messina Alfredo Director - - - - Nieri Gina Director Mediaset S.p.A. 5,500 - - 5,500 Querci Niccolò Director Mediaset S.p.A. 15,000 - - 15,000 Secchi Carlo Director - - - - Ventura Attilio Director - - - - Giussani Alberto Indipendent Auditor - - - - Bianchi Martini Silvio Indipendent Auditor - - - - Vittadini Francesco Indipendent Auditor - - - -

(*) Mediaset S.p.A. Executives with strategic responsibilities are Company Directors (1) 7,000 of which are held by the spouse. (2) shares acquired through a subsidiary (3) 500 of which are held by the spouse. (4) Fausti Luigi (former independent director) has left the charge on 1 March 2011

153 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations INFORMATION REQUIRED BY ARTICLE 2428 OF THE ITALIAN CIVIL CODE

Research & Development Operations

R&D operations carried on 2010 mainly concerned the advertising area, with reference to the implementation of a new advertising management system project (in terms of definition of the commercial policy, order collection, planning and invoicing).

Relationships with subsidiaries, associates, parent companies, affiliates and related parties

On 9 November 2010, the Board of Directors voted to adopt the "Procedure for Related-Party Transactions" carried out by Mediaset S.p.A. directly or through subsidiaries. This procedure was prepared in accordance with principles set forth in the "Regulation with Provisions Concerning Related-Party Transactions" adopted by Consob in its Resolution no. 17221 of 12 March 2010.

The procedure, which is published on the company's website (www.mediaset.it/investor/governance/particorrelate) and included in the "Report on Corporate Governance and Ownership Structure," sets rules for identifying, approving, executing and advertising related-party transactions carried out by Mediaset S.p.A. directly or through subsidiaries, in order to ensure the transparency and substantive and procedural appropriateness of the transactions, as well as cases for which these rules do not apply.

Balance Sheet and Income Statement related transactions with subsidiaries, associates, parent companies, affiliates and other related parties entered into under normal market conditions are detailed with comments in the explanatory notes.

Treasury shares owned by the controlling entity

None of the subsidiary owns stakes of the holding company.

2009-2011 stock option plan (shareholders' meeting of 22 April 2009)

Based in part on the experience gained with previous plans, on 22 April 2009 the shareholders' meeting deemed it appropriate to promote the creation of a stock option plan with the aim of gaining the loyalty of participants and making them a part of plans to enhance the company.

This shareholders' meeting approved the creation of a stock option plan for the company's treasury shares for a period of three years starting in 2009. The plan is limited to directors and employees (executives, journalists, organisational unit heads and similar employees) and outside consultants of the company and its subsidiaries identified by the Board of Directors as key individuals who perform functions that are essential for the group's achievement of its strategic goals.

The shareholders' meeting then appointed the Board of Directors to manage the 2009-2011 stock option plan with broad powers to identify participants, set performance objectives, assign options and execute all aspects of the plan. Specifically, with respect to financial year 2010, the Board of Directors:

154 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations Identified 49 recipients (executives and journalists);

Allocated a total of 3,420,000 personal, non-transferable stock options equal to 0.29% of share capital;

Set, as the criterion for determining the strike price of the options, the arithmetic mean of reference prices for ordinary Mediaset shares as reported by Borsa Italiana S.p.A. during the period from the allocation date and the same date of the previous calendar month in accordance with current tax laws. Thus, the unit strike price is 4.92 Euros;

Specified that the achievement of certain annualised economic and financial corporate performance parameters (ROE and free cash flow) was a necessary condition for exercising the options. A weighting of 50% was assigned to each of the two performance objectives so that if any single objective is achieved, options will be assigned according to a scale that is quantitatively commensurate with the degree each objective is achieved. The fulfilment of conditions for exercising options will be verified by the Board by the end of the first half of the year following the year options are allocated, i.e., by the end of the first half of 2011;

Determined that options assigned for 2010 may be exercised only after a period of 36 months from the allocation date subject to the fulfilment of the above conditions for exercising them. Thus, the option exercise period will be from 23 June 2013 until 22 June 2016.

The stock option plan for 2009-2011 and previous plans (2003-2005 and 2006-2008) led to the following assignment of stock options for Mediaset shares:

Options rights Check of compliance with the Year Number of attribuited for the Exercise Exercise period only criteria estabilished by the 1/1 - 31/12 participant to Plan purchase of company price allowed in one off solution Board of Directors shares

2005 132 3,774,500 EUR 9,60 23.6.2008/22.6.2011 (*) Rights to exercise Options rights non available 2006 128 3,716,000 EUR 8,92 26.7.2009/25.7.2012 (*) for the exercise as a result of unmet pre-requisites 2007 43 3,130,000 EUR 7,87 29.6.2010/28.6.2013 Rights to exercise

2007 1 100,000 EUR 7,73 18.7.2010/17.7.2013 Rights to exercise

2008 46 3,290,000 EUR 4,86 24.6.2011/23.6.2014 Rights to exercise

2009 50 3,450,000 EUR 4,72 30.9.2012/29.9.2015 Rights to exercise 2010 49 3,420,000 EUR 4,92 23.6.2013/22.6.2016 Rights to exercise

(*) On 28 June 2007 the Board of Directors approved a revision of the exercise date to comply with new plan regulations applicable to 2005 and 2006.

2003-2005 stock option plan

To date, options have been assigned for the purchase of 3,565,500 Mediaset shares equal to 0.30% of current share capital, and the conditions for the purchase have been met.

155 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations 2006-2008 stock option plan

To date, options have been assigned for the purchase of 6,520,000 Mediaset shares equal to 0.55% of current share capital, and the conditions for the purchase have been met. In addition, 3,716,000 options have been assigned for the 2006 plan; this amounts to 0.31% of current share capital, and the conditions for the purchase have not been met.

2009-2011 stock option plan

To date, options have been assigned for the purchase of 6,840,000 Mediaset shares equal to 0.58% of current share capital, and the conditions for the purchase have been met.

OTHER INFORMATION

Privacy: policy document on security

Pursuant to paragraph 26 of Appendix B to Legislative Decree No. 196/2003 (the Privacy Code), "Technical Regulations Concerning Minimum Security Measures (Articles 33 to 36 of the Code)," "the data controller shall indicate, in the report (if required) accompanying the company's financial statement whether the policy document on security has been prepared or updated."

Pursuant to Article 26 of the Technical Regulations Concerning Minimum Security Measures, which is contained in Legislative Decree No. 196 of 30 June 2003, and which is called the Personal Data Protection Code, the data controller in charge of privacy shall indicate that it has updated the policy document on security (DPS). This is a periodic update since this document was previously prepared in accordance with the law (the previous version was updated on 30 March 2010).

The DPS sets security policies and standards and the procedures the company follows when handling personal data on the basis of the analysis of risks pertaining to data and the distribution of duties and responsibilities in areas in charge of data handling.

Supervision and control

Your company supported the implementation of Legislative Decree 231/2001 concerning criminal liability in companies, and in 2003 appointed an internal "Supervisory and Control Body," which with full autonomy and the support of company areas and any outside consultants, must supervise the full application of the "organisational model" adopted by updating its contents, and reporting any violations or breaches to the company's Board of Directors.

Management and coordination activities

Mediaset S.p.A. is subject to the de facto control of Fininvest S.p.A. since the latter holds 38.980% of the company's share capital. On 4 May 2004 Fininvest notified Mediaset that pursuant to Article 2497 and the following ones of the Italian Civil Code, it would not conduct management and coordination activities with respect to Mediaset. The company acknowledged Fininvest's notification at the meeting of the Board of Directors on 11 May 2004. Fininvest's

156 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations statement is based on the fact that Mediaset independently sets its own strategy and has full organisational, management and negotiating autonomy since it is not subject to any strategic or coordination activities imposed by Fininvest for its own business operations. In particular, Fininvest does not issue directives to Mediaset or provide any technical, administrative or financial assistance or coordination for Mediaset and its subsidiaries.

Pursuant to Article 2497 and the following ones of the Italian Civil Code, Mediaset S.p.A. currently performs management and coordination activities for the following Mediaset Group companies:

Digitalia ’08 S.r.l.; Elettronica Industriale S.p.A.; Media Shopping S.p.A.; Mediaset Investimenti S.p.A.; Medusa Film S.p.A.; Promoservice Italia S.r.l. Publitalia ’80 S.p.A.; R.T.I. S.p.A.; Taodue S.r.l.; Video Time S.p.A. X Content S.r.l. in liquidation.

Consob recommendation DAC/RM97001574 issued on 20/02/1997

In accordance with Consob recommendation (Communication dated 20 February 1997, Prot. DAC/RM97001574), the list of directors and their respective powers is provided below: Chairman Fedele Confalonieri Power of ordinary and extraordinary administration up to a maximum limit of EUR 13,000,000.00 per individual transaction, with the exception of powers exclusively granted to the Board of Directors and the Executive Committee. According to the Articles of Association, the Chairman has powers of representation of the Company. Vice Chairman Pier Silvio Berlusconi Powers of ordinary and extraordinary administration up to a maximum limit of EUR 10,000,000.00 per individual transaction, with the exception of powers exclusively granted to the Board of Directors and the Executive Committee. According to the Articles of Association, the Vice Chairman has powers of representation of the Company. The Vice Chairman represents the Company when the Chairman is absent or unable to perform his duties. The replacement of the Chairman by the Vice Chairman for representation purposes should be regarded as evidence of the Chairman’s

157 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations absence or inability to perform his duties, and relieves third parties from any liability and verification obligation. Managing Director Giuliano Adreani Powers of ordinary and extraordinary administration up to a maximum limit of EUR 5,000,000.00 per individual transaction, with the exception of powers exclusively granted to the Board of Directors and the Executive Committee. According to the Articles of Association, the Managing Director represents the Company.

Directors Marina Berlusconi Pasquale Cannatelli Paolo Andrea Colombo Mauro Crippa Bruno Ermolli Luigi Fausti* Marco Giordani Alfredo Messina Gina Nieri Niccolò Querci Carlo Secchi Attilio Ventura

Executive Committee Fedele Confalonieri Pier Silvio Berlusconi Giuliano Adreani Gina Nieri

Internal Controls Carlo Secchi (Chairman) Committee Alfredo Messina Attilio Ventura

Compensation Bruno Ermolli (Chairman) Committee Paolo Andrea Colombo Attilio Ventura

Governance Committee Attilio Ventura (Chairman) Paolo Andrea Colombo Carlo Secchi

* Luigi Fausti (Indipendent Director) has left the charge on 1 March 2011

158 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations EVENTS SUBSEQUENT TO 31 DECEMBER 2010

Starting from 1 January, in the context of the Italian advertising operations re-engineering , the operations regarding the sale of advertising spaces relating to free-to-air thematic channel (Iris, Mediaset Extra and La 5) which have been managed by Digitalia ’08 S.r.l. until 31 December 2010 will be managed by Publitalia ’80 S.p.A., while the barter operation will be conveyed in Promoservice Italia S.r.l., established through a brach spin-off from Digitalia ’08 S.r.l.

On 1 February Telecinco submitted a restructuring plan to the appropriate Spanish labour authorities concerning the companies Sogecuatro and CINTV. The proceeding should be concluded by the end of the second quarter of this year.

On 15 February a merge by incorporation of Med Due S.r.l. (which held the entire controlling stake of Medusa Film S.p.A. and Taodue S.r.l.) into RTI S.p.A. has been stipulated.

On 23 February Premium Net TV was launched. This is a new, totally original non-linear national programme in the domestic market that can also be accessed by PC, and offers users a selection of over 1,000 various types of content, including in HD, with the functionality of a DVD: films (with over 200 films available as well as many pay-TV premiers), TV series, cartoons, documentaries, football and Mediaset programming for the last seven days. In addition, Net TV makes it possible to rent the best films from Warner, Universal, Medusa and 01 Distribution by remote control at the same time the DVD is released. The films of other major international movie studios will be added shortly. Premium Net TV can be accessed using a fully open independent network system that can be accessed using an authorised terrestrial digital decoder and ADSL connection of any telephone operator included in the normal subscription to Mediaset Premium with no additional costs.

Starting 1 March Mediaset Premium enhanced its offerings, which already included first-release films, pre-release TV series, the best in entertainment for children, and naturally the best of football, with two new, exclusive channels with documentaries, special reports and in-depth coverage, BBC Knowledge and Discovery World, after entering into two strategic agreements with the two largest worldwide producers of documentaries and factual entertainment, BBC Worldwide and Discovery Communications Europe.

Specifically, BBC Knowledge will offer an exceptional mix of science, technology, history, nature and adventure programmes, while Discovery World will be the documentary channel for the entire family with programmes ranging from history to archaeology, biographies to events, and adventure to nature using an engrossing, modern vocabulary.

On 1 March the new semi-generalist digital terrestrial channel called "Me" was launched. The scheduled programmes of the channel, which will take advantage of the experience gained by Mediaset in recent years with the Media Shopping brand, will include 16 hours of remote sales using innovative TV shopping formats, and 8 hours of entertainment, films and information in the 24-hour programme schedule. The new brand and new catalogue of products of famous Italian and international brands will also be offered online through the new e-commerce portal, www.byme.com.

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Also in view of the geopolitical events that have characterised the first months of the year, the international economic recovery appears still uncertain and Italy and Spain are among the countries in the euro zone for which also 2011 is expected to be a year of very low growth.

In Italy advertising investments in the first months of 2011 continued to feel the effect of the progressive slowdown that characterised the final months of last year, while forecasts for the second half of the year indicate an improved macroeconomic trend and consequently improved conditions also for the advertising market. In this context, the Group will pursue, also in 2011 the aim of consolidating its market share, in line with its own strategic guidelines.

With regard to the now structural fragmentation of the audience, the Group has plans to reinforce the schedules of the generalist channels during the year, as well as its FTA muti- channel offer, with the aim of achieving over the full year a further improvement in its television advertising revenues. Regarding other areas of the business, further revenue growth is expected for Mediaset Premium, even if the effects could be felt of the loss of revenues generated in 2010 from the sale of carriage and content to telephone operators, whose multi-year contracts expired at the end of last year.

In Spain Telecinco, through its merger with Cuatro, aims to further increase its market share, both in terms of audience share and advertising sales. In 2011 the contribution of Telecinco to the Group's consolidated results will, however, be impacted by the dilution of the Group's stake from the end of last year.

In the light of these elements, the expected improvement in the results of subsidiaries and the amortisation of the assts to be identified in the final purchase price allocation of the acquisitions of Cuatro and Digital Plus, the Group aims to end the current year with a consolidated net profit higher than that of 2010.

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BOARD OF DIRECTOR’S REPORT TO THE GENERAL MEETING OF 19 - 20 APRIL 2011 DESCRIBING THE FOLLOWING ITEM OF BUSINESS::

A) Financial Statements as at 31 December 2010 1. Approval of the Financial Statements as at 31 December 2010 and Directors’ Report on Operations; presentation of the External Auditing Company’s Report and Statutory Auditors’ Report to the Shareholders; presentation of the Consolidated Financial Statements as at 31 December 2010; Directors’ Report on Operations and External Auditing Company’s Report. Dear Shareholders, Confiding in your approval of the format and criteria adopted in preparing the Company’s Balance Sheet, Income Statement, Cash Flow Statement, Tables of the Changes in the Net Equity and the Explanatory Notes to these Financial Statements as at 31 December 2010, we submit them for your approval together with our Report on Operations. 2. Approval of the allocation of operating profit; relevant resolutions Dear Shareholders, We also invite you to resolve upon the allocation of the profit for the year, amounting to EUR 213,032,495.78, proposing to pay out a EUR 0.35 dividend per share through the partial utilization of available profit and to allocate the residual profit to extraordinary reserves. For your information, we also point out that based on the number of outstanding shares as at 21 March 2010 (1,181,227,564 shares minus 44,825,500 treasury shares) the aforesaid dividend distribution would amount to EUR 397,740,722.40.

B) Appointment of a Board Director 3. Appointment of a Board Director Dear Shareholders, about the resignation on March 1, 2011 by the Independent Board Director Luigi Fausti, we inform you that the Board of Directors on March 22, 2011 voted to replace the same, pursuant to article 2386 of the Civil Code and article 17 of the Company bylaws, with Mr. Michele Perini, as non-executive director and with the requirements of independence, which will remain in office until the next General Meeting. We invite you, therefore, to decide on the matter.

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C) Appointment of the Supervisory Board and remuneration 4. Appointment of the members of the Supervisory Board Dear Shareholders, we inform you that the mandate of the Supervisory Board, as conferred by resolution of the General Meeting of 16 April 2008, expires with the General Meeting to approve the financial statements at 31 December 2010. We therefore invite you to vote on the appointment of the members of the supervisory body. 5. Determination of the annual remuneration of the Supervisory Board Dear Shareholders, we also invite you to establish the annual remuneration of the Supervisory Board.

D) Authority to the Board of Directors for the purchase and sale of treasury shares 6. Authority to the Board of Directors to purchase and sell treasury shares, also to service Stock Option Plans; relevant resolutions Dear Shareholders, After approval of the Financial Statements as at 31 December 2010, the Board of Directors’ authority to purchase treasury shares will expire. We deem it useful to renew such authority in order to pursue, in the Company’s interest, the objectives permitted by the applicable regulations, including: conduct transactions on shares to be sold to Stock Option Plan participants for the 2003/2005, 2006/2008 and 2009/2011 periods; conduct trading and hedging transactions; make cash investments. Purchase transactions shall be carried out in compliance with Articles 2357 et seq. of the Italian Civil Code, Article 132 of Legislative Decree n° 58/98, Article 144, part two, of Consob regulation implementing Legislative Decree n° 58 of 24 February 1998, concerning the discipline of issuers ("Issuers Regulation"), and with all other applicable provisions, including those under Directive 2003/6 as well as EU and national regulations for the enforcement thereof. To date, the company's share capital amounts to EUR 614,238,333.28, subdivided into 1,181,227,564 shares of common stock, and as of 1 March 2011 the Company owns 44,825,500 treasury shares, equal to 3.795% of the share capital; Mediaset’s subsidiaries do not hold any shares of the parent company.

162 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations We therefore submit for your approval the proposal to vest the Board of Directors with authority to purchase, through the trading of options or financial instruments (including derivatives of Mediaset stock) or otherwise, up to a maximum of 118,122,756 common treasury shares at the par value of EUR 0.52 each (equal to 10% of the current share capital), in one or more transactions, until approval of the Financial Statements as at 31 December 2011 and in any case for a period not longer than 18 months from the date of the Shareholders’ Meeting’s resolution. The amount indicated above is covered by the reserves available as specified in the latest approved Financial Statements. The purchases shall be carried out as follows: i) Purchases required for the implementation of the 2003/2005, 2006/2008 and 2009/2011 Stock Option Plans shall be carried out in the listing Stock Exchange, using operating criteria as set forth in Article 144, part two, paragraphs b) and c) of the Issuers Regulation, at a price not exceeding the higher between the price of the last independent transaction and the price of the highest current independent offer on the electronic stock market managed by Borsa Italiana; ii) Any other purchases shall be conducted in the listing Stock Exchange, using operating criteria as set forth in Article 144, part two, paragraphs b) and c) of the Issuers Regulation, at a price not exceeding the higher between the price of the last independent transaction and the price of the highest current independent offer on the electronic stock market managed by Borsa Italiana; We also ask you, in accordance with Article 2357, part three, of the Italian Civil Code, to confirm the Board of Directors’ authority to perform the following, in compliance with all law provisions applicable from time to time and with the regulations issued by Borsa Italiana, and in accordance with relevant EU provisions: a) sell treasury shares, whether purchased in accordance with this resolution or already in the company’s portfolio, to Stock Option Plan participants upon their exercise of the granted options, at the prices and under the terms and conditions set forth in the each of the Stock Option documents applicable to the 2003/2005, 2006/2008 and 2009/2011 Plans. The authority requested in this paragraph is limited to the period indicated in each Stock Option Plan; b) sell shares previously purchased in accordance with this resolution or already in the company’s portfolio according to the following alternative procedures: i) through cash transactions; in this case, the sales shall be carried out in the listing stock exchange and/or over the counter, at a price not less than 90% of the reference price recorded by the stock in the trading day prior to each individual transaction; or ii) through exchanges, swaps, assignments or other acts of disposal, as part of industrial projects or extraordinary finance transactions. In this case the economic terms of the sale, including the valuation of the shares that are being traded, shall be determined with the assistance of independent experts on the basis of the nature and characteristics of the transaction, also keeping in mind the market performance of Mediaset stock. The authority requested in this paragraph b) is limited to a period not exceeding 18 months after the resolution date.

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E) PROPOSAL TO AMEND THE COMPANY BYLAWS 7. Proposal to amend the following articles of the Company Bylaws: 6) (Share Capital), 9), 10), 11) and 16) (General Meeting); 17), 23), 24) and 26) (Board of Directors); 27) (Supervisory Board); introduction of a new article 27) (Operations with related parties), with the consequent renumbering of the entire text of the Company Bylaws; pertinent and consequent resolutions. Dear Shareholders, as you know, Legislative Decrees no. 27 and no. 39, 27 January 2010, have introduced new regulations respectively in terms of the rights of the shareholders of listed companies and of the statutory auditing of annual and consolidated financial statements. The Board of Directors’ Meeting of 9 November 2010, as empowered by article 23 of the Company Bylaws and by article 2365, section 2, of the Italian Civil Code, has therefore introduced, as of that date, the amendments required to align the Bylaws of Mediaset with the new provisions introduced by the aforementioned Decrees. The amendments proposed here refer to the possibility offered by Legislative Decree no. 27/2010 to introduce additional optional changes in the regulations, addressed to the adoption of criteria with a view organisational and operational simplification. In detail, the following proposed amendments to the Bylaws are for the purposes of simplification:

granting the Board of Directors power to call General Meetings on a single date. This may represent an opportunity to simplify communications with Shareholders, as well as to streamline the General Meeting organisation procedure (articles 9, 11, 16 and 17);

the extension of the final term for calling the annual General Meeting to 180 days after the end of the financial year (article 10); We also propose, with regard to matters which are the sole responsibility of the Board of Directors, to remove the upper limit for the issue of non-convertible bonds and exclusion of the residual responsibility of the General Meeting, in line with the provisions of article 2410 of the Italian Civil Code (article 23, no. 2). Finally, we draw your attention to the change in position (from article 24, letter e, to article 26, no. 3) of the declaration regarding the remuneration of directors with special duties, in order to improve the wording of article 26 on the subject of directors’ remuneration. At the same Board of Directors’ Meeting on 9 November 2010, pursuant to and for the purposes of the “Regulations containing provisions relating to transactions with related parties“ adopted by Consob with Resolution no. 17221, 12 March 2010, the Board of Directors adopted the “Procedure for transactions with Related Parties”. The Board also resolved to submit to the next General Meeting the amendments to the Bylaws resulting from the decisions taken by the Company, as provided for in the aforementioned Procedure, regarding urgent transactions and transactions of greater importance in the case of a negative opinion from or comments raised by the independent directors.

164 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Directors’ Report on Operations In particular, the new article 27 of the Company bylaws permits recourse to the general meeting proceeding known as “Whitewash”. This procedure overrides the negative opinion of or comments raised by the independent directors with regard to transactions of greater importance with related parties, which are the responsibility both of the General Meeting and the Board of Directors. In this case the resolutions of the general meeting must be voted by the majorities required by law, without affecting the fact that transactions are blocked if the majority of unrelated voting shareholders votes against them. As envisaged by the Procedure, transactions are blocked only if the unrelated shareholders attending the general meeting represent at least 10% of the share capital with voting rights (article 27, nos. 2 and 3). The same article also allows the conclusion of urgent transactions with related parties which are not subject to approval by or the responsibility of the General Meeting, adopting the simplified rules envisaged by the Procedure for transactions with Related Parties which, in the case in point, does not make provision for preliminary examination and verification by the independent directors (article 27, no. 4). In consideration of the above, we submit the amendments to the Bylaws for your approval, as summarised in the table attached under letter “A”, which provides a comparison between the current text and the proposed amendments, as well as the reasons for same. In consideration of the proposed variations, we submit the new text of the amended and renumbered Bylaws for your approval. We finally remind you that the proposed amendments to the Bylaws are not among those which, pursuant to current legislation, attribute the right of withdrawal to shareholders who do not vote for the relative resolutions.

For the Board of Directors the Chairman

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SCHEDULE A

MEDIASET S.P.A. COMPANY BYLAWS

REASONS CURRENT TEXT PROPOSED TEXT SHARE CAPITAL SHARE CAPITAL Article 6) Article 6) 1. The company’s share capital is €614,238,333.28.= (six 1. Unchanged hundred and fourteen million two hundred and thirty-eight thousand three hundred and thirty-three euros and twenty- eight cents), divided into 1,181,227,564 (one thousand one hundred and eighty-one million two hundred and twenty- seven thousand five hundred and sixty-four) ordinary shares of nominal value €0.52 (fifty-two cents) each. 2. The share capital may be increased by means of 2. Unchanged contributions in money, in kind and/or in receivables. Only the General Meeting may issue any bond which confers rights to subscribe any of the company’s shares. 3. Without prejudice to any other provision concern capital 3. Without prejudice to any other provision concern capital increases, the capital may be increased (by means of increases, the capital may be increased (by means of contributions in money and without any option rights) by contributions in money and without any option rights) by amounts not exceeding 10% (ten percent) of its amount prior amounts not exceeding 10% (ten percent) of its amount prior to the increase, provided that the issue price corresponds to to the increase, provided that the issue price corresponds to the market value of the shares and that this correspondence is the market value of the shares and that this correspondence is confirmed in a special report by the company’s confirmed in a special report by the company engaged to independent auditors. The quorums necessary for any perform the statutory auditing of the accounts. The quorums Simply for the purposes of formal alignment with article 37, resolution under this paragraph shall be those provided for in necessary for any resolution under this paragraph shall be Legislative Decree 39/2010. Civil Code Articles 2368 and 2369. those provided for in Civil Code Articles 2368 and 2369. 4. Without prejudice to the provisions of Article 2441(viii) of 4. Unchanged the Civil Code, the General Meeting may, for the purposes of its stock option plans and by a resolution voted for by members representing over half the share capital (even if the resolution is adopted by the General Meeting at a meeting 166 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399

other than on first convening), resolve upon an increase in the share capital by amounts not exceeding 5% of its amount prior to the increase; there shall be no option rights, and the subscription price may be set at a discount to the average stock market price, providing that subscription price has been determined by reference to the objective parameters provided for in those stock option plans. The minimum subscription price per share shall in no circumstances be lower than its value in proportion to the Net Worth shown in the accounts or the nominal value, whichever is higher. 5. The General Meeting may under Civil Code Article 2443 5. Unchanged delegate its decision-making capacity in relation to the matters in the above subparagraphs to the Board of Directors. GENERAL MEETING GENERAL MEETING Article 9) Article 9) 1. General Meetings shall be held at the Company's registered 1. General Meetings shall be held at the Company's registered office or elsewhere within Italy. office or elsewhere within Italy. 2. General Meetings (at first and second call) shall be 2. General Meetings (at first and second call) shall be convened by means of a notice giving the date, time, place and convened by means of a notice giving the date, time, place and agenda for the meeting, as well as all the information required agenda for the meeting, as well as all the information required by the law as its stands at the time. by the law as its stands at the time. The notice must also Amendment relating to the change described in the note to provide the date of second call, as long as the Board of paragraph no. 3 of this article 9). Directors does not intend to have recourse to the powers set forth in paragraph 3 below.

The notice may also give the same details for one or more The notice may also give the same details for one or more subsequent calls beyond the second. If it does not, then the subsequent calls beyond the second. If it does not, the General Meeting’s third or subsequent calls must be within 30 General Meeting may be held at the third or subsequent call (thirty) days of the preceding call, with a reduction to 10 (ten) as long as it is convened within 30 (thirty) days of the previous days as long as the agenda is not changed. call, with a reduction of the term for the publication of the notice of meeting to 10 (ten) days as long as the agenda is not changed. 3. The Board of Directors, if it so deems appropriate, may With a view to organisational and operational simplification, the nevertheless establish that the ordinary and extraordinary Board of Directors is granted the power, if it so deems meeting be held at one sole call by stating this expressly in the appropriate from time to time, to exclude recourse to calls after notice of meeting, the first. In this case the majorities provided by article 2369 of the Italian Civil Code are applicable to the meeting at one sole call. 3. The notice of meeting must be published within the legal 4. The notice of meeting must be published pursuant to the 167 180 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399

term on the company’s website or by means of the alternative terms of the law on the company’s website and as otherwise methods established by current legislation. established by the law as it stands at the time.

Article 10) Article 10) The Annual General Meeting to approve the Financial The Annual General Meeting to approve the Financial The introduction of the possibility of recourse to the longer term Statements must be called at least once a year, no later that Statements must be called at least once a year, no later that of 180 days is supported by the amendment to article 154-ter, one hundred and twenty days after the end of the company’s one hundred and twenty days after the end of the company’s TUF, which makes reference to the obligation to publish the financial year. financial year, or within one hundred and eighty days if the draft financial statements approved by the Board of Directors conditions provided by the law apply. (and no longer the financial statements approved by the general meeting), making it possible once again for listed companies to postpone the term to convene and fix the date of the general meeting to approve the financial statements with greater flexibility.

Article 11) Article 11) Parties with voting rights may attend the General Meeting. Parties with voting rights may attend the General Meeting. The legitimate right to attend the general meeting and vote is The legitimate right to attend the general meeting and vote is certified by notification sent to the company by the Agent in certified by notification sent to the company by the Agent in favour of the party eligible to vote, based on the records at favour of the party eligible to vote, based on the records at the end of the accounting day on the seventh day on which the end of the accounting day on the seventh day on which the market is open for business prior to the date fixed for the the market is open for business prior to the date fixed for the general meeting at first call. Credit and debit transactions general meeting at first or sole call. Credit and debit See note to article 9, no. 3. recorded in accounts after this term have no effect for the transactions recorded in accounts after this term have no purposes of voting rights. effect for the purposes of voting rights. Agent’s notifications must arrive no later than the third day on Agent’s notifications must arrive no later than the third day on which the market is open for business prior to the date fixed which the market is open for business prior to the date fixed for the general meeting at first call, or the other term for the general meeting at first or sole call, or the other term See note to article 9, no. 3. established by the law as it stands at the time. established by the law as it stands at the time. Attendance and voting rights remain legitimate if the notices Attendance and voting rights remain legitimate if the notices arrive at the company after the term established by the arrive at the company after the term established by the previous paragraph, as long as they arrive before the start of previous paragraph, as long as they arrive before the start of the general meeting. the general meeting.

Article 16) Article 16) The normal provisions of the law shall apply to the proper The normal provisions of the law shall apply to the proper constitution of first and subsequent calls of General constitution at any call of General Meetings (AGMs and See note to article 9, no. 3. Meetings (AGMs and EGMs), and to the taking of decisions at EGMs), and to the taking of decisions at such meetings. such meetings. BOARD OF DIRECTORS BOARD OF DIRECTORS 168 181 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399

Article 17) Article 17) 1. The company shall be run by a Board of Directors 1. Unchanged composed of no fewer than five nor more than twenty-one Directors, who may be re-elected. 2. The General Meeting shall, before appointing the Board, 2. Unchanged decide on its period of office (subject to the time-limits prescribed by law) and the number of directorships. 3. The Board of Directors shall be appointed by the General 3. The Board of Directors shall be appointed by the General Meeting on the basis of lists, each list naming and serially Meeting on the basis of lists, each list naming and serially numbering its (twenty-one or fewer) candidates. numbering its (twenty-one or fewer) candidates. Any candidate whose name appears on more than one list Any candidate whose name appears on more than one list shall be disqualified. shall be disqualified. No member may, alone or with others, present or vote for No member may, alone or with others, present or vote for more than one list, not even through an intermediary or more than one list, not even through an intermediary or trustee. Members belonging to the same group - intended as trustee. Members belonging to the same group - intended as the parent company, subsidiaries and companies with a the parent company, subsidiaries and companies with a common controlling interest - and members who have signed common controlling interest - and members who have signed a shareholders' agreement pursuant to article 122, D. Lgs. no. a shareholders' agreement pursuant to article 122, D. Lgs. no. 58/1998 regarding shares in the company, may not, alone or 58/1998 regarding shares in the company, may not, alone or with others, present or vote for more than one list, not even with others, present or vote for more than one list, not even through an intermediary or trustee. through an intermediary or trustee. Lists may only be presented by members or groups of Lists may only be presented by members or groups of members with voting rights representing at least 2.5% (two members with voting rights representing at least 2.5% (two and a half percent) of the share capital formed of shares with and a half percent) of the share capital formed of shares with voting rights at the ordinary General Meeting, or the other voting rights at the ordinary General Meeting, or the other percentage established by the law as it stands at the time and percentage established by the law as it stands at the time and which will be stated from time to time in the notice convening which will be stated from time to time in the notice convening the General Meeting to appoint the Board of Directors. the General Meeting to appoint the Board of Directors. Ownership of the minimum shareholding pursuant to the Ownership of the minimum shareholding pursuant to the previous paragraph required to present lists is determined on previous paragraph required to present lists is determined on the basis of the shares registered in the name of the member the basis of the shares registered in the name of the member on the day in which the lists are lodged with the company. on the day in which the lists are lodged with the company. Certification proving ownership of such shareholdings may Certification proving ownership of such shareholdings may also be produced after lodging, as long as it is produced within also be produced after lodging of the list, as long as it is Mere formal change for a better clarity the term provided for the publication of lists by the company. produced within the term provided for the publication of lists by the company. For the purposes of electing the directors, lists will not be For the purposes of electing the directors, lists will not be taken into consideration which have not received a taken into consideration which have not received a percentage of votes equal to at least half that required by the percentage of votes equal to at least half that required by the 169 182 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399

bylaws or the law as it stands at the time for the presentation bylaws or the law as it stands at the time for the presentation of lists. of lists. Each list must include and clearly identify at least two Each list must include and clearly identify at least two candidates who may be classified as independent pursuant to candidates who may be classified as independent pursuant to the law as it stands at the time. the law as it stands at the time. Lists, accompanied by the candidates' professional CVs Lists, accompanied by the candidates' professional CVs containing comprehensive information on their personal and containing comprehensive information on their personal and professional characteristics and certifying that they may professional characteristics and certifying that they may properly be classified as independent according to the law as properly be classified as independent according to the law as it stands at the time, signed by the presenting members, must it stands at the time, signed by the presenting members, must be lodged at the Company's registered office within the be lodged at the Company's registered office within the twenty-fifth day before the date of the General Meeting and twenty-fifth day before the date of the General Meeting at made available for public consultation pursuant to the law as it first or sole call and made available for public consultation See note to article 9, no. 3. stands at the time. pursuant to the law as it stands at the time. Subject to production of the certificate proving title to the Simply a clarification with reference to provisions already shareholding within the term established by paragraph six of contained in this article. this paragraph 3, On presenting the list, information must also be lodged on presenting the list, information must also be given regarding the identity of the members presenting the list, regarding the identity of the members presenting the list, including the total percentage of the share capital held. including the total percentage of the share capital held. Members other than those who hold, alone or with others, a Members other than those who hold, alone or with others, a controlling or majority stake must also present a declaration controlling or majority stake must also present a declaration that they have no links pursuant to the law with the latter. that they have no links pursuant to the law with the latter. Declarations from the individual candidates must be lodged by Declarations from the individual candidates must be lodged by the same date, agreeing to stand and declaring, on their own the same date, agreeing to stand and declaring, on their own responsibility, that there is no cause why they cannot be responsibility, that there is no cause why they cannot be elected nor any legal impediment to their serving as Directors. elected nor any legal impediment to their serving as Directors. Together with each list, within the above term, the additional Together with each list, within the above term, the additional information required according to the law as it stands at the information required according to the law as it stands at the time, and which will be stated in the notice convening the time, and which will be stated in the notice convening the meeting, must also be lodged at the registered office. meeting, must also be lodged at the registered office. Any list presented in contravention of any of the above Any list presented in contravention of any of the above provisions is considered as not presented and shall not be provisions is considered as not presented and shall not be voted on. voted on.

4. When the voting ends, the votes obtained by each list shall 4. Unchanged be divided by the integers from one to the number of Directors to be elected. The resulting quotients are then allocated, one each, to the 170 183 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399

candidates on that list, in accordance with the order in which their names appear there. All the candidates on all the lists are then arranged in descending order of their individual quotients. Those with the highest quotients are declared elected, until all the directorships up to the number set by the General Meeting have been filled, subject however to the condition that the candidate at the head of the list which obtained the second- highest number of votes, and who is in no way connected, even indirectly, to the members who presented or voted in favour of the list which obtained most votes, must be made a director. This means that if that candidate’s quotient is not high enough for election, then the lowest placed candidate from the winning list is not appointed director, but the last directorship must go to the candidate appearing at the head of the second list which obtained the highest number of votes. 5. If, at the end of the procedure in paragraph 4 above, 5. Unchanged insufficient directors who can be classified as independent have been appointed according to the law as it stands at the time, the following procedure is applicable. If the board has seven or less directors, the candidate non independent with the lowest quotient in the first list (or next lowest if the last candidate has been replaced by the minority director pursuant to paragraph 4 above) is replaced by the first unelected independent candidate to appear subsequently in said list. If the board has more than seven members and as a result of the procedure in paragraph 4 above only one independent director has been appointed, the non independent candidate with the lowest quotient in the first list (or next lowest if the last candidate has been replaced by the minority director pursuant to paragraph 4 above) is replaced by the first unelected independent candidate to appear subsequently in said list. If the board has more than seven members and as a result of the procedure in paragraph 4 above no independent directors have been appointed: (i) the candidate with the lowest quotient in the first list (or next lowest if the last candidate has been replaced by the minority director pursuant to paragraph 4 above) is replaced by the first unelected independent 171 184 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399

candidate to appear subsequently in said list, and (ii) the non independent candidate elected with the lowest quotient in the second list that obtained the highest number of votes is replaced by the first unelected independent candidate to appear subsequently in the same list; if all the directors are elected from just one list, the second independent director will be also be appointed from said list according to the aforementioned criteria. 6. The candidate appearing at the head of the list which 6. Unchanged obtained the highest number of votes shall be appointed Chairman of the Board of Directors. 7. If there are more candidates with the same quotient in 7. Unchanged competition for one of the places on the Board of Directors, then the candidate shall be elected who appears on the list which has not yet had any director elected, or the list which has had the fewest directors elected. If none of the lists involved has yet had a director elected, or all of them have had the same number of directors elected, then the candidate from whichever of these lists has obtained the highest number of votes shall be elected. If, as well as individuals having the same quotient and lists have obtained the same number of votes, then the General Meeting shall take another vote according to the law as it stands at the time, in which the candidate who obtains a simple majority of the votes shall be elected. 8. If only one list has been presented, the General Meeting 8. Unchanged shall vote on it; and if it obtains a relative majority, then the candidates listed on it shall be elected as directors in progressive order until the number of directorships set by the General Meeting has been filled, without prejudice to the fact that at least as many independent directors must be appointed as is established by the law as it stands at the time. The candidate at the head of the list shall be elected Chairman of the Board of Directors. 9. The list voting procedure is applicable only in the event of 9. Unchanged the renewal of the entire Board of Directors. 10. If no lists are presented, and in the case in which as a 10. Unchanged result of the list voting mechanism the number of candidates elected is less than the number established by the General 172 185 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399

Meeting, the Board of Directors is appointed by the General Meeting with the majority requirements as specified by law, in such a way as to ensure that the necessary number of directors are appointed who can be classified as independent according to the law as it stands at the time. 11. If one or more directorships should fall vacant for any reason, the remaining directors shall fill same by co-option, 11. Unchanged ensuring that there is the required number of directors who can be classified as independent according to the law as it stands at the time. 12. Directors appointed pursuant to Article 2386 of the Civil Code shall be elected by the General Meeting with the 12. Unchanged majority requirements as specified by law; the period of office of Directors appointed in this way shall expire at the same time as that of those already in office at the time of their appointment. Article 23) Article 23) 1. The Board of Directors shall have all powers of ordinary 1. Unchanged and extraordinary management of the company. 2. The following matters shall be determined only by the 2. Without prejudice to the matters which shall be Simply a reference to the matters which are the sole Board of Directors, and shall not be delegated: determined only by the Board of Directors as established by responsibility of the Board of Directors as established by the law. the law as its stands at the time, the following matters shall be determined only by the Board of Directors and shall not be delegated: - the concluding of any contract or legally-binding - the concluding of any contract or legally-binding relationship whatsoever between the company and any of relationship whatsoever between the company and any of its members holding 5% or more of the share capital (or its members holding 5% or more of the share capital (or any company belonging to the same group as such a any company belonging to the same group as such a member, i.e. any of the company’s controlled subsidiaries, member, i.e. any of the company’s controlled subsidiaries, any company or individual with a controlling interest in the any company or individual with a controlling interest in the company, and any company controlled by such a company company, and any company controlled by such a company or individual), where the amount involved exceeds or individual), where the amount involved exceeds €13,000,000.00.= (thirteen million euros and no cents); €13,000,000.00.= (thirteen million euros and no cents); - the concluding of any contract or legally-binding - the concluding of any contract or legally-binding relationship whatsoever where the amount involved relationship whatsoever where the amount involved exceeds €130,000,000.00.= (one hundred and thirty exceeds €130,000,000.00.= (one hundred and thirty million euros and no cents); million euros and no cents); the issuing of non-convertible bonds, subject to the Removal of the upper limit to the issue of non-convertible limits laid down in Civil Code Article 2412 and also obligations and elimination of the residual responsibility of the 173 186 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399

to a maximum of €300,000,000.00.= (three hundred general meeting, pursuant to the provisions of article 2410, million euros and no cents). Only an Extraordinary Italian Civil Code. General Meeting may authorize an issue exceeding this limit. 3. Without prejudice to the provisions of Article 15.2 of this 3. Without prejudice to the provisions of Article 15.2 of this company constitution, the Board of Directors shall have the company constitution, the Board of Directors shall have the power to make decisions relating to mergers and spin-offs in power to make decisions relating to mergers and spin-offs in those cases described in Civil Code Article 2505, 2505 bis and those cases described in Civil Code Article 2505, 2505 bis and 2506 ter, to set up or close down secondary centres, to 2506 ter, to set up or close down secondary centres, to authorize any director to represent the company, to reduce authorize any director to represent the company, to reduce the share capital in the event of a member’s withdrawal, or to the share capital in the event of a member’s withdrawal, or to amend the company constitution in order to bring it into line amend the company constitution in order to bring it into line with legal or regulatory provisions. with legal or regulatory provisions.

Article 24) Article 24) The Board shall, without prejudice to the provisions of Civil The Board shall, without prejudice to the provisions of Civil Code Article 2381, have powers to do the following: Code Article 2381, have powers to do the following: a) appoint an Executive Committee, if the Board itself a) appoint an Executive Committee, if the Board itself numbers at least seven; to determine the Executive numbers at least seven; to determine the Executive Committee’s numbers; and to delegate to it all or part of its Committee’s numbers; and to delegate to it all or part of its own powers and duties save only those reserved by law to own powers and duties save only those reserved by law to the Board; if an Executive Committee is appointed, the the Board; if an Executive Committee is appointed, the following officers shall belong to it ex officio without counting following officers shall belong to it ex officio without counting towards its designated numbers: the Chairman of the Board, towards its designated numbers: the Chairman of the Board, any Vice Chairmen and any Managing Director(s). any Vice Chairmen and any Managing Director(s). In the event of resignations or any other cause of termination In the event of resignations or any other cause of termination of the post of member of the Executive Committee, the of the post of member of the Executive Committee, the Board may appoint further directors to restore the Executive Board may appoint further directors to restore the Executive Committee’s numbers to the level established. Committee’s numbers to the level established. The provisions above concerning the convening of the Board The provisions above concerning the convening of the Board and the conduct of its meetings shall also apply to meetings of and the conduct of its meetings shall also apply to meetings of the Executive Committee. the Executive Committee. Executive Committee members shall continue to serve on the Executive Committee members shall continue to serve on the Executive Committee until their directorship expires; Executive Committee until their directorship expires; b) set up other Committees (whose members need not all be b) set up other Committees (whose members need not all be directors), determine their duties, powers and remuneration directors), determine their duties, powers and remuneration (if any), and prescribe how they are to be composed and to (if any), and prescribe how they are to be composed and to function. If such a committee includes non-directors then its function. If such a committee includes non-directors then its powers shall be advisory only; powers shall be advisory only; 174 187 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399

c) delegate all or part of its own powers to one or more of its c) delegate all or part of its own powers to one or more of its members (who may or may not be given the title of members (who may or may not be given the title of “Managing Director”), though without prejudice to the “Managing Director”), though without prejudice to the provisions of Article 23 of this company constitution; provisions of Article 23 of this company constitution; d) appoint a General Manager and one or more Managers, and d) appoint a General Manager and one or more Managers, and determine their powers; and grant powers of attorney for the determine their powers; and grant powers of attorney for the execution of particular deeds or categories of deed; execution of particular deeds or categories of deed; e) set the remuneration for those directors who have Simply a change in position (from article 24, letter e, to article been assigned particular duties, taking into 26, no. 3) of the declaration on the subject of the remuneration consideration the advice of the Supervisory Board. of directors with special duties.

Article 26) Article 26) 1. Directors shall be entitled to reimbursement of their 1. The General Meeting sets the remuneration of all directors. Improved wording of article 26), also with regard to the change expenses incurred in the discharge of their duties. of position described in the previous note. 2. The General Meeting shall set an overall amount for 2. The General Meeting may also grant the directors other the remuneration of all the directors. kinds of indemnity or reward. 3. The General Meeting may also grant the directors 3. The remuneration of directors with special duties is set by other kinds of indemnity or reward. the Board of Directors after receiving the opinion of the Supervisory Board. 4. Directors shall be entitled to reimbursement of their expenses incurred in the discharge of their duties.

RELATED PARTIES TRANSACTIONS

Article 27) 1. With regard to the provisions of this article, for definitions Reference to the “Procedure for transactions with Related of transactions with related parties, transactions of greater Parties” introduced by Mediaset S.p.A. with the Board of importance, independent directors committee and unrelated Directors’ resolution of 9 November 2010, which regulates the shareholders please consult the procedure for transactions matters introduced by Consob Resolution no. 17221, 12 March with related parties adopted and published by the Company 2010. on its website (“Procedure”) and legislation as it stands from time to time on the subject of transactions with related parties. 2. Transactions of greater importance with related parties Subject to the introduction of the relative clause in the Bylaws, which are the responsibility of the General Meeting, or which the Procedure permits recourse to the general meeting must be authorised by same, and which are submitted to the proceeding known as “Whitewash” provided for in article 11, General Meeting when the independent directors committee sections 2 and 3 of the Consob Regulation; this procedure has issued a negative opinion, or in any case without taking overrides the negative opinion of or comments raised by the account of the comments made by said committee, are independent directors with regard to transactions of greater 175 188 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399

resolved by the legal majority, without affecting the fact that importance with related parties which are the responsibility of transactions are blocked if the majority of unrelated voting the General Meeting, with resolutions voted by the legal shareholders votes against the transaction. As envisaged by majority, as long as the majority of unrelated voting shareholders the Procedure, the transaction is blocked only if the unrelated does not vote against the transactions. Transactions are blocked shareholders attending the general meeting represent at least only if the unrelated shareholders attending the general meeting 10% (ten percent) of the share capital with voting rights. represent at least 10% of the share capital with voting rights.

3. Transactions of greater importance with related parties The “Whitewash” proceeding can also be applied to transactions which are the responsibility of the Board of Directors may be with related parties which are the responsibility of the Board of approved by the Board when the independent directors Directors, in the case of the negative opinion of or comments committee has issued a negative opinion, or in any case raised by the independent directors committee. In this case the without taking account of the comments raised by this Board of Directors may submit the transaction for the approval committee, on the condition that the transaction is submitted of the General Meeting, which resolves on the matter with the for approval by the ordinary general meeting of the company. same majorities described in the previous note. Resolutions of the general meeting are subject to the majorities established by the law, without affecting the fact that transactions are blocked if the majority of unrelated voting shareholders votes against them. As envisaged by the Procedure, transactions are blocked only if the unrelated shareholders attending the general meeting represent at least 10% (ten percent) of the share capital with voting rights. 4. Transactions with related parties which are not the The regulations introduced by article 13, section 6, Consob responsibility of the general meeting and which do not have to Regulation no. 17221, 12 March 2010, regarding urgent be approved by same, in cases of urgency, may be performed transactions with related parties makes provision for such by applying the special rules established by the Procedure. transactions to be performed by means of a simplified procedure if the Bylaws explicitly assert the authorisation of same.

SUPERVISORY BOARD SUPERVISORY BOARD Article 27) Article 28) 1. The Annual General Meeting shall elect a Supervisory Board 1. Unchanged composed of three full and two alternate members, to remain in office for three financial years, until the date of the General Meeting convened to approve the Financial Statements for the third financial year of their term in office; members of the Supervisory Board may be re-elected. All members of the Supervisory Board must be entered in the special register established pursuant to the law and have no less than three years’ experience of the statutory auditing of accounts. 176 189 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399

Members of the Supervisory Board must also satisfy the legal and regulatory requirements in force from time to time, and the Board of Directors shall satisfy itself they do so. 2. Members of the Supervisory Board shall be appointed on 2. Unchanged the basis of lists presented by company members according to the following procedure. The lists must contain at least one candidate to the position of Full Member of the Supervisory Board and one candidate to the position of Alternate Member, and may contain up to a maximum of three candidates to the position of Full Member of the Supervisory Board and of two candidates to the position of Alternate Member. The candidates shall be listed with a progressive number. Each list shall contain candidates’ names, numbered and in order. Each list shall have two sections: one of candidates for the position of Full Member of the Supervisory Board, and the other of candidates for the position of Alternate Member. Any candidate whose name appears on more than one list shall be disqualified. 3. Lists may only be presented by members or groups of 3. Unchanged members with voting rights who, at the time the lists are presented, represent the percentage of the share capital required by the company constitution to present lists for the appointment of the members of the Board of Directors. No member may present or vote for more than one list, not even through an intermediary or trustee. Members belonging to the same group - intended as the parent company, subsidiaries and companies with a common controlling interest - and members who have signed a shareholders' agreement pursuant to article 122, D. Lgs. no. 58/1998 regarding the shares of the Company may not, alone or with others, present or vote for more than one list, not even through an intermediary or trustee. Ownership of the minimum shareholding pursuant to the previous paragraph required to present lists is determined on the basis of the shares registered in the name of the member on the day in which the lists are lodged with the company. Certification proving ownership of such shareholdings may also be produced after lodging, as long as it is produced within 4. Lists, accompanied by the professional CVs of the 177 190 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399

the term provided for the publication of lists by the company. individuals listed and signed by their presenting members, 4. Lists, accompanied by the professional CVs of the must be lodged at the Company's registered office within the individuals listed and signed by their presenting members, twenty-fifth day prior to the date of the General Meeting at See note to article 9, no. 3. must be lodged at the Company's registered office within the first or sole call and made available for public consultation twenty-fifth day prior to the date of the General Meeting and pursuant to the law as its stands at the time. made available for public consultation pursuant to the law as Subject to production of the certificate proving title to the Simply a clarification with reference to provisions already its stands at the time. shareholding within the term established by paragraph three contained in this article. of paragraph 3 above, On presentation of the list the following must also be lodged: on presenting the list the following must also be provided: (i) information regarding the identity of the members (i) information regarding the identity of the members presenting the list, including the total percentage of the share presenting the list, including the total percentage of the share capital held and the certificate issued by a registered capital held and the certificate issued by a registered intermediary proving ownership of said shares, intermediary proving ownership of said shares, (ii) a CV of each candidate containing comprehensive (ii) a CV of each candidate containing comprehensive information on the personal and professional characteristics of information on the personal and professional characteristics of the candidates and (iii) the additional information required the candidates and (iii) the additional information required according to the law as it stands at the time, which will be according to the law as it stands at the time, which will be stated in the notice convening the General Meeting. Members stated in the notice convening the General Meeting. Members other than those who hold, alone or with others, a controlling other than those who hold, alone or with others, a controlling or majority stake must also present a declaration that they or majority stake must also present a declaration that they have no links pursuant to the law with the latter. Declarations have no links pursuant to the law with the latter. Declarations from individual candidates must be lodged by the same date, from individual candidates must be lodged by the same date, agreeing to stand and declaring, on their own responsibility, agreeing to stand and declaring, on their own responsibility, that there is no cause (including the restriction on corporate that there is no cause (including the restriction on corporate office-holding referred to in the next subparagraph) why they office-holding referred to in the next subparagraph) why they cannot be elected, nor any legal impediment to their serving cannot be elected, nor any legal impediment to their serving on the Supervisory Board and that they satisfy any on the Supervisory Board and that they satisfy any requirements prescribed by law, regulations or the company requirements prescribed by law, regulations or the company constitution for members of the Supervisory Board. The list of constitution for members of the Supervisory Board. The list of administration and control offices held by each candidate at administration and control offices held by each candidate at other companies must also be lodged within the same term. other companies must also be lodged within the same term. 5. No person may be elected to the Supervisory Board who 5. Unchanged holds more directorships and/or memberships of supervisory boards than is allowed by the law as it stands at the time. 6. Any list presented in contravention of any of the above 6. Unchanged provisions is considered as not presented and shall not be voted on. 7. The procedure for the election of the members of the 7. Unchanged Supervisory Board shall be as follows: 178 191 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399

a) two full members and one alternate member of the Supervisory Board shall be drawn from the list obtaining the most votes at the AGM, in progressive order as listed in that list’s sections; b) the remaining full member of the Supervisory Board, and the other alternate member, shall be drawn from the second list obtaining the highest number of votes at the AGM, out of the lists presented and voted by members who are not linked to the reference members pursuant to article 148, clause 2, of the Consolidation Act on the subject of financial Intermediaries, in progressive order as listed in that list’s two sections. If more lists obtain the same number of votes, all of these lists shall be balloted once more in a run-off vote, according to the law as it stands at the time, and the candidates on the list obtaining the most votes shall be elected by simple majority. 8. The candidate at the head of the Full-Member Candidates 8. Unchanged section of the list, elected pursuant to paragraph 7.b) above, shall be elected Chairman of the Supervisory Board. 9. If only one list has been presented, the General Meeting 9. Unchanged shall vote on that list; if it obtains a relative majority, then the three candidates at the head of its Full-Member Candidates section shall be elected as full members of the Supervisory Board and the two candidates at the head of the Alternate- Member Candidates section shall be elected as alternate members; the person indicated at the head of the Full- Member Candidates section of that list shall be appointed Chairman of the Supervisory Board. Any vacancy among the Full Members of the Supervisory Board due to death, resignation or termination shall be filled by the highest-listed of the Alternate Members. If the vacancy was that of the Chairman, the Supervisory Board shall appoint another of its number to be the new Chairman, to remain in office until the next General Meeting, which shall restore the numbers of the Supervisory Board. 10. If no lists are forthcoming, the Supervisory Board and its 10 Unchanged Chairman shall be appointed by the General Meeting with the majority requirements as specified by the law. 11. If two or more lists were presented, then a vacancy 11 Unchanged 179 192 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399

among the Full Members of the Supervisory Board due to death, resignation or termination shall be filled by the Alternate Member at the top of the same list as the departed Full Member. In this case, the members needed to complete the Supervisory Board are appointed as follows: when it is necessary to replace supervisory board members elected in the majority list, the appointment is made by majority vote without any restrictions regarding lists; when, however, the general meeting must appoint full or alternate supervisory board members to complete the Supervisory Board by replacing full or alternate supervisory board members elected in the minority list, it makes its resolution by relative majority vote, choosing from the candidates in the list on which the supervisory board member to replace appeared or, secondarily, from the candidates on any other minority lists. If there are no candidates on the minority list(s), appointment is by voting for one or more lists, comprising a number of candidates no greater that the number to elect, presented before the general meeting pursuant to the provisions of this article regarding the appointment of the Supervisory Board, without prejudice to the fact that lists may not be presented (and if they are will not be effective) by significant members or members associated to them, as defined by the laws and regulations in force. The candidates on the list which obtains most votes shall be elected. 12. The General Meeting shall determine the remuneration 12 Unchanged payable to members of the Supervisory Board, in addition to the reimbursement of their expenses incurred in the performance of their duties. 13. The powers and duties of members of the Supervisory 13 Unchanged Board shall be as prescribed by law.

COMPANY ACCOUNTANT COMPANY ACCOUNTANT Article 28) Article 29) The Board of Directors, after taking into account the opinion Unchanged of the Supervisory Board, appoints and terminates the appointment of the executive responsible for preparing the company’s accounting documents, selected from candidates with at least three years experience in (a) administration or 180 193 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399

control activities, ie. financial, accounting or control management functions at joint stock companies with share capital of no less than EUR 2 million, or consortia between joint stock companies with total share capital of no less than EUR 2 million, or (b) professional legal, economic or financial work closely related to the activities of the Company, or (c) management functions with public entities or administrations operating in the banking, financial and insurance sectors, or in any case in sectors which are closely related to that in which the Company operates. The sectors of activity closely related to that in which the Company operates are the sectors given in article 4 of this company constitution. The Board shall grant the Company Accountant adequate powers and resources to carry out his/her duties as required by the law and regulations. The provisions governing directors’ responsibility in relation to their allotted duties shall also apply to the Company Accountant, with the exception of actions to be taken on the basis of his/her status as a company employee.

AUDITING OF THE ACCOUNTS AUDITING OF THE ACCOUNTS Article 29) Article 30) The accounts shall be audited by an independent audit Unchanged company entered in the special register established pursuant to the law. The appointment, duration, remuneration, duties, powers and responsibilities of the independent auditors shall be as laid down by the relevant laws.

FINANCIAL STATEMENTS AND PROFITS FINANCIAL STATEMENTS AND PROFITS Article 30) Article 31) 1. The Company's financial year shall close on 31 December 1. Unchanged of each year. 2. At the end of each financial year the governing body shall 2. Unchanged draw up a Financial Statement for the period as required by law. Article 31) Article 32) 1. The net profits shown in the Financial Statement shall, after 1. Unchanged deduction of not less than 5% (five percent) for the statutory 181 194 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399

reserve until that reserve reaches one fifth of the share capital, be distributed proportionally among the members, unless the General Meeting resolves on any special allocation to extraordinary reserves or other applications, or resolves to carry all or part of the profits forward to the next financial period. 2. The General Meeting may also under Civil Code Article 2. Unchanged 2349 resolve on an extraordinary dividend through the issue, without charge, of ordinary shares of a nominal total corresponding to the profits to be distributed. Article 32) Article 33) The Board of Directors may resolve to distribute an interim Unchanged dividend, subject to the arrangements permitted by law. Article 33) Any dividend not claimed within five years from the date on Article 34) which it first became payable shall revert to the company. Unchanged

WINDING UP AND LIQUIDATION – FINAL WINDING UP AND LIQUIDATION – FINAL PROVISIONS PROVISIONS Article 34) Article 35) If at any time and for any reason whatsoever the company is Unchanged to be wound up, then the General Meeting shall determine the liquidation arrangements and shall appoint one or more liquidators and specify their powers and remuneration. Article 35) Any matter not provided for in this company constitution shall Article 36) be determined in accordance with the relevant statutory and Unchanged regulatory provisions in force at the time.

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Mediaset Group 2010 Annual Report

Consolidated Financial Statements and Explanatory Notes

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MEDIASET GROUP

CONSOLIDATED STATEMENT OF FINANCIAL POSITION (*)

(EUR million)

Notes 31/12/2010 31/12/2009

ASSETS

Non current assets

Property, plant and equipment 7.1 545.6 504.2

Television and movie rights 7.2 2,396.7 2,598.0

Goodwill 7.3 1,043.9 512.4

Other intangible assets 7.4 481.6 452.5

Investments in associates 7.5 537.9 175.0

Other financial assets 7.6 103.0 58.9

Deferred tax assets 7.7 497.9 506.2

TOTAL NON CURRENT ASSETS 5,606.6 4,807.3

Current assets

Inventories 8.1 96.8 74.9

Trade receivables 8.2 1,138.6 1,120.5

Tax receivables 8.3 41.3 12.9

Other receivables and current assets 8.3 177.4 162.7

Current financial assets 8.4 64.4 35.0

Cash and cash equivalents 8.5 182.4 100.0

TOTAL CURRENT ASSETS 1,700.9 1,506.0

Non current assets held for sale -

TOTAL ASSETS 7,307.5 6,313.3

(*) With reference to CONSOB decision n. 15519 dated 27th July 2006, the effects on the Balance Sheet items generated by related parties transactions are shown in a separated table mentioned in the next pages and moreover describer in the Explanatory Note 16

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MEDIASET GROUP

CONSOLIDATED STATEMENT OF FINANCIAL POSITION (*) (EUR million)

Notes 31/12/2010 31/12/2009

SHAREHOLDERS' EQUITY AND LIABILITIES

Share capital and reserves

Share capital 9.1 614.2 614.2

Share premium reserve 9.2 275.2 275.2

Treasury shares 9.3 (416.7) (416.7)

Other reserves 9.4 598.1 430.3

Valuation reserve 9.5 21.9 5.6

Retained earnings9.61,172.8 1,150.7

Net profit for the period 352.2 272.4

Group Shareholders' Equity 2,617.7 2,331.8

Minority interests in net profit 34.5 32.8

Minority interests in share capital, reserves and retained earnings 782.8 173.7

Minority interests 817.3 206.5

TOTAL SHAREHOLDERS' EQUITY 3,435.0 2,538.3

Non current liabilities

Post-employment benefit plans 10.1 97.5 100.4

Deferred tax liabilities 7.7 62.0 60.6

Financial liabilities and payables 10.2 1,071.1 828.6

Provisions for non current risks and charges 10.3 75.5 69.0

TOTAL NON CURRENT LIABILITIES 1,306.1 1,058.6

Current liabilities

Financial payables 11.1 701.9 797.0

Trade and other payables 11.2 1,421.5 1,497.1

Provisions for current risks and charges 10.3 87.5 92.1

Current tax liabilities 11.3 7.5 2.5

Other financial liabilities 11.4 59.5 47.1

Other current liabilities 11.6 288.5 280.5

TOTAL CURRENT LIABILITIES 2,566.4 2,716.4

Liabilities related to non current assets held for sale -

TOTAL LIABILITIES 3,872.5 3,775.0

TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 7,307.5 6,313.3 (*) With reference to CONSOB decision n. 15519 dated 27th July 2006, the effects on the Balance Sheet items generated by related parties transactions are shown in a separated table mentioned in the next pages and moreover describer in the Explanatory Note 16

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MEDIASET GROUP

CONSOLIDATED STATEMENT OF INCOME(*)

(EUR million)

2010 2009 Notes

Sales of goods and services 12.1 4,253.6 3,815.0 Other revenues and income 12.2 38.9 67.9

TOTAL NET CONSOLIDATED REVENUES 4,292.5 3,882.9

Personnel expenses 12.3 542.5 507.6 Purchases, services, other costs 12.4 1,760.5 1,593.3 Amortisation, depreciation and write-downs 12.5 1,168.3 1,180.6 Impairment losses and reversal of impairment on fixed assets 12.6 5.6

TOTAL COSTS 3,477.0 3,281.5

EBIT 815.5 601.5

Financial expenses 12.7 (101.1) (84.0) Financial income 12.8 76.2 55.2 Income/(expenses) from equity investments 12.10 (191.0) (124.4)

EBT 599.6 448.4

Income taxes 12.11 212.9 142.5

NET PROFIT FROM CONTINUING OPERATIONS 386.7 305.8

Net Gains/(Losses) from discontinued operations -(0.6)

NET PROFIT FOR THE PERIOD 12.12 386.7 305.2

Attributable to: - Equity shareholders of the parent company 352.2 272.4 - Minority Interests 34.5 32.8

Earnings per share 12.13 - Basic 0.31 0.24 - Diluted 0.31 0.24

(*) With reference to CONSOB decision n. 15519 dated 27th July 2006, the effects on the Income Statement items generated by related parties transactions are shown in a separated table mentioned in the next pages and moreover describer in the Explanatory Note 16

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MEDIASET GROUP

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(EUR million)

Note 2010 2009

PROFIT OR (LOSS) FOR THE PERIOD (A) 386.7 305.2

Changes in revaluation surplus --

Changes arising from translating the financial statement of foreign operations --

Gains and losses on available-for-sale financial assets --

Effective portion of gains and losses on hedging instruments (cash flow hedge) 9.5 21.0 (3.3)

Actuarial gains and losses on defined benefit plans 9.5 (3.2) (1.7)

Other gains and losses of associates valued by equity method 9.4 10.9 15.7

Other gains and losses 9.4 161.6

Tax effects relating to other gains and losses (4.9) 1.1 TOTAL OTHER COMPREHENSIVE INCOME FOR THE PERIOD NET OF TAX EFFECTS (B) 185.4 11.9

TOTAL COMPREHENSIVE INCOME (A)+(B) 572.1 317.2 attributable to:

- owners of the parent 532.9 278.8

- non controlling interests 39.2 38.4

18812 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399

MEDIASET GROUP CONSOLIDATED STATEMENT OF CASH FLOWS

(EUR million)

Notes 2010 2009

CASH FLOW FROM OPERATING ACTIVITIES: Operating profit before taxation 632.2 477.6 + Depreciation and amortisation 12.5 1,174.0 1,180.6 + Other provisions and non-cash movements (14.6) 0.5 + Equity investments evaluation result (net of gains/losses from sale operations) 12.10 191.0 120.4 + Change in trade receivables 8.2 (18.1) 30.2 + Change in trade payables 11.2 286.2 62.3 + Change in other assets and liabilities (185.9) (70.1) - Interests (paid)/received (6.6) (3.5) - Income tax paid (230.1) (228.9)

Net cash flow from operating activities [A] 1,828.1 1,569.1

CASH FLOW FROM INVESTING ACTIVITIES: Proceeds from the sale of fixed assets 3.5 2.8 Proceeds from the sale of equity investments 2.0 0.2 Interests (paid)/received 3.8 - Purchases in television rights 7.2 (749.8) (1,249.5) Changes in advances for television rights 7.4 (31.8) 58.2 Purchases of other fixed assets 11.2 (151.1) (128.1) Equity investments (537.8) (7.8) Changes in payables for investing activities (361.9) 145.7 Proceeds/(Payments) for hedging derivatives 23.3 (15.9) Changes in other financial assets (51.9) (25.3) Loans to other companies (granted)/repaid (0.7) Dividends received 3.6 1.8 Business Combinations net of cash acquired 37.8 - Changes in consolidation area (48.5) (1.8)

Net cash flow from investing activities [B] (1,858.8) (1,220.4)

CASH FLOW FROM FINANCING ACTIVITIES: Share capital issues 243.4 - Change in treasury shares -(2.9) Changes in financial liabilities (119.6) 182.8 Corporate bond 296.0 Dividends paid (289.9) (534.6) Changes in other financial assets/liabilities (2.4) (5.9) Interests (paid)/received (14.4) (27.8)

Net cash flow from financing activities [C] 113.1 (388.3)

CHANGE IN CASH AND CASH EQUIVALENTS [D=A+B+C] 8.5 82.4 (39.6)

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD [E] 100.0 139.6

CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD [F=D+E] 182.4 100.0

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MEDIASET GROUP CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (EUR million)

Share Share Legal Company's Valuation Retained Profit/ Total Total TOTAL capital premium reserve treasury reserve earnings/ (loss) Group shareholders' SHARE- reserve and other shares (accumulated for the shareholders' equity HOLDERS' reserves losses) period equity attributable EQUITY to minority interests

Balance at 1/1/2009 614.2 275.2 421.4 (416.7) 11.2 1,118.1 459.0 2,482.4 273.4 2,755.8

Allocation of the parent company's 2008 net profit - - - - - 459.0 (459.0) - - -

Dividends paid by the parent company - - - - - (431.8) - (431.8) (102.8) (534.6)

Stock Option plan valuation - - - - (2.7) 5.4 - 2.7 0.5 3.2

(Purchase)/sale of treasury shares - - (1.4) - - - - (1.4) (1.5) (2.9) Profits/(losses) from negotiation of treasury shares ------

Changes in consolidation area - - 0.3 - 0.8 - - 1.1 (1.5) (0.4)

Other changes ------

Comprehensive income/(loss) - - 10.0 - (3.7) - 272.4 278.8 38.4 317.2

Balance at 31/12/2009 614.2 275.2 430.3 (416.7) 5.6 1,150.7 272.4 2,331.8 206.5 2,538.3

Changes in accounting criteria 0.3 (0.3) - -

Balance at 1/1/2010 614.2 275.2 430.3 (416.7) 5.9 1,150.4 272.4 2,331.8 206.5 2,538.3

Allocation of the parent company's 2009 net profit - - - - - 272.4 (272.4) - - -

Dividends paid by the parent company - - - - - (250.0) - (250.0) (40.0) (290.0)

Stock Option plan valuation - - - - 3.1 - - 3.1 0.7 3.8

(Purchase)/sale of treasury shares ------Profits/(losses) from negotiation of treasury shares ------

Changes in consolidation area ------611.0 611.0

Other changes ------(0.1) (0.1)

Comprehensive income/(loss) - - 167.8 - 12.9 - 352.2 532.9 39.2 572.1

Balance at 31/12/2010 614.2 275.2 598.1 (416.7) 21.9 1,172.8 352.2 2,617.7 817.3 3,435.0

19012 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399

MEDIASET GROUP

CONSOLIDATED STATEMENT OF FINANCIAL POSITION ACCORDING TO CONSOB RESOLUTION N. 15519 DATED 27 JULY 2006

(EUR million)

of which of which vs. related vs. related 31/12/2010 % wheight 31/12/2009 % wheight parties parties Notes (note 16) (note 16)

ASSETS Non current assets

Property, plant and equipment 7.1 545.6 504.2

Television and movie rights 7.2 2,396.7 63.9 3% 2,598.0 88.0 3%

Goodwill 7.3 1,043.9 512.4

Other intangible assets 7.4 481.6 2.5 1% 452.5 2.1 0%

Investments in associates 7.5 537.9 175.0

Other financial assets 7.6 103.0 74.0 72% 58.9 46.0 78%

Deferred tax assets 7.7 497.9 506.2

TOTAL NON CURRENT ASSETS 5,606.6 4,807.3

Current assets

Inventories 8.1 96.8 74.9

Trade receivables 8.2 1,138.6 30.0 3% 1,120.5 21.6 2%

Tax receivables 8.3 41.3 12.9

Other receivables and current assets 8.3 177.4 162.7 6.1 4%

Current financial assets 8.4 64.4 2.6 4% 35.0 3.5 10%

Cash and cash equivalents 8.5 182.4 100.0

TOTAL CURRENT ASSETS 1,700.9 1,506.0

Non current assets held for sale 0.0 0.0

TOTAL ASSETS 7,307.5 6,313.3

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MEDIASET GROUP

CONSOLIDATED STATEMENT OF FINANCIAL POSITION ACCORDING TO CONSOB RESOLUTION N. 15519 DATED 27 JULY 2006

(EUR million)

of which of which vs. related vs. related 31/12/2010 % wheight 31/12/2009 % wheight parties parties Notes (note 16) (note 16)

SHAREHOLDERS' EQUITY AND LIABILITIES Share capital and reserves

Share capital

Share premium reserve 9.1 614.2 614.2

Treasury shares 9.2 275.2 275.2

Other reserves 9.3 (416.7) (416.7)

Valuation reserve 9.4 598.1 430.3

Retained earnings 9.5 21.9 5.6

Net profit for the period 9.6 1,172.8 1,150.7

352.2 272.4

Group Shareholders' Equity 2,617.7 2,331.8

Minority interests in net profit 34.5 32.8

Minority interests in share capital, reserves and retained earnings 782.8 173.7

Minority interests 817.3 206.5

TOTAL SHAREHOLDERS' EQUITY 3,435.0 2,538.3

Non current liabilities

Post-employment benefit plans 10.1 97.5 100.4

Deferred tax liabilities 7.7 62.0 60.6

Financial liabilities and payables 10.2 1,071.1 90.1 8% 828.6 150.0 18%

Provisions for non current risks and charges 10.3 75.5 69.0

TOTAL NON CURRENT LIABILITIES 1,306.1 1,058.6

Current liabilities

Financial payables 11.1 701.9 60.1 9% 797.0 160.0 20%

Trade and other payables 11.2 1,421.5 139.4 10% 1,497.1 94.0 6%

Provisions for current risks and charges 10.3 87.5 92.1

Current tax liabilities 11.3 7.5 2.5

Other financial liabilities 11.4 59.5 12.5 21% 47.1 4.9 10%

TOTAL CURRENT LIABILITIES 11.6 288.5 0.0

TOTAL CURRENT LIABILITIES 2,566.4 2,716.4

Liabilities related to non current assets held for sale 0.0 0.0

TOTAL LIABILITIES 3,872.5 3,775.0

TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 7,307.5 6,313.3

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MEDIASET GROUP

CONSOLIDATED STATEMENT OF INCOME ACCORDING TO CONSOB RESOLUTION N. 15519 DATED 27 JULY 2006

(EUR million)

of which vs. of which vs. related related 2010 % wheight 2009 % wheight parties parties Note (note 16) (note 16)

Sales of goods and services 12.1 4,253.6 54.7 1% 3,815.0 49.4 1% Other revenues and income 12.2 38.9 2.2 4% 67.9 11.2 17%

TOTAL NET CONSOLIDATED REVENUES 4,292.5 3,882.9

Personnel expenses 12.3 542.5 0.1 0% 507.6 0.1 0% Purchases, services, other costs 12.4 1,760.5 269.4 15% 1,593.3 251.6 16% Amortisation, depreciation and write-downs 12.5 1,168.3 52.0 4% 1,180.6 65.4 6% Impairment losses and reversal of impairment on fixed asset 12.6 5.6

TOTAL COSTS 3,477.0 3,281.5

EBIT 815.5 601.5

Financial expenses 12.7 (101.1) (4.5) 4% (84.0) (5.4) 6% Financial income 12.8 76.2 2.4 3% 55.2 2.2 4% Income/(expenses) from equity investments 12.10 (191.0) (124.4)

EBT 599.6 448.4

Income taxes 12.11 212.9 142.5

NET PROFIT FROM CONTINUING OPERATIONS 386.7 305.8

Net Gains/(Losses) from discontinued operations 0.0 (0.6)

NET PROFIT FOR THE PERIOD 12.12 386.7 305.2

Attributable to: - Equity shareholders of the parent company 352.2 272.4 - Minority Interests 34.5 32.8

Earnings per share 12.13 - Basic 0.31 0.24 - Diluted 0.31 0.24

19312 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Explanatory Notes

EXPLANATORY NOTES

1. GENERAL INFORMATION

Mediaset S.p.A. is a joint stock company incorporated in Italy and inscribed in the Enterprises Register of Milan. Its registered office is located in Via Paleocapa, 3, Milan. Its majority shareholder is Fininvest S.p.A. The main activities of the company and its subsidiaries are described in the opening section of the Board of Directors Report on Operations. These Financial Statements are stated in the Euro, because this is the currency that is used for most of the Group’s transactions.

2. GENERAL DRAFTING CRITERIA AND ACCOUNTING STANDARDS FOR THE DRAFTING OF THE FINANCIAL STATEMENTS

These Financial Statements have been drawn up in the context of the continuance of the company’s business, because the Directors have checked that there do not exist any signs of any financial, operational, managerial criticalities or of any other nature that could possibly impact the ability of the Group to face up to its obligations in the foreseeable future. The risks and the uncertainties relative to the business itself are described in the Directors Report on Operations. The description of how the Group manages its financial risks, among which there are the liquidity and capital ones, is contained in the paragraph called Additional information on financial instruments and the risk management policies contained in these Explanatory Notes. The Consolidated Financial Statements at 31 December 2010 have been drawn up according to the IAS/IFRS (International Accounting Standards/International Financial Reporting Standards) and the relative interpretations issued by the SIC/IFRIC (Standards Interpretation Committee/International Financial Reporting Interpretation Committee) homologated by the European Commission and in force at the date in question. The accounting criterion normally used for assets and liabilities is that of historical cost, with the exception of some financial instruments for which, pursuant to what is laid down in IAS 39, the fair value is used. The tables in the Financial Statements and the Explanatory Notes have been prepared together with the supply of the additional information laid down, regarding Financial Statements layouts and information, by the Consob (Italian SEC) Resolution n° 15519 of 27 July 2006 and by the Consob (Italian SEC) Communication n° 6064293 of 28 July 2006. The values of the items in the Consolidated Financial Statements, considering their size, are shown in amounts of million Euros.

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3. SUMMARY OF THE ACCOUNTING STANDARDS AND VALUATION CRITERIA

Accounting standards, amendments and interpretations applied from 1 January 2010 The Group applied the following accounting standards, amendments and interpretations, for the first time, starting from 1 January 2010.

IFRS 3R (Business Combinations) and IAS 27R (Consolidated and Separate Financial Statements) The revised versions of IFRS 3 – Business Combinations - and of IAS 27 – Consolidated and Separate Financial Statements – issued by the IASB (International Accounting Standards Board) on 10 January 2008, have been applicable to the tables regarding business combinations, accounted for in Financial Statements relative to fiscal years beginning from 1 July 2009. Because the Group did not opt to apply these changed standards in advance it has applied them in accounting for the Business Combinations that have taken place, starting from 1 January 2010. The main changes contained in the revised version of IFRS 3 regarding the accounting for business combinations are relative to the following: - Calculation of the goodwill or of the income, only to be made at the date of acquiring control, calculating the difference between the fair value of the price transferred for the transaction, including any prices subject to conditions valued at the same date, increased in a business combination that takes place in a number of stages by the fair value of the previously owned interests, and the fair value of the identifiable assets and liabilities, including the potential liabilities, acquired. - In the case of the purchase of controlling interests that are less than 100% of the capital, the interest of minorities can either, for each individual business combination, be valued at the fair value with the corresponding posting of the goodwill, i.e. the Full goodwill method, or with the method, already contained in the prior IFRS 3, based on the proportional amount of the fair value of the identifiable net assets acquired. - In the case of the purchase of control in stages, the elimination of the obligation of valuing the acquired assets and liabilities at fair value at each successive purchase and, therefore, calculating the goodwill as the sum of the fair values generated separately with each transaction. Applying the new version of the standard, on the other hand, the purchaser must treat the previously owned interest, up till that time, accounted for according to the specific case and following what is laid down by IAS 39 – Financial Instruments: Recognition and Measurement, according to IAS 28 – Accounting for Investments in Associates, or according to IAS 31 – Interests in Joint Ventures, just as if it had been sold and reacquired at the date when control was acquired, recalculation the fair value at the date of “sale” and posting any gains or losses arising from that valuation to the Income Statement. Furthermore, in these circumstances any value previously posted to the Net Equity as Other comprehensive gains and losses must be reclassified to the Income Statement.

195 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Explanatory Notes

- Identification of the purchaser with reference to the definition of “control”, understood as being “the power to govern the financial and managerial policies of an entity, with the purpose of obtaining benefits from its business activities”. - The posting to the Income Statement of the ancillary charges relative to business combinations in the accounting period when they are incurred, with the exception of those incurred relative to issues of debt securities or shares that have to be posted according to what is laid down by IAS 32 and 39. According to the previous version of the standard these charges were included in the amount of the purchase cost. - Posting at the purchase date of the liabilities for contingent considerations. Any successive differences compared to the initial estimates must be posted to the Income Statement, unless arising from additional information existing at the purchase date; in this case they are adjustable within 12 months from the date of purchase. Similarly any rights to receive back some parts of the price paid if certain conditions arise must be classified as assets by the purchaser. The previous version of the standard stated that the prices subject to conditions had to be posted at the purchase date only if their payment was believed probable and their amount could be dependably calculated. In the fiscal year being looked at these criteria were applied in accounting for the business combination carried out on 28 December 2010 by the subsidiary Gestevision Telecinco, as explained afterwards in Explanatory Note 5. On the other hand the changes made to IAS 27 are mainly relative to the accounting treatment of purchases and sales of minority interests in subsidiary companies. These changes lay down that the impacts coming from changes in the interest held in a subsidiary, as long as they do not result in a loss of control, are dealt with as transactions with shareholders. Consequently, the difference between the fair value of the price paid, or received, regarding these transactions and the adjustment made to minority interests must be posted with the other side of the entry going to the item Other comprehensive gains and losses of the Parent Company’s Net Equity. Similarly, also the ancillary costs arising from these operations must be posted, in accordance with IAS 32, in the Net Equity. Previously, in the absence of a Standard, or of a specific interpretation regarding this subject, the Mediaset Group, in the case of the purchase of minority interests in an already controlled company, used the Parent Company method, posting the difference between the price paid and the pro-rata book value of the assets and liabilities purchased to the item goodwill. On the other hand, in the case of the sale of minority interests in consolidated companies that not lead to a loss of control and gains or losses were posted to the Income Statement. In the fiscal year being looked at the Group has posted the impacts, arising from the application of the changes in this standard, in accounting for the reduction of the controlling interest held by the Group in Gestevision Telecinco, consequent to the business combination operation carried out by the latter and in accounting for the purchase of minority interests in subsidiary companies carried out in the fourth quarter. As commented on, afterwards, in detail in note 9.4, the use of these criteria for these Financial Statements has brought about the posting to the item Other gains and Losses in the Comprehensive Income Statement of net incomes amounting to 161.6 million Euros.

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IAS 39 Financial Instruments: Recognition and Measurement – Hedge qualifying instruments The changes to IAS 39, issued in August 2008 and effective for fiscal years beginning from 1 July 2009 or afterwards, are relative to the designation of unilateral risks of a hedged instrument and the designation of the inflation as a hedged risk, or portion of a hedged risk in certain situations: The change clarifies that the entity has the discretionary faculty of designating a part of the changes in fair value, or the change in the cash flows of a financial instrument as a hedged instrument. The changes introduced in the standard relative to the technical methodologies of recognition and accounting for the effective part of the change in value of the hedging instrument has fairly insignificant impacts in these Financial Statements as shown in the following note 9.5 Valuation Reserves.

IAS 24 Revised – Related Party Disclosures The Group, in these Financial Statements, has applied in advance the revised version of IAS 24, which shall be obligatory from 1 January 2011. Based on the clarifications contained in the new standard, the subsidiary companies controlled by parties over which, either directly or indirectly the entity that draws up the Consolidated Financial Statements exercises a significant influence and the subsidiaries of the controlling entity, fall within the definition of Related Parties for the purposes of Financial Statements disclosures. Relative to applying this criterion that, however. The comparative figures relative to the fiscal year 2009, which are contained in the specific Financial Statements layouts and in some of the following Explanatory Notes, were recalculated using the same criteria to make them truly comparable.

On the other hand, the following amendments, improvements and interpretations that are in effect from 1 January 2010, govern circumstances and cases that were not in existence within the Group at the closing date of these Financial Statements.

IAS 39 – Financial Instruments: recognition and measurement The amendment restricts the exception of non-applicability contained in paragraph 2(g) of IAS 39 to the sell forward contracts between a purchaser and a seller for the purposes of the sale of a company transferred in a business combination at a future purchase date, whenever the completion of the business combination does not depend upon any further actions of one of the two parties, but only on the passage of the appropriate time period. On the other hand the amendment clarifies that there do fall within the context of applicability of IAS 39 the option contracts, whether exercisable or not, which allow one of the two parties to have control over whether or not future events take place and the exercising of which would bring about the control of a company.

197 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Explanatory Notes the amendment establishes that the term “Group” is understood as having the same meaning as it has in IAS 27 – Consolidated and Separate Financial Statements, which means including the Group Parent and its subsidiaries. The amendment then specifies that a company must value the goods or services, received in the context of a transaction that is settled in cash or shares, from its own point of view, which may not necessarily coincide with that of the Group and with the relative amount that is recognized in the Consolidated Financial Statements. The IASB also clarified that, because IFRS 3 changed the definition of a business combination so that the conferment of a branch of a company to form a joint venture, or the combinations of enterprises, or branches of companies, in jointly controlled entities, does not fall within the area of applicability of IFRS 2.

IFRS 5 – Non-current Assets Available for sale and Discontinued The change establishes that if a company is involved in an equity sale programme that brings about the loss of control of a subsidiary, all the subsidiary’s assets and liabilities must be classified among the assets available for sale, even if after the sale made by the company it will still own a minority interest in the subsidiary.

Financial Statements tables and layouts The Consolidated Balance Sheet is drawn up following the layout that splits assets and liabilities into current and non-current. An asset or liability is classified as current when it meets one of the following criteria: It is expected that it will be realized, or extinguished, or it is estimated that it will be sold, or used, in the ordinary operating cycle of the Group, or it is mainly held for trading, or it is expected that it will be realized or extinguished within 12 months from the Financial Statements closing date. Lacking all three of the above conditions the assets and liabilities are classified as being non- current. The Income Statement is drawn up with the layout of costs by type, following the same methodology as the Group’s internal reporting and in line with the prevailing international practices in the sector, showing the intermediate levels of the operating result and the pre-tax result. The operating result is the difference between the Net Revenues and the operating costs and these latter include the costs of a non-monetary nature relative to the amortisation, depreciation and write-downs of current and non-current assets, net of any reinstatements of value. To enable a better measurement of the true progress of normal operations there can also be shown separately, within the section down to the Operating Result, cost and revenue components arising from events or operations that, because of their type and amount, have to be considered as non-recurrent. These operations can be linked to the definitions of significant non-current operations and events that are contained in the Consob (Italian SEC) Communication n° 6064293 of 28 July 2006, differing from the definition of “atypical and/or unusual operations” contained in the same Consob (Italian SEC) Communication of 28 July 2006, according to which there are considered to be atypical and/or unusual operations those

198 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010– Explanatory Notes operations which, due to their significance/relevance, the type of the counterparts, the subject of the transaction, the method of calculating the transfer price and the time of the event, i.e. nearness to the closing date of the financial year, can give rise to doubts regarding the correctness/completeness of the information in the Financial Statements, to conflicts of interest, to the safeguarding of the company’s equity, or to safeguarding of the minority shareholders’ interests.

The Comprehensive Income Statement table shows the cost and revenue items, net of tax, which as asked for, or allowed, by the various International Accounting Standards are posted directly among the Balance Sheet reserves. For each one of the significant Balance Sheet reserves that are shown in the table there are given the references to the successive Explanatory Notes, within which there is supplied the relative information and there are detailed the breakdowns and the changes that have taken place since the last fiscal year.

The Cash Flow Statement has been drafted by applying the indirect method, according to which the pre-tax result is adjusted for the impacts of non-monetary operations, for any deferral or provision of previous or future operational incomes or payments and for elements of revenues or cost connected with financial flows deriving from investment or financial activities. Investments in television rights, as well as the advances paid for future purchases of rights are included in investment operations. Changes in payables to suppliers for investments are included in the Cash Flows from investment activities. Similarly, also the receipts and payments regarding cash flow hedging operations for foreign currency payments of television rights are recognised in line with the hedged item in the flows from investments activities. Incomes and charges relative to medium/long-term financing operations and the relevant hedging instruments, as well as dividends paid, are included in the financial activities.

The Net Equity Movements table shows the changes that have taken place in the Net Equity items relative to the following: Allocation of the profit for the accounting period of the Group Parent and subsidiaries to minority shareholders. Breakdown of the comprehensive profit/loss. Amounts relative to transactions with the shareholders, i.e. purchases and sales of treasury shares. Impact from any changes in the accounting standards. It is highlighted that for the purpose of fulfilling the obligations contained in the Consob (Italian SEC) Resolution n° 15519 of 27 July 2006 called “Measures regarding Financial Statements layouts”, there are also given, in addition to the obligatory tables, specific Consolidated Income Statement and Balance Sheet tables giving the significant amounts of the balances or transactions with Related Parties shown apart from the respective reference items.

199 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Explanatory Notes

Consolidation standards and area The Consolidated Financial Statements includes the Financial Statements of Mediaset S.p.A. and of the Italian and foreign companies regarding whom Mediaset S.p.A. has the legal right of exercising control, either directly or indirectly, which is understood as the power to determine their financial and operational choices and obtain the relative benefits from them. The assets, liabilities, charges and incomes of the subsidiary companies are consolidated on a line-by-line basis, which means they are taken into the Consolidated Financial Statements in their entirety. The book value of these equity investments is washed out against the corresponding fraction of the Net Equity of the subsidiary companies, giving each asset and liability item its current value at the purchase date, i.e. the Purchase Method. Any remaining difference if positive is posted to “Goodwill” among the non-current assets and if negative is posted as an income to the Income Statement. In the case of purchases of equity investments by a common parent , i.e. a business combination under common control, a situation that is excluded from the area of obligatory application of IFRS 3, in the absence of specific IAS/IFRS standards or interpretations for these types of operations, taking into account what is laid down by IAS 8, there is generally held to be applicable the criterion based on the standard of the continuity of the values, which foresees that in the Consolidated Financial Statements of the purchaser the assets and the liabilities are transferred at the values contained in the Consolidated Financial Statements at the transfer date of the common parent that controls the parties who carry out the business combination, with the posting of any difference between the price paid for the equity investment and the net book value of the assets to a specific reserve within the Group Net Equity. In the preparation of the Consolidated Financial Statements there are washed out all the intercompany receivables, payables, costs and revenues between the consolidated companies, as well as the unrealised profits on intercompany operations. The amounts of the Net Equity and of the result for the accounting period of the consolidated companies belonging to minority shareholders are identified and shown separately in the Consolidated Balance Sheet and Income Statement. The assets and liabilities of foreign companies that come within the consolidation area and that originate in currencies other than the Euro, including the goodwill and the fair value adjustments of the assets and liabilities identified at the time of allocating the price paid in the context of a business combination, are converted using the spot rates at the closing date of the Financial Statements. Incomes and costs, on the other hand, are converted at the average rate for the fiscal year. The conversion differences that arise from using these methods are posted to a specific Net Equity reserve until the equity investment is sold. The accounting situations of the affiliated companies and of companies subject to joint control, are posted to the Consolidated Financial Statements using the Net Equity method, as described in the following item Equity Investments. Pursuant to IAS 28, an affiliate is a company in which the Group is able to exercise a significant but not a controlling or joint control influence, through participation in the decisions regarding financial and operational policies of the affiliate. With reference to IAS 31, a joint venture is a contractual agreement with which the Group, together with other participants, undertakes a business activity subject to joint control. For joint control there is meant the contractual sharing of control of a business activity and this only

200 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010– Explanatory Notes exists when the strategic, financial and operational decisions regarding the business require the unanimous consent of the parties that share control of it.

Real estate, plant and equipment Plant, machinery, equipment, buildings and land are posted at purchase, production or conferment cost, including any ancillary charges, any dismantling costs and the direct costs necessary to made the asset ready for use. These fixed assets, with the exception of land, which is not subject to depreciation, are systematically depreciated in each accounting period on a straight-line basis, using economic and technical depreciation rates determined in relation to the remaining useful life of the assets. Depreciation is calculated on a straight-line basis on the cost of the assets net of the relative residual values, if significant, based on their estimated useful lives, applying the following rates: - Buildings 2% -3% - Plant and machinery 10%- 20% - Light constructions and equipment 5% - 16% - Office furniture and machines 8% - 20% - Motor vehicles and other means of transport 10% - 25% The possibility to recover their value is assessed according to the criteria laid down by IAS 36, described in the section below “Impairment of assets”. Ordinary maintenance costs are posted in full to the Income Statement. Incremental maintenance costs are attributed to the related assets and depreciated over their remaining useful life. Leasehold improvements are attributed to the classes of assets to which they refer and depreciated at the lower between residual life of the lease contract and residual useful life of the type of asset to which the improvement relates. Whenever the single components of a complex tangible fixed asset have different useful lives, they posted separately in order to be depreciated separately, in line with their individual useful lives, i.e. the component approach” Specifically, according to this principle, the value of land and that of the buildings that are on it are separated and only the buildings are depreciated. Gains and losses resulting from sales or disposals of assets are calculated as the difference between the sale revenue and the net book value of the asset and are posted to the Income Statement.

Assets in leasing Assets acquired through leasing contracts are posted to tangible fixed assets and a financial payable for the same amount is posted to liabilities. The payable is progressively reduced according to the reimbursement plan of the amounts of the principal included in the contract instalment payments. The amount of the interest ratio is kept in the Income Statement in the item financial charges and the value of the asset posted to tangible fixed assets is depreciated on

201 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Explanatory Notes a straight-line basis according to the economic/technical life of the asset, or, if shorter, on the basis of the expiry date of the leasing contract. The costs for leasing instalments coming from operating leases are posted at fixed amounts based on the duration of the contract.

Intangible fixed assets Intangible fixed assets are assets without any physically identifiable nature, controlled by the company and able to generate future economic benefits. They also include goodwill when this is acquired for value. They are posted at purchase or production cost, including ancillary charges according to the criteria already described for tangible fixed assets. In the event of purchased intangible fixed assets whose availability for use and the relevant payments are deferred beyond ordinary terms, the purchase value and the relative payable are discounted by posting the implicit financial charges contained within the original purchase price. Internally generated intangible fixed assets are posted to the Income Statement in the period in which they are incurred if relative to research costs. Development costs, mainly regarding software, are capitalized and amortised on a straight-line basis over their estimated useful lives (3 years on average), provided that they can be identified, that the cost can be dependably calculated and that the asset is likely to generate future economic benefits. Intangible fixed assets with a defined useful life are amortised on a straight-line basis, starting from the time when the asset is available for use, over the period of their forecasted usefulness. The possibility to recover their value is assessed according to the criteria envisaged by IAS 36, described in the next section Impairment of assets. This criterion is also used for the multi-year licences regarding television rights, the amortisation criterion of which must reasonably and reliably reflect the correlation between costs, audience share and advertising revenues. Whenever this correlation cannot be objectively found the criterion generally used by the Group is the straight-line amortisation method, calculated over the duration of the contract and, in any event, over a period not exceeding 120 months. This method reflects the greater and multiple opportunities of publication exploitation and advertising sales. In the opposite case the amortisation criterion is usually the decreasing method based on the number of showings contractually available and their actual transmission. Based on the different and existing business model the straight-line amortisation method is generally applied for the Italian television library, while the decreasing method is applied for the Spanish television library. In the case where, regardless of the amortisation already posted, if all showings made available under the relevant television rights contracts have been used up, the residual value is fully expensed. The rights relative to sporting events to be transmitted in Pay or Pay Per View mode by DTT technology are amortised 100% when the event is broadcast. Sports, news and entertainment programmes rights are amortised almost entirely (90%) in the year when the right is available and the remaining portion is amortised in the following fiscal year. Rights related to long fiction TV series are amortised at 70% in the first twelve months starting from their availability date and for the remaining 30% in the following twelve months.

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The rights available for multiple means of exploitation, to be used in distribution activities are amortised according to international accounting best practice, with reference to the ratio existing between the actual revenues achieved for each type of exploitation compared to the total overall revenues coming from the exploitation of the right itself. Costs regarding the right to use television frequencies dedicated to the setting up of digital terrestrial networks acquired from third parties, pursuant to the relative legislation currently in force, are amortised on a straight-line basis relative to the expected duration of their use starting from the moment of activation of the service until 31 December 2028, based on the period of validity for network operator’s individual licence, laid down by the conversion of the television concessions into a general authorisation, as per Law n° 101 of 6 June 2008. Goodwill and the other non current assets with undefined useful life or not available for use are not subject to amortisation on a straight-line basis but subject to an impairment test, at least yearly, carried out at the level of Cash Generating Unit, or groups of Cash Generating Units to which company Management imputes goodwill. Any write-downs of these assets cannot be the subject of subsequent reinstatements of value. The goodwill resulting from the acquisition of control of an equity investment or of a branch of a company is the excess between the purchase cost, understood as being the sum of the prices transferred for the business combination, increased by the fair value of any equity investment that was previously owned in the acquired enterprise, compared to the fair value of the assets, liabilities and potential liabilities identifiable in the acquired entity as of the date of acquisition. In the case of the acquisition of amounts of control that are not totalitarian, the goodwill can be calculated, at the date of acquisition, both compared to the percentage of control acquired and by valuing at fair value the amount of the Net Equity of minorities, the full goodwill. The choice of the valuation method can be carried out, from time to time, for each individual transaction. For the purposes of calculating the goodwill, the transfer price for a business combination is calculated as the sum of the fair values of the assets transferred and the liabilities taken on by the Group at the date of acquisition and of the capital instruments issued in exchange for the control of the acquired entity, also including the fair value of any prices subject to conditions that are foreseen in the purchase contract. Any goodwill adjustments can be posted in the measurement period, which cannot be more than one year from the date of acquisition, which are due to either successive changes in the fair value of the prices subject to conditions or to the calculation of the current value of the assets and liabilities acquired, if they were only posted provisionally at the date of acquisition and when these changes are calculated as adjustments based on further information regarding facts and circumstances existing at the date of the combination. In the case of the sale or ceding of amounts of control equity investments the remaining amount of the goodwill attributable to them is included in the calculation of the gain or loss from disposal. The amounts of goodwill calculated as a result of Business Combinations took place before 1 January 2010 have been posted according to the criteria laid down by the previous version of IFRS 3.

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Impairment of assets The book values of the tangible and intangible fixed assets are periodically reviewed as laid down by IAS 36, which asks for the evaluation of the existence of any losses of value, i.e. “impairment”, where there are indicators that indicate that this problem could exist. In the case of goodwill, of intangible fixed assets with an undefined lifespan or of assets not available for use this valuation is carried out at least yearly, normally at the time of the preparation of the Yearly Financial Statements, but also at any time when there is an indication of a possible loss of value of an asset. The possible recovery of the posted values is checked by comparing the accounting book value in the Financial Statements with the greater between the net sale price, where there is an active reference market, and the usage value of the asset. The usage value is calculated based on the discounting of the cash flows expected from the usage of the individual asset or of the cash generating unit to which the asset belongs and from its disposal at the end of its useful life. The cash generating units are identified, in line with the organisational and business structures of the Group, as homogenous combinations that generate autonomous incoming cash flows coming from the continuous usage of the assets appertaining to them. In the case of impairment the cost is posted to the Income Statement but, first of all, reducing the goodwill and then posting the excess amount, proportionately to the value of the other assets of the specific CGU. With the exception of the goodwill and the assets with an undefined lifespan reinstatements of the values of the other assets are allowed when the conditions that brought about the write-down change. In this case the book value of the asset can be increased within the limits of the new estimated value but not over the value that would have been calculated, where there were no preceding write-downs.

Equity investments in associated companies and joint ventures These equity investments are accounted for in the Consolidated Financial Statements using the Net Equity method. At the time of purchase the difference between the cost of the equity investment, including any ancillary charges and the amount belonging to the purchaser of the net fair value of the assets, liabilities and identifiable potential liabilities of the subsidiary is accounted for according to IFRS 3, by posting, if it is positive, a goodwill, included in the book value of the equity investment or, if it is negative, an income in the Consolidated Income Statement. The posted values of these equity investments are afterwards adjusted to the initial posting, based on the pro rata changes in the Net Equity of the subsidiary coming from the accounting situations, drawn up by the companies involved, at the time of drafting the Consolidated Financial Statements. When there are losses belonging to the Group that are higher than the book value the book value is written off and appropriate provisions or liabilities are posted for the amount of any further losses, but only if the investor is committed to fulfilling legal or implicit obligations regarding the subsidiary or, in any case, to cover its losses. Whenever no further losses are found and, afterwards, the subsidiary achieves profits the investor will only post the amount of the profits appertaining to it after these have equalled the losses not accounted for.

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After the application of the Net Equity method, the book value of these equity investments, also including the goodwill if any, whenever there exist the prerequisites laid down by the measures in IAS 39, must be subjected to an impairment test, pursuant to and following the methodologies, previously commented on, that are laid down by IAS 36. In the case of a write-down for loss of value the relative cost is posted to the Income Statement. The original value can be reinstated in the following fiscal years if the reasons for the write-down disappear.

Non-current financial assets Equity investments other than investments in associated companies or jointly controlled companies are posted to the item “other financial assets” in non- current assets and are classified pursuant to IAS 39 as financial assets “Available for sale” at Fair value or, alternatively, at cost if the fair value cannot be dependably calculated with the posting of the valuation impact, until the asset is disposed of but with the exception of the case when it has suffered a permanent loss in value, to a specific reserve in the Net Equity. In the event of a write-down for loss of value, i.e. impairment, the cost is posted to the Income Statement. The original value is reinstated in subsequent fiscal years if the reasons for the write- down disappear. The risk resulting from any losses above the value of the Net Equity is posted to a specific risks fund to the extent to which the investor is committed to fulfilling legal or implicit obligations regarding the subsidiary or, in any case, to cover its losses. Among the assets available for sale there also fall the financial investments, not held for trading, valued according to the rules already referred to for the assets “Available for sale” and the financial payables, for the amount of them that is due beyond 12 months. The receivables are posted at their amortised cost, using the actual interest rate method.

Non-current assets available for sale Non-current assets available for sale are valued at the lower between their previous net book value and their market value less cost of sales. Non-current assets are classified as available for sale when it is estimated that their book value will be recovered by means of a sale transaction rather than through their use in company operations. This condition is only met when the sale is considered as very likely and the asset is available for immediate sale in its current condition. For this purpose, Management must be committed to the sale, which must take place within 12 months from the date of classification of this item.

Current assets Inventories The inventories of raw materials, semi-finished and finished products are valued at the lower between acquisition or production cost, including ancillary charges, i.e. at FIFO (First In First Out) and their presumed net realisable value deducible from the market trend. Finished products regarding teleshopping activities are valued by applying the criterion of weighted

205 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Explanatory Notes average cost. The inventories also include television rights acquired for exploitation periods of less than 12 months and the costs of already completed television productions. Trade receivables The receivables are posted at their fair value, which is generally also their face value, except in the case where, because of significant extended payment terms, it is the same as the value calculated by applying the amortised cost method. Their value at year-end is adjusted to their estimated realisable value and written down in case of impairment. Those originating in non- EMU currencies are valued at the year-end spot rates issued by the European Central Bank. Sale of receivables The recognition of the sale of receivables is subject to the measures laid down by IAS 39 regarding the derecognising of financial assets. As a result, the receivables sold to factoring companies, with or without recourse, in the event that the latter includes clauses that imply maintaining a significant exposure to the trend of the cash flows from the sold receivables, remain in the Financial Statements, even though they have been legally sold, with a corresponding accounting posting of a financial liability for the same amount. Current financial assets Financial assets are posted and reversed in the Financial Statements based on their transaction date and they are initially valued at cost, including the expenses directly connected with their acquisition. At successive dates of the Financial Statements, those financial assets to be held until maturity are shown at amortised cost, according to the actual interest rate method, net of write-downs made to reflect impairment. Financial assets other than those held until maturity are classified as held for trading or available for sale and are valued at their “fair value” at each accounting period with the posting of their impacts to the Income Statement in the item “Financial (Charges)/Incomes” or to a specific reserve in the Net Equity and, in this latter case, until they are realised or have suffered a loss of value. The fair value of securities quoted on an active market is based on market prices at the date of the Financial Statements. The market prices used are bid/ask prices according to the asset/liability position held. The fair value of securities that are not quoted on an active market, and of the trading derivatives is calculated by using the most prevalent evaluation models and techniques available on the market, or by using the price supplied by a number of independent counterparts and not only by one of them. Cash and equivalents This item includes the petty cash, the bank current accounts and deposits that are repayable on demand and other short-term and high liquidity financial investments that are readily convertible to cash, with an insignificant risk of a change in value.

Treasury shares Treasury shares are shown at cost and posted as a reduction of Net Equity and all the gains and losses resulting from trading them are posted to a specific reserve in the Net Equity.

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Employee Benefits Post-Employment Benefit Plans The Employee Leaving Indemnity (ELI), which is obligatory for Italian companies pursuant to article 2120 of the Italian Civil Code, is a type of deferred remuneration and it is related to the length of the working lives of the employees and the emoluments received. Due to the Supplementary Pension Reform that is referred to in the relative Decree, the amounts of the ELI accrued until 31 December 2006 shall continue to remain within the company constituting a defined benefit plan, with the obligation of the accrued benefits to that date being subject to an actuarial valuation, while the amounts that accrue from 1 January 2007, with the exception of those regarding companies with less than 50 employees, according to the choices made by the employees are allocated to supplementary pension funds, or transferred by the company to the treasury fund managed by INPS (Italian National Social Security Institute) starting from the time when the employees formalise their choice, as defined contribution plans that are no longer subject to actuarial valuation. For the benefits subject to actuarial valuation, the liability relative to the ELI must be calculated by projecting forward the already accrued amount up to the future date of the dissolution of the employment relationship and then calculating the net present value of the amount, at the date of the Financial Statements, using the actuarial method called the “Projected Unit Credit Method”. From an accounting point of view, through the actuarial valuation, there is input to the Income Statement in the item “Financial Incomes/Charges” the interest cost, which constitutes the theoretical charge that the company would have to incur if it asked the market for a loan of the amount equal to the ELI fund and in the item “personnel costs” the current service cost that defines the amount of the rights accrued by the employees during the fiscal year but only for those companies of the Group with less than 50 employees and who, therefore, have not transferred to supplementary pension schemes the amounts accrued from 1 January 2007. The actuarial gains and losses that reflect the impacts coming from the changes in the actuarial hypotheses used are posted directly to the Net Equity, without ever passing to the Income Statement and they are shown in the Comprehensive Income Statement table.

Share-based payments The Group, in line with what is laid down by IFRS 2, which classifies Stock Options as “share- based payments” and asks that for the type that falls into the “equity-settled” category, which means that it foresees the physical handing over of the share certificates, the calculation at the assignment date of the fair value of the option rights issued and its posting as a personnel costs to be split evenly of the period of the accrual of the rights, i.e. the vesting period with the posting of the other side of the entry to the specific reserve of Net Equity. This posting is carried out based on the estimate of the rights that will actually accrue in favour of the person who has the right, taking into consideration the usufruct conditions of them, not based on the market value of the rights. At the end of the exercising period the relative Net Equity reserve is reclassified among the reserves available for use. The calculation of the fair value takes place using the “binomial” model.

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Trade payables The trade payables are posted at their nominal value, which is usually close to the amortised cost. Those originating in non-EMU currencies are valued at the year-end spot rates issued by the European Central Bank.

Funds for risks and charges The funds for risks and charges are relative to those costs and charges whose existence is either certain or probable but, however, for which, at the closing date of the accounting period it was not possible to ascertain, with absolute certainty, either their true amount or the exact date on which they shall fall due. They have been provided only when there is a real current obligation, which is the result of past events that can be of a legal or contractual type, or derived from declarations or behaviour of the company that create valid expectations in the persons involved, i.e. implicit obligations. The provisions for these items have been posted at the value that represents the best possible estimate of the amount that the enterprise would have to pay in order to extinguish its obligation. When they are significant, and the payment date can be dependably estimated, the provisions are shown in the Financial Statements at current values with the posting to the Income Statement, in the item “Financial Incomes and (Charges)”, of the charges coming from the passage of time.

Non-current financial liabilities The Non-current financial liabilities are shown at their amortised cost, using the actual interest rate method.

Financial derivatives and accounting for hedging operations The Mediaset Group is exposed to financial risks that are mainly linked to exchange rate fluctuations regarding the acquisition of television rights in currencies different from the Euro and those of the interest rates on multi-year loans stipulated a variable rate. The Group uses financial derivatives, mainly futures contracts on currencies and options, in order to hedge the risks arising from foreign currency fluctuations both for highly probable future commitments and for payables regarding purchases already made. For the Mediaset Group the exchange risk is linked to the possibility that the currency rates change during the period between the time when the acquisition of assets in foreign currency has become highly probable, i.e. an authorised purchase negotiation, and the time when these assets are posted to the Financial Statements and, therefore, the hedging goal is to define the exchange rate of the price in Euros at the approval date of the transaction, i.e. hedge accounting according to the IAS. On the other hand, starting from the time when the assets are posted to the Financial Statements, the hedging goals are pursued through natural hedge where the hedging tools, i.e. optional financial derivatives, and the underlying items, i.e. payables for the acquisition of rights, are valued according to the reference standards in an independent manner and have, therefore, an accounting treatment that is on a non hedge basis. Specifically, the financial derivatives, in accordance with IAS 39, are valued at the fair value with the posting of the value differences to the Income Statement, while the payables for the acquisition of the

208 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010– Explanatory Notes rights, representing monetary items in accordance with IAS 21, are updated using the exchange rate at the end of the accounting period. The financial derivatives are current financial assets and liabilities shown at fair value. The fair value of the futures contracts on currencies is calculated as the discounting back of the difference between the notional amount valued at the forward contract rate and the notional amount valued at the fair forward rate, i.e. the future exchange rate forecasted at the date of the Financial Statements. The fair value of the exchange rate options is calculated using the Black & Sholes formula for the plain-vanilla options, while for the Single Barrier Options, with the barrier based on discrete events, the binomial method is used. Regarding the financial derivatives used to hedge the interest rate risk it is pointed out that the fair value of the interest rate swaps is calculated based on the current value of the forecasted future cash flows and the fair value of collar financial derivatives is calculated using the Black & Scholes formula. The methodologies and the relative accounting entries vary according to whether or not they are designated as being hedging instruments, pursuant to the requisites required by IAS 39. Specifically, Mediaset designates as hedging instruments for the purposes of hedge accounting those that are relative to the hedging of currency exposures linked to the commitments for future purchases of television rights to be made in foreign currency, i.e. forecasted transactions, and those for hedging interest rates for which there is formally documented both the relation between the derivative and the subject of the hedging as well as the high level of probability/effectiveness linked to the actual taking place of the event hedged. The effective portion of the fair value adjustment of the derivative that has been designated and that can be qualified as a hedging instrument is posted directly to Net Equity, while the ineffective part goes to the Income Statement. The accounting treatment of these operations takes place through the activating of the cash flow hedge. According to this rule the effective portion of the change in value of the derivative impacts Net Equity reserve. In the case of the hedging of the commitments for the purchase of rights this reserve is used to adjust, afterwards, the value of the asset posted in the Financial Statements, i.e. the basis adjustment. In the case of the hedging of the exchange rate risk this reserves has an impact on the Income Statement that is proportional to, and takes place at the same time as, the connected cash flows take place. The changes in the fair value of the derivatives activated for the purpose of financial hedging that hedge the risk of changes in the fair value of the items posted in the Financial Statements, specifically, foreign currency payables and receivables, or of those derivatives that do not satisfy the necessary conditions in order in order to qualify as hedging derivatives are posted to the Income Statement as “financial charges and/or financial incomes”.

Revenue recognition The revenues from sales and services are posted when the actual transfer takes place of the risks and benefits arising from the ceding of the ownership of the goods or at the time when the supply of the service takes place.

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Specifically, for the main types of sales of the Group the revenues are recognised according to the following criteria:

Revenues from the sale of advertising space, at the time of the appearance of the advertisement, or of the advertising spot. The revenues for the sale of advertising in exchange for merchandise and, correspondingly, the costs of the merchandise, are adjusted to take into account the presumed realizable value of the merchandise itself.

Sale of moveable assets, at the time when they are shipped or delivered.

Revenues from the rental or sub-licensing of rights, even for limited exploitation periods, which bring about the transfer of the control of the asset to the renter or sub-licensee are wholly recognised at the time when the transferred exploitation starts to run.

The fees invoiced to the distributors coming from the sale of prepaid cards and recharges that allow watching events in Pay per view mode, are split according to the remaining period of validity of the cards and recharges sold. Similarly, the direct costs are also split over that period.

The Government grants obtained regarding investments in cinema plant and productions are posted to the Financial Statements and the time when there is the reasonable certainty that the company will respect all the conditions necessary to be allowed to receive them and that they will actually be received. The grants are posted to the Income Statement over the same period as when their related costs are posted. The revenues are shown net of returns, discounts, allowances and premiums, as well as of any directly linked tax charges. Any cost recoveries are shown as a direct reduction of the relative costs.

Income taxes The current income taxes are posted, for each company, on the basis of the estimated taxable income in line with the tax rates and fiscal measures that are currently in force, or have been basically approved, at the close of the accounting period in the various countries, taking into account any applicable exemptions and tax credits that are due. The prepaid and deferred taxes are calculated based on the timing differences between the values attributed to the assets and liabilities in the Financial Statements on a statutory basis and the corresponding values that are recognized for fiscal purposes, on the basis of the tax rates that will be in force at the time when the timing differences will be reversed. When the results are posted directly to Net Equity, the current taxes, the prepaid taxes assets and the deferred taxes liabilities are also posted to Net Equity. The deferred taxes assets and liabilities are set off when there exists a legal right to be able to set off the current taxes assets and liabilities and when they refer to taxes that are due to the same Tax Authority and the Group intends to settle the current tax assets and liabilities on a net basis. In the case of any changes in the net book value of the deferred tax assets and liabilities arising from a change in the tax rates or the relative legislation, rules or regulations, the resulting deferred taxes are posted into the Income Statement, unless they are relative to elements that have already been debited or credited previously to the Net Equity.

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Dividends The dividends are accounted for in the accounting period in which there is passed the resolution to distribute them.

Earnings per share The earnings per share are calculated by dividing the net profit of the Group by the weighted average of the number of shares in circulation, net of the treasury shares. The diluted earnings per share is calculated by taking into account in the calculation the number of shares in circulation and the potential diluting effect coming from the assignment of treasury shares to the beneficiaries of stock option plans that have already reached maturity.

Use of estimates The drawing up of the Consolidated Financial Statements and of the Explanatory Notes required making estimates and assumptions, both in calculating some assets and liabilities, as well as in the evaluation of the potential assets and liabilities. Specifically, the current macroeconomic climate, made unstable by the impacts of the ongoing financial crisis, has meant that the estimates regarding the future progress of these items have been made taking into account the very high level of uncertainty involved. The main estimates are relative to the calculation of the usage value of the Cash Generating Units to which the goodwill, or other assets with a defined or indefinite useful life are allocated, for the purposes of the periodic check regarding the ability to be able to find the recoverable value of these assets according to the criteria laid down by IAS 36. The calculation of this usage value requires the estimating of the cash flows that are forecasted to be produced by the CGU, as well as the setting of an appropriate discounting rate to be used. The main uncertainties that could influence this estimate are relative to the calculation of the Weighted Average Cost of Capital (WACC), of the growth rates of the flows beyond the forecast horizon (g), as well as the hypotheses made in developing the expected cash flows for the years of the explicit forecast. The main forecasted data refer to the funds for risks and charges and the Bad Debts Reserves. The estimates and assumptions are periodically reviewed and the impacts of each individual change in them are posted to the Income Statement.

Changes in accounting estimates Pursuant to the IAS 8 these items are input to the Income Statement, on a forecasted basis, starting from the accounting period during which they are adopted.

New accounting standards, interpretations and amendments not yet applicable and not applied in advance by the Group Standards issued but not yet effective up to the date of issuance of the Group’s financial statements are listed below. This listing is of standards and interpretations issued, which the

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Group reasonably expects to be applicable at a future date. The Group intends to adopt those standards when they become effective.

IAS 32 Financial Instruments: Presentation - Classification of Rights Issues The amendment to IAS 32 is effective for annual periods beginning on or after 1 February 2010 and amended the definition of a financial liability in order to classify rights issues (and certain options or warrants) as equity instruments in cases where such rights are given pro rata to all of the existing owners of the same class of an entity’s non-derivative equity instruments, or to acquire a fixed number of the entity’s own equity instruments for a fixed amount in any currency. This amendment will have no impact on the Group after initial application.

IFRIC 14 Prepayments of a minimum funding requirement The amendment to IFRIC 14 is effective for annual periods beginning on or after 1 January 2011 with retrospective application. The amendment provides guidance on assessing the recoverable amount of a net pension asset. The amendment permits an entity to treat the prepayment of a minimum funding requirement as an asset. The amendment is deemed to have no impact on the financial statements of the Group.

IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments IFRIC 19 is effective for annual periods beginning on or after 1 July 2010. The interpretation clarifies that equity instruments issued to a creditor to extinguish a financial liability qualify as consideration paid. The equity instruments issued are measured at their fair value. In case that this cannot be reliably measured, the instruments are measured at the fair value of the liability extinguished. Any gain or loss is recognised immediately in profit or loss.

Improvements to IFRSs (issued in May 2010) The IASB issued Improvements to IFRSs, an omnibus of amendments to its IFRS standards. The amendments have not been adopted as they become effective for annual periods on or after either 1 July 2010 or 1 January 2011. The amendments listed below, are considered to have a reasonable possible impact on the Group:

IFRS 3 Business Combinations

IFRS 7 Financial Instruments: Disclosures

IAS 1 Presentation of Financial Statements

IAS 27 Consolidated and Separate Financial Statements

IFRIC 13 Customer Loyalty Programmes The Group, however, expects no impact from the adoption of the amendments on its financial position or performance.

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4. MAIN COMPANY OPERATIONS AND CHANGES IN THE CONSOLIDATION AREA Below there are given, split based on the different types of company operations that have brought them about, the main changes that impacted the consolidation perimeter in the financial year being looked at

- Business combinations: To carry out the contents of the agreements stipulated on 14 April 2010 and following the obtaining of the necessary authorisations from the competent Spanish Antitrust authorities issued on 28 October 2010, on 24 December 2010 the Extraordinary Shareholders’ Meeting of Gestevision Telecinco S.A. resolved on anon-monetary increase of Share Capital for the nominal value amount of 36.7 million Euros, through the issue of 73,401,870 ordinary shares reserved for Prisa Television S.A.U., covered by a conferment of 100% of the Share Capital of the company Sociedad General de Television Cuatro S.A.U. This company wholly owns the companies Compania Indipendiente de Notocias de Television S.L., Sogecable Media S.A.U. and Sogecable Editorial S.A.U. The conferment and the increase of the Share Capital were carried out on 28 December 2010. The ceding/offering counterpart Prisa Television S.A.U. became a shareholder of Gestevision Telecinco S.A., with an equity investment of 18.041% on the Share Capital that went from a nominal value of 166.7 million Euros to 203.4 million Euros, split into 406,861,426 ordinary shares. Based on the previously stipulated contractual agreements, the subject of which was the values of the respective equity investments involved in the operation, the parties agreed a revision of the price, reducing the number of shares of Gestevision Telecinco belonging to Prisa Television S.A.U. to 70,534,898 shares, equivalent to a holding of 17.336% of the Share Capital. Due to this operation the holding of the Mediaset Group in Gestevision Telecinco went from 50.51% to 41,552% and from 51.24% to 42.218% excluding the treasury shares. As a result of this operation Prisa has representation on the Board of Directors of Telecinco proportional to the amount of its equity investment. The Mediaset Group, however, keeps the majority of the members of the Board of Directors maintaining its position of controlling majority shareholder.

- Acquisition and ceding/sale of minority equity investments On 28 June 2010 Publiespana S.A.U. sold its equity investment of 50% held in Publieci Television S.A. at a price of 0.2 million Euros, equal to the net equity value at the transaction date. On 28 December 2010 Gestevision Telecinco S.A., in carrying out the terms of the contractual agreements referred to in the previous paragraph, bought from the Prisa Television Group, for 488.0 million Euros, 22% of the Share Capital of the company DTS Distribuidora de Television Digital S.A. (Digital +) that heads up the Pay TV activities of the Prisa Group. This equity investment is valued with the net equity method. The price for this operation was financed on a pro rata basis by the shareholders of Telecinco through the subscription of an increase by payment of Share Capital carried out on 14 December 2010 for the total overall amount of 499.2 million Euros. The total disbursement incurred by Mediaset Investimenti and Mediaset S.p.A. for the respective holdings owned in Gestevision Telecinco at that date amounted to 255.8 million Euros.

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- Changes of holdings in equity investments already owned with an impact on the valuation criterion for consolidation purposes: On 11 October 2010 the equity investment held by Mediaset Investment Sarl in Sportsnet Media Limited, a company that heads the activities of the Chinese sports channel CSPN, went down from 49% to 12% following the entry into the Share Capital of a minority shareholder. Due to the impact of this operation, this equity investment that was previously valued with the net equity method, which was classified at 31 December 2010 in the category of the Financial Assets “Available for sale”.

- Changes of holdings in subsidiary companies and in equity investments already owned without an impact on the valuation criterion for consolidation purposes: On 31 December 2009, with effect from 1 January 2010 the company Medusa Video S.r.l., previously owned 100% by Medusa Film S.p.A. was merged by incorporation into that company. On 10 February 2010 the equity investment owned by Atlas Espana S.A.U., a subsidiary company of Gestevision Telecinco, in Producciones Mandarina SL went down from 42.13% to 30%, due to an increase of the Share Capital that was totally subscribed by minority shareholders. On 26 March 2010 there was liquidated the company Advanced Media S.A.U., 100% owned by Publiespana S.A.U. The operation did not have any significant impacts on the Consolidated Balance Sheet or Income Statement situations. On 15 October 2010, the subsidiary company RTI S.p.A. bought, at a price of 23.1 million Euros, a number of holdings that total 25% of the Share Capital of Meddue S.r.l, a company that that heads up the totalitarian equity investments of Medusa Film S.p.A. and Taodue S.p.A., owned by minority shareholders. Due to this operation the holding of the Group in this company at 31 December 2010 is now 100% of the Share Capital. On 25 October 2010 the equity investment owned by Gestevision Telecinco S.A. in Pegaso Television Inc. increased from 35.08% to 43.71% following the conversion into Share Capital of financial receivables.

5. BUSINESS COMBINATIONS As described previously, on 28 December 2010 the subsidiary company Gestevision Telecinco S.A. finalised the acquisition of total control of the unencrypted television activities of the Cuatro Group. The acquisition took place by means of the conferment made by the company Prisa TV S.A.U. of 100% of the shares of the company Sociedad General de Television Cuatro S.A.U. (Sogecuatro) covered by the increase in the reserved Share Capital Gestevision Telecinco, resolved upon in favour of the conferring party. At the end of these operations the controlling majority holding of the Mediaset Group, calculated with the exclusion of the treasury shares, went down from 51.244% to 41.218%, while the new shareholder Prisa, also due to the impact of the price adjustment that was applied based on the agreements that were signed following the checking and verification of the Balance Sheet parameters of the conferred company, owns a holding amounting to 17.614%. The remaining amount of the Share Capital, on the other hand, is held by the open market.

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The acquisition was accounted for pursuant to the IFRS 3 Revised, applying the so-called purchase method. Considering that the date of the finalising of the operation was so close to the closing date of the financial year, at the date of these Financial Statements, because there was not fully available all the information necessary in order to be able to complete the Purchase Price Allocation process, the acquired assets and liabilities have been, provisionally, posted at their accounting book values, calculating the goodwill by difference compared to the recognised acquisition price, consisting of the fair value of the newly issued ordinary shares of Telecinco calculated based on their spot market value at 29 December 2010, as detailed in the following table:

(values in million Euros)

Book value of the Fair Value Fair value Net assets acquired acquired company Adjustments (provisional) Tangible assets 0.4 0.4 Television rights 66.4 66.4 Other intangible assets 8.5 8.5 Tax assets/(liabilities) 19.3 19.3 Inventories 9.4 9.4 Trade (payables)/receivables (34.8) (34.8) Cash and cash equivalents 37.8 37.8 Other liabilities (53.5) (53.5) Total pro-quota net assets acquired 53.6 0.0 53.6

Goodwill 537.1 Total acquistion cost 590.7

The definitive process of the allocation of the fair value of the assets and liabilities acquired will be completed, as laid down by IFRS 3, within the 12 months following the acquisition date. The financial impact of this operation, which has not brought about any financial cash out for the Group, is equal to 34.6 million Euros, linked to the net available liquidity acquired amounting to 37.8 million Euros, net of the transaction costs directly attributable to the business combination process amounting to 3,2 million Euros. If the business combination had taken place at the beginning of the financial year the net consolidated revenues would have amounted to 4,556.5 million Euros and the net pre-tax result would have been 579.6 million Euros.

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6. SEGMENT REPORT

As required under IFRS 8, the following information relates to the operating segments identified on the basis of the Group’s present organisational structure and internal reporting system.

The Group’s main operating segments (already included in the analysis of results contained in the Report on Operations, are the same as the geographical areas (Italy and Spain) identified according to the location of operations. These operations are then segmented further, to monitor the performance of the business areas operating in each country, which are identified according to their economic profile (type of product, process and reference market). In relation to Spain (Telecinco Group) no significant areas have been identified other than the core business of television, which is the same entity.

The following paragraphs contain the information and reconciliations required under IFRS 8 in relation to profits, losses, assets and liabilities, based on this segmentation process. The information can be extrapolated from the two sub-consolidated accounts drawn up at that level, while the information provided for the three operating segments based in Italy has been given with reference to the profits, losses and operational assets directly attributable to them.

Geographical sectors

The following tables contain the key financial information for the two operational areas of Italy and Spain, as at 31 December 2010 and 2009 respectively.

The tables were prepared on the basis of specific sub-consolidated accounts in which the book value of the shareholdings held by companies belonging to a segment in companies belonging to another segment were kept at the respective purchase cost and cancelled at the time of consolidation. Likewise, in the income statement for the sector, income and charges (relating to any dividends received from these investments) have been included under Income from other equity investments.

The data on inter-segment assets relates to the cancellation of equity investments entered under the assets for Italy, in Gestevision Telecinco (41.6%) and Mediacinco (25%-owned, and already fully consolidated into the Spain area, being 75%-owned by Telecinco) and the loan granted to Mediacinco by Mediaset Investiment Sarl, which amounted to Euro 72.7 million as at 31 December 2010.

Non-monetary costs relate to the provisions for risks and charges and the costs of stock option plans.

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Eliminations / MEDIASET ITALY SPAIN 2010 Adjustments GROUP

MAIN INCOME STATEMENT FIGURES Revenues from external customers 3,437.4 855.1 - 4,292.5 Inter-segment revenues 0.9 - (0.9) - Consolidated net revenues 3,438.3 855.1 (0.9) 4,292.5 %80%20%100%

EBIT 596.1 219.4 - 815.5

%73%27%0%100%

Financial income/(losses) (28.0) 3.1 - (24.9)

Income/(expenses) from equity investments valued 0.1 (176.8) (176.7)

Income/(expenses) from other equity investments 19.5 (9.2) (24.6) (14.3)

EBT 587.7 36.5 (24.6) 599.6

Income taxes (212.9) - - (212.9)

NET PROFIT FROM CONTINUING OPERATIO 374.8 36.5 (24.6) 386.7

Net Gains/(Losses) from discontinued operations - - - -

NET PROFIT FOR THE PERIOD 374.8 36.5 (24.6) 386.7

Attributable to: - Equity shareholders of the parent company 374.7 70.5 (93.0) 352.2 - Minority Interests 0.1 (34.0) 68.4 34.5

OTHER INFORMATION Assets 5,942.8 1,980.9 (616.1) 7,307.6 Liabilities 3,341.7 604.8 (74.1) 3,872.5 Investments in tangible and intangible non current assets 777.8 155.0 - 932.8 Amortization 1,015.2 153.2 - 1,168.4 Impairment losses 5.6 - - 5.6 Other non monetary expenses 7.8 (6.0) - 1.8

(*) Includes the change in “Advances for the purchase of rights”

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Eliminations / MEDIASET ITALY SPAIN 2009 Adjustments GROUP

MAIN INCOME STATEMENT FIGURES Revenues from external customers 3,226.7 656.3 - 3,882.9 Inter-segment revenues 2.1 - (2.1) - Consolidated net revenues 3,228.8 656.3 (2.2) 3,882.9 %83%17%100% EBIT 478.7 122.8 - 601.5 %80%20% 100%

Financial income/(losses) (32.0) 3.2 - (28.8)

Income/(expenses) from equity investments valued 0.0 (119.2) (119.3)

Income/(expenses) from other equity investments 105.7 (3.9) (106.9) (5.1)

EBT 552.4 2.8 (106.8) 448.4

Income taxes (166.7) 24.1 - (142.5)

NET PROFIT FROM CONTINUING OPERATIO 385.7 26.9 (106.8) 305.8

Net Gains/(Losses) from discontinued operations (0.6) - - (0.6)

NET PROFIT FOR THE PERIOD 385.1 26.9 (106.8) 305.2

Attributable to: - Equity shareholders of the parent company 374.7 48.4 (150.7) 272.4 - Minority Interests 9.2 (21.5) 45.1 32.8

OTHER INFORMATION Assets 5,927.0 734.1 (347.8) 6,313.3

Liabilities 3,394.1 442.5 (61.6) 3,775.0 Investments in tangible and intangible non current assets 1,145.2 174.2 - 1,319.4 Amortization 1,011.5 169.1 - 1,180.6 Impairment losses - - - - Other non monetary expenses 29.8 (37.5) - (7.7)

(*) Includes the change in “Advances for the purchase of rights”

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The following table illustrates the cash flow statement for each geographical area. The item Cashed-in dividends (Italy) includes dividends received from Gestevision Telecinco. The item Equity investments for the italian activities in 2010 includes an amount of 255.8 million Euros regarding the capital increase subscribed in Gestevision Telecinco S.A. for its own shareholding interest. The same amount is included in item capital increase issues in the Spanish area.

CASH FLOW STATEMENT - GEOGRAPHICAL Italy Spain DETAIL

31/12/2010 31/12/2009 31/12/2010 31/12/2009

Operating profit before taxation 592.7 477.9 39.4 (0.4) + Depreciation and amortisation 1,020.8 1,011.5 153.2 169.1 + Other provisions and non-cash movements (25.3) 31.3 10.7 (30.8) + Equity investments evaluation result (net of gains/losses from sale operations) 5.0 1.2 186.0 119.2 + Change in working capital/ other assets and liabilities 84.3 8.2 (2.1) 14.4 - Interests paid/received (3.5) (3.5) (3.1) - - Income tax paid (204.9) (213.2) (25.2) (15.7)

Net cash flow from operating activities [A] 1,469.1 1,313.4 358.9 255.8

CASH FLOW FROM INVESTING ACTIVITIES: Proceeds from the sale of fixed assets 3.5 2.8 - Proceeds from the sale of equity investments - 2.1 0.2 Interests and other financial income received 0.2 - 3.6 - Purchases in television rights (624.9) (1,034.8) (124.9) (214.7) Changes in advances for television rights (11.8) 12.5 (20.0) 45.7 Purchases of other fixed assets (141.1) (122.9) (10.1) (5.2) Changes in debt for investment (including hedging operations) (323.8) 120.5 (14.7) 9.3 Equity investments (261.6) (7.8) (532.1) (0.1) Changes in other financial assets (1.9) (11.6) (50.0) (13.7) Loans to other companies (granted)/repaid (0.5) (0.2) Dividends received 27.4 107.6 1.0 1.8 Business combination net of cash acquired - 37.8 Changes in the consolidation area (48.5) (1.8)

Net cash flow from investing activities [B] (1,382.5) (935.9) (707.3) (176.9)

CASH FLOW FROM FINANCING ACTIVITIES: Share capital issues -499.2- Change in treasury shares - (2.9) Net changes in financial liabilities 198.3 76.3 (21.9) 106.5 Dividends paid (266.3) (431.9) (48.4) (210.3) Net changes in other financial assets/liabilities (0.1) (3.9) (2.2) (1.9) Interests (paid)/received (18.4) (30.2) 4.0 2.4

Net cash flow from financing activities [C] (86.5) (389.7) 430.7 (106.2)

CHANGE IN CASH AND CASH EQUIVALENTS [D=A+B+C] 0.1 (12.2) 82.3 (27.3)

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR [E] 94.5 106.7 5.6 32.9

CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR [F=D+E] 94.5 94.5 87.9 5.6

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Italy: operating segments

As already mentioned in the report on operations, the operating segments in Italy are listed below, taking into account the significance and the Group’s organisation/business structure (as reported in the Directors’ Report on operations):

Free To Air TV, the Group’s traditional core business, which includes advertising sales and programme scheduling for the three national core channels and proprietary free-to-air thematic channels broadcast in digital terrestrial mode;

Network Operator, related to operation of the analogue broadcasting network dedicated to proprietary free-to-air channels and digital terrestrial broadcasting (multiplex);

Mediaset Premium, relating to the supply of pay tv programmes and events under this brand;

Other operations, related to the main activities. These include internet, teletext, services and content providing to mobile phone operators, non-TV advertising licences, teleshopping, licensing, merchandising and movie distribution.

As reported in the Directors’ Report on operations, in 2010 the TaoDue activities has been reclassified in Free To Air TV business unit and therefore the 2009 prospect has been consequently reclassified.

FREE TO AIR NETWORK MEDIASET OTHER ELIMINATIONSGEOGRAPHICAL 2010 TELEVISION OPERATOR PREMIUM / SEGMENT ADJUSTMENTS ITALY

Revenues from external customers 2,453.6 70.0 700.4 214.3 3,438.3 Inter-segment revenues 9.0 133.7 - 119.1 (261.7) - Consolidated net revenues 2,462.6 203.7 700.4 333.4 (261.7) 3,438.3 % 72% 6% 20% 10% -8% 100%

Operating costs from thrid parties (1,159.8) (138.5) (352.1) (172.5) 1.4 (1,821.4) Inter-segment operating costs (96.5) - (34.2) (7.1) 137.8 - Total Operating Costs (1,256.3) (138.5) (386.3) (179.6) 139.2 (1,821.4) Amortisation, depreciation and write-downs (624.5) (65.7) (314.4) (114.0) 97.7 (1,020.8) EBIT 581.8 (0.5) (0.3) 39.8 (24.8) 596.1

Television rights 1,784.0 - 460.4 117.2 (187.4) 2,174.2 Other tangible and intangible non current assets 299.4 540.1 28.5 61.8 - 929.9 Goodwill 118.5 6.2 - 18.9 - 143.6 Trade receivables 737.7 16.6 88.0 91.8 - 934.1 Inventories 59.7 5.6 12.7 7.2 - 85.1 Operating assets 2,999.3 568.6 589.7 296.9 (187.4) 4,267.0

Investments in television rights (*) 604.3 - 75.4 91.3 (146.1) 624.9 Other investments 48.4 70.2 21.4 1.1 - 141.1 Investments in tangible and intangible assets 652.6 70.2 96.8 92.4 (146.1) 766.0 (*) Not including the change in “Advances for the purchase of rights”

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FREE TO AIR NETWORK MEDIASET OTHER ELIMINATIONS GEOGRAPHICAL 2009 TELEVISION OPERATOR PREMIUM / SEGMENT ADJUSTMENTS ITALY

Revenues from external customers 2,351.7 93.6 560.6 222.7 3,228.7 Inter-segment revenues 17.7 125.4 - 132.2 (275.3) 0.0 Consolidated net revenues 2,369.5 219.0 560.6 354.9 (275.3) 3,228.8 % 73% 7% 17% 11% -9% 100%

Operating costs from thrid parties (1,098.2) (138.0) (314.6) (188.9) 1.1 (1,738.6) Inter-segment operating costs (79.0) - (49.9) (11.6) 140.5 - Total Operating Costs (1,177.2) (138.0) (364.5) (200.5) 141.6 (1,738.6) Amortisation, depreciation and write-downs (677.4) (58.3) (267.0) (118.8) 110.1 (1,011.5) EBIT 514.8 22.7 (70.8) 35.6 (23.6) 478.7

Television rights 1,775.8 - 668.7 141.4 (166.8) 2,419.1 Other tangible and intangible non current assets 292.9 539.3 12.3 44.1 - 888.6 Goodwill 118.5 6.2 - 24.6 - 149.3 Trade receivables 1,075.8 38.6 80.9 76.3 - 1,271.6 Inventories 41.3 2.9 23.8 6.9 - 74.9 Operating assets 3,304.4 587.0 785.7 293.3 (166.8) 4,803.5

Investments in television rights (*) 556.1 - 491.3 133.3 (145.9) 1,034.8 Other investments 27.3 89.1 5.7 0.8 - 122.9 Investments in tangible and intangible assets 583.4 89.1 497.0 134.1 (145.9) 1,157.7

(*) Not including the change in “Advances for the purchase of rights”

Notes on the breakdown and changes to income in the above areas of operation have already been included in the Report on Operations.

The main operations allocated refer to television rights, and in particular:

for the Free-to-air area, the library (films, dramas, mini-series, TV films and cartoons), long-running self-produced drama series, entertainment, news and sport rights serving the three free to air channels;

for Pay tv, the sports, cinema and entertainment rights reserved for Mediaset Premium. Sports rights include the broadcasting rights for Italy’s leading football clubs up until the 2009/2010 season.

Other investments:

for free-to-air television, these relate mainly to systems and equipment that support television production centres, IT systems, and the upgrading of management offices and other property.

for Pay tv, they include investments relating to development of the subscription-based pay- TV platform Mediaset Premium.

for Network operator activities, they include purchases necessary for maintenance and upgrading of the DTT broadcasting network.

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NOTES ON MAIN ASSET ITEMS

7. NON-CURRENT ASSETS

The following tables contain the changes over the past two years, detailed by cost, amortisation and depreciation, and the net book value of the main Balance Sheet items relating to non- current assets.

The details of “Changes to consolidation area” for 2010 relate to the effects of the acquisition by Gestevision Telecinco of Cuatro’s TV business, as mentioned above (Note 5, Business Combinations); those for 2009 related to the deconsolidation of the equity investments in Medusa Cinema and Medusa Multicinema.

7.1 Property, Plant and Equipment

Technical and Tangible assets Land and Plant and Other tangible HISTORICAL COST commercial under formation Total building machinery assets equipment and advances

Balance at 1/1/2009 294.2 788.8 118.2 122.6 58.6 1382.5

Additions 2.4 56.0 6.7 7.2 32.7 105.0

Other changes 2.9 26.6 1.3 1.3 (32.7) (0.6)

Disposals (0.5) (21.8) (3.7) (2.4) (0.0) (28.4)

Changes in the consolidation area (49.2) (8.7) (10.2) (0.3) - (68.4)

Balance at 31/12/2009 249.8 840.9 112.5 128.4 58.5 1,390.1

Additions 4.7 35.5 7.6 4.3 81.4 133.4

Other changes 11.0 16.1 3.9 1.9 (38.1) (5.3)

Disposals (0.0) (27.2) (0.8) (4.5) (0.0) (32.6)

Changes in the consolidation area 0.0 0.4 - 0.0 - 0.4 Balance at 31/12/2010 265.5 865.5 123.2 130.1 101.8 1,486.1

Technical and Tangible assets Land and Plant and Other tangible AMORTISATION AND DEPRECIATION commercial under formation Total building machinery assets equipment and advances

Balance at 1/1/2009 (114.1) (576.1) (80.8) (83.8) - (854.9)

Other changes (0.8) (3.4) (0.3) 0.0 - (4.4)

Disposals 0.5 20.9 3.4 2.3 - 27.1

Amortisation (7.7) (53.2) (7.5) (11.8) - (80.1)

Changes in the consolidation area 9.5 8.1 8.6 0.2 - 26.4

Balance at 31/12/2009 (112.5) (603.8) (76.6) (93.0) - (885.9)

Other changes (0.2) 3.7 0.7 0.1 - 4.2

Disposals - 25.6 0.6 4.4 - 30.7

Amortisation (7.6) (60.5) (8.0) (11.3) - (87.3)

Depreciation and write-downs - (2.2) - - - (2.2)

Changes in the consolidation area (0.0)----(0.0) Balance at 31/12/2010 (120.3) (637.2) (83.2) (99.8) - (940.5)

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Technical and Tangible assets Land and Plant and Other tangible NET BOOK VALUE commercial under formation Total building machinery assets equipment and advances

Balance at 1/1/2009 180.0 212.7 37.4 38.9 58.6 527.6

Additions 2.4 56.0 6.7 7.2 32.7 105.0

Other changes 2.1 23.3 1.1 1.3 (32.7) (5.0)

Disposals (0.0) (0.9) (0.3) (0.1) (0.0) (1.3)

Amortisation (7.7) (53.2) (7.5) (11.8) - (80.1)

Changes in the consolidation area (39.6) (0.6) (1.6) (0.1) - (41.9)

Balance at 31/12/2009 137.3 237.1 35.9 35.4 58.5 504.2

Additions 4.7 35.5 7.6 4.3 81.4 133.4

Other changes 10.8 19.8 4.5 1.9 (38.1) (1.1)

Disposals (0.0) (1.6) (0.2) (0.1) (0.0) (1.9)

Amortisation (7.6) (60.5) (8.0) (11.3) - (87.3)

Depreciation and write-downs - (2.2) - - - (2.2)

Changes in the consolidation area - 0.4 - 0.0 - 0.4 Balance at 31/12/2010 145.2 228.4 40.0 30.2 101.8 545.6

The main increases during the period were as follows:

72.4 million Euros increases in property, plant and equipment, 40.1 million Euros of which concerned purchases during the year and 32.2 million Euros the capitalisation of deposits paid earlier, mostly for the purchase of broadcasting plant, recording equipment and wireless links. In particular:

- 19.7 million Euros was spent on digitalisation equipment for the Italian regions scheduled for conversion to digital terrestrial broadcasting in 2010;

- 13.1 million Euros was for constructing fibre optic networks and high tech wireless carrier links;

- 10.4 million Euros was for building work on the company’s main offices;

- 9.2 million Euros was spent upgrading existing production facilities to modern standards.

Assets under Formation and Advances (81.4 million Euros) mainly involved projects awaiting completion regarding apparatus for digitalising the transmission network (33.3 million Euros), DTT broadcasting equipment including infrastructure for the Pay-TV system (13.8 million Euros), and capital spending on the Net Premium Web TV service (5.0 million Euros)

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7.2 Television and movie rights

AMORTISATION HISTORICAL NET BOOK AND COST VALUE DEPRECIATION Balance at 1/1/2009 7,543.1 (5,147.0) 2,396.1 Additions 977.9 - 977.9 from Intangible assets under formation and advances 271.6 271.6 Other changes (532.7) 516.7 (16.0) Disposals - - - Amortisation - (1,026.8) (1,026.8) (Write-offs)/Write-ups - (4.8) (4.8) Changes in the consolidation area - - - Balance at 31/12/2009 8,259.9 (5,661.9) 2,598.0

Additions 583.6 - 583.6 from Intangible assets under formation and advances 166.3 166.3 Other changes (984.1) 975.5 (8.6) Disposals (69.5) 66.4 (3.2) Amortisation - (1,004.4) (1,004.4) (Write-offs)/Write-ups - (1.2) (1.2) Changes in the consolidation area 66.4 - 66.4 Balance at 31/12/2010 8,022.5 (5,625.7) 2,396.7

Total increases in 2010 were 749.8 million Euros (1,249.5 million Euros in 2009) and break down as follows: capital purchases this year, 583.6 million Euros (977.9 million Euros in the year to 31 December 2009), capitalisation of earlier advance payments to suppliers classified last year under “Fixed Assets under Formation and Advances”, 166.3 million Euros (271.6 million Euros at 31 December 2009).

Of capital purchases this year, 13.7 million Euros relate to rights maturing after the year’s end. The total value of such rights held (not yet exercisable as of 31 December 2010) was approximately 583.9 million Euros (approx. 791.4 million Euros at 31 December 2009), and consisted mainly of the digital terrestrial Pay-TV rights to broadcast the fixtures of twelve Serie A clubs in the 2011 and 2012 football seasons.

Write-downs in the period mainly relate to TV programmes, which were discontinued earlier than their contractual expiry date.

The item Other changes include rights for which the contrats have expired and cancelled contrats.

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As required under IAS 36, assets not yet available for use are subjected to an annual impairment test by the Cash Generating Units (CGUs) that use them (TV Commerciale Italia and Mediaset Premium), together with the other tangible/intangible assets attributable to these CGUs. Details of impairment for the Free to Air TV CGUs are given below in Note 7.3, Goodwill.

Impairment testing of Mediaset Premium’s rights was done by estimating their value in use on the basis of the CGU’s five-year plan (2011-2015) as approved by the Board of Mediaset S.p.A.

The main assumptions on which that Plan’s income estimates are based concern growth in average uptake of Mediaset Premium (Easy Pay and pre-paid modes) and accordingly in revenue per customer, the expected renewal of major rights-acquisition contracts due to expire during the five-year period, and planned changes in the Group’s product range (channels and content).

Those assumptions take account of Mediaset Premium’s growth to date: launched in early 2005, it achieved operating break-even this year, in line with the latest five-year plan’s profit targets.

Cash flows were discounted at the weighted average cost of capital (9.84% net of tax effects, or 12.9% gross), and were extrapolated beyond the plan horizon (Terminal Value) using a growth rate of 2%.

The impairment test conducted on this basis confirmed that the CGU has every prospect of earning its full book value. Sensitivity testing for the following combinations of discount rate and perpetual growth rate still yielded values for the CGU at least equal to its book value:

- a 20% higher discount rate (11.81%) and a perpetual growth rate of 2%

- a 10% higher discount rate (10.83%) and a zero perpetual growth rate .

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7.3 Goodwill

Total Balance at 1/1/2009 513.4 Additions 0.0 Disposals (1.0) Impairments - Balance at 31/12/2009 512.4 Additions 537.1 Disposals - Impairments (5.6) Balance at 31/12/2010 1,043.9

The increase in this item in 2010 is due to inclusion of the goodwill recognised on the provisional allocation of the newly-issued Telecinco stock paid as consideration when the Group’s subsidiary Gestevision Telecinco took over the whole of the TV business of Sogecuatro (Sociedad General de Television Cuatro): further details of that acquisition will be found above in Note 5, Business Combinations.

Goodwill was subjected to the impairment test required under IAS 36, at 31 December 2009 and 2010. That test is applied at least once a year to every cash-generating unit (CGU) that carries goodwill, on the basis in each case of the five-year plan approved by its Board of Directors.

The CGUs are identified according to the Group’s organisational and business structure, and are all either “operating segments” as defined in IFRS 8 or identifiable sub-segments within them (for a description of these segments please refer to the relevant section of the Report on Operations). For this purpose, as mentioned above both in the Report on Operations and in Explanatory Note 6 (Segment Reporting), it should be noted that in line with the senior management’s decision to include Taodue’s assets in the TV Free CGU from 2010 onwards, the corresponding goodwill ( 115.8 million Euros) has been valued with reference to that CGU for the purposes of determining any impairment.

However small their associated goodwill (in absolute and/or relative terms), all CGUs accounting for a significant proportion of tangible or intangible assets have been subjected to impairment tests which, even in the absence of any particular external or internal indication of impairment, take full account of present economic circumstances: highly volatile markets, and considerable uncertainty as to how far the current economic downturn will go and how long it will last.

The following table shows the amounts of total goodwill (following the impairment tests) for the two periods, and their distribution among the various CGUs .

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CGU 31/12/2010 31/12/2009

Telecinco 900.3 363.2 Italian Free TV 118.5 2.7 Mediashopping 0.9 6.5 Movie distribution (Medusa Film) 18.0 18.0 Fiction / TV series production (TaoDue) 115.8 Network operator 6.2 6.2

Totale 1,043.9 512.4

The 900.3 million Euros goodwill recoverable for the Telecinco CGU is made up of 363.2 million Euros resulting from the piecemeal acquisition of the controlling interest in Gestevision Telecinco and 537.1 million Euros from the full takeover carried out by Telecinco in 2010. The total for this goodwill has been derived as the greater of two measures: fair value, in this case Telecinco’s market capitalisation on the basis of the spot price recorded at 31 December 2010, and value in use calculated as the discounted present value of net operating cashflow (DCF) as forecast in the company’s latest approved budget and plans.

All the other goodwill items were subjected to impairment testing by estimating the value in use based on the DCFs derived from the latest business plans for each CGU on the basis of the 2011 budget approved by the Board of Directors of Mediaset S.p.A. Those valuations applied a discount rate equivalent to a weighted average cost of capital of 9.84% (compared with 7.55% used for impairment testing in the Consolidated Financial Statement at 31 December 2009). The corresponding gross rates range from 12.5% to 14.2%, depending on the CGU; the growth rate used in extrapolating cash flows beyond the plan horizon was 2%.

The main operating assumptions involved in preparing the various CGUs’ business plan were as follows:

- for the TV Free to Air Italia CGU, forecast advertising sales and TV production costs for the core and thematic channels; the sales forecasts are more conservative the further into the future they look;

- for the Network Operator CGU, growth in revenues from hiring out transmission capacity to other Group CGUs and to outside operators is forecast on the basis of the expected changes in availability and use of the existing transmission networks over the next two years as a result of the probable reorganization at national level which will among other things affect the allocation of TV frequencies among the various operators as analogue transmission is switched off (by 31 December 2012, according to present EU provisions).

- for the Movie Distribution CGU, its investment and production plans and the revenues expected from Medusa Film’s exploitation of the resulting product.

These valuations confirmed the appropriateness of all the CGUs’ impairment-tested book values apart from the 5.6 million Euros goodwill in the Mediashopping CGU derived from the price paid for the teleshopping business in 2005. That goodwill has been written down in view

227 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Explanatory Notes of the lower recoverable value implied by expected cashflow up to the forecast horizon and the objective difficulty of maintaining this figure for goodwill solely on the basis of value attributable to cashflow beyond that horizon, at a time when the Group is considering a range of possible strategic options for moving away from the original business model following the acquisition of this shareholding.

Each of the valuations summarised above has been subjected to sensitivity testing using different figures for each of the financial parameters used to calculate value in use: a discount rate 20% higher or lower than the basic expectation, and a perpetual growth rate ranging between 0/2.

The following table summarises, for each CGU, the valuation method used to calculate the recoverable value, the implied discount rate (gross of tax effects) used to calculate value in use, and the combination of discount rate (net of tax effects) and perpetual growth rate that would be needed to make the CGU’s recoverable value exactly equal to its book value.

CGU Sensitivity Recoverable value Implicit WACC gross discount rate perpetual computation method of income taxes net of income growth rate taxe

Telecinco Fair value Italian Free TV Value in use 13.9% 14.96% 0 Movie distribution (Medusa Film) Value in use 14.2% 10.83% 2 Network Operator Value in use 12.5% 8.86% 0

7.4 Other intangible fixed assets

Patents and Intangible assets Other intangible HISTORICAL COST intellectual Trademarks Licences in progress and Total assets property rights advances

Balance at 1/1/2009 172.0 135.0 365.7 208.1 80.9 961.7

Additions 8.7 0.0 9.7 199.6 0.9 219.0

Other changes 5.7 (0.4) 0.2 (261.0) (2.3) (257.8)

Disposals (0.4) (0.0) (1.6) - - (2.0)

Changes in the consolidation area (2.7) (0.1) (0.2) (0.1) (0.1) (3.1) Balance at 31/12/2009 183.3 134.5 373.8 146.7 79.5 917.8

Additions 4.5 1.0 0.5 212.2 5.3 223.5

Other changes 3.1 0.0 (2.9) (172.4) 1.4 (170.8) Disposals (0.4) - (0.0) (0.0) - (0.5) Changes in the consolidation area 1.0 0.1 - 7.5 (0.0) 8.5 Balance at 31/12/2010 191.3 135.7 371.4 194.0 86.2 978.5

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Patents and Intangible assets Other intangible AMORTISATION AND DEPRECIATION intellectual Trademarks Licences in progress and Total assets property rights advances

Balance at 1/1/2009 (151.2) (131.5) (88.5) (40.6) (25.7) (437.4)

Other changes (0.0) (0.0) 2.3 - 0.0 2.2

Disposals 0.3 0.0 0.3 - - 0.6

Amortisation (16.3) (1.0) (14.3) - (10.0) (41.6)

(Depreciation), (write-downs)/write-ups - (1.3) - 9.6 - 8.3

Changes in the consolidation area 2.4 0.1 0.1 - 0.1 2.8 Balance at 31/12/2009 (164.8) (133.8) (100.2) (30.9) (35.6) (465.2)

Other changes (0.0) (0.0) 2.9 2.0 (1.8) 3.1

Disposals 0.4----0.4

Amortisation (15.3) (0.3) (14.8) - (7.8) (38.2)

(Depreciation), (write-downs)/write-ups - - 3.0 - 3.0

Changes in the consolidation area ----0.00.0 Balance at 31/12/2010 (179.7) (134.0) (112.0) (25.9) (45.1) (496.8)

Patents and Intangible assets Other intangible NET BOOK VALUE intellectual Trademarks Licences in progress and Total assets property rights advances

Balance at 1/1/2009 20.8 3.5 277.2 167.6 55.3 524.3

Additions 8.7 0.0 9.7 199.6 0.9 219.0

Other changes 5.7 (0.4) 2.4 (261.0) (2.4) (255.7)

Disposals (0.1) (0.0) (1.4) - - (1.4)

Amortisation (16.3) (1.0) (14.3) - (10.0) (41.6)

(Depreciation), (write-downs)/write-ups - (1.3) - 9.6 - 8.3

Changes in the consolidation area (0.3) - (0.0) (0.1) 0.0 (0.3) Balance at 31/12/2009 18.5 0.8 273.7 115.7 43.8 452.5

Additions 4.5 1.0 0.5 212.2 5.3 223.5

Other changes 3.1 0.0 (0.0) (170.4) (0.4) (167.7)

Disposals (0.0) - (0.0) (0.0) - (0.0)

Amortisation (15.3) (0.3) (14.8) - (7.8) (38.2)

(Depreciation), (write-downs)/write-ups - - - 3.0 - 3.0 Changes in the consolidation area 1.0 0.1 - 7.5 - 8.5 Balance at 31/12/2010 11.6 1.6 259.4 168.1 41.0 481.6

The increases in the item Patents and Intellectual Property Rights are mainly due to the purchase or completion of new software: 1.7 million Euros of this is for developing pay-per-view systems .

Licences include the right to use television frequencies acquired from third parties, intended to develop Digital Terrestrial Television platforms.

Assets in Formation and Advances, as of 31 December 2010, relate mainly to advances paid to suppliers for the acquisition of rights, advances on dubbing services, options on programmes, and production launches. Increases for the period relating to advances paid to rights vendors, and to advances for the production of long-running TV dramas, amounted to 200.8 million Euros. The decreases mainly related to the completion of productions and the finalisation of contracts pending at 31 December 2009, which were consequently reclassified under Television Rights, to the value of 166.3 million Euros.

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Other Intangible Assets mainly includes intangible assets relating to exclusivity undertakings by the founders and directors of Taodue. Those assets were identified and valued with the aid of an independent consultant when the cost of acquiring the controlling interest in Taodue S.r.l. and Nova Film S.r.l. was being calculated during 2008. Their carrying value was revised in 2010 to take account of the contractual agreements between the parties following RTI’s acquisition of the remaining 25% of Taodue’s parent company, Med Due Srl.

7.5 Investments in associates companies and joint ventures

The following table summarises the investments held, based on the percentages of ownership and book values of the shareholdings, valued according to the Net Equity method during the two years in question.

31/12/2010 31/12/2009 Book Value Book Value Stake % Stake % (EUR million) (EUR million)

Associated companies

Titanus Elios S.p.A. 30.0% 10.3 30.0% 10.7 Publieci Television S.A. - - 50.0% 0.5 Ares Film S.r.l. 30.0% 0.2 30.0% 5.7 Capitolosette S.r.l. 49.0% 14.5 49.0% 10.7 La Fabrica De La Tele SL 30.0% 3.1 30.0% 2.1 Pegaso Television INC 43.7% 4.0 35.1% 1.4 NESSMA S.A. 25.0% - 25.0% 2.2 Producciones Mandarina S.L. 30.0% 1.3 42.1% 0.2 Edam Acquisition Holding I Cooperatief U.A. 33.3% - 33.3% 127.6 BigBang Media SL 30.0% 0.3 30.0% 0.2 DTS Distribuidora de Television Digital S.A. 22.0% 488.0 Sportsnet Media Limited (*) 12.0% - 49.0% - Altre 0.4 0.7 Total 522.1 162.0

Joint ventures

Boing S.p.A. 51.0% 5.6 51.0% 3.6 Fascino P.G.T. S.r.l. 50.0% 7.0 50.0% 6.1 Mediamond S.p.a. 50.0% 0.7 50.0% 0.5 Mediavivere S.r.l. 50.0% 1.4 50.0% 2.2 Tivù S.r.l. 48.3% 1.1 48.3% 0.6 Total 15.8 13.0 Balance at 31/12 537.9 175.0

The main changes during 2010 were the write-off of the 33.3% stake in Edam Acquisition Holding I Cooperatief U.A., the Dutch parent company of the Endemol Group (the book value of this investment at 31/12/2009 had been 127.6 million Euros) and the acquisition for 488 million Euros on 28 December 2010 by the Group’s subsidiary Gestevision Telecinco of a 22% stake in DTS Distribuidora Television Digital S.A., the Spanish company which owns the Pay-TV business of Digital Plus.

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In the case of the Edam investment, in 2010 the group headed by that company achieved net consolidated income of 1,245.9 million Euros ( 1,189.3 million Euros in 2009), and an EBITDA of 179.6 million Euros ( 178.7 million Euros). Gains of 249 million Euros were booked in 2010 , mainly generated by members’ contribution of portions of the mezzanine debt; last year’s figure included gains of 81.3 million Euros generated by the net buyback of the group’s own debt from the creditor banks. Edam made a consolidated net loss of 1,239.2 million Euros in 2010 (in 2009 this loss had been 337.8 million Euros), mainly resulting from the 1,376.0 million Euros write-down of Goodwill at 31 December 2010 following the annual impairment test conducted with the help of an independent expert. That test applied discount rates of between 8.5% and 9.1% and used the approved business plans for 2011-2014 to determine the value in use of each of the group’s CGUs that carried amounts of goodwill. Because of the consolidated net loss for 2010, Edam’s Consolidated Net Equity was in fact negative at 31 December 2010, at - 767.2 million Euros.

As already explained in the latest Interim Report (30 September 2010), the book value of the Mediaset Group’s shareholding in Edam was written off in the interim consolidated accounts following the impairment test conducted by Mediaset on the basis of the provisional 2011 budget figures and the three-year business plan. The net amount charged to the consolidated Income Statement at 31 December 2010 as a result of that write-down was 178.7 million Euros, after allowing for the rise in the holding’s value this year as the shareholders contributed portions of the mezzanine debt on subscribing a capital increase of 40.2 million Euros in total (see Note 7.6below).

Following the write-off of this shareholding in Mediaset’s books, and given the further losses recorded by the subsidiary in question, it was decided (in accordance with IAS 28) not to recognise the Group’s share of that part of the subsidiary’s losses for the period ( 255.5 million Euros) which exceeded the shareholding’s book value, since the Group is under no legal or implicit obligation to cover such losses. Should this part-owned subsidiary generate profits in future, the appropriate proportion of such profits will be reflected in the Consolidated Financial Statement only if and when they begin to exceed the losses not being recognised now.

So far as the Group’s other shareholdings are concerned, two other write-downs at 31 December 2010 should also be noted: that of the 5.8 million Euros goodwill implicit in the book value of the 30% stake in the mini-series/TV movie production company Ares Srl, and the total write-off of the 25% holding in Nesmma S.A., a holding company through which the Group had a stake in the business of the free-to-air satellite channel of the same name which broadcasts to the North African region. That write-off was occasioned by Nesmma S.A.’s consolidated loss of 2.6 in 2010; again, in the absence of any legal or implicit obligation on Mediaset as shareholder, its share of that loss in excess of the shareholding’s value has not been recognised.

With reference to the equity investments in Distribuidora de Television Digital S.A., purchased on 28th December 2010 a Purchase Price Allocation has not yet been made on this annual report reference date. The difference between the price consideration and the net book value of the assets and liabilities involved has been treated as implicit goodwill.

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The schedule below sets out the main Balance Sheet and Income Statement figures for the Group’s part-owned subsidiaries and joint ventures. The 2009 consolidated figures for Capitolosette (which owns the cinema group The Space, formed on 30 June 2009 by the merger of Medusa Cinema and Warner Village) refer to the second half of 2009 only.

Shareholders' Liabilities and 2010 Assets Revenues Net Result Equity minorities

Ares Film S.r.l. 16.1 0.7 15.4 17.0 0.7 BigBang 2.1 1.1 1.0 1.1 0.1 Boing S.p.A. 15.1 11.0 4.1 18.1 3.8 Capitolosette S.r.l. (**) 152.1 29.6 122.5 145.9 7.1 Edam Acquisition Holding I Cooperatief U.A. (**) 2,218.3 (792.9) 3,011.2 1,249.9 (1,239.2) DTS Distribuidora de Television Digital S.A. 1,500.0 992.0 508.0 1,028.0 167.0 Fascino P.G.T. S.r.l. 22.3 11.5 10.8 43.3 1.7 LaFabrica De La Tele SL 19.3 10.4 8.9 32.3 7.0 Mediamond S.p.A. 11.2 1.4 9.8 14.6 (1.0) Mediavivere S.r.l. 8.5 2.7 5.8 24.1 1.6 NESSMA S.A. (**) 21.5 (7.7) 29.2 5.3 (10.5) Pegaso Television INC (*) (**) 23.8 2.8 21.0 1.0 (2.5) Producciones Mandarina S.L. 11.1 4.4 6.7 17.4 3.6 Titanus Elios S.p.A. 34.3 34.3 - 4.9 1.5 Tivù S.r.l. 6.4 2.2 4.2 12.6 1.0

Total 4,062.1 303.5 3,758.6 2,615.5 (1,058.1)

Shareholders' Liabilities and 2009 Assets Revenues Net Result Equity minorities

Ares Film S.r.l. 23.8 - 23.8 17.8 (0.2) BigBang 2.7 0.8 1.9 4.0 0.6 Boing S.p.A. 9.2 7.1 2.1 9.4 (1.4) Capitolosette S.r.l. (**) 78.5 21.9 56.6 65.6 (1.0) Edam Acquisition Holding I Cooperatief U.A. (**) 3,460.1 240.9 3,219.2 1,189.3 (337.8) Fascino P.G.T. S.r.l. 20.6 9.8 10.8 43.3 4.0 LaFabrica De La Tele SL 15.8 6.9 8.9 22.2 4.6 Mediamond S.p.A. 1.5 1.0 0.5 (0.5) Mediavivere S.r.l. 9.4 4.5 4.9 32.4 3.4 NESSMA S.A. (**) 14.7 2.9 11.8 1.3 (9.7) Pegaso Television INC (*) (**) 30.4 8.8 21.6 2.4 (12.3) Producciones Mandarina S.L. 2.4 0.9 1.5 7.5 0.3 Publieci Television S.A. 1.2 1.0 0.2 7.9 0.7 Sportsnet Media Limited (*) (**) 3.2 (26.6) 29.8 7.5 (15.5) Titanus Elios S.p.A. 35.9 35.7 0.2 5.0 1.5 Tivù S.r.l. 3.1 1.1 2.0 5.8 0.2 Total 3,712.5 316.7 3,395.8 1,421.4 (363.1)

(*) Conversion to Euros on the basis of book values denominated in USD (**) Consolidated figures

7.6 Other financial assets

Changes in the Fair Value Balance at Balance at consolidation Additions Disposals adjustments/ Reclassification 31/12/2009 31/12/2010 area Impairment s Equity investments 3.9 5.4 (2.0) (5.1) 2.3 Financial receivables (due 55.0 82.3 (40.8) (8.7) (1.7) 86.0 after 12 months) Hedging derivatives - 14.7 14.7 Total 58.9 - 102.4 (42.8) (13.8) (1.7) 103.0

Financial receivables include 73.2 million Euros owed by companies belonging to Edam Acquisition Holding I Cooperatief U.A. ( 44.4 million Euros at 31 December 2009).

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Some of those receivables consist of mezzanine debt bought for 31,1 million Euros in total and “second lien” (junior) debt of 6,8 million Euros, which had been purchased from third parties in previous financial years at a considerable discount to their nominal value in view of the market conditions prevailing at the time. Those assets have been carried on the books at their amortised cost.

On 23 September and 29 December 2010 the Group’s holdings of the mezzanine debt were contributed by way of payment for the capital increase of Edam Acquisition Holding I Cooperatief U.A. subscribed by the Group alongside the other two Edam shareholders.

During 2010 the Group subsidiaries Mediaset Investment Sarl and Conecta 5 also bought some of Edam’s senior debt for a total consideration of 73.5 million Euros (again, at a discount to its nominal value in keeping with the instrument’s type and the prevailing market conditions).

The recoverable value of the receivables in question was reassessed at 31 December 2010 in the light of signs of their possible impairment; connected to the financial situation of Endemol Group.

On the basis of the Endemol Group’s profitability as forecast in the 2011 budget, there is a risk that Edam subsidiaries may in the next few months fail to meet certain financial covenants relating to debts contracted by them in 2007 to finance the acquisition of Endemol. The breach of the covenants would, according to the contractual provisions currently in force, entitle the group’s lenders to demand immediate payment and to start proceedings for appropriation of the company in proportion to the creditors’ holdings of the senior debt.

On the base of this possible event, Endemol appointed some advisors to evaluate every possible scenario and preliminary agreements between shareholders and lenders in order to supply the company with a more sustainable financial structure facing the Group’s business plans. Mediaset, without any specific commitments, shall evaluate with rationality every options strong of its triple role of shareholder, customer and lender and of its decision to write-off the investment.

On the basis of current assessments of these various possibilities, the Board’s view is that the intrinsic value of the Endemol Group, as determined by the independent valuer for the purposes of impairment testing, provides sufficient grounds for regarding the senior loan’s book value at 31 December as recoverable, but not that of the junior loan. In accordance with that assessment, then, the book value of the Group’s portion of that “Second lien” receivable ( 8.3 million Euros) has been entirely written off as of 31 December .

Financial Receivables also includes the loan of 3.7 million Euros by the Group subsidiary Publitalia ’80 to Radio e Reti S.r.l., 1.8 million Euros of advance payments for film production, and 0.7 million Euros of trade receivables due from affiliated companies. The item also includes for a consideration equal to 5.0 million Euros the option right granted by Prisa TV to Telecinco on certain rights in relation to the management of Digital Plus. That option may be exercised one year after the acquisition of the stake on Distribudora de Television Digital S.A., and is conditional on approval by the Antitrust regulator, as explained in the Report on Operations under “Main Corporate Operations and Equity Investments”.

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7.7 Deferred tax assets and liabilities

31/12/2010 31/12/2009

Deferred tax assets 497.9 506.2 Deferred tax liabilities (62.0) (60.6)

Net position 435.9 445.6

The following tables show the changes in advance and deferred taxes over the past two years (details are given separately for asset and liability items).

The tax assets and liabilities relating to actuarial valuations of defined benefit schemes and changes in cash flow hedge reserves are booked directly to equity.

Other Changes in 2009 had mainly involved the reclassification among Advance Tax Assets of approximately 50 million Euros entered in the consolidated accounts under Tax Credits.

Business Through combinations / Deferred tax Balance at Through Income Balance at Shareholders' Changes in Other changes assets 1/1 Statement 31/12 Equity consolidation area

2009 416.3 39.7 7.3 (5.2) 48.1 506.2

2010 506.2 (24.7) 4.5 19.3 (7.4) 497.9

Business Through combinations / Deferred tax Balance at Through Income Balance at Shareholders' Changes in Other changes liabilities 1/1 Statement 31/12 Equity consolidation area

2009 (67.8) 5.8 (0.8) 0.8 1.4 (60.6)

2010 (60.6) 3.3 (4.7) 0.0 (62.0)

Between the main changes through income statement it is worth noting the use of 3.7 million Euros of tax credit relating to unlimited recoverable fiscal losses of the Luxembourg subsidiary Mediaset Investment S.a.r.l. (21.4 million Euros of which has been steel booked at 31 December 2010). The value of this tax asset is supported by the reasonable recoverability of the fiscal losses already mentioned. The company, which not consider the dispositions envisaged by paragraph 8-bis of Article 167 of the TUIR (Income Tax Consolidation Act) will present an application for a tax ruling, even considering the nature of the company’s business. Moreover the same article provides the application of the so-called “CFC tax” – Controlled Foreign Companies – system event to subsidiaries located in countries with ordinary taxation systems (EU countries included).

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The following is a breakdown of the temporary differences for 2010 that generated deferred tax assets and liabilities:

Temporary Tax effect Temporary Tax effect gap 31/12/2010 gap 31/12/2009

Deferred tax assets related to:

Property, plant and equipment 4.3 1.3 - - Non current intangible assets 125.2 38.5 136.4 42.1 Television and movie rights 143.1 38.8 313.5 89.4 Provision for receivables write-off 47.3 13.2 65.3 18.1 Provisions for risks and charges 70.9 21.5 103.1 31.4 Post-employment benefit plans 9.6 2.6 8.1 2.2 Provisions for equity investments write-off 403.3 120.9 251.3 75.4 Inventories 14.7 4.3 12.3 3.7 Hedging derivatives 3.5 1.1 7.2 2.1 Tax losses that can be brought forward 77.8 22.2 90.6 25.9 Other temporary differences 111.7 33.7 84.7 25.3 Consolidation adjustments 648.3 199.7 617.7 190.5 Total 1,659.7 497.9 1,690.3 506.2

Consolidation Adjustments includes the tax credits generated through eliminating gains on intra- Group sales of rights ( 86.4 million Euros) and tax effects arising from other intra-Group transactions ( 104.7 million Euros) .

Temporary Tax effect Temporary Tax effect gap 31/12/2010 gap 31/12/2009

Deferred tax liabilities related to:

Non current tangible assets 4.4 1.2 2.4 0.7 Non current intangible assets 187.9 32.9 162.4 27.9 Television and movie rights 0.4 0.1 0.4 0.1 Provision for receivables write-off 11.5 3.2 33.3 9.2 Provisions for risks and charges 0.0 0.0 - - Post-employment benefit plans 20.9 5.7 19.5 5.4 Hedging derivatives 17.5 4.8 - - Other temporary differences 7.3 2.1 8.1 2.4 Consolidation adjustments 37.7 11.9 45.5 14.9 Total 287.7 62.0 271.6 60.6

Consolidation Adjustments includes the 11.2 million Euros tax impact of the recognition of goodwill in the price paid for Taodue.

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8. CURRENT ASSETS

8.1 - Inventory

Year-end inventory was made up as follows:

31/12/2010 31/12/2009 Gross Write-downs Net value Net value

Raw and ancillary materials, consumables 10.4 (4.3) 6.0 3.3 Work in progress and semi-finished products 5.1 5.1 2.2 Finished goods and products 92.6 (7.0) 85.7 69.4

Total 108.1 (11.3) 96.8 74.9

Raw materials, consumables and supplies primarily include spare parts for radio and television equipment. The write-down relates to low-turnover items, whose value has been adjusted in order to bring them into line with the presumed realisation value.

Work in progress and semi-finished products primarily consists of screenplays and television programmes under production.

Finished products and goods primarily include:

television productions held by R.T.I. S.p.A. to the value of 32.7 million Euros (17.5 at 31 December 2009), and by the Telecinco Group to the value of 11.7 million Euros;

stocks of Mediaset Premium smart cards, 4.4 million Euros (4.9 million Euros at 31 December 2009);

the remaining duration of television rights expiring in one year or less, 4.1 million Euros (18.1 million Euros at 31 December 2009);

products destined for the “goods swap” business of Digitalia ’08 S.r.l., 3.9 million Euros (5.4 million Euros at 31 December 2009);

products for the teleshopping business, 6.1 million Euros (6.8 million Euros at 31 December 2009);

8.2 Trade receivables

At the end of the period this item was made up as follows:

Balance at 31/12/2010 Balance at Due 31/12/2009 Total Within 1 year After 1 year

Receivables from customers 1,108.6 1,099.2 9.4 1,098.9 Receivables from related parties 30.0 29.9 0.0 21.6

Total 1,138.6 1,129.1 9.4 1,120.5

This item include 111.4 millions Euros of receivables related to the Business Combination as reported in previous note 5.

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Details of type, risk class, concentration and deadline will be found in Note 14 below.

Details of receivables from related parties are given in Note 16 below (Related Party transactions).

8.3 Tax receivables, other receivables and current assets

8.3.1 Tax receivables

This item, amounting to 41.3 million Euros (12.9 million Euros at 31 December 2009), consists of 40.0 million Euros (7.2 million Euros at 31 December 2009) relating to the net amount due from the Italian tax authorities to the Group’s Italian companies, and 1.3 million Euros (5.7 million Euros at 31 December 2009) relating to tax credits of the Group subsidiary Gestevision Telecinco S.A.

8.3.2 Other receivables and current assets

31/12/2010 31/12/2009

Other receivables 125.4 90.3 Prepayments and accrued income 52.0 72.4

Total 177.4 162.7

Other Receivables mainly includes:

advances to suppliers, contractors and agents: sums paid in advance to advertising and agencies, creatives and consultants, or to suppliers, artists and other independent vendors in connection with television productions, to the value of 31.8 million Euros;

receivables to the value of 64.3 million Euros due from factoring companies in relation to trade receivables assigned on a “without recourse” basis which had not yet been settled by the factor as of the Balance Sheet date. The total amount of receivables assigned to factors without recourse during the year was 541.9 million Euros (362.1 million Euros in the year to 31 December 2009);

receivables amounting to 6.1 millions Euros referred to the restitution of the State Aid relative to the contributions for the purchase DTT decoders paid back to the Italian Government in February 2010. Regarding this there are ongoing a series of pleas as can be reported in Note 10.3

The most significant items in Prepayments and Accrued Income (13.7 million Euros of which relate to the Telecinco Group) were as follows:

• 7.6 million Euros paid to Union des Associations Européennes de Football for rights to Champions League matches for the 2011 season; • 2.2 million Euros paid to UEFA for rights to Europa League matches;

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• 1.2 million Euros paid for 2011 World Formula 1 Championship broadcasting rights ; • 14.8 million Euros for smart card and voucher costs.

8.4 Current financial assets

31/12/2010 31/12/2009

- Financial receivables (due within 12 months) 20.8 31.0 - Securities 29.4 0.9 - Financial assets for hedging derivatives (cash flow hedge) 11.4 0.9 - Financial assets for derivatives with no hedging purpose 2.8 2.3

Total 64.4 35.0

Financial Receivables includes 14.9 million Euros of government grants under Law No. 1.213 of 04/11/65 (as amended by Law No. 153 of 01/03/1994) for film productions by Medusa Film S.p.A., awarded by the competent bodies but not yet paid (8.7 million Euros at 31 December 2009). It also includes 0.8 million Euros (5.1 million Euros at 31 December 2009) lent to associate companies by the Telecinco Group and loans lent by Mediaset Investment S.a.r.l. to associate company Nessma S.A. for a total amount of 1.8 millions euros

The change from last year mainly refers to the repayment of 17.1 million Euros lent to British Telecom under a contract signed in February 2005 for the sale of the shareholding in Albacom.

The 28.5 million Euros change in Securities and Other Financial Assets relates to 25.0 million Euros placed on term deposit by the Group subsidiary Gestevison Telecinco and to investments by another subsidiary, Mediaset Investment S.a.r.l., in securities and funds.

The figure for Cash Flow Hedges at 31 December 2010 refers to the current portion of derivatives used to hedge exchange rate risk, carried at fair value.

Non-Hedge Derivatives refers to the fair value of derivatives to which hedge accounting is not applied as they are used to cover the risk of changes in the fair value of Balance Sheet items, in particular receivables and payables denominated in foreign currency.

8.5 Cash and cash equivalents

31/12/2010 31/12/2009

Bank and postal deposits 182.2 99.9 Cash in hand and cash equivalents 0.2 0.1

Total 182.4 100.0

An analysis of the changes in cash flow will be found in the Consolidated Cash Flow Statement.

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COMMENTS ON THE MAIN LIABILITY ITEMS

9 SHARE CAPITAL AND RESERVES The main items in Net Equity and their changes are as follows:

9.1 Share Capital At 31 December 2010, the Share Capital of the Mediaset Group, the same as that of the Group Parent, was fully subscribed and paid up. It is made up of 1,181,227,564 ordinary shares with a nominal value of 0.52 Euros each, and a total value of 614.2 million Euros. No changes occurred during the year.

9.2 Share premium reserve At 31 December 2010, the share premium reserve amounted to 275.2 million Euros. No changes occurred during the year.

9.3 Treasury shares This item includes Mediaset S.p.A. shares, the acquisition of which was authorised by resolutions of the General Meetings of Shareholders on 16 April 2003, 27 April 2004, 29 April 2005, 20 April 2006 and 19 April 2007, 16 April 2008, 22 April 2009 and 21 April 2010, in which the Board of Directors was authorised to purchase a maximum of 118,122,756 shares (10% of the Share Capital). The authority given to the Board of Directors is valid up until approval of the Financial Statements for the year ending 31 December 2010, and in any event for no longer than 18 months from the date of the Meeting resolution.

2010 2009 Number of shares Book value Number of shares Book value

Balance at 1/1 44,825,500 416.7 44,825,500 416.7 Additions - - Disposals - -

Balance at 31/12 44,825,500 416.7 44,825,500 416.7 During 2010, there were no sales or purchases of treasury shares. At 31 December 2010, the shares’ book value was 416.7 million Euros, equivalent to 1,895,500 shares intended to fulfil the stock option plans authorised, and 42,930,000 shares acquired on 13 September 2005 and 8 November 2005 following the Meeting resolutions authorising the buyback of treasury shares.

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9.4 Other reserves

31/12/2010 31/12/2009

Legal reserve 122.8 122.8 Equity investment evaluation reserve (27.6) (33.7) Consolidation reserve (78.8) (78.8) Other comprehensive income/(losses) 161.6 Other reserves 419.9 419.9

Total 598.1 430.3 6.5 million Euros of the change for the year, totalling 167.8 million Euros, was due to the changes in the Equity investment valuation reserve, an item that incorporates, as part of the valuation of equity investments valued according to the Net Equity method, the components booked directly to the subsidiary’s Net Equity. In particular, the change for the year relates to the adjustment of cash flow hedge and exchange rate conversion reserves recognised in the Net Equity of the subsidiary Edam Acquisition Holding I Cooperatief U.A. The item Other comprehensive income totalling 161.6 million Euros, refers, for an amount of 165.5 millions Euros, to the reserve created as a result of the dilution of the shareholding in Gestevision Telecinco S.A., which fell from 51.244% to 42.218%, as a result of the acquisition of the Cuatro Group, commented on in the Report on Operations, and for an amount of -3.9 to the reserve created as a result of the difference between the price paid for the acquisition of 25% of Meddue S.r.l. and the correspondence stake of equity.

9.5 Valuation reserves

31/12/2010 31/12/2009

Cash flow hedge reserve 10.4 (5.1) Stock option plans 18.9 15.8 Actuarial Gains/(Losses) (7.4) (5.1)

Total 21.9 5.6 The table below illustrates the changes to these reserves during the year.

Opening Changes in the Through balance Balance at Other Increase/ Fair Value Deferred tax Balance at Valuation reserves consolidation Profit and adjustments 1/1 Changes (Decrease) adjustments effect 31/12 area Loss Account of the hedged item

Financial assets for cash flow hedging purpose (5.1) 0.4 - (1.2) (1.7) (23.8) 47.6 (5.8) 10.4 of which: ------FOREX rate risk (1.5) - - (1.2) (0.3) (23.8) 44.7 (5.3) 12.6

- interest rate risk (3.6) 0.4 - - (1.4) - 2.9 (0.5) (2.2)

Stock option plans 15.8 3.1 - - - - 18.9 Actuarial Gains/(Losses) on defined benefit plans (5.1) (3.2) - - - 0.9 (7.4)

Total 5.6 0.4 - (1.4) (1.7) (23.8) 47.6 (4.9) 21.9 The cash flow hedge valuation reserve is set up in connection with the valuation of derivatives to hedge against the exchange risk, for the amount of 12.6 million Euros (-1.5 million Euros at

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31 December 2009) and to hedge against the interest risk for the amount of -2.2 million Euros (-3.6 million Euros at 31 December 2009). With reference to the financial instruments used to manage the interest risk, following the recalculation of the value of this reserve on 1 January 2010, in application of IAS 39 (in force for the year beginning 1 July 2009 and subsequent years), relating to the method by which the effective part of the change in value of the hedging instrument is recorded and booked, the item Other changes refers to the effects of that recalculation. Changes to the valuation reserves for derivatives used to hedge exchange rate risk relate as to - 23.8 million Euros to the adjustment in the initial recognition of television rights acquired during the year, while 44.7 million Euros relate to changes in fair value. The change in the effective part of the gains/(losses) on the cash flow hedge instruments entered in the income statement, totalling 21.0 million Euros, refers to the total change in this reserve, gross of fiscal effect, and the share pertaining to third party shareholders. The Reserve for stock option plans includes the contra-entry of the amount of costs accruing at 31 December 2010, determined in accordance with IFRS 2, for the three-year stock option plans granted by Mediaset during 2005, 2007, 2008, 2009 and 2010, and the Group’s quota of the plans allocated by Telecinco during 2005, 2006, 2007, 2008, 2009 and 2010. The change of 3.1 million Euros for the year relates to the Group’s share of the cost accruing at 31 December 2010. The Reserve for actuarial valuation of profits and losses includes the actuarial components relating to the valuation of defined benefit schemes, booked directly in Net Equity.

9.6 Previous years’ profit (loss) The change compared to 31 December 2009 relates mainly to the distribution of dividends by the parent company during the year, to the value of 250.0 million Euros, following the resolution of the shareholders’ meeting on 21 April 2010.

10. NON-CURRENT LIABILITIES

10.1 Post-employment benefit plans Benefits to employees who qualify for Employee Leaving Indemnity (ELI) under Italian legislation are considered under IAS 19 as post-employment benefits, and must be recognised on the balance sheet according to actuarial valuations. The procedure for determining the Group’s obligations to its employees was carried out by an independent actuary, according to the following steps:

Projection of the ELI already accrued at the valuation date up until the point in the future when the contract of employment will terminate, or the when the accrued amounts are partially paid as advances on ELI;

Discounting, at the valuation date, of the cash flows the Group will pay to its employees in the future;

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Realigning the discounted benefits on the basis of the employee’s length of service at the valuation date compared to the length of service expected on the hypothetical date of payment by the Group. The valuation of ELI according to IAS 19 is conducted “ad personam” with a closed population, i.e. detailed calculations were made for each Mediaset employee without taking into account any employees who may be taken on in the future. The actuarial valuation model is based on “technical bases” which are the demographic, economic and financial assumptions relating to the calculation parameters. The assumptions are summarised below:

Demographic assumptions

Death probability ISTAT survival table, divided by age and gender, 2006

Probability of leaving the Group Percentages for retirement, resignation/dismissal, contract expiry have been taken from the observation of company data for each Group company. The probabilities adopted were separated by age, gender and contract qualification (office workers, middle managers, managers). The valuation period reaches an age of 60 years for female employees and 65 years for male employees.

TFR advance Frequencies of advances and average percentage of TFR requested in advance have been taken from the observation of historical data for each company of the Group

Supplementary retirement schemeThose who entirely pay their TFR to supplementary schemes relieve the Company from any commitments with respect to TFR and are not assessed. For other employees, their position has been assessed by considering their actual choices updated at December 31st 2010.

Economic-financial assumptions

Inflation rate Inflation scenario in line with the most recent Economic and Financial Planning Documents: for the assessment of the provision for TFR of the Companies of the Mediaset Group at December 31st, 2010, DPEF 2011-2013 was taken as reference, with an inflation rate reaching the value of 1.5%

Discount rates Curve of the risk free Euro industrial rates (source: Bloomberg) regarding securities of top companies in the Euro market (minimum rating A+) at the valuation date

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The changes in the provision for post-employment benefits are summarised in the following table:

2010 2009

Balance at 1/1 100.4 103.4 Business combinations/Changes in the consolidation area (0.7) Service Cost 0.2 0.2 Actuarial (gains)/losses 3.2 1.7 Interest Cost 1.4 2.9 Indemnities paid (7.6) (7.2) Other changes -

Balance at 31/12 97.5 100.4

As indicated in the section on valuation criteria, the Group relies on the option provided for under IAS 19 (paragraph 93 A-D), recognising the actuarial profits and losses directly under Net Equity.

10.2 Financial liabilities and payables

31/12/2010 31/12/2009

Due to banks 769.3 822.9 Corporate bond 296.0 - Due to other financial institutions 3.3 3.7 Financial liabilities on hedging derivatives (non current stake) 1.7 1.9 Other financial liabilities 0.8 0.2

Total 1,071.1 828.6

The item Non-current payables due to banks refers to the non-current part of medium/long term loans taken out by the Group, recognised according to the amortised cost method. The reduction from 2009 of 53.6 in the item Non-current payables due to banks is broken down as follows: • the reimbursement of loans to the value of 100.0 million Euro; • reclassification under the item Current payables due to banks of the amount of the loan repayable within 12 months, with Intesa S.Paolo (formerly S.Paolo – IMI) and the loan taken out with Mediobanca for a total nominal amount of 88.6 million Euros; • reduced recourse to the medium-long term credit facilities taken out by the subsidiary Gestevision Telecinco, of approximately 29.9 million Euros; • the execution of new finance agreements with leading banks, paid out in the form of revolving credit facilities, with a total authorised notional value of 255 million Euros, of which 165.0 million Euros have been utilised.

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The existing loans and lines of credit are subject to financial covenants on a consolidated basis accounted at the amortized cost method, summarised below:

financing counterpart covenant checking period

Net Financial Position / EBITDA <= 1,5 every 6 months Mediobanca loan EBITDA / Net Financial Losses >= 10 every 6 months

Net Financial Position / EBITDA <= 4 every 6 months S.Paolo IMI loan Net Financial Position / Equity <= 2 every 6 months

Intesa - S.Paolo loan Net Financial Position / EBITDA <= 2 every 6 months

Net Financial Position / EBITDA <= 1,5 on annual basis Centrobanca loan EBITDA / Net Financial Losses >= 10 on annual basis

Mediaset S.p.A. is required to repay the amount of any loans or lines of credit utilised, if the financial covenants are not met. To date, all the requirements have been met.

At 31 December 2010, approximately 62.4% of the total credit lines available was committed. The following table shows the actual interest rates and financial charges recognised in the income statement for existing loans:

IRR Financial Charges Fair Value

Mediobanca loan 1.26% 2.1 150.7

S.Paolo IMI loan 1.4% 0.7 43.1

Intesa - S.Paolo loan (1st split 15.3.2007) 1.0% 0.8 100.4

Intesa - S.Paolo loan (2nd split 19.7.2007) 1.0% 0.8 100.5

The item Corporate bond refers to the non-current portion of the 7-year bond issued by Mediaset S.p.A. on 1 February 2010 with a total nominal value of 300.0 million Euros, booked according to the amortised cost method based on an internal rate of return of 5.23%. For more detailed information about the loans and bond loan, please refer to the explanatory notes of Mediaset S.p.A. Liabilities to other lenders refers mainly to loans received for development, film distribution and production, in the amount of 2.9 million Euros. The item Financial liabilities on hedging derivatives refers to the non-current portion of the fair value of collars relating to the hedging of fluctuations in interest rates for medium/long term financial liabilities.

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10.3 Provisions for risks and charges The composition and changes in these provisions are illustrated below:

2010 2009

Balance at 1/1 161.1 215.1 Provisions made during the period 84.7 65.8 Provisions used during the period (110.8) (116.6) Financial charges 0.6 0.6 Other changes/Business combinations 27.4 (3.8)

Balance at 31/12 163.0 161.1

Of which: current 87.5 92.1 non current 75.5 69.0

Total 163.0 161.1

Provisions for risks at 31 December 2010 mainly relate to legal disputes valued at 41.2 million Euros (39.5 million Euros at 31 December 2009), employment disputes valued at 13.9 million Euros (14.8 million Euros at 31 December 2009), and contractual risks linked to the risk of under-utilising artistic resources compared to contractual provisions, of 60.7 million Euros (60.7 million Euros at 31 December 2009) The item Other changes/Business combinations includes 32.7 million Euros relating to the acquisition of the Cuatro Group, of which 18.5 million relate to contractual risks and 14.2 million relate to other risks. Significant changes during the period in question include 23.0 million Euros used in connection with the agreement entered into by Gestevision Telecinco S.A. with the trade association A.I.E.( Agencia de Intérpretes y Ejecutantes) and a decrease totalling 17.8 millions Euros referred to the contribution amounting to 3% of Telecinco gross advertising revenues, as required under Law 8/2009, concerning the financing from Radio Televisión Española. The Other movements item includes 5.3 millions Euros related to a reclassification to the Other tax payables item connected to the final interpretation , issued on 5th august 2010 (Real Decreto 1004/2010) about the calculation method of this contribution. As reported in 2009 Annual Report it should also be noted that the “Other risks” include a provision, accounted in 2009, of 6.0 million Euros relating to the repayment of State Aid to the Italian government, in relation to state contributions for the purchase of DTT decoders ordered by the European Commission in its decision n° C2006-6634 of 24 January 2007. Appeal proceedings are currently pending before the Court of First Instance, in relation to that decision, and also before the Civil Court of Rome, against the order for payment made on 12 November 2009 by the Ministry of Communications. The criminal proceedings n° 22964/2001 (known also as “television rights case”) , is still ongoing with reference to the allegations of tax fraud for the years 2001, 2002 and 2003, and to the other accusation (which does not affect Mediaset’s Financial Statements (money laundering). It is highlighted that on 27 December 2010 the Tax Receipts Agency served an assessment notice, with which there was adjusted, for IRPEG (Corporate Tax) and IRAP

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(Regional Tax) purposes, the taxable income for the financial year 2001 amounting to 15.6 million Euros, as a consequence of the lack of recognition of the amortisation of the television rights that are the subject of the criminal proceedings referred to above. Since, in the current state of the procedure, the relative risk is believed to be a fairly remote one, the posting of a specific provision has not been judged necessary. The criminal proceedings n° 40382/05 (known also as “Mediatrade”), involving Frank Agrama, Silvio Berlusconi, Pier Silvio Berlusconi, Fedele Confalonieri, Giorgio Dal Negro, Paolo Del Bue, Daniele Lorenzano, Roberto Pace, Gabriella Ballabio, Giovanni Stabilini, Paddy Chan and Catherine Hsu Chun, are at the preliminary hearing stage. Pier Silvio Berlusconi as Chairman of R.T.I. S.p.A. and Vice-Chairman of Mediaset, and Fedele Confalonieri as Chairman of Mediaset have been charged of aggravated tax fraud. The allegations cover the period from the 2005 financial year through to 30 September 2009, and the alleged tax evasion, at the current stage, amounts to 8.2 miilions Euros. The company is confident that the proceedings will reveal that the company, its directors and executives are extraneous to the the alleged charges , and therefore considers that no balance sheet provisions need to be made, considering also that this proceedings is in the preliminary phase where the indictment of the charged people is debated. In relation to the criminal proceedings listed at General Register n° 31358/10 R.G.N.R., (“Mediatrade 2 Roma”), during October 2010 the Rome Public Prosecutor’s Office issued several directors of the company with a series of requests to undergo questioning. The company was thus informed of criminal proceedings for tax fraud, pending for the offences governed by articles 2 and 3 of legislative decree 74/2000, also involving other parties, extraneous to the company, who are already involved in the Mediatrade proceedings pending before the Court of Milan. From what the company has been able to deduce from the request to undergo questioning, it is essentially a reformulation of the Mediatrade proceedings relating to different tax years (2003 and 2004) no longer pertaining to Mediatrade but its incorporating company RTI. The Public Prosecutor’s Office with jurisdiction over these offences is in Rome, where RTI has its head office. The proceedings are at the preliminary investigation stage.

11. CURRENT LIABILITIES 11.1 Payables due to banks

31/12/2010 31/12/2009

Loans 209.4 314.2 Credit lines 492.5 482.8

Total 701.9 797.0 The item Loans refers to short-term committed credit facilities. The credit lines, all variable rate, relate to very short-term revolving credit facilities which usually expire after one year with the possibility of renewal. The change is mainly due to the greater recourse to this type of borrowing. The fair value is the same as the recognition value.

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The reduction of 95.1 in the item Current payables due to banks, is the result of:

repayments of current instalments of medium-long term loans, totalling 188.6 million; the discharge of a short-term loan totalling 50.0 million Euros; reduced recourse to the short-term credit facilities taken out by the subsidiary Gestevision Telecinco, of approximately 4.6 million Euros; the reclassification (commented on above) of the instalments due within 12 months of the loans with Mediobanca and Intesa S.Paolo (ex S.Paolo – IMI) for a total nominal amount of 88.6 million Euros; the taking out of a new loan of 50.0 million Euros; greater recourse to credit facilities totalling approximately 9.5 million Euros.

11.2 Trade payables

Balance at 31/12/2010 Due Balance at Total Within 1 year After 1 year 31/12/2009

Due to suppliers 1,282.1 1,110.0 172.1 1,403.2 Due to related parties 139.4 130.2 9.3 94.0

Total 1,421.5 1,240.1 181.4 1,497.2 This item mainly relates to: payables for the acquisition of licences relating to television and film rights and other content (including those with a term of less than one year), to the value of 603.8 million Euros (860.3 million Euros at 31 December 2009); payables for the acquisition/production of TV programmes, and amounts payable to freelance performers and TV professionals totalling 288.2 million Euros (228.6 million Euros at 31 December 2009). This item include 120.3 millions Euros of payables related to the Business Combination as reported in previous note 5. Payables due to related parties refer to amounts payable to affiliated or subsidiary companies, and the parent company. Details of these payables are given in Note 16 below (related-party transactions).

11.3 Tax payables This item, amounting to 7.5 million Euros (2.5 million Euros at 31 December 2009) incorporates the Treasury tax position of the Mediaset Group’s foreign companies, of 3.8 million Euros, and the Group’s net Treasury position in respect of IRAP (regional business tax).

11.4 Other financial liabilities

31/12/2010 31/12/2009

Corporate bond 14.1 - Due to other financial institutions 37.4 37.3 Financial liabilities on derivatives with no hedging purpose 0.5 3.7 Financial liabilities on hedging derivatives 7.6 6.2

Total 59.5 47.1

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The item Bond loan refers to the current portion of the bond issued in February 2010 (already commented on in the note Financial payables and liabilities), represented by the interest accruing at 31 December 2010 to be paid during the course of 2011. Payables to other lenders refer mainly to amounts payable to factoring companies, totalling 24.5 million Euros (31.1 million Euros at 31 December 2009), current account relations with affiliated companies to the value of 12.5 million Euros (4.9 million Euros at 31 December 2009). The item Financial liabilities for non-hedging derivatives refers to the fair value of derivatives used for financial hedging (for which hedge accounting is not applied), to cover the risk of changes in the fair value of balance sheet items. The item Financial liabilities on hedging derivatives refers to the current portion of the fair value of collars relating to the hedging of fluctuations in interest rates for medium/long term financial liabilities and the current portion of derivatives instruments used to hedge exchange rate risk.

11.5 Hedging derivatives The following is an analysis of the financial assets and liabilities relating to hedging derivatives, previously commented in Notes 7.6 (current financial assets), note 8.4 (financial current assets), 10.2 (financial payables and liabilities) and 11.4 (other financial liabilities) in order to highlight the Group’s net position.

31/12/2010 Assets Liabilities

Foreign currency forward contracts 28.8 (6.1) Exchange rate collars contracts - (3.7)

Total 28.8 (9.8)

The table below shows the notional value of the derivatives used to hedge exchange rate risk, both in terms of future commitments for the acquisition of rights, and contracts already entered into.

31/12/2010 31/12/2009

United States Dollars (USD) 905.8 718.6 Great Britain Pounds (GBP) 0.3 0.5

Total 906.1 719.1 With reference to the hedging of future commitments for the acquisition of rights, the derivatives in existence at 31 December 2010 were entered into with deadlines that reflect the periods in which these fixed assets will be formalised by contract and recognised on the balance sheet. The economic effect of these assets will manifest itself through the amortisation/depreciation process from the date when the rights take effect.

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The following table contains details (in the reference currency, US dollars), of the periods by which these cash flows are expected to appear.

within 12 months 12-24 months after 24 months Total

2010 527.0 221.3 8.3 756.6

2009 268.7 215.5 6.2 490.4

11.6 Other current liabilities

31/12/2010 31/12/2009

Due to social security institutions 24.3 22.1 Withholding tax on employees' wages and salaries 15.8 14.3 VAT payables 20.5 6.3 Other tax payables 27.0 23.3 Advances 19.1 25.5 Other payables 100.6 71.7 Accrued and deferred income 81.2 117.3

Total 288.5 280.5 The item Other Treasury payables includes 19.9 million Euros relating to the contribution of 3% of its gross advertising revenues, as required under Law 8/2009 in connection with the financing of Radio Televisión Española. The changes in the Other payables item is mainly due to personal payables also connected to Cuatro business acquisition operation. The item accrued and deferred income includes 46.0 million Euros (60.1 million Euros at 31 December 2009) relating to the portion of revenue generated from the sale of prepaid cards and top-ups not pertaining to the year, and 8.2 million Euros generated under long-term contracts for the sale of multi-platform television content and on “easy pay” Mediaset Premium revenues, of 14.2 million Euros.

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11.7 Net financial position The following is a breakdown of the consolidated net financial position as required under CONSOB directive n° 6064293 of 28 July 2006, highlighting the Group’s current and non- current net borrowing. Each item is accompanied by details of the reference to the relevant Notes. For an analysis of the changes in Net Financial Position during the year, please refer to the Report on Operations (section relating to comments on the Group’s Financial and Equity Structure).

note 31/12/2010 31/12/2009

Cash in hand and cash equivalents 8.5 0.2 0.1 Bank and postal deposits 8.5 182.2 99.9 Securities and other current financial assets 8.4 35.6 0.9 Total liquidity 218.0 100.9

Financial receivables from affiliated companies 8.4 0.8 4.5 Current financial receivables 8.4 17.4 9.4 Total current financial receivables 18.2 13.9

Due to banks 11.1 (701.9) (796.9) Other financial liabilities 11.4 (43.3) (37.2) Financial liabilities due to affiliated companies and joint ventures 11.4 (12.5) (4.7) Current financial debt (757.8) (838.8)

Current Net Financial Position (521.6) (724.0)

Due to banks 10.2 (769.3) (823.0) Corporate bond 10.2 (296.0) - Payables and other non current financial liabilities 10.2 (3.3) (5.0) Non current financial debt (1,068.6) (828.0) Net Financial Position (1,590.2) (1,552.0)

The item Securities and current financial assets at 31 December 2010 refers for an amount of 29.4 millions Euros to securities and time deposits and for 6.2 millions Euros relative to the ineffective component of the derivatives instruments and to the fair value of not qualified as hedging derivatives for the portion in excess compared to the change in hedged foreign currency payables. The item Current financial receivables mainly refers to government grants obtained in return for movie productions. The item Current financial payables and liabilities include the current portion of Corporate bond totalling 14.1 millions Euros payables due to factoring companies and the current portion of fair value of derivatives used to hedge against changes in interest rates. The item Non current financial payables and liabilities includes the non current portion of fair value of derivatives used to hedge against changes in interest rates

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INCOME STATEMENT

12.1 Revenues from sales and services

Below is a breakdown of these revenues with the main categories highlighted:

2010 2009

Television advertising revenues 3,188.6 2,850.6 Other advertising revenues 74.0 51.3 Trading of TV rights and television production 267.2 322.6 Pay-tv subscriptions and sales of pre-paid cards 473.8 311.5 Sales of goods 64.1 61.2 Construction and maintenance of television equipment 70.5 78.9 Movie distribution 63.4 48.6 Other revenues 52.1 90.1

Total 4,253.6 3,815.0

Revenues from the sale of TV advertising includes the revenues, net of agency commissions, from the sale of advertising space on the three networks which hold a national licence granted by Publitalia ’80 S.p.A., and on the Spanish broadcaster Telecinco, licensed by Publiespana S.A. and Publimedia S.A.. They also include revenues from the sale of television space in exchange for goods, by Digitalia ‘08 S.r.l, and the net advertising revenues from free-to-air and pay-per-view television channels broadcast via digital terrestrial technology.

Other advertising revenues relate mainly to the revenue from static advertising and sponsorships (terminated operations at the end of the 2010 first half), revenues from advertising on proprietary websites, teletext related commercial services and advertising revenues from non-TV media, earned by Publieurope Ltd. and Publimedia S.A.

The revenues from the sale of rights and productions mainly include revenues from the multi-platform sale of premium content and the sale of film rights on home videos and televisions.

Revenues from the sale of prepaid cards and subscriptions are generated by Mediaset Premium offer.

The revenues from the sale of goods relate to teleshopping operations and advertising barter activities.

Revenues for the production, rental and maintenance of television installations relates to the income paid by mobile phone operators in return for the use of capacity on the network dedicated to digital video mobile broadcasting (DVB-H). This item also includes revenues from the sale of equipment by Elettronica Industriale S.p.A. to third party customers, and rental and maintenance services provided to other television operators.

Movie distribution revenues include the proceeds from Telecinco and Medusa Film cinema distribution operations.

The item Other revenues mainly includes royalties relating to merchandising, income from telephone traffic originating from the interaction of various TV productions on the Mediaset and Telecinco networks, and the sale of multimedia content and services to telephone operators.

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Revenue breakdown by geographical area

Below is a breakdown of revenues by geographical area, according to the client’s country of residence:

2010 2009

Italy 3,271.9 3,030.1 Spain 835.8 627.2 Other EU Countries 96.5 132.9 North America 3.0 2.6 Other Countries 46.4 22.2

Total 4,253.6 3,815.0

Concentration of revenues

None of the income receivable from individual clients is equal to or exceeds 10% of the consolidated net revenues.

12.2 Other revenues and income

This item mainly includes revenues from property rents and leases, income from the leasing of television stations, contingent assets and royalty income.

During 2009, this item also included earnings of EUR 6.0 million from Fininvest S.p.A. for the definitive closing of the guarantee issued on 6 June 1996 by Fininvest S.p.A. to Mediaset S.p.A. and its subsidiaries.

12.3 Personnel costs

Personnel costs increased from EUR 507.6 million in 2009 to 542.5 million Euros in 2010.

2010 2009

Ordinary pay 267.9 260.9 Overtime 13.3 11.3 Special benefits 60.9 48.0 Additional salary period (13th and 14th salary period) 39.7 38.7 Accrued holiday pay 1.7 0.6

Total wages and salary 383.6 359.6

Social security contributions 106.3 101.2 Employee severence indemnity 0.3 0.2 Stock Option 3.8 3.2 Other expenses 47.6 43.4

Total personnel expenses 542.5 507.6

The item Other costs mainly includes short-term benefits for employees (other than wages, salaries, contributions and paid leave) and includes medical assistance, company cars, canteen services and other goods and services offered free or at a reduced price. The item also

252 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Explanatory Notes includes the fees paid to the directors employed by Group companies, totalling 9.4 million Euros (7.2 million Euros as at 31 December 2009), 4.9 million Euros of that amount relates to the Telecinco Group,

Stock options plans cost item includes 1.3 million Euros related to Telecinco Group plans (1.0 millions Euros at 31 December 2009).

12.4 Purchases, services and other costs

2010 2009 Purchases 253.9 245.8 Change in the inventories of raw materials, work in progress, semi- finished and finished goods (103.5) (98.0)

Consultants, temporary staff and services 234.1 206.4 Production services and purchase of television products 566.6 509.5 Publisher's fees and other fixed fees ("minimi garantiti") 33.6 33.8 Advertising spaces and public relations 63.4 67.4 EDP 21.8 21.8 Personnell search, training and other costs 0.6 0.6 Other services 371.5 338.9 Total services 1,291.6 1,178.4 Leasing and rentals 233.7 214.7 Provisions for risks (2.0) (8.6) Other operating costs 86.8 61

Total purchases, service and other costs 1,760.5 1,593.3

The item purchases includes 113.1 million Euros relating to the acquisition of rights with a term of less than 12 months (125.8 million Euros as at 31 December 2009).

The increase of Other services is mainly due to the customer care activities related to Mediaset Premium business.

The item leasing and rentals includes 106.6 Euros million relating to the transport of television signals (102.3 million Euros as at 31 December 2009), royalties of 56.8 million Euros (51.8 million Euros as at 31 December 2009) and 53.4 million Euros relating to rents and leases, mainly of television studios, office space and television stations (48.0 million Euros as at 31 December 2009).

The increase of Other operating costs is mainly due to 3% contribution of Telecinco gross advertising revenues, as required under Law 8/2009, concerning the financing from Radio Televisión Española.

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12.5 Depreciation, amortizations and write-downs

2010 2009

Amortisation of TV and movie rights 1,004.4 1026.8 Amortisation of other intangible assets 38.2 43 Amortisation of tangible assets 87.3 80.1 Write-downs/(Write-ups) of fixed assets 0.4 (4.2) Write downs of receivables 38.0 34.9

Total amortisation, depreciation and write-downs 1,168.3 1,180.6

12.6 Impairment loss /(reversal) of fixed assets

This amount, of 5.6 million Euros, relates to the write-down of Mediashopping goodwill, as commented in the note 7.3.

12.7 Financial charges

2010 2009

Interests on financial liabilities (27.1) (28.0) From derivative instruments (4.8) (3.4) Other financial losses (9.7) (9.7) Foreign exchange losses (59.5) (42.9)

Total financial losses (101.1) (84.0)

12.8 Financial income

2010 2009

Interests on financial assets 12.1 13.6 From derivative instruments 0.5 0.1 Other financial income 1.2 2.1 Foreign exchange gains 62.4 39.4

Total financial gains 76.2 55.2

The item Gains and losses on exchange rates includes the effects of derivatives relating to the hedging of foreign currency exposure connected to commitments for the future acquisition of rights, and the effect of derivatives used to hedge against fluctuations in the exchange rates on balance sheet items.

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12.9 Financial income/charges recognised according to IAS 39

The table below summarises the gains and losses recorded on the income statement, classified according to IAS 39 categories. For more detail please refer to Note 13, which contains additional information on financial instruments and risk management policies.

2010 2009

Trading derivatives 1.3 (11.6) Liabilities evaluated with amortized cost method (30.2) (21.3) Financial assets held to maturity - - Loans and receivables 11.1 13.7 Financial assets availble for sale - - Other financial income/(losses) (7.1) (9.6)

Total financial losses (24.9) (28.7)

The item Derivatives held for trading includes net financial income and charges relating to derivatives used to hedge against the risk of fluctuating interest rates for medium/long term liabilities, and those used to hedge against fluctuating exchange rates.

The item Other income and charges mainly includes the charges relating to the discounting of severance pay and interest relating to the discounting of provisions for risk expiring after 12 months.

12.10 Result of equity investments

This item includes the share of net profits in companies valued according to the net equity method, including any losses in value or write-backs, the write-downs of investments classified as available for sale included in the item other non-current financial assets, the amounts allocated to the provision for risk on equity investments, and the income deriving from dividend collection and losses or gains from disposals.

2010 2009

Result of equity investments valued with the equity method (176.7) (119.2) Other equity investments (5.1) (5.7) Write-downs of financial assets (8.3) (0.5) Gain/(losses) from the sale of equity investments (0.9) 1.1 Dividends - -

Total income/(expenses) from equity investments (191.0) (124.4)

2010 breakdown of equity investments results mainly includes:

- write-down of 178.7 million Euros relating to the shareholding in Edam Acquisition Holding 1 Cooperatief U.A.; - write-down of 2.2 million Euros relating to the equity investment in Nessma S.A.;

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- write-down of 5.7 million Euros relating to the equity investment in Ares Film S.r.l. - pro-rata loss of 1.5 million Euro of the shareholding in Pegaso Television INC; - pro-rata income totalling 3.7 millions Euros related to the equity investment in Capitolosette S.r.l. - pro-rata income totalling 2.0 millions Euros related to the equity investment in Boing S.p.A.

The item Other shareholdings includes the write-down of the shareholding in Ted TV Educational, amounting to 5.0 million Euros, after that company was placed into liquidation.

8.3 million Euros of the item Write-downs of financial assets relates to the depreciation of the Second lien receivables from subsidiaries of Edam Acquisition Holding I Cooperatief U.A. as reported in note 7.6.

12.11 Income taxes

2010 2009

Irap tax 42.8 36.5 Ires tax 115.4 141.8 Current tax expenses (foreign companies) 33.3 9.7 Deferred tax expense 21.4 (45.5)

Total 212.9 142.5

The following is a reconciliation of the tax rate in force in Italy (corporate income tax) for the years 2009 and 2010, and the Group’s actual rate.

2010 2009

Current tax rate 31.40% 31.40% IRAP tax non deductible expenses 3.58% 4.44% Effects of companies with different tax rate -2.27% -4.82% Effects of past fiscal losses -

Non deductible expenses and consolidation adjustment with no tax effect 2.79% 0.76%

Actual tax rate 35.51% 31.78%

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12.12 Profit for the year and proposed dividend

The consolidated net result as at 31 December 2010 amounts to 352.2 million Euros compared to 272.4 million Euros for the previous year. The single dividend proposed by the Board to the Meeting of Shareholders is 35 Eurocents per share, corresponding to a total outlay estimated at 397.7 million Euros, calculated net of the own shares held after the treasury stock buyback plan.

12.13 Earnings per share

The calculation of basic and diluted earnings per share is based on the following data:

31/12/10 31/12/09

Net profit for the year (millions of euro) 352.2 272.4

Weighted average number of ordinary shares (without own shares) 1,136,402,064 1,136,402,064 Basic EPS 0.31 0.24

Weighted average number of ordinary shares for the diluted EPS computation 1,136,402,064 1,136,402,064 Diluted EPS 0.31 0.24

The figure for earnings per share is determined by reconciling the Group’s net profit with the weighted average number of shares in circulation during the period, net of own shares. The figure for diluted shares is determined by calculating the number of shares in circulation and the potential diluting effect from the allocation of own shares to the beneficiaries of accrued stock option rights.

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CASH FLOW STATEMENT

13.1 Equity Investment

This item in 2010 includes the increase equal to 40.3 million Euros (without any changes in consolidated cash flow statement) related to the Edam capital increase subscribed which took place by means of the conversion of the financial receivable related to financial debt owed by companies belonging to Edam Acquisition Holding I Cooperatief U.A.

13.2 Business combination

This item includes the effect on cash flow of the acquisition of assets and liabilities from the Cuatro Group, as detailed in the following table:

Tangible and intangible non current assets (8.9) Television rights (66.4) Deferred tax assets (19.3) Trade receivables (111.4) Inventories (9.4) Trade payables 114.1 Other assets/(liabilities) 85.3 Net Shareholders' Equity 53.7

Net cash flows 37.8

13.3 Changes of interest in controlling entities

The item include the cash out for the acquisition of the 25% stake of the company Med Due S.r.l. from the third parties.

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OTHER INFORMATION

14 ADDITIONAL INFORMATION ON FINANCIAL INSTRUMENTS AND RISK MANAGEMENT POLICIES

The tables below include an analysis, separately for the two years being compared, regarding the additional information asked for by IFRS 7, for the purpose evaluating the relevancy of the financial instruments with reference to the Balance Sheet and Financial situations and the Income Statement result of the Group.

Categories of financial assets and liabilities

Here below is a breakdown of the book value of financial assets and liabilities in the categories laid down by IAS 39.

IAS 39 CATEGORIES Held for trading FINANCIAL ASSETS EXPLANATOR financials Financials BOOK VALUE AS AT 31 DECEMBER 2010 Assets held to Loans and Y NOTES instruments instruments available maturity receivables evaluated at fair for sale value

OTHER FINANCIALS ASSETS: equity investments 2.3 2.3 hedging derivatives (non current stake) 14.7 14.7 7.6 financials receivables (due after 12 months) 86.0 86.0

TRADE RECEIVABLES: receivables from customers 1,108.6 1,108.6 8.2 receivables from related parties 30.0 30.0

OTHER RECEIVABLES/CURRENT ASSETS: receivables from factoring companies 67.4 67.4 8.3

CURRENT FINANCIALS ASSETS: financials receivables (due within 12 months) 20.9 20.9 securities and financial receivables 4.4 25.0 29.4 8.4 hedging derivatives 11.4 11.4 derivatives with no hedging purpose 2.8 2.8

CASH AND CASH EQUIVALENTS bank and postal deposits 182.4 182.4 8.5 TOTAL FINANCIALS ASSETS 33.2 - 1,520.3 2.3 1,555.9

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IAS 39 CATEGORIES Held for trading FINANCIAL LIABILITIES financials EXPLANATOR Liabilities at BOOK VALUE AS AT 31 DECEMBER 2010 instruments Y NOTES amortizated cost evaluated at fair value

NON CURRENT FINANCIAL LIABILITIES AND PAYABLES: due to banks 769.3 769.3 corporate bond 296.0 296.0 10.2 hedging derivatives (non current stake) 1.7 1.7 other financial liabilities 4.1 4.1

CURRENT LIABILITIES: due to banks 701.9 701.9 11.1 due to suppliers 1,282.1 1,284.6 11.2 due to related parties 139.4 139.4

OTHER FINANCIAL LIABILITIES: due to factoring company 24.5 24.5 corporate bond 14.1 14.1 other financial liabilities 0.4 0.4 11.4 hedging derivatives 7.6 7.6 derivatives with no hedging purpose 0.5 0.5 financial liabilities to related parties 12.5 12.5 TOTAL FINANCIAL LIABILITIES 9.8 3,244.3 3,254.1

IAS 39 CATEGORIES Held for trading FINANCIAL ASSETS AS EXPLANATOR financials Financials BOOK VALUE AT 31 DECEMBER 2009 Assets held to Loans and Y NOTES instruments instruments available maturity receivables evaluated at fair for sale value OTHER FINANCIALS ASSETS: equity investments 3.9 3.9 hedging derivatives (non current stake) - 7.6 financials receivables (due after 12 months) 55.0 55.0

TRADE RECEIVABLES: receivables from customers 1,098.9 1,098.9 8.2 receivables from related parties 21.6 21.6

OTHER RECEIVABLES/CURRENT ASSETS: receivables from factoring companies 33.3 33.3 8.3

CURRENT FINANCIALS ASSETS: financials receivables (due within 12 months) 31.0 31.0 securities and financial receivables 0.9 0.9 8.4 hedging derivatives 0.9 0.9 derivatives with no hedging purpose 2.3 2.3

CASH AND CASH EQUIVALENTS bank and postal deposits 100.0 100.0 8.5 TOTAL FINANCIALS ASSETS 4.1 - 1,339.7 3.9 1,347.7

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IAS 39 CATEGORIES Held for trading FINANCIAL LIABILITIES financials EXPLANATOR Liabilities at BOOK VALUE AS AT 31 DECEMBER 2009 instruments Y NOTES amortizated cost evaluated at fair value

NON CURRENT FINANCIAL LIABILITIES AND PAYABLES: due to banks 822.9 822.9 hedging derivatives (non current stake) 1.9 1.9 10.2 other financial liabilities 3.9 3.9

CURRENT LIABILITIES: due to banks 797.0 797.0 11.1 due to suppliers 1,403.2 1,432.2 11.2 due to related parties 94.0 94.0

OTHER FINANCIAL LIABILITIES: due to factoring company 31.1 31.1 other financial liabilities 1.2 1.2 hedging derivatives 6.2 6.2 11.4 derivatives with no hedging purpose 3.7 3.7 financial liabilities to related parties 4.9 4.9 TOTAL FINANCIAL LIABILITIES 11.7 3,158.1 3,169.8

Fair value of financial assets and liabilities and calculation models used

Below is an analysis of the amounts corresponding to the fair value of assets and liabilities broken down by the methodologies and the calculation models used.

It is highlighted that there are not shown those financial assets and liabilities for which the fair value cannot be calculated objectively and that the fair value of the financial derivatives shows the net position between asset values and liabilities values.

Mark to Model EXPLANAT ITEM OF BALANCE TOTAL BOOK VALUE Mark to Market ORY AS AT 31 DECEMBER 2010 FAIR VALUE NOTES Black&Scholes's Binomial Model DCF Model Model Financial receivables 2.5 2.4 2.4 7.6 Trade receivables 15.1 14.8 14.8 8.2 Securities 4.4 4.4 4.4 8.4 Due to banks (857.9) (859.8) (859.8) 10.2 Corporate bond (310.1) (309.4) (309.4) 10.2 Due to suppliers at mid/long term (613.1) (599.6) (599.6) 11.2 Derivatives with no hedging cash flow: - Plain vanilla options - Options with barrier 8.4;11.3 - Forward contracts 2.3 2.3 2.3 Derivatives for cash flow hedge: - Plain vanilla options (3.7) (3.7) (3.7) 7.6;8.4; - Forward contracts 20.4 20.4 20.4 10.2;11.4 -

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Mark to Model EXPLANATOR ITEM OF BALANCE TOTAL BOOK VALUE Mark to Market Y AS AT 31 DECEMBER 2009 FAIR VALUE NOTES Black&Scholes's Binomial Model DCF Model Model Financial receivables 50.3 - - - 75.1 75.1 7.6 Trade receivables 12.0 - - - 11.8 11.8 8.2 Securities 0.9 0.9 - - - 0.9 8.4 Due to banks (911.6) - - - (914.3) (914.3) 10.2 Due to suppliers at mid/long term (601.6) - - - (588.8) (588.8) 10.2 Trade payables due to related parties (18.0) (18.0) (18.0) 11.2 Derivatives with no hedging cash flow: - Plain vanilla options - - Options with barrier - 8.4;11.3 - Forward contracts (1.4) --- (1.4) (1.4) Derivatives for cash flow hedge: - Plain vanilla options (5.7) - (5.7) --(5.7) 7.6;8.4; - Forward contracts (1.4) --- (1.4) (1.4) 10.2;11.4

In 2009 The item financial receivables mainly refers to the stake of medium/long term liabilities of associated companies acquired from third parties with an high discount rate facing to the notional amount.

The fair value of stocks listed on an active market is based on market prices at the closing date of the Financial Statements. Market prices used are bid/ask prices according to the relevant assets or liabilities position held. The fair value of stocks not listed in an active market and trading derivatives is determined by employing the most commonly used evaluation models and techniques on the market or using the price provided by several independent experts, with reference to comparable quoted stock prices.

The fair value of the payables due to banks, non-current item, has been calculated without any hypothesis regarding the credit spread of Mediaset S.p.A..

As far as corporate bond (listed at Luxembourx Stock Exchange) concerns, the market value of 103.76 at 30 December 2010 is represented by the tel quel price which includes, beside the exchange price, the accrual in interest to be paid.

It should be noted that the fair value of trade receivables and payables due within the financial year has not been calculated, since their book value is very close to it. As a result, the book value indicated for the receivables and payables for which the fair value was calculated, also includes the portion due within 12 months from the Balance Sheet date.

It should also be noted that the item financial payables includes the short-term part of medium-long term loans.

It should also be noted that the fair value of financial derivatives refers to evaluation techniques already described in the section Summary of accounting standards and valuation criteria section and by using variables observable in the market, for example the rates curve and exchange rates.

As far as the financial assets and liabilities valued at fair value, the following table shows the hierachy, depending on the nature of financial parameters used into the fair value assessment, on the basis of the scale envisaged by the principle:

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a) Level I: prices quoted on active markets for identical instruments;

b) Level II: other variables than prices quoted in active markets that may be observed either directly (as in the case of prices) or indirectly (derived from the prices);

c) Level III: variables that are not based on observable market values.

ITEM OF BALANCE TOTAL FAIR Explanatory BOOK VALUE Level I Level II Level III AS AT 31 DECEMBER 2010 VALUE Notes

Securities 4.4 4.4 4.4 8.4 Derivatives with no hedging cash flow: - Plain vanilla options - - Options with barrier - 8.4;11.3 - Forward contracts 2.3 2.3 2.3 Derivatives for cash flow hedge:

- Plain vanilla options (3.7) (3.7) (3.7) 7.6;8.4; - Forward contracts 20.4 20.4 20.4 10.2;11.4

ITEM OF BALANCE TOTAL FAIR Explanatory BOOK VALUE Level I Level II Level III AS AT 31 DECEMBER 2009 VALUE Notes

Securities 0.9 0.9 0.9 8.4 Derivatives with no hedging cash flow: - Plain vanilla options - - Options with barrier - 8.4;11.3 - Forward contracts (1.4) (1.4) (1.4) Derivatives for cash flow hedge:

- Plain vanilla options (5.7) (5.7) (5.7) 7.6;8.4; - Forward contracts (1.4) (1.4) (1.4) 10.2;11.4

Financial charges and incomes identified in compliance with IAS 39

Below is an analysis of the net financial charges and incomes generated from financial assets and liabilities broken down pursuant to the categories laid down by IAS 39 (as shown in note 11.8) and showing, for each of them, the nature of these charges and incomes.

Foreign IAS 39 categories From changes From equity Net From interests exchange as at 31 December 2010 in fair value reserve gains/losses gains/losses

Financials instrument held for trading - (2.9) (1.7) 5.9 1.3

Liabilities at amortizated cost (27.5) - - (2.7) (30.2)

Financial instruments held to ---- - maturity

Loans and receivables 11.1 - - - 11.1

Financials instruments available for ---- - sale

Total IAS 39 categories (16.4) (2.9) (1.7) 3.1 (17.8)

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Foreign IAS 39 categories From changes From equity Net From interests exchange as at 31 December 2009 in fair value reserve gains/losses gains/losses

Financials instrument held for trading - 0.0 (3.4) (8.2) (11.6)

Liabilities at amortizated cost (26.1) - - 4.8 (21.3)

Financial instruments held to ---- - maturity

Loans and receivables 13.7 - - - 13.7

Financials instruments available for ---- - sale

Total IAS 39 categories (12.4) 0.0 (3.4) (3.4) (19.2)

Equity management

The Group’s objectives regarding the management its equity are aimed at protecting the Group’s ability, jointly, both to ensure the shareholders’ yields, stakeholders’ interests and compliance with the covenants and maintaining an optimal equity structure.

Types of financial risks and connected coverage activities

Mediaset has defined specific policies for the management of the Group’s financial risks; aimed at reducing its exposure to exchange rate risks, interest rate risks and liquidity risks. For the purpose of optimising the structure of management costs and the resources dedicated to this, this activity is centralised within the group parent Mediaset S.p.A., which has been entrusted with the task of collecting the information regarding the positions exposed to risk and to carry out their relative coverage.

Mediaset S.p.A. and Gestevision Telecinco directly operate in their own reference markets, carrying out a financial risk control and risk management activity for their subsidiaries. The selection of the financial counterparts is concentrated on those with a high credit standing while, at the same time, ensuring a limited concentration of exposure with them.

Exchange rate risk

The Group’s exposure to exchange rate risk stems from the acquisition of television and film rights in currencies other than the Euro, mainly in US dollars, carried out in the areas of their respective activities by RTI S.p.A, Medusa Film S.p.A. and Gestevision Telecinco S.A.

In compliance with the Group’s policies, the companies adopt an exchange rate risk management policy aimed at eliminating the effect of exchange rate fluctuations by pre- determining, at the same time, the book value at which the rights will be posted once they are acquire.

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The exchange rate risk emerges from the early stages of the negotiation regarding the stipulation of any contract and continues until the payment of the amount due for the acquisition of the rights. From an accounting standpoint, the Mediaset Group, starting from the date of the stipulation of the derivatives contract until the date of posting the asset, applies the hedge accounting methodology documenting, with a specific report, i.e. the so-called “hedging relationship”, the risk covered and the purposes of the coverage, periodically checking its effectiveness.

Specifically, in the period going from the date of definition of the commitments regarding the purchases and the subsequent accounting for the hedged television right, the cash flow hedge method is applied in accordance with IAS 39. Based on this method, as more detailed in the ”Summary of accounting standards and valuation criteria” section, the effective portion of the change in the value of the derivative is accounted for in a reserve in Net Equity, which is used to adjust the posted value of the right in the Financial Statements (basis adjustment), producing an impact on the Income Statement when the item hedged against, i.e. the right, is amortised.

At the same time as the posting of the right, in the period going from the arising of the payable until it is extinguished, following the termination of the relationship of formal coverage of cash flow hedge, the subsequent accounting takes place by actuating the so-called natural hedge due to which both the adjustment of the exchange rates on the debt and the adjustment of the fair value of the financial derivative on exchange rates, are posted “naturally” to the Income Statement, which takes in their opposite impacts.

The types of financial derivatives mostly used are forward purchases and purchases of option contracts. The fair value of forward contracts on currencies is determined as the discounted difference between the notional amount valued at the contract forward rate and the notional amount valued at the fair forward at the date of the Financial Statements. The fair value of exchange rate options is calculated using the Black & Scholes method for plain-vanilla options, while the binomial method is used for barrier options.

The valuation of the effectiveness is intended to show the high correlation between the technical and financial characteristics of the hedged risk (maturity, amount, etc.) and those of the hedging instrument through the application of specific retrospective and prospective tests by using Dollar off-set and volatility reduction measure methods, respectively.

The expectation that there will arise future cash flows subject to hedging is shown in a specific table illustrating the movements of the relative valuation reserve, i.e. the cash flow hedge reserve.

Sensitivity analysis

The financial instruments exposed to EURO/USD exchange rate risk, mainly comprising payables for the purchase of rights and currency denominated derivative contracts, have been subject to sensitivity analysis at the Balance Sheet date. The value entered in the Financial Statements regarding such financial instruments was adjusted by applying a symmetrical percentage change to the period-end exchange rate equal to the implicit volatility at one year of the currency of reference published by Reuters and corresponding to 14.6% (13.2% for 2009).

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This sensitivity analysis for the derivatives under cash flow hedge accounting has had an impact on the changes in spot values posted to the Net Equity Reserve, while the change due to the forward points impacts the Income Statement Result, in compliance with the method defined in the hedging relationship.

The following table below shows, summarised, the changes in the Result for the year and in the Consolidated Net Equity, consequent to the sensitivity analysis carried out net of the relevant tax impacts calculated on the basis of the standard tax rate in force at the date of the Financial Statements:

rectified EUR/USD Total EUR/USD exchange rate through Profit exchange through Equity Shareholders' and Loss as at 31 december Equity % change

14.6% 1.5310 1.1 (49.4) (48.4) 2010 1.3362 -14.6% 1.1414 (1.4) 66.3 64.9

13.2% 1.6311 0.0 (27.3) (27.3) 2009 1.4406 -13.2% 1.2501 (0.0) 35.6 35.6

Interest rate risk

The management of the financial resources of the Mediaset Group foresees the centralisation of cash-pooling activities within the group parent Mediaset S.p.A and in Gestevision Telecinco S.A., for its subsidiaries. There is fully entrusted to them the gathering in of money from the market through the stipulation of medium/long term loans and the opening of committed and uncommitted credit lines.

The interest rate risk is mainly originates from variable rate financial payables and the indexation of financial leasing contracts, which expose the Group to a cash flow risk. The objective management objective is to limit the fluctuation of the financial charges that impact the financial result, limiting the risk of a potential rise in interest rates.

Within this context, the Group pursues its objectives using financial derivatives contracts stipulated with third parties aimed at pre-determining or reducing, the change in cash flows, due to the market change in the interest rates of medium/long term debt. The timeframe considered significant for rate change risk management is defined as the minimum term of 18 months of residual duration of the operation.

Hedge Accounting is put in place starting from the stipulation date of the derivatives contract until the date of its extinction or expiry, documenting, with a specific report called the hedging relationship, the risk hedged, the purposes of the hedging and periodically checking on its effectiveness.

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Specifically, the cash flow hedge method laid down by IAS 39 is used. Based on this method, as described in greater detail in the ”Summary of accounting standards and valuation criteria” section, the effective portion of the change in the value of the derivative is accounted for in a reserve in Net Equity, which is used to adjust the value of the hedged interest in the Income Statement, when it occurs.

The evaluation of the effectiveness is intended to show the high correlation between the technical and financial characteristics of the hedged liabilities (maturity, amount, etc.) and those of the hedging instrument through the application of specific retrospective and prospective tests by using Dollar off-set and volatility reduction measure methods, respectively.

The fair value of the options (interest rate collar) on the interest rates is calculated using the Black & Scholes formula.

The expectation of future cash flows subject to hedging is shown in the table illustrating the changes in the cash flow hedge reserve.

The Group has in existence zero-cost collar derivatives instruments to cover variable rate medium/long term loans. Below are the main features of these.

Cap Floor Maturity

Collar on interest rates for global notionals amounts 150 EUR m 4.50% 3.17% 29/05/2013

Sensitivity analysis

The financial instruments exposed to interest rate risk underwent a sensitivity analysis at the time of the drafting of these Financial Statements. The assumptions upon which the model is based are illustrated below:

Medium-to-long term payables were subject to a change of 100 bps in case of a raise (-30 bps in case of reduction) as at the date of re-fixing of the internal yield rate noted during the period of reference.

Short and medium/long revolving payables and other current financial items were subject to a recalculation of the amount of financial charges by applying a change of 100 bps in case of raise (-30 bps in case of reduction) to the values entered.

Collars on interest rates were subject to recalculation of the fair value by applying a parallel and symmetrical shift of 100 bps to the interest rate curve as at the closing date of these Financial Statements. The ineffective component was calculated based on the average ineffective component for the financial year. In addition, any use of financial derivatives at any date of verification of the underlying interest rate was considered with subsequent discharge of the cash flow hedge reserve in the Income Statement.

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It has been not possible to apply a symmetrical change of 100 bps as the short-term interest rate curve at the date of closing showned amounts close to 0.

The table below shows, in summary, the changes in the Financial result and the Consolidated Net Equity due to the sensitivity analysis carried out, net of the consequent tax impacts calculated on the basis of the standard tax rate in force at the date of the Financial Statements:

Total through Profit and through Equity Shareholders' Loss changes Equity +100 b.p. (8.0) (0.3) (8.3) 2010 -30 b.p. 2.7 (0.2) 2.6 +100 b.p. (9.9) 1.0 (8.9) 2009 -30 b.p. 2.6 - 2.6

Liquidity risk

The liquidity risk is correlated to the difficulty of finding funds to honour commitments.

This may be due to the unavailability of sufficient funds to face financial commitments in accordance with the established terms and expiry dates in case of sudden revocation of uncommitted credit lines or in the event that the company must honour its financial liabilities before their natural maturity.

Thanks to its careful and prudent financial management, which is reflected in the relevant policy, and the constant monitoring of the ratio between the approved credit lines granted and their use, as well as the balance between short-term debt and medium/long term debt, the Mediaset Group has put in place sufficient credit lines, both in terms of quantity and quality, to face the current crisis.

As already mentioned, the Group’s treasury activities are centralised within Mediaset S.p.A. and Gestevision Telecinco SA, operating in their respective domestic markets as well as internationally, through the use of automatic cash pooling movements used by almost all the group companies.

The management of the liquidity risk implies:

The maintenance of a substantial balance between the committed and uncommitted credit lines in order to avoid liquidity crises in the event of requests for reimbursement by the lenders.

The maintenance of an average financial exposure, during the financial year, within an amount that is basically 2/3 of the total credit given by the banks.

The availability of financial assets that can be quickly turned into cash to meet any cash requirements.

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In order to optimise the management of liquidity, the Group concentrates the dates of payment, to almost all its suppliers, at the same dates as those of the most significant cash inflows.

The table below shows the Group’s financial obligations, by contract maturity date, considering the so-called worst case scenario and at undiscounted values, considering the neatest date when the Group may be asked to make payment and showing the relative Financial Statements notes for each class.

It is highlighted that at 31 December 2010, in the item “current and non current payables to banks” within 3 months there are included, in consideration of the expiry of the current drawdown ability at the date of the Financial Statements, committed medium/long term revolving credit lines for EUR 465.0 million (EUR 400.0 million at 31 December 2009) and revolving credit lines whose contracts expire within the year for EUR 64.3 million euros (164.3 millions Euros at 31 december 2009), as well as credit lines relative to advances with very short-term revocation, with expiry conventionally established for one year, renewable, for 491.0 millions Euros (476.0 million Euros at 31 December 2009)

Corporate bond item includes the interest that will be paid during the course of 2011, acconted in the Other financial liabilities item

Time Bands ITEM OF BALANCE Total cash Explanatory Book value as at 31 DECEMBER 2010 from 0 to 3 from 4 to 6 from 7 to 12 from 1 to 5 flows Notes after 5 years months months months years FINANCIAL LIABILITIES: Non current due to bank 769.3 466.4 0.8 1.7 306.4 - 775.2 10.2 Corporate bond 310.1 15.0 - - 60.0 330.0 405.0 10.2 Current due to bank 701.9 592.0 40.9 69.6 - - 702.4 11.1 Financial due to related parties 12.5 12.5 - - - - 12.5 Due to suppliers for television and movie rights 603.8 190.8 85.5 156.5 170.7 0.3 603.8 11.2 Due to other suppliers 680.8 642.2 36.7 5.1 0.1 - 684.1 11.2 Due to related parties 136.9 64.4 10.8 7.5 8.5 1.3 92.3 11.2 Due to factoring companies 24.5 24.5 - - - - 24.5 11.4 Due to leasing companies 0.1 - - - 0.1 - 0.1 11.4 Other debt and financial liabilities 3.6 0.1 0.7 0.9 1.9 - 3.7 11.4 Total 3,243.4 2,007.8 175.3 241.2 547.7 331.5 3,303.5

DERIVATIVES:

hedging derivatives (buying currency) (value to the contractual exchange) (20.4) 18.5 192.9 177.8 159.9 - 549.1 hedging derivatives (availability currency): 7.6;10.2 (value to the exchange at the end of the year) (17.9) (203.9) (172.7) (171.8) - (566.3) derivatives with no hedging purpose (buying currency) (value to the contractual exchange) (2.0) 20.2 72.6 3.8 3.4 - 100.0 derivatives with no hedging purpose (availability 8.4;11.4 currency) (value to the exchange at the end of the year) (20.5) (74.0) (3.9) (3.4) - (101.8) hedging derivatives (rate risk) 3.7 0.8 0.8 1.3 2.0 - 4.9 10.2;11.4 Total (18.7) 1.1 (11.5) 6.4 (10.0) - (14.0)

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Time Bands ITEM OF BALANCE Total cash Explanatory Book value as at 31 DECEMBER 2009 from 0 to 3 from 4 to 6 from 7 to 12 from 1 to 5 flows Notes after 5 years months months months years FINANCIAL LIABILITIES: Non current due to bank 822.9 401.0 0.7 1.7 427.4 - 830.8 10.2 Current due to bank 797.0 654.7 42.6 89.3 - - 786.7 11.1 Financial due to related parties 4.9 4.9 - - - - 4.9 11.4 Due to suppliers for television and movie rights 860.3 212.8 90.3 146.9 410.6 0.0 860.6 11.2 Due to other suppliers 571.9 540.4 25.0 6.8 0.2 - 572.3 11.2 Due to related parties 65.0 49.8 10.4 3.3 1.1 - 64.6 11.2 Due to factoring companies 31.1 28.4 2.6 - - - 31.1 11.4 Due to leasing companies 0.2 0.2 - 0.2 11.4 Other debt and financial liabilities 5.0 1.1 - 1.2 2.6 - 5.0 11.4 Total 3,158.2 1,893.4 171.6 249.3 841.9 0.0 3,156.1

DERIVATIVES:

hedging derivatives (buying currency) (value to the contractual exchange) 1.4 6.1 179.4 2.1 155.2 - 342.9 hedging derivatives (availability currency): 7.6;10.2 (value to the exchange at the end of the year) (6.1) (178.3) (2.1) (153.9) - (340.4) derivatives with no hedging purpose (buying currency) (value to the contractual exchange) 1.4 91.6 27.5 5.9 36.3 - 161.3 derivatives with no hedging purpose (availability 8.4;11.4 currency) (value to the exchange at the end of the year) (92.8) (26.6) (5.6) (34.5) - (159.6) hedging derivatives (rate risk) 5.7 1.2 1.2 2.0 5.0 - 9.4 10.2;11.4 Total 8.5 (0.1) 3.2 2.3 8.2 - 13.6

The Group expects to face these obligations through the realisation of its financial assets and, specifically, through the collection of receivables connected to its various commercial activities.

The difference between the values in the Financial Statements and the total of the financial flows is mainly due to the calculation of interest on the contractual duration of the payables to banks. Furthermore, with reference to loans valued using the amortised cost method, the interest calculation method foresees the use of the nominal rate instead of the actual yield rate.

With reference to the section relative to financial derivatives, it is highlighted that, in the hypothesis of the regulating of gross flows, the contractual exchange rate means the forward exchange rate defined at the date of stipulation of the contract, while the year end rate means the spot rate at the date of the Financial Statements.

Credit risk

The credit risk mainly comes from the sales of advertising time on the Mediaset Group’s Italian and Spanish television networks.

The Group, based on a specific policy, manages the credit risk relative to the sale of advertising time through a comprehensive customer credit rating procedure, with an analysis of their economic and financial situations both at the time of setting the initial credit limit and through the ongoing and continuous monitoring of observance of the payment terms, updating, when necessary, the previously assigned credit limit.

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Based on the abovementioned credit rating procedure and its subsequent updates, it is possible to break down customers’ exposure into the following three classes of risk, which represent the summary of a wider and more complex subdivision:

Low risk

Customers presenting a standard risk index and with a financial position that adequately supports their assigned credit limit.

Medium risk

Customers who have not punctually fulfilled their contractual commitments or who have current economic/financial situations that are critical compared to those relative to their original credit limit. Based on these specifications of credit positions, a write-down is calculated based on the percentage incidence of historically observed losses.

High risk

Customers with whom there are ongoing default situations, or there is objective insolvency regarding their receivables, for which specific write-downs are made and, in some cases, recovery plans agreed, or extended payment terms which, in any case, do not exceed 12 months.

Below is a summary table of the net balances and of the Bad Debts Reserve broken down according to the above-mentioned classes.

Net matured RISK CLASSES Net Total net Provision for as at 31 DECEMBER 2010 receivables 0-30days 30-60days 60-90days further matured bad debts

ITALY ADVERTISING RECEIVABLES:

low 586.2 16.9 4.2 0.5 0.8 22.5 - medium 62.3 10.2 1.2 0.9 2.0 14.3 3.8 high 30.2 0.4 0.9 0.6 9.4 11.3 35.5 FOREIGN ADVERTISING RECEIVABLES :

low 259.1 85.8 19.8 2.8 0.1 108.5 7.1 medium 4.2 0.7 0.1 0.1 1.0 1.9 3.3 high 1.8 0.3 0.4 0.1 0.1 1.0 7.9 OTHER RECEIVABLES :

Distributors 9.7 0.4 0.3 0.0 1.4 2.1 1.4 Phone and television operator 40.0 0.1 1.5 0.0 0.4 2.0 0.6 Film area 58.3 4.9 3.5 0.5 30.7 39.6 11.8 Other customers 56.7 6.8 4.3 1.9 33.1 46.1 34.2 RECEIVABLES FROM RELATED PARTIES:

low 30.0 0.1 - - 0.2 0.3 0.6 TOTAL TRADE RECEIVABLES 1,138.6 126.7 36.2 7.5 79.0 249.6 106.1

The Distributors item mainly comprises receivables from the distribution of Mediaset Premium cards.

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The Telephone/television operators item mainly comprises receivables from the sale of content activities.

The Other clients includes receivables relative to Mediaset Premium’s Easy-Pay customers.

Net matured RISK CLASSES Net Total net Provision for as at 31 DECEMBER 2009 receivables 0-30days 30-60days 60-90days further matured bad debts

ITALY ADVERTISING RECEIVABLES:

low 617.3 32.3 5.2 0.9 1.9 40.4 - medium 57.8 14.0 3.0 1.1 4.6 22.7 3.1 high 58.0 2.9 1.1 1.7 23.7 29.4 53.1 FOREIGN ADVERTISING RECEIVABLES :

low 164.1 46.2 5.2 1.9 5.8 59.1 7.5 medium 6.2 0.2 1.8 0.3 3.1 5.4 1.7 high 2.8 1.3 0.4 0.1 0.3 2.2 6.7 OTHER RECEIVABLES :

Distributors 10.7 2.4 - - 1.4 3.8 1.3 Phone and television operator 56.3 1.1 0.0 0.1 0.9 2.2 0.9 Film area 51.7 5.4 2.2 1.1 24.8 33.5 11.0 Other customers 74.0 13.2 0.6 1.2 5.0 20.0 12.1 RECEIVABLES FROM RELATED PARTIES:

low 21.6 0.9 0.6 0.3 1.6 3.5 0.3 TOTAL TRADE RECEIVABLES 1,120.5 120.1 20.2 8.6 73.2 222.1 97.7

The overall amount of guarantees received, mainly bank guarantees, for the receivables balances of third parties totals EUR 32.2 million (EUR 37.6 million at 31 December 2009) of which EUR 20.6 million relating to Telecinco Group.

In addition, bank guarantees in favour of third party companies have been issued for a total amount of EUR 41.2 million (EUR 51.8 million at 31 December 2009). Of this amount EUR 38.3 million were issued by Telecinco Group (EUR 47.1 million at 31 December 2008).

With reference to the main category of trade receivables generated by advertising activities in Italy, it should be noted that in terms of concentration, the top 10 customers accounted for approximately 28% of turnover, while the top 100 customers accounted for 73% of total sales. These indicators are in line with those of the previous years.

Below is a table showing the changes in the Bad Debts Reserve.

Changes in the Provisions made Employment of Balance at 1/1 consolidation Balance at 31/12 during the period the period area

2010 97.7 44.5 (36.1) 106.1

2009 82.1 38.0 (20.1) (2.4) 97.7

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In addition, below is a table showing a detailed analysis of other financial assets, whose maximum credit risk exposure corresponds to the book value.

2010 2009

Financial receivables 107.0 84.0 Other financial assets 25.0 Hedging derivatives 26.1 0.9 Derivatives with no hedging purpose 2.8 2.3 Receivables from factor companies 67.4 33.3 Bank and postal deposits 182.4 100.0

Total financial asset 410.8 220.5

The factored receivables with the recourse clause amount overall to EUR 22.0 million and are included in the item Receivables due from customers. For these receivables advances of EUR 11.0 million were received from the purchaser and posted to the item Payables to factoring companies.

15. SHARE-BASED PAYMENTS

As at 31 December 2010, the stock option plans eligible for exercise and allocated in the years 2007, 2008, 2009 and 2010 relating to the allocation of rights to ordinary Mediaset shares were valued for IFRS purposes. All the plans fall into the equity-settled category, in other words they allow for the allocation of own shares bought back on the market. Options granted to the beneficiary employees are linked to the company‘s achievement of financial performance targets and the employee remaining with the Group for a certain length of time.

The characteristics of these stock option plans can be summarised as follows:

Stock Option Plan Stock Option Plan Stock Option Plan Stock Option Plan 2007 2008 2009 2010

Grant date 28/06/2007 23/06/2008 29/09/2009 22/06/2010 Vesting Period from 01/01/2007 from 01/01/2008 from 01/01/2009 from 01/01/2010 to 28/06/2010 to 23/06/2011 to 29/09/2012 to 22/06/2013 Exercise period from 29/06/2010 from 24/06/2011 from 30/09/2012 from 23/06/2013 to 28/06/2013 to 23/06/2014 to 29/09/2015 to 22/06/2016 Fair Value EUR 0.72 EUR 0.30 EUR 1.35 EUR 0.68 Strike price EUR 7.87 EUR 4.86 EUR 4.72 EUR 4.92

On 22 June 2010 the stock option plan for 2010 was allocated, with the granting of 3,420,000 rights to ordinary shares in Mediaset S.p.A.. The three-year period for this plan will take effect for 36 months with effect from 23 June 2013.

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Due to the absence of conditions required for maturity of the options (e.g. the employee leaving the Mediaset Group), during 2010, 30,000 options right s were cancelled for the 2009 plan.

Below is a summary of the changes to stock option plans:

Stock Option Stock Option Stock Option Stock Option Plan Plan Plan Plan Total 2007 2008 2009 2010

Options outstanding at 1/1/2009 3,230,000 3,290,000 - - 9,763,500 Options issued during the year 3,450,000 3,450,000 Options exercised during the year ----- Options not-exercised during the year - - - - (3,243,500) Options expired/cancelled during the year - - - - - Options outstanding at 31/12/2009 3,230,000 3,290,000 3,450,000 - 9,970,000 - Options outstanding at 1/1/2010 3,230,000 3,290,000 3,450,000 - 9,970,000 Options issued during the year 3,420,000 3,420,000 Options exercised during the year ----- Options not-exercised during the year - - - - - Options expired/cancelled during the year - - (30,000) - (30,000) Options outstanding at 31/12/2010 3,230,000 3,290,000 3,420,000 3,420,000 13,360,000

The stock options are entered on the accounts at their fair value:

- 0.72 Euros for options in the 2007 plan; 0.77 Euros for options awarded to the employees of Medusa Film S.p.A. in relation to the date that company was included in the consolidation perimeter after the plan allocation date;

0.30 Euros for the 2008 options

1.35 Euros for the 2009 options

0.68 Euros for the 2010 options

The options’ fair value was determined by the binomial method: the exercise of the stock options is incorporated into the model, on the assumption that it will take place as soon as the option price is higher than a pre-determined multiple of the strike price. Any dilution of the shares due to the issue of new shares is already discounted by the current market prices. The data used in the model are as follows:

spot price on the valuation date (reference price)

historic volatility 6 years ex-dividend (calculated on the reference prices)

the expected dividend yield calculated by assuming the dividend distributed during the year will remain constant until expiry

the Euro rates curve

the exit rate of the stock option holders as zero.

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The assumptions underlying the principal values used in the calculation model are given below:

Stock Option Stock Option Stock Option Stock Option Plan Plan Plan Plan 2007 2008 2009 2010

Average stock price 7,60 euro 4,35 euro 4,85 euro 5,08 euro Historical volatility 16.34% 25.08% 45.39% 31.46% Risk-free rate 4.86% 5.07% 3.00% 2.46% Expected dividend yield 5.81% 12.15% 5.72% 10.32%

The subsidiary Telecinco also has stock option plans, allocated in 2006, 2007, 2008, 2009 and 2010. The characteristics of these five plans are summarised in the table below:

Stock Option Plan Stock Option Plan Stock Option Plan Stock Option Plan Stock Option Plan 2006 2007 2008 2009 2010

Grant date 26/07/2006 25/07/2007 30/07/2008 29/07/2009 28/07/2010 Vesting Period from 26/07/2006 from 25/07/2007 from 30/07/2008 from 29/07/2009 from 28/07/2010 to 25/07/2009 to 24/07/2010 to 29/07/2011 to 28/07/2012 to 28/07/2013 Exercise period from 26/07/2009 from 25/07/2010 from 30/07/2011 from 29/07/2012 from 28/07/2013 to 25/07/2011 to 24/07/2012 to 29/07/2013 to 28/07/2014 to 27/07/2015 Fair Value EUR 2.87 EUR 2.91 EUR 0.71 EUR 1.05 EUR 2.34 Strike price EUR 18.57 EUR 20.82 EUR 8.21 EUR 6.25 EUR 7.7

Below is a summary of the changes to the stock option plans allocated by Telecinco:

Stock Option Plan Stock Option Plan Stock Option Plan Stock Option Plan Stock Option Plan Total 2006 2007 2008 2009 2010

Options outstanding at 1/1/2009 1,516,150 1,078,650 1,357,748 - 3,952,548 Options issued during the year - - - 319,163 - 319,163 Options exercised during the year ------Options not-exercised during the year ------Options expired/cancelled during the year (36,000) (36,000) (785,423) - - (857,423) Options outstanding at 31/12/2009 1,480,150 1,042,650 572,325 319,163 - 3,414,288

Options outstanding at 1/1/2010 1,480,150 1,042,650 572,325 319,163 0 3,414,288 Options issued during the year - - - 1,297,650 1,297,650 Options exercised during the year ------Options not-exercised during the year ------Options expired/cancelled during the year -- - Options outstanding at 31/12/2010 1,480,150 1,042,650 572,325 319,163 1,297,650 4,711,938

The assumptions underlying the principal values used in the calculation model are given below:

Stock Option Stock Option Stock Option Stock Option Stock Option Plan Plan Plan Plan Plan 2006 2007 2008 2009 2010

Average stock price 17,49 euro 19,74 euro 7,13 euro 5,21 euro 7,0 euro Historical volatility 22.50% 22.50% 27.50% 30.00% 50.00% Expected dividend yield 6.00% 6.00% 10.00% 5.00% 5.50%

275 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Explanatory Notes

Finally, the information on payments and stock option plans granted to the Group’s key management personnel can be found in the annual balance sheet of Mediaset S.p.A.

16. RELATED-PARTY TRANSACTIONS

As already mentioned in the section on Drafting standards (Note 3), the Group has applied, ahead of time, the revised version of IAS 24 (Disclosure of Related Party Transactions). This version will become mandatory with effect from 1 January 2011.

Under the new version of that standard, the definition of related parties for financial statement reporting purposes now includes companies controlled by parties over which the company drafting the consolidated statements exercises a significant direct or indirect influence.

The schedule below provides a breakdown, by principal business combination, for each related party.

The total values of the positions and transactions with related parties and their impact on the relative types of financial statement are illustrated in the specific balance sheet and income statement schedules drafted in accordance with CONSOB decision no.15519 of 27 July 2006 reported at the begin of this Financial Statements.

For the additional information required under IAS 24, relating to the fees of directors with strategic responsibilities, please refer to Mediaset S.p.A. explanatory notes.

276 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Explanatory Notes

Other Financial Trade Operating Trade payables receivables/ Revenues income/ receivables costs (payables) (charges)

CONTROLLING ENTITY

Fininvest S.p.A. 1.4 0.6 - 0.1 5.9 -

ASSOCIATED ENTITIES A.C. Milan S.p.A.* 0.2 15.7 - 0.1 5.7 - Alba Servizi Aerotrasporti S.p.A. 0.1 0.6 - 0.2 3.3 - Arnoldo Mondadori Editore S.p.A.* 8.5 2.5 - 25.7 5.7 - Fininvest Gestione Servizi S.p.A. 0.6 1.8 - 0.1 0.2 - Isim S.p.A. ------Mediolanum S.p.A.* 0.0 0.0 - 6.4 0.0 - Trefinance S.A.* 0.0 - - 0.0 - -

Other associated 0.7 2.4 (150.2) 0.0 8.3 (2.6)

Total associated 10.1 22.9 (150.2) 32.5 23.1 (2.6)

JOINT COTROLLED AND AFFILIATED ENTITIES

Ares Film S.r.l. - 8.7 - - 0.0 - Auditel S -0.0- -5.4- Beigua S.r ------Big Bang Media S.L. - 0.7 - - 5.5 - Boing S.p.A. 1.3 9.3 (5.1) 5.4 15.8 (0.0) Canal Factoria de Ficcion SAU ------Capitolosette S.r.l.** 4.7 2.6 0.7 7.2 2.7 (1.8) Compania Independiente de Noticias de Television S.L.U.------Consorzio Campus Multimedia in formazione 0.1 0.1 - 0.2 0.2 - DTS Distribuidora de Television Digital SA 3.1 10.0 - - 0.0 - Edam Acquisition Holding I Cooperatief U.A.** 1.3 52.1 73.2 0.3 77.3 2.2 Fascino Produzione Gestione Teatro S.r.l. 0.4 6.1 (7.4) - 40.6 (0.0) La Fabbrica De la Tele SL 0.1 4.4 - 0.4 35.4 - Mediamond S.p.A. 3.2 0.3 - 4.2 0.4 - Mediavivere S.r.l. 1.5 16.7 - 0.7 30.6 - Nessma Lux S.A.** 0.0 0.1 1.7 - - 0.1 Pegaso Television INC** 1.2 - 0.8 1.1 - 0.1 Premiere Megaplex SA ------Produciones Mandarina SL 0.0 2.9 - 0.0 17.7 - Titanus Elios S.p.A. ----5.0- Tivù S.r.l. 1.3 0.5 - 4.3 1.1 -

Total joint controlled and affiliated entities 18.2 114.6 64.0 23.8 237.5 0.5

KEY STRATEGIC MANAGERS 0.0 0.3 (0.1) 0.0 1.6 -

PENSION FUNDS (Mediafond) 0.0 1.0 - - 0.3 -

OTHER RELATED PARTIES 0.2 0.0 0.0 0.4 1.1 -

TOTAL RELATED PARTIES 30.0 139.4 (86.3) 56.8 269.5 (2.2)

* this figure includes the company and its subsidiaries, affiliates and companies subject to joint control ** this figure includes the company and its subsidiaries

The trade receivables from affiliated companies relate mainly to the sale of TV advertising space. The costs and related trade payables mainly relate to the purchase of TV rights and productions.

The Other affiliated entities item mainly includes financial loans with Mediobanca (Fininvest Group associated entity) already described in note 10.2

277 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Explanatory Notes

With reference to the transactions with Edam Acquisition Holding I Cooperatief U.A. and its subsidiaries it should be noted that operating costs and trade payables referred to purchases of television productions by RTI S.p.A. and Gestevision Telecinco S.A. respective from Endemol Italy and Endemol Spain. The amount reported in Other receivables/payables item refers to the portion of Endemol B.V. and Endemol Finance B.V. Senior debt owned by the Group as reported in note 7.6.

The Other receivables/payables item refers to the cash pooling agreement and financial loan lent to associate entities.

Relations in the item Key strategic managers refer to the Group’s relations with the directors of Mediaset S.p.A. and Fininvest S.p.A., members of their close families and companies over whom those individuals exercise control, joint control or a significant influence, or hold (directly or indirectly) a significant interest of not less than 20% of the voting rights.

The item Other related parties includes the relations, which the Mediaset Group has with various consortia mainly for the management of television signal transmission operations.

The main impacts on the consolidated cash flow generated from related-party transactions relate, in addition to the payment of 100.4 million in dividends to the parent company Fininvest S.p.A., to outgoings in respect of rights acquired from Milan A.C. (37.5 million Euros), Ares Film S.p.A. (19.3 million Euros), Mediavivere S.r.l. (9.9 million Euros) and companies in the Endemol Group (to the total value of 26.3 million Euros).

During the year, rights were also acquired from Milan A.C. (10.8 million Euros relating to the friendly matches for the seasons 2011-2016) and Mediavivere S.r.l. (19.2 million Euros).

The principal commitments to related parties are illustrated in Note 17 below.

17. COMMITMENTS

The main commitments of the Mediaset Group can be summarised as follows:

• multi-year commitments relating to satellite channel hire agreements of varying durations, which will involve future expenditure of 180.8 million (200.1 million as at 31 December 2009) and the contract for services of digital broadcasting capacity to the value of 574.3 million Euros (603.9 million Euros as at 31 December 2009);

• commitments in respect of artistic projects, television productions and press agency contracts to the value of approximately 179.0 million Euros (205.2 million Euros as at 31 December 2009), of which 79.0 millions Euros with related parties;

• commitments for the acquisition of rights, totalling 1,576.1 million Euros ( 1,301.7 million Euros as at 31 December 2009) of which 5.2.with related parties. These future commitments relate mainly to volume deal contracts which the Mediaset Group has with some of the leading American majors in order secure the availability of films and TV productions made by those channels, assuring that a volume of investments can be made which reflects the Group’s

278 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Explanatory Notes

strategy to improve its library, and long-term commitments in respect of digital pay per rights, of 378.7 million Euros;

• commitments for the purchase of new equipment, works and supplies for the companies’ head offices, and the supply of EDP services totalling 20.2 million Euros (3.9 million Euros as at 31 December 2005).

17. POTENTIAL LIABILITIES

As mentioned in 2009 Annual Report Mediaset and Fininvest signed a settlement agreement in which they confirmed the definitive resolution of the indemnity agreement concluded on 6 June 1996, on the eve of the Mediaset stock exchange listing, under which Fininvest undertook to indemnify Mediaset and its subsidiaries until the date of fiscal time-barring, against all damages, costs, liabilities, contingencies and losses deriving from circumstances pre-dating the flotation date.

In consideration of Fininvest’s payment to Mediaset of the all-inclusive sum of EUR 6.0 million plus VAT, the parties acknowledged the discharge of all mutual obligations, with reference to all the disputes still covered by that indemnity. Those disputes mainly related to litigation with third parties that had not been settled by a final court order. The related disputes had been listed by the parties in a deed of acknowledgement signed on 19 December 2002, which was then amended, by another deed dated 11 November 2003.

The amount paid by Fininvest corresponds to the sum of the potential residual financial risk borne by Mediaset Group companies in the event they lost the disputes included in the above list.

Only one tax litigation procedure was deleted from the final settlement, involving RTI, towards whom Fininvest’s indemnity obligations would remain, in the event the case was lost.

for the Board of Directors The Chairman

279 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Explanatory Notes

LIST OF EQUITY INVESTMENTS INCLUDED IN THE GROUP’S CONSOLIDATED FINANCIAL STATEMENT AT 31 DECEMBER 2010

(values in millions of EUR ) % held by the Companies consolidated on a line-by-line basis Registered Office Currency Share capital Group (*)

Mediaset S.p.A. Milan EUR 614.2 - Publitalia '80 S.p.A. Milan EUR 52.0 100.00% Digitalia '08 S.r.l. Milan EUR 10.3 100.00% Publieurope Ltd. London EUR 5.0 100.00% R.T.I. S.p.A. Rome EUR 500.0 100.00% Videotime S.p.A. Milan EUR 52.0 98.98% Elettronica Industriale S.p.A. Lissone (MB) EUR 363.2 100.00% Mediashopping S.p.A. Milan EUR 7.0 100.00% Med Due S.r.l. Milan EUR 92.5 100.00% Medusa Film S.p.A. Rome EUR 120.0 100.00% Taodue S.r.l. Rome EUR 0.1 100.00% Mediaset Investment S.a.r.l. Luxembourg EUR 79.6 100.00% Mediaset Investment Belgium S.p.r.l. (in liquidazione) Woluwe-Saint-Lambert (Bruxelles) EUR 0.0 100.00% Mediaset Investimenti S.p.A. Milan EUR 500.0 100.00% Gestevision Telecinco S.A. Madrid EUR 203.4 41.55% Publiespaña S.A.U Madrid EUR 0.6 41.55% Publimedia Gestion S.A.U. Madrid EUR 0.1 41.55% Agencia de Television Latino-Americana de servicios y Noticias España S.A.U. Madrid EUR 0.9 41.55% Atlas Media S.A.U. Barcelona EUR 0.4 41.55% Agencia de Television Latino-Americana de servicios y Noticias Pais Vasco S.A.U. Bilbao EUR 0.4 41.55% Mi Cartera Media S.A.U. Madrid EUR 0.1 41.55% Sociedad General de Television Cuatro SAU Madrid EUR 6.0 41.55% Sogecabel Editorial SLU Madrid EUR 0.0 41.55% Sogecabel Media SLU Madrid EUR 0.0 41.55% Compagnia Independiente de Noticias de Television SLU Madrid EUR 1.4 41.55% Telecinco Cinema S.A.U. Madrid EUR 0.2 41.55% Grupo Editorial Tele 5 S.A.U. Madrid EUR 0.1 41.55% Canal Factoria de Ficcion S.A.U. Madrid EUR 0.3 41.55% Conecta 5 Telecinco S.A.U. Madrid EUR 0.1 41.55% Mediacinco Cartera S.L. Madrid EUR 240.0 56.16%

% held by the Joint control and affiliated companies Registered Office Currency Share capital Group Auditel S.r.l. Milan EUR 0.3 26.67% Ares Film S.r.l. Rome EUR 0.0 30.00% Beigua S.r.l. Rome EUR 0.1 24.50% BigBang Media S.L. (già Telecinco Factoria de Production, SLU) Madrid EUR 0.2 12.47% Boing S.p.A. Milan EUR 10.0 51.00% Capitolosette S.r.l. Milan EUR 2.9 48.96% DTS Distribuidora de Television Digital SA Madrid EUR 126.3 9.14% Edam Acquisition Holding I Cooperatief U.A. Amsterdam EUR 2,075.6 18.72% Fascino Produzione Gestione Teatro S.r.l. Rome EUR 0.0 50.00% La Fabrica De La Tele S.L. (già Hormigas Blancas Producciones S.L.) Madrid EUR 0.0 12.47% Mediamond S.p.A. Milan EUR 1.5 50.00% Mediavivere S.r.l. Milan EUR 0.7 59.36% Nessma S.A. Luxembourg EUR 8.1 25.00% Nessma Broadcast S.a.r.l. Tunisi DYN 1.0 25.00% Pegaso Television INC Miami (Florida) USD 83.3 18.16% Premiere Megaplex S.A. Madrid EUR 0.1 20.78% Producciones Mandarina S.L. Madrid EUR 0.0 12.47% Titanus Elios S.p.A. Rome EUR 29.5 29.69% Tivù S.r.l. Rome EUR 1.0 48.25%

281 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Consolidated Financial Statements 2010 – Explanatory Notes

% held by the Equity investments held as "Available for sale" Registered Office Currency Share capital Group Aprok Imagen S.L. Madrid EUR 0.3 1.27% Cinecittà Digital Factory S.r.l. Rome EUR 6.0 15.00% Circuito Cinema S.r.l. Rome EUR 0.8 10.00% Class CNBC S.p.A. Milan EUR 0.6 10.90% Corporación de Medios Radiofónicos Digitales S.A. Zamudio-Vizcaya (Spagna) EUR 6.0 4.16% Grattacielo S.r.l. Milan EUR 0.1 10.00% International Media Services Ltd. In liquidazione Valletta (Malta) EUR 0.1 99.95% Kirch Media GmbH & Co. Kommanditgesellschaft auf Aktien Unterföhring (Germania) EUR 55.3 2.28% Radio e Reti S.r.l. Milan EUR 1.0 10.00% Romaintv S.p.A. Rome EUR 0.8 9.68% Sportsnet Media Limited George Town (Grand Cayman) USD 0.1 12.00% TED - Tv EDucational S.p.A. in liquidazione Rome EUR 0.1 100.00% X Content S.r.l. (in liquidazione) Rome EUR 0.1 100.00% (*) Group's stake calculated not considering parent companies' own shares

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Mediaset Group 2010 Annual Report

Attestation of the Group’s Financial Statements in conformity with article 154, part two, of Legislative Decree 58/98

WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399

Attestation of the Consolidated Financial Statements pursuant to article 154, part two, of the Legislative Decree 58/98

1. The undersigned persons Fedele Confalonieri, Chairman of the Board of Directors and Andrea Goretti, the Assigned Executive for the drafting of the company accounting documents of Mediaset S.p.A. attest, also taking into account what is laid down by article 154, part two, paragraphs 3 and 4, of the Legislative Decree of 24th February 1998, n° 58,

• to the adequacy relative to the characteristics of the Group and • the effective application

of the administrative and accounting procedures for building up the Consolidated Financial Statements, during the financial year 2010.

2. The evaluation of the adequacy of the administrative and accounting procedures for building up the Consolidated Financial Statements at 31st December 2010 was carried out based on the rules and methodologies defined by Mediaset S.p.A. in line with the model Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, which represents a body of general reference principles for the system of internal controls that is generally accepted at international level.

3. Furthermore, it is also attested that:

3.1 The Consolidated Financial Statements: a) Are drawn up in conformity with the applicable International Accounting Standards recognised within the European Community, pursuant to the regulation (EC) n° 1606/2002 of the European Parliament and Council, of 19th July 2002, as well as with the measures issued to actuate article 9 of the Legislative Decree n° 38/2005. b) Reflect the balances in the books and the accounting postings. c) Are suitable and appropriate in order to give a true and fair view of the Balance Sheet, Income Statement and Financial situations of the Issuer and of the group of companies included within the consolidation.

3.2 The Board of Directors Report on Operations contains a trustworthy analysis of the progress and result of operations, as well as of the situation of the Issuer and of the group of companies included within the consolidation, together with the description of the main risks and uncertainties to which they are exposed.

22nd March 2011

For the Board of Directors The Assigned Executive for the drafting The Chairman of the company accounting documents

(Fedele Confalonieri) (Andrea Goretti) WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399

Mediaset Group 2010 Annual Report

Indipendent Auditors’ Report

WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399

WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 MEDIASET S.p.A.

2010 Annual Report

Financial Statements and Explanatory Notes

WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 MEDIASET S.p.A. Statement of financial position as of 31 December 2010 (values in Euros)

ASSETS Notes 31/12/2010 31/12/2009

Total non current assets 1,856,981,194 1,845,209,436

Current Assets 6 Trade receivables due from: 6.2 customers 94,067 87,158 associates 167,400 140,000 subsidiaries 5,073,155 4,621,826 affiliated companies and joint ventures 25,715 18,122 holding companies 9,000 9,000 Total 5,369,337 4,876,106 Tax assets 6.3 39,703,772 4,953,005 Other receivables and current assets 6.4 28,551,126 39,718,491 Intercompany financial receivables due from 6.5 subsidiaries 3,198,577,594 3,009,640,433 Total 3,198,577,594 3,009,640,433

Other current financial assets 6.6 33,934,587 35,610,759

Cash and cash equivalents 6.7 77,956,962 82,472,138

Total current assets 3,384,093,378 3,177,270,932

Non current assets held for sale 7 - -

TOTAL ASSETS 5,241,074,572 5,022,480,368

2921 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 MEDIASET S.p.A. Statement of financial position as of 31 December 2010 (values in Euros)

LIABILITIES AND SHAREHOLDERS' EQUITY Notes 31/12/2010 31/12/2009

Shareholders' equity 8 Share capital 8.1 614,238,333 614,238,333 Share premium reserve 8.2 275,237,092 275,237,092 Treasury shares 8.3 (416,656,052) (416,656,052) Other reserves 8.4 2,768,490,894 2,688,792,353 Valuation reserve 8.5 11,408,610 6,337,812 Reserve for rounding figures 2 2 Retained earnings 8.6 (808,413,428) (807,853,578) Profit (loss) for the period 8.7 213,032,496 329,706,995 TOTAL SHAREHOLDERS' EQUITY 2,657,337,947 2,689,802,957

Non current liabilities 9 Post-employment benefit plans 9.1 4,154,469 4,257,391 Deferred tax liabilities 9.2 931,987 402,063 Financial liabilities and payables 9.3 1,066,478,232 794,309,608 Provisions for non current risks and charges 9.4 343,695 142,867 Total non current liabilities 1,071,908,383 799,111,929

Current liabilities 10 Financial payables 10.1 630,851,722 714,811,909 Trade payables due to: 10.2 suppliers 5,047,181 3,572,637 subsidiaries 1,595,315 584,379 affiliated companies and joint ventures - 916 associates 221,910 278,925 holding companies 26,024 26,000 Total 6,890,430 4,462,857 Provisions for current risks and charges 10.3 6,069,009 6,054,913 Tax payables 10.4 10,122,764 1,135,047 Intercompany financial payables due to: 10.5 subsidiaries 384,579,304 374,531,021 affiliated companies and joint ventures 7,364,783 1,131,977 Total 391,944,087 375,662,998 Other financial liabilities 10.6 423,213,873 406,122,568 Other current liabilities 10.7 42,736,357 25,315,190 Total current liabilities 1,511,828,242 1,533,565,482

Non current liabilities linked to assets held for sale 11 - -

TOTAL LIABILITIES 2,583,736,625 2,332,677,411

TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 5,241,074,572 5,022,480,368

2932 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 MEDIASET S.p.A. Statement of income as of 31 December 2010 (values in Euros)

INCOME STATEMENT Notes esercizio 2010 esercizio 2009

Revenues 12 Sales of goods and services 12.1 5,206,988 4,914,664 Other revenues and income 12.2 400,933 7,476,149 Total revenues 5,607,921 12,390,813

Costs 13 Personnel expenses 13.1 34,387,281 31,070,563 Purchases 13.2 305,734 330,647 Services 13.5 24,920,761 19,850,607 Leases and rentals 13.6 3,985,856 3,621,825 Provisions for risks 13.7 207,780 5,950,361 Other operating expenses 13.8 1,547,107 7,761,031 Amortisation and depreciation 13.9 129,642 174,542 Total costs 65,484,161 68,759,576 Profit/(loss) deriving from disposals of non current 14 - - assets

Operating profit (59,876,240) (56,368,763)

(Charges)/proceeds deriving from financial investments 15 Financial expenses 15.1 (226,673,574) (240,313,345) Financial income 15.2 228,658,158 244,100,176 Income/(expenses) from equity investments 15.3 dividends from subsidiaries 256,307,695 369,206,773 other income/(expenses) from investments (75,917) - Total 256,231,778 369,206,773 Total (charges)/proceeds deriving from financial investments 258,216,362 372,993,604

Pre-tax result 198,340,122 316,624,841

Income taxes for the period 16 current taxes 16.1 (14,944,185) (21,363,002) deferred taxes 16.2 251,811 8,280,848 Total income taxes for the period (14,692,374) (13,082,154)

Net result for the period 213,032,496 329,706,995

Profit/(loss) deriving from assets to be transferred 17 --

Profit (loss) for the period 18 213,032,496 329,706,995

2943 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 MEDIASET S.p.A. Statement of Comprehensive Income as of 31 December 2010 (values in Euros)

COMPREHENSIVE INCOME STATEMENTS Notes 31/12/2010 31/12/2009

PROFIT (LOSS) FOR THE PERIOD (A) 213,032,496 329,706,995 Statement of comprehensive profits/(losses)

Profit(losses) on available-for-sale financial assets 1,824,564

Effective portion of gains and losses on hedging instruments (cash flow hedge) 8.5 2,928,914 (5,793,506)

Actuarial gains and losses on defined benefit plans 8.5 (121,820) (84,524) Dividends received from "under common control" operations 8.4 - 472,024,000

Tax effects relating to other gains/(losses) (1,273,706) (4,873,872)

TOTAL COMPREHENSIVE INCOME(LOSSES) NET OF TAX EFFECTS (B) 3,357,952 461,272,098

TOTAL COMPREHENSIVE INCOME FOR THE YEAR (A+B) 216,390,448 790,979,093

2954 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 MEDIASET S.p.A. Statement of Cash Flows as of 31 December 2010 (values in thousand Euros)

CASH FLOW FROM OPERATING ACTIVITIES 31/12/2010 31/12/2009 Operating profit (59,876) (56,369) Depreciation and amortisation 130 175 Allowances net of utilisation (75) 5,409 Other non-cash movements 1,009 883 Changes in current assets 20,524 25,522 Interests received/paid 44,115 57,621 Income tax paid/received 16,109 17,341 Dividends collected 256,507 370,072 Net cash flow from operating activities (A) 278,443 420,654

CASH FLOW FROM INVESTING ACTIVITIES (Purchases)/Sales of tangible assets (34) (3) (Purchases)/Sales of other intangible assets - (35) Equity investments (2,054) (350,000) Total (Purchases)/Sales of assets (2,088) (350,038) Net cash flow from investing activities (B) (2,088) (350,038)

CASH FLOW FROM FINANCING ACTIVITIES Changes in long term financial payables (23,799) (91,523) Bond Issuance 295,967 - Dividends paid (250,008) (431,833) Changes in other financial assets/ liabilities (104,560) 184,298 Interests and other financial expenses (26,491) (56,648) Net cash flow from financing activities (C) (108,891) (395,706)

Change in cash and cash equivalents (D=A+B+C) 167,464 (325,090)

Cash and cash equivalents at the beginning of the period (E) 2,716,416 3,041,506

Cash and cash equivalents at end of the period (F=D+E) 2,883,880 2,716,416

2965 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 MEDIASET S.p.A. Statement of changes in equity as of 31 December 2010 and 31 December 2009 (values in thousand Euros)

Retained Total Share Share premium Treasury Legal Other Evaluation earnings/ Profit/(loss) for Shareholders' capital reserve shares reserve reserves reserve (accumulated the period equity losses)

Balance as of 1/1/2009 614,238 275,237 (416,656) 122,848 2,188,289 11,436 (807,853) 342,479 2,330,018

2008 net result allocation as per Shareholders' Meetings resolution of 22/04/2009 - - - - (89,354) - - (342,479) (431,833) Reserve on unrealised exchanges flow - - - - 56 (56) - - - Stock Option Plan valuation - - - - 1,419 (3,256) - - (1,837)

297 Changes in Hedging Reserve collar on interest rates - - - - - 2,476 - - 2,476 Comprehensive profit/(loss) for the period - - - - - 461,272 - 329,707 790,979

Balance as of 31/12/2009 614,238 275,237 (416,656) 122,848 2,100,410 471,872 (807,853) 329,707 2,689,803

Change of accounting standard 273 (560) (287)

Balance as of 1/1/2010 614,238 275,237 (416,656) 122,848 2,100,410 472,145 (808,413) 329,707 2,689,516

2009 net result allocation as per Shareholders' Meetings resolution of 21/04/2010 - - - - 79,699 - - (329,707) (250,008) Stock Option Plan valuation - - - - - 2,473 - - 2,473 Changes in Hedging Reserve collar on interest rates - - - - - (1,033) - - (1,033) Comprehensive profit/(loss) for the period - - - - - 3,358 - 213,032 216,390

Balance as of 31/12/2010 614,238 275,237 (416,656) 122,848 2,180,109 476,943 (808,413) 213,032 2,657,338

WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399

MEDIASET S.p.A. Statement of financial position as per Consob Resolution n° 15519 of 27 July 2006

of witch % of of witch % of ASSETS Notes 31/12/2010 related inci- 31/12/2009 related inci- parties dence parties dence

Non current assets 5 Property, plant and equipment 5.1 4,787,486 4,829,075 Other intangible assets 5.4 30,440 82,075 Investments in: 5.5 subsidiaries 1,837,439,804 1,836,029,041 other companies 11,163,118 11,161,118 99.98% 1,999 Total 1,848,602,922 1,836,031,040 Receivables and other non current financial assets 5.6 203,104 202,724 Deferred tax assets 5.9 3,357,242 4,064,522 Total non current assets 1,856,981,194 1,845,209,436 Current Assets 6 Trade receivables due from: 6.2 customers 94,067 46,830 49.8% 87,158 28,359 32.5% associates 167,400 140,000 subsidiaries 5,073,155 4,621,826 affiliated companies and joint ventures 25,715 18,122 holding companies 9,000 9,000 Total 5,369,337 4,876,106 Tax assets 6.3 39,703,772 4,953,005 Other receivables and current assets 6.4 28,551,126 21,441,183 75.1% 39,718,491 37,981,154 95.6% Intercompany financial receivables due from 6.5 subsidiaries 3,198,577,594 3,009,640,433 affiliated companies and joint ventures -- Total 3,198,577,594 3,009,640,433

Other current financial assets 6.6 33,934,587 5,424,724 16.0% 35,610,759 15,347,438 43.1%

Cash and cash equivalents 6.7 77,956,962 82,472,138

Total current assets 3,384,093,378 3,177,270,932 Non current assets held for sale 7 - - TOTAL ASSETS 5,241,074,572 5,022,480,368

The item Equity investments in other companies of which related parties consists of the equity investment in Gestevision Telecinco S.A., held for 0.334%, the valuation of which at fair value based on the market quotation of 30 December 2010 (bid price of Euros 8.224) amounted to 11,161 thousand Euros. The item Other receivables and current assets of which related parties mainly refers both to the receivables from the subsidiary companies for 6,196 thousand Euros relative to the IRES (Corporate Tax) receivable from the Fiscal Consolidation and the VAT credit from the centralised Group VAT system for 13,690 thousand Euros, as well as to the receivable from the parent company Fininvest S.p.A. for 1,216 thousand Euros, which represents the reimbursement request due to the partial deductibility of the IRAP (Regional Tax on Productive Activities) that has now become available, relative to the tax paid by the companies in the Fininvest Fiscal Consolidation for the tax year 2004. The item Other current financial assets of which related parties amounting to 5,425 thousand Euros mainly refers to receivables from the subsidiary company R.T.I. S.p.A. regarding financial derivatives for hedging exchange risks that Mediaset S.p.A. purchases on the market and then transfers through the stipulation of an inter-company contract.

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MEDIASET S.p.A. Statement of financial position as per Consob Resolution n° 15519 of 27 July 2006

of witch % of of witch % of LIABILITIES AND SHAREHOLDERS' EQUITY Notes 31/12/2010 related inci- 31/12/2009 related inci- parties dence parties dence

Shareholders' equity 8 Share capital 8.1 614,238,333 614,238,333 Share premium reserve 8.2 275,237,092 275,237,092 Treasury shares 8.3 (416,656,052) (416,656,052) Other reserves 8.4 2,768,490,894 465,533,670 16.8% 2,688,792,353 465,533,670 17.3% Revaluation reserve 8.5 11,408,610 6,337,812 Reserve for rounding figures 2 2 Retained earnings 8.6 (808,413,428) (807,853,578) Profit (loss) for the period 8.7 213,032,496 329,706,995 TOTAL SHAREHOLDERS' EQUITY 2,657,337,947 2,689,802,957

Non current liabilities 9 Post-employment benefit plans 9.1 4,154,469 4,257,391 Deferred tax liabilities 9.2 931,987 402,063 Financial liabilities and payables 9.3 1,066,478,232 90,050,548 8.4% 794,309,608 15,021,178 18.9% Provisions for non current risks and charges 9.4 343,695 142,867 Total non current liabilities 1,071,908,383 799,111,929

Current liabilities 10 Financial payables 10.1 630,851,722 60,128,531 9.5% 714,811,909 160,006,690 22.4% Trade payables due to: 10.2 suppliers 5,047,181 2,841,386 56.3% 3,572,637 399,363 11.2% subsidiaries 1,595,315 584,379 affiliated companies and joint ventures - 916 associates 221,910 278,925 holding companies 26,024 26,000 Total 6,890,430 4,462,857 Provisions for current risks and charges 10.3 6,069,009 6,054,913 Tax payables 10.4 10,122,764 1,135,047 Intercompany financial payables due to: 10.5 subsidiaries 384,579,304 374,531,021 affiliated companies and joint ventures 7,364,783 1,131,977 Total 391,944,087 375,662,998 Other financial liabilities 10.6 423,213,873 400,914,859 94.7% 406,122,568 395,517,069 97.4% Other current liabilities 10.7 42,736,357 35,406,500 82.8% 25,315,190 19,039,044 75.2% Total current liabilities 1,511,828,242 1,533,565,482

Non current liabilities linked to assets held for sale 11 - -

TOTAL LIABILITIES 2,583,736,625 2,332,677,411 TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 5,241,074,572 5,022,480,368

The item Other reserves of which related parties refers to the dividend received in 2009 from the subsidiary company Mediaset Investment S.a.r.l., amounting to 472,024 thousand Euros net of the fiscal impact for 6.490 thousand Euros, posted directly to a Reserve in Net Equity because it is a distribution coming out of profit reserves following under common control operations and, therefore, not posted to the Income Statement when they are distributed. The item Non-current financial liabilities and payables of which related parties consists of the non-current amount relative to the loan with Mediobanca with start date 17 November 2005 for an initial amount of 160,000 thousand Euros. After having exercised the relative contractual right, in November 2006 this loan was taken to 210,000 thousand Euros and during 2010 it was partially reimbursed in two lots amounting to 30,000 thousand Euros each. The item Financial payables of which related parties refers to the short-term part of the principal repayable of the loan contract stipulated with Mediobanca in 2005, including the relative interest. The forecasted repayment dates are 30 May and 29 November 2011. In November 2005, with the same contract, a revolving credit line was opened for an initial amount of 75,000 thousand Euros, taken to 100,000 thousand Euros, with the exercising of the contractual right and it was totally paid back and closed during the month of November del 2010.

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The item Trade payables to suppliers of which related parties includes the payable for professional services to Mediobanca for consultancy regarding the acquisition of Cuarto and Digital Plus by Gestevision Telecinco S.A.. The item Other financial liabilities of which related parties refers both to the inter-company loan with the subsidiary company Mediaset Investment S.a.r.l. for 372,371 thousand Euros including the accrued interest at year-end and to the payables to the subsidiary companies R.T.I. S.p.A. for 28,535 thousand Euros and Media Shopping S.p.A. for 9 thousand Euros, regarding financial derivates for hedging exchange risks that Mediaset S.p.A. purchases on the open market and then transfers with the stipulation of inter-company contracts. The item Other current liabilities of which related parties mainly refers to the payable relative to the Group centralised VAT for 4,817 thousand Euros, to the payables to the subsidiary companies for belonging to the Fiscal Consolidation for 29,223 thousand Euros, as well as to the payables to the subsidiary companies relative to the repayment of the partial deductibility of the IRAP (Regional Tax on Productive Activities) that has now become available, relative to the tax paid by the companies in the Fininvest Fiscal Consolidation for the tax year that has now become available, relative to the tax paid by the companies in the Fininvest Fiscal Consolidation for the tax year 2004 for 1,173 thousand Euros.

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MEDIASET S.p.A. Statement of income as per Consob Resolution n° 15519 of 27 July 2006

of witch % of of witch % of INCOME STATEMENT Notes 31/12/2010 related inci- 31/12/2009 related inci- parties dence parties dence

Revenues 12 Sales of goods and services 12.1 5,206,988 5,206,057 99.98% 4,914,664 4,871,834 99.1% Other revenues and income 12.2 400,933 352,423 87.9% 7,476,149 6,431,742 86.0% Total revenues 5,607,921 12,390,813

Costs 13 Personnel expenses 13.1 34,387,281 2,583,670 7.5% 31,070,563 2,669,000 8.6% Purchases 13.2 305,734 330,647 Services 13.5 24,920,761 10,611,381 42.6% 19,850,607 3,049,023 15.4% Leases and rentals 13.6 3,985,856 2,982,420 74.8% 3,621,825 2,724,988 75.2% Provisions for risks 13.7 207,780 5,950,361 Other operating expenses 13.8 1,547,107 96,718 6.3% 7,761,031 5,645,332 72.7% Amortisation and depreciation 13.9 129,642 174,542 Total costs 65,484,161 68,759,576 Profit/(loss) deriving from disposals of non current assets 14 - -

Operating profit (59,876,240) (56,368,763) (Charges)/proceeds deriving from financial investments 15 Financial expenses 15.1 (226,673,574) (129,848,618) 57.3% (240,313,345) (121,361,747) 50.5% Financial income 15.2 228,658,158 112,346,243 49.1% 244,100,176 155,934,345 63.9% Income/(expenses) from equity investments 15.3 dividends from subsidiaries 256,307,695 369,206,773 other income/(expenses) from investments (75,917) - Total 256,231,778 369,206,773 Total (charges)/proceeds deriving from financial investments 258,216,362 372,993,604

Pre-tax result 198,340,122 316,624,841

Income taxes for the year 16 current taxes 16.1 (14,944,185) (21,363,002) deferred taxes 16.2 251,811 8,280,848 Total income taxes for the period (14,692,374) (13,082,154)

Net result for the period 213,032,496 329,706,995

Profit/(loss) deriving from assets to be transferred 17 - - Profit (loss) for the period 18 213,032,496 329,706,995

The item Sales of goods and services of which related parties mainly refers to the services offered by the Central Communications and Information Management for 3,635 thousand Euros, to the supply of graphics/advertising services for 650 thousand Euros, to the supply of direct business services for 325 thousand Euros, as well as to the commissions on the sureties given to third parties, in the interest of the subsidiary companies for 181 thousand Euros. The item Other revenues and income of which related parties is 350 thousand Euros for the renting of the owned real estate unit in Roma to the subsidiary company R.T.I. S.p.A.. The item Services of which the related parties part mainly refers to the travelling expenses for air travel from the associated company Alba Servizi Aerotrasporti S.p.A. for 1,067 thousand Euros, to administrative services from the subsidiary company R.T.I. S.p.A. for 772 thousand Euros and from the subsidiary company Videotime S.p.A. for 37 thousand Euros, as well as to sponsorships to the associated company Il Teatro Manzoni S.p.A. for 371 thousand Euros. The item also includes the professional services for 7,200 thousand Euros to Mediobanca for consultancy regarding the acquisition of Cuarto and Digital Plus by Gestevision Telecinco S.A..

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The item Leases and rentals of which related parties mainly refers to the real estate rents paid to the subsidiary company R.T.I. S.p.A. for 2,259 thousand Euros and to the parent company Fininvest S.p.A. for 259 thousand Euros and to the usage of the Fininvest trademark to the parent company for 465 thousand Euros. The item Financial expenses of which related parties mainly refers to interest payable on the loan from the subsidiary company Mediaset Investment S.a.r.l. for 10,521 thousand Euros, to interest payable on intercompany current accounts to the subsidiary, affiliated and jointly controlled companies for 2.020 thousand Euros, to foreign exchange losses, mainly to the subsidiary company R.T.I. S.p.A. for 114,381 thousand Euros (of which 50,622 thousand Euros from valuation), as well as the unrealised net loss of 2,817 thousand Euros coming from the valuation at their fair value at 30 November 2010 of the Telecinco shares reclassified from shares for trading to financial fixed assets. We highlight that there are also included in this item the financial charges from Mediobanca for 2,097 thousand Euros that refer to the loan at amortized cost and for 544 thousand Euros relative to revolving credit line. The item Financial income of which related parties mainly refers to the interest receivable on the intercompany current accounts for 46.135 thousand Euros from the subsidiary, affiliated and jointly controlled companies, to gains on foreign exchange mainly from the subsidiary company R.T.I. S.p.A. for 65,948 thousand Euros (of which 25.675 thousand Euros from valuation), as well as to dividends received on the Telecinco shares for 199 thousand Euros. The item Financial incomes for dividends from subsidiary companies includes the dividends from the subsidiary company R.T.I. S.p.A. for 192,308 thousand Euros and those from the subsidiary company Publitalia ‘80 S.p.A. for 64,000 thousand Euros. More details regarding the relations with Group companies are given afterwards.

30211 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Financial Statements 2010 Mediaset S.p.A. – Explanatory Notes MEDIASET S.p.A. Explanatory Notes

1. General information Mediaset S.p.A. is a joint stock company incorporated in Italy and inscribed in the Enterprises Register of Milan. Its registered office is located in Via Paleocapa, 3, Milan. Its majority shareholder is Fininvest S.p.A. The main activities of the company and its subsidiaries are described in the opening section of the Board of Directors Report on Operations These Financial Statements are stated in the Euro, because this is the currency that is used for most of the Group’s transactions. The amounts are stated in thousands of Euros.

2. Adoption of the International Accounting Standards Following the coming into force of the Legislative Decree N° 38 of 28 February 2005, which actuated, within the Italian legislation, the European Regulation n° 1606/2002, Mediaset S.p.A. has drawn up its Financial Statements at 31 December 2010 according to the IAS/IFRS (International Accounting Standards/International Financial Reporting Standards) issued by the International Accounting Standards Board (IASB) at homologated at EEC level. The accounting layouts and the disclosures contained in these Yearly Financial Statements have been drawn up according to IAS 1, as laid down by the CONSOB (Italian SEC) Communication n° DEM 6064313 of 28 July 2006. The data in these Financial Statements are compared with those of the previous year that have been drawn up using the same criteria.

3. General drafting criteria and the accounting standards used to prepare the Financial Statements and the valuation criteria These Financial Statements have been drawn up in the context of the continuance of the company’s business because the Directors have checked that there do not exist any signs of any financial, operational, managerial criticalities or of any other nature that could possibly impact the ability of the company to face up to its obligations in the foreseeable future. The risks and the uncertainties relative to the business itself are described in the Report on Operations attached to the Consolidated Financial Statements. In the drafting of the Financial Statements at 31 December 2010 there have been applied the International Accounting Standards, and their interpretations, in force at that date. Accounting standards, amendments and interpretations applied from 1 January 2010 The Group applied the following accounting standards, amendments and interpretations, for the first time, starting from 1 January 2010.

IAS 39 Financial Instruments: Recognition and Measurement – Hedge qualifying instruments These changes to IAS 39, issued in August 2008 and effective for fiscal years beginning from 1 July 2009 or afterwards, are relative to the designation of unilateral risks of a hedged instrument and the designation of the inflation as a hedged risk, or portion of a hedged risk in certain

303 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Financial Statements 2010 Mediaset S.p.A. – Explanatory Notes situations: The change clarifies that the entity has the discretionary faculty of designating a part of the changes in fair value, or the change in the cash flows of a financial instrument as a hedged instrument. The changes introduced in the standard relative to the technical methodologies of recognition and accounting for the effective part of the change in value of the hedging instrument has fairly insignificant impacts in these Financial Statements.

IAS 24 Revised – Related Party Disclosures The company has applied, in advance, in these Financial Statements the revised version of IAS 24, which became obligatory from 1 January 2011. Based on the clarifications contained in the new accounting standard there fall within the definition of Related Parties, for the purposes of Financial Statements disclosures, the subsidiary companies of parties over whom, either directly or indirectly, the entity that draws up the Financial Statements exercises a notable influence and the affiliated companies of the parent company. Regarding the adoption of this criterion, the comparative data relative to the financial year 2009, contained in the relative Financial Statements layouts and in some of their following Explanatory Notes, have been recalculated by applying the same criteria to make them homogenous. On the other hand, the following amendments, improvements and interpretations that are in effect from 1 January 2010, govern circumstances and cases that were not in existence within the Company at the closing date of these Financial Statements.

IFRS 3R (Business Combinations) and IAS 27R (Consolidated and Separate Financial Statements) The revised versions of IFRS 3 – Business Combinations - and of IAS 27 – Consolidated and Separate Financial Statements – issued by the IASB (International Accounting Standards Board) on 10 January 2008, have been applicable to the tables regarding business combinations, accounted for in Financial Statements relative to fiscal years beginning from 1 July 2009. The main changes contained in the revised version of IFRS 3 regarding the accounting for business combinations are relative to the following: - calculation of the goodwill or of the income, only to be made at the date of acquiring control, calculating the difference between the fair value of the price transferred for the transaction, including any prices subject to conditions valued at the same date, increased in a business combination that takes place in a number of stages by the fair value of the previously owned interests, and the fair value of the identifiable assets and liabilities, including the potential liabilities, acquired; - in the case of the purchase of controlling interests that are less than 100% of the capital, the interest of minorities can either, for each individual business combination, be valued at the fair value with the corresponding posting of the goodwill, i.e. the Full goodwill method, or with the method, already contained in the prior IFRS 3, based on the proportional amount of the fair value of the identifiable net assets acquired; - in the case of the purchase of control in stages, the elimination of the obligation of valuing the acquired assets and liabilities at fair value at each successive purchase and, therefore, calculating the goodwill as the sum of the fair values generated separately with each transaction. Applying the new version of the standard, on the other hand, the purchaser must treat the previously owned interest, up till that time, accounted for according to the specific case and following what is laid down by IAS 39 – Financial Instruments: Recognition and Measurement, according to IAS 28 – Accounting for Investments in Associates, or

304 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Financial Statements 2010 Mediaset S.p.A. – Explanatory Notes according to IAS 31 – Interests in Joint Ventures, just as if it had been sold and reacquired at the date when control was acquired, recalculation the fair value at the date of “sale” and posting any gains or losses arising from that valuation to the Income Statement. Furthermore, in these circumstances any value previously posted to the Net Equity as Other comprehensive gains and losses must be reclassified to the Income Statement; - identification of the purchaser with reference to the definition of “control”, understood as being “the power to govern the financial and managerial policies of an entity, with the purpose of obtaining benefits from its business activities”; - the posting to the Income Statement of the ancillary charges relative to business combinations in the accounting period when they are incurred, with the exception of those incurred relative to issues of debt securities or shares that have to be posted according to what is laid down by IAS 32 and 39. According to the previous version of the standard these charges were included in the amount of the purchase cost; - posting at the purchase date of the liabilities for future conditional payments, i.e. earn- out. Any successive differences compared to the initial estimates must be posted to the Income Statement, unless arising from additional information existing at the purchase date; in this case they are adjustable within 12 months from the date of purchase. Similarly any rights to receive back some parts of the price paid if certain conditions arise must be classified as assets by the purchaser. The previous version of the standard stated that the prices subject to conditions had to be posted at the purchase date only if their payment was believed probable and their amount could be dependably calculated.

IFRS 2 – Share-based payment The amendment to this reporting standard clarifies that the company that receives goods or services in the context of share-based payment plans, must post these goods or services to its accounts, independently of which company of the Group regulates the transaction, and also independently of the fact that the actual settlement takes place in cash or shares. Furthermore, the amendment establishes that the term “Group” is understood as having the same meaning as it has in IAS 27 – Consolidated and Separate Financial Statements, which means including the Group Parent and its subsidiaries. The amendment then specifies that a company must value the goods or services, received in the context of a transaction that is settled in cash or shares, from its own point of view, which may not necessarily coincide with that of the Group and with the relative amount that is recognized in the Consolidated Financial Statements. The IASB also clarified that, because IFRS 3 changed the definition of a business combination so that the conferment of a branch of a company to form a joint venture, or the combinations of

305 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Financial Statements 2010 Mediaset S.p.A. – Explanatory Notes enterprises, or branches of companies, in jointly controlled entities, does not fall within the area of applicability of IFRS 2. In point 20 of these Explanatory Notes “Additional information on financial instruments and risk management policies”, there are given the details of the financial assets and liabilities, classified into the different categories laid down by IAS 39, both for the financial year being looked at and the previous one, the calculation models used for their valuation and the details relative to the different types of financial risks and the connected hedging assets. Point 20 reflects the amendment to IFRS 7 Financial instruments – additional information, applied from 1 January 2009, which was issued in order to increase the disclosure level required in the case of the valuation at fair value and in order to strengthen the existing standards regarding the disclosure on the liquidity risks of financial instruments. Specifically, it asks that disclosures be supplied regarding the calculation of the fair value of the financial instruments by valuation hierarchy levels. The adoption of this reporting standard has not given rise to any impact from the point of view of the valuation and the postings to the balances contained in the Financial Statements, but only regarding the type of information supplied in the notes.

IFRS 5 – Non-current Assets Available For Sale and Discontinued The change establishes that if a company is involved in a disposal plan that brings about the loss of control of a subsidiary company, all the subsidiary’s assets and liabilities must be classified among the assets available for sale, even if after the sale made by the company it will still own a minority interest in the subsidiary company. Financial Statements tables and layouts The Balance Sheet is drawn up following the layout that splits assets and liabilities into current and non-current. An asset or liability is classified as current when it meets one of the following criteria: It is expected that it will be realized, or extinguished, or it is estimated that it will be sold, or used, in the ordinary operating cycle of the Group, or it is mainly held for trading, or it is expected that it will be realized, or extinguished, within 12 months from the closing date of the financial year. Lacking all three of the above conditions the assets and liabilities are classified as being non- current. The Income Statement is drawn up following the layout of costs by type, showing the intermediate levels relative the operating result and the pre-tax result. In order to enable a better measurement of the true progress of normal operations there are shown separately the cost and revenue components arising from events or operations that, because of their type and amount, have to be considered as non-recurrent such as, for example, the disposals of controlling equity investments. These operations can be linked to the definitions of significant non-current operations and events that are contained in the Consob (Italian SEC) Communication n° 6064293 of 28 July 2006, differing from the definition of “atypical and/or unusual operations” contained in the same Consob (Italian SEC) Communication of 28 July 2006, according to which there are considered to be atypical and/or unusual operations those operations which, due to their significance/relevance, the type of the counterparts, the subject of the transaction, the method of calculating the transfer price and the time of the event, i.e. nearness to the closing date of the financial year, can give rise to doubts regarding the correctness/completeness of the 306 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Financial Statements 2010 Mediaset S.p.A. – Explanatory Notes information in the Financial Statements, to conflicts of interest, to the safeguarding of the company’s equity or to safeguarding of the minority shareholders’ interests. The Comprehensive Income Statement shows the cost and revenue items, which as asked for, or allowed, by the various International Accounting Standards are posted directly among the Balance Sheet reserves The Cash Flow Statement has been drafted by applying the indirect method, according to which the operating result is adjusted for the impacts of non-monetary operations, for any deferral or provision of previous or future operational incomes or payments and for elements of revenues or cost connected with financial flows deriving from investment or financial activities. Incomes and charges relative to medium/long-term financing operations and the relevant hedging instruments, as well as the dividends paid, are included in the financial activities. The balance of the item Banks, cash and equivalents takes in also takes in the balance of the non-bank current account maintained with the subsidiary, affiliated and jointly controlled companies, for centralised treasury, i.e. cash pooling, purposes. The Net Equity Movements table shows the changes that have taken place in the Net Equity items relative to the following: The allocation of the profit for the accounting period. The movements of the Net Equity reserve, i.e. share-based payments for stock option plans and the hedging of interest rate risks. The impact arising from any changes in the accounting standards. The breakdown of the comprehensive profit/loss. For each significant item shown in the aforesaid tables there are also indicated the references to the successive Explanatory Notes, within which there is supplied the relative disclosures and information and there are detailed the breakdowns and the changes that have taken place compared to the previous financial year. It is also highlighted that for the purpose of fulfilling the obligations contained in the Consob (Italian SEC) Resolution n° 15519 of 27 July 2006 called “Measures regarding Financial Statements layouts”, there are also given, in addition to the obligatory tables, specific Income Statement and Balance Sheet tables giving the significant amounts of the balances, or transactions, with Related Parties shown apart from the respective reference items.

Real estate, plant and equipment Plant, machinery, equipment, buildings and land are posted at purchase, production or conferment cost, including any ancillary charges, any dismantling costs and the direct costs necessary to made the asset ready for use. These tangible fixed assets, with the exception of land, which is not subject to depreciation, are systematically depreciated in each accounting period on a straight-line basis, using economic and technical depreciation rates determined in relation to the remaining useful life of the assets. Depreciation is calculated on a straight-line basis on the cost of the assets net of the relative residual values, if significant, based on their estimated useful lives, applying the following percentage rates: Buildings 2.5% Plant and machinery 10% - 20% Light constructions and equipment 5% - 16% Office furniture and machines 8% - 20% Motor vehicles and other means of transport 10% - 25% 307 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Financial Statements 2010 Mediaset S.p.A. – Explanatory Notes The possibility to recover their value is assessed according to the criteria laid down by IAS 36, described in the section below called “Impairment of assets”. Ordinary maintenance costs are posted in full to the Income Statement, whereas Incremental maintenance costs are attributed to the related assets and depreciated over the remaining useful life of the assets in question. The capitalised costs for improvements to rented assets are posted to the classes of assets to which they refer and then depreciated at the lower between the residual life of the rental contract and residual useful life of the type of asset to which the improvement relates. Whenever the individual components of a complex tangible fixed asset have different useful lives, they posted separately in order to be depreciated separately, in line with their individual useful lives, i.e. the component approach” Specifically, according to this principle, the value of land and that of the buildings that are on it are separated and only the buildings are depreciated. The gains and losses resulting from sales or disposals of assets are calculated as the difference between the sale revenue and the net book value of the asset and are then posted to the Income Statement.

Assets in operational leasing The costs for leasing instalments coming from operating leases are posted at fixed amounts based on the duration of the contract.

Intangible fixed assets The Intangible fixed assets are assets without any physically identifiable nature, controlled by the company and able to generate future economic benefits. They are posted at purchase or production cost, including ancillary charges according to the criteria already described above for the tangible fixed assets. In the event of purchased intangible fixed assets whose availability for use and the relevant payments are deferred beyond ordinary terms, the purchase value and the relative payable are discounted by posting the implicit financial contained charges within the original purchase price. Internally generated intangible fixed assets are posted to the Income Statement in the period in which they are incurred if relative to research costs. Development costs, mainly regarding software, are capitalized and amortised on a straight- line basis over their estimated useful lives (3 years on average), provided that they can be identified, that the cost can be dependably calculated and that the asset is likely to generate future economic benefits. Intangible fixed assets with a defined useful life are amortised on a straight-line basis, starting from the time when the asset is available for use, over the period of their forecasted usefulness. The possibility to recover their value is assessed according to the criteria envisaged by IAS 36, described in the next section Impairment of assets. Impairment of assets The book values of the tangible and intangible fixed assets are periodically reviewed, as laid down by IAS 36, which asks for the evaluation of the existence of any losses of value, i.e. “impairment”, of the intangible and tangible fixed assets where there are indicated that this problem could exist. In the case of goodwill, of intangible fixed assets with an undefined lifespan

308 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Financial Statements 2010 Mediaset S.p.A. – Explanatory Notes or of assets not available for use this valuation is carried out at least yearly, normally at the time of the preparation of the Yearly Financial Statements, but also at any time when there is an indication of a possible loss of value of an asset. The possible recovery of the posted values is checked by comparing the accounting book value in the Financial Statements with the greater between the net sale price, where there is an active reference market, and the usage value of the asset. The usage value is calculated based on the discounting of the cash flows expected from the usage of the asset, or from a combination of assets, i.e. the cash generating units, to which the asset belongs and from its disposal at the end of its useful life. The cash generating units are identified, in line with the organisational and business structures, as homogenous combinations that generate autonomous incoming cash flows coming from the continuous usage of the assets appertaining to them.

Equity investments in subsidiary, affiliated companies and joint ventures The equity investments in subsidiary, affiliated companies and joint ventures are valued according to the cost method, reduced by any loss of value pursuant to IAS 36. The posted book value is subject impairment testing. In the case of any write-down as a result of a loss in value from this the cost is posted to the Income Statement. The original value is reinstated during the following financial years if the reasons for the write-down disappear.

Equity investments in other enterprises The equity investments in other enterprises are valued at their fair value, which, in the case of quoted companies is the bid price of the last trading day of the accounting period, with any change in value posted to Net Equity, pursuant to IAS 39.

Non-current financial assets The equity investments different from the equity investments in subsidiary, affiliated, jointly controlled companies and in other enterprises, are posted in the item Non-current receivables and financial assets and are they are classified, pursuant to IAS 39, as financial assets “Available for sale” at their Fair value or, alternatively, at cost if the fair value cannot be dependably calculated with the posting of the valuation impact, until the asset is disposed of but with the exception of the case when it has suffered a permanent loss in value, to a specific reserve in the Net Equity. In the event of a write-down for loss of value, i.e. impairment, the cost is posted to the Income Statement. The original value is reinstated in subsequent financial years if the reasons for the write-down disappear. The risk resulting from any losses above the value of the Net Equity is posted to a specific risks fund to the extent to which the investor is committed to fulfilling legal or implicit obligations regarding the subsidiary or, in any case, to cover its losses. Among the assets available for sale there also fall the financial investments, not held for trading, valued according to the rules already referred to for the assets “Available for sale” and the financial payables, for the amount of them that is due beyond 12 months.

Non-current assets available for sale Non-current assets available for sale are valued at the lower between their posted net book value and their market value less cost of sales. Non-current assets are classified as available for

309 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Financial Statements 2010 Mediaset S.p.A. – Explanatory Notes sale when it is estimated that their book value will be recovered by means of a sale transaction rather than through their use in company operations. This condition is only met when the sale is considered as very likely and the asset is available for immediate sale in its current condition. For this purpose, Management must be committed to the sale, which must take place within 12 months from the date of classification of this item.

Current assets

Trade receivables The receivables are posted at their fair value, which is generally also their face value, except in the case where, because of significant extended payment terms, it is the same as the value calculated by applying the amortised cost method. Their value at year-end is adjusted to their estimated realisable value and written down in case of impairment. Those originating in non- EMU currencies are valued at the year-end spot rates issued by the European Central Bank. The write-downs of the receivables are carried out on all those customer balances that have lowers percentage levels than they should have at the stage of the collection process undertaken by the specific company function and afterwards by its legal department.

Other current financial assets Financial assets are posted and reversed in the Financial Statements based on their transaction date and they are initially valued at cost, including the expenses directly connected with their acquisition. At successive dates of the Financial Statements, those financial assets to be held until maturity are shown at amortised cost, according to the actual interest rate method, net of write-downs made to reflect any impairment. Financial assets other than those held until maturity are classified as held for trading or available for sale and are valued at their “fair value” at each accounting period with the posting of their impacts to the Income Statement in the item “Financial (Charges)/Incomes” or to a specific reserve in the Net Equity and, in this latter case, until they are realised or have suffered a loss of value. The fair value of securities quoted on an active market is based on market prices at the date of the Financial Statements. The market prices used are bid/ask prices according to whether it is an asset/liability position that is held. The fair value of securities that are not quoted on an active market, and of the trading derivatives is calculated by using the most prevalent evaluation models and techniques available on the market, or by using the price supplied by a number of independent counterparts and not by only one of them. Cash and equivalents This item includes the petty cash, the bank current accounts and deposits that are repayable on demand and other short-term and high liquidity financial investments that are readily convertible to cash, with an insignificant risk of a change in their values.

Treasury shares Treasury shares are shown at cost and posted as a reduction of the Net Equity and all the gains and losses resulting from trading them are posted to a specific reserve in the Net Equity.

310 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Financial Statements 2010 Mediaset S.p.A. – Explanatory Notes Employee Benefits Post-Employment Benefit Plans The Employee Leaving Indemnity, which is classifiable as a “post-employment benefit”, of the “defined benefit plan” type, the amount of which is already accrued must be projected forward in order to be able to estimate the amount to be settled at the time when the employment relationship will end and afterwards it is discounted to net present value, using the “projected unit credit method”. This actuarial method is based on some demographic and financial hypotheses, in order that it becomes possible to be able to make a reasonable forecast of the amount of the benefits that each individual employee has already accrued relative to the employment services that they have already supplied. Through the use of this actuarial valuation there posted to the Financial (Charges)/Incomes, the interest cost that constitutes the theoretical charge that the company would have to incur if it went to the market and obtained a loan for the same amount as that of the Employee Leaving Indemnity Fund. The actuarial gains and losses that reflect the impacts coming from the changes in the actuarial hypotheses used are posted directly to a specific reserve in the Net Equity. It is highlighted that following the changes made to the regulating of the Employee Leaving Indemnity Fund (“ELI”) by the Law of 27 December 2006 n° 296 (“Finance Law 2007”) and by the successive actuating Decrees and Regulations, the accounting criteria applied to the amounts of the Employee Leaving Indemnity accrued at 31 December 2006 and to those that shall accrue in the following financial years have been changed, starting from the previous financial year, following the methodologies laid down by IAS 19 and the relative interpretations that were defined during the month of July 2007 by the competent Italian national technical bodies. Due to the Supplementary Pension Reform that is referred to in the relative Decree, the amounts of the Employee Leaving Indemnity Fund accrued until 31 December 2006 shall continue to remain within the company constituting a defined benefit plan, with the obligation of the accrued benefits to that date being subject to an actuarial valuation, while the amounts that accrue from 1 January 2007, according to the choices made by the employees during the first half-year will be allocated to supplementary pension funds, or transferred by the company to the treasury fund managed by INPS (Italian National Social Security Institute) starting from the time when the employees formalise their choice, as defined contribution plans that are no longer subject to actuarial valuation.

Share-based compensation plans Mediaset S.p.A., in line with what is laid down by IFRS 2, which classifies Stock Options as “share-based payments” and asks that for the type that falls into the “equity-settled” category, which means that it foresees the physical handing over of the share certificates, the calculation at the assignment date of the fair value of the option rights issued and its posting as a personnel costs to be split evenly of the period of the accrual of the rights, i.e. the vesting period with the posting of the other side of the entry to the specific reserve of Net Equity. This posting is carried out based on the estimate of the rights that will actually accrue in favour of the person who has the right, taking into consideration the usufruct conditions of them, not based on the market value of the rights. In line with what is laid down by IFRIC 11 “IFRS 2-Group and Treasury Shares Transactions” issued on 30 November 2006 and homologated on 1 June 2007 by the European Commission the Stock Options assigned directly by Mediaset S.p.A. to the employees

311 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Financial Statements 2010 Mediaset S.p.A. – Explanatory Notes of its direct and indirect subsidiaries are to be considered as being within the category “equity settled” and posted as a contribution to the direct and indirect subsidiaries with the other side of the accounting entry posted to a reserve in the Net Equity. The calculation of the fair value takes place using the “binomial” model. In accordance with the transitional standards this standard was applied to all the assignments after 7 November 2002 and not yet matured at 1 January 2005. Trade payables The trade payables are posted at their nominal value. Those originating in currencies and not in Euros are valued at the relative year-end spot rates issued by the European Central Bank. Funds for risks and charges The funds for risks and charges are relative to those costs and charges whose existence is either certain or probable but, however, for which, at the closing date of the financial year it was not possible to ascertain, with absolute certainty, either their true amount or the exact date on which they shall fall due. They have been provided only when there is a real current obligation, which is the result of past events that can be of a legal or contractual type, or derived from declarations or behaviour of the company that create valid expectations in the persons involved, i.e. implicit obligations. The provisions for these items have been posted at the value that represents the best possible estimate of the amount that the enterprise would have to pay in order to extinguish its obligation. When they are significant, and the payment date can be dependably estimated, the provisions are shown in the Financial Statements at current values with the posting to the Income Statement, in the item “Financial Incomes and (Charges)”, of the charges coming from the passage of time. Non-current financial liabilities The Non-current financial liabilities are shown at their amortised cost, using the actual interest rate method. Financial derivatives and accounting for hedging operations Mediaset S.p.A. carries out a function of intermediation regarding the exposure to financial risks that are mainly linked to exchange rate fluctuations regarding the acquisition of television rights, carried out by the direct subsidiary company R.T.I. S.p.A., in currencies that are different from the Euro and which are predominantly carried out in US Dollars. Mediaset S.p.A. uses financial derivatives, mainly futures contracts on currencies, in order to hedge the risks arising from foreign currency fluctuations both for highly probable future commitments and for payables regarding purchases already made. These contracts, purchased on the open market to hedge the exchange risks relative to contracts for the acquisition of television rights, cannot be qualified, in the Financial Statements of Mediaset S.p.A., as hedging contracts pursuant to what is contained in IAS 39 and, therefore, they are accounted for with the changes to fair value posted to the Income Statement, as realised and valuation gains and losses on foreign exchange, in the item Financial Incomes/(Charges). The fair value of the futures contracts is calculated as the discounted net present value of the difference between the notional amount valued at the forward contract rate and the notional amount valued at the fair forward rate, i.e. the forward exchange rate calculated at the date of the financial Statements.

312 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Financial Statements 2010 Mediaset S.p.A. – Explanatory Notes Mediaset S.p.A. is exposed to the financial risks on interest rates regarding multi-year loans stipulated at variable rates. Regarding the interest rate risk, if the hedging is considered as being effective pursuant to IAS 39 the effective portion of the adjustment of the fair value of the financial derivative that has been designated and that does qualify as hedging instrument is posted directly to the Net Equity, while the ineffective part is posted to the Income Statement. This reserve produces an impact in the Income Statement when there are realised the cash flows connected to the actual arrival of the hedged risk, or to the payment of the relative interest. As previously indicated above, at point 20 of these Explanatory Notes called “Additional information on financial instruments and risk management policies”, there are given the details of the financial instruments that have been used and the relative models that have been used for the valuation that is laid down by IAS 39. Revenue recognition The revenues from sales and services are posted when the actual transfer takes place of the risks and benefits arising from the ceding of the ownership of the goods or at the time when the supply of the service takes place. The revenues are shown net of returns, discounts, allowances and premiums, as well as the directly connected taxes. Any cost recoveries are shown as a direct reduction of the relative costs.

Financial incomes and charges The financial incomes and charges are posted to the Income Statement on a proper accruals timing basis.

Income taxes The current income taxes are posted on the basis of the estimated taxable income in line with the tax rates and fiscal measures that are currently in force, or have been basically approved, at the close of the accounting period in the various countries, taking into account any applicable exemptions and tax credits that are due. The prepaid and deferred taxes are calculated based on the timing differences between the values attributed to the assets and liabilities in the Financial Statements on a statutory basis and the corresponding values that are recognized for fiscal purposes, on the basis of the tax rates that will be in force at the time when the timing differences will be reversed. When the results are posted directly to Net Equity, the current taxes, the prepaid taxes assets and the deferred taxes liabilities are also posted to Net Equity.

Dividends distributed The dividends payable are shown as a Net Equity movement in the financial year when they have been approved by the Shareholders’ Meeting.

Dividends received The dividends received from the companies in which there are equity investments are recognised in the Income Statement at the time when the right to receive payment of them is established.

313 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Financial Statements 2010 Mediaset S.p.A. – Explanatory Notes Exchange gains and losses The amount of any net gain arising from the update of the exchange rates at the closing date of the financial year for the balances originating in foreign currencies, at the time of the approval of the Financial Statements and the consequent allocation of the financial result is posted, for the part of it that is not absorbed by the loss for the financial year, if there is one, to a non- distributable reserve until the time afterwards when it is actually realised. At the closing date of each financial year the total overall amount of the unrealised exchange gains and losses is recalculated. Whenever an overall net gain on exchange emerges that is higher than the amount that is posted in the aforesaid reserve the difference is added to it. If, on the other hand there emerges a loss, or a net gain that is less than the amount that is posted in the aforesaid reserve, then either the whole reserve, or the excess, is reclassified to a reserve that is freely distributable, at the time of the drafting of the Financial Statements.

Use of estimates The drawing up of the Financial Statements and of the Explanatory Notes required making estimates and assumptions, both in calculating some assets and liabilities, as well as in the evaluation of the potential assets and liabilities. Specifically, the current macroeconomic climate, made unstable by the impacts of the ongoing financial crisis, has meant that the estimates regarding the future progress of these items have been made taking into account the very high level of uncertainty involved. The main estimates are relative to the calculation of the accounting book value of the equity investments. The calculation of the usage value requires the estimating of the cash flows that are forecasted to be produced by the CGU, as well as the setting of an appropriate discounting rate to be used. The main uncertainties that could influence this estimate are relative to the calculation of the Weighted Average Cost of Capital (WACC), of the growth rates of the flows beyond the forecast horizon (g), as well as the hypotheses made in developing the expected cash flows for the years of the explicit forecast. Some of the main forecasted data also refer to the funds for risks and charges. The estimates and assumptions are periodically reviewed and the impacts of each individual change in them are posted to the Income Statement.

Changes in accounting estimates Pursuant to the IAS 8 these items are input to the Income Statement, on a forecasted basis, starting from the accounting period during which they are adopted. Accounting standards, interpretations and amendments not yet applicable and not applied in advance by the Company. On 8 October 2009, the IASB issued an amendment to IAS 32 – Financial Instruments: presentation in the Financial Statements - the subject of which was the classification of the rights issued for the purpose of regulating the accounting treatment of the issue of rights, i.e. rights, options or warrants, in a different currency from the issuer’s functional one. Previously these rights were accounted for as liabilities for financial derivatives. The amendment, on the other hand, requires that, in certain specific conditions, these rights must be classified to Net Equity, regardless of the currency in which the exercising price is fixed. This amendment must be applied, retrospectively, from 1 January 2011. It is believed that the application of the amendment will not have any significant impacts on the Financial Statements of the Company.

314 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Financial Statements 2010 Mediaset S.p.A. – Explanatory Notes On 12 November 2009 lo IASB published IFRS 9 – Financial Instruments: This standard was then amended on 28 October 2010. The standard, applicable from 1 January 2013, is the first part of a process, in stages, the objective of which is to totally replace IAS 39 and introduce new criteria for the classification and valuation of the financial assets and liabilities and for the derecognition from the Financial Statements of the financial assets. Specifically, for the financial assets the new reporting standard uses a single approach based on the methodologies of managing the financial instruments and on the characteristics of the contractual cash flows of the financial assets themselves, for the purpose of determining the valuation criterion, replacing the different rules laid down by IAS 39. For the financial liabilities, on the other hand, the main change that has taken place refers to the accounting treatment of the changes in the fair value of a financial liability designated as a financial liability valued at fair value through Income Statement, in the case where these are due to the change in the credit status of the liability itself. According to the new standard these changes must be shown in the Other comprehensive gains and losses and they will no longer pass through the Income Statement. At the date of these Financial Statements the competent bodies of the European Union had not yet concluded the homologation process necessary for the application of the new standard. On 26 November 2009 the IASB issued an amendment to IFRIC 14 – Advance payments regarding a minimum funding requirements clause, allowing companies that pay a minimum funding requirement in advance to recognise it as an asset. The amendment must be applied from 1 January 2011. It is believed that the application of the amendment will not have any significant impacts on the Financial Statements of the Company. On 26 November 2009 the IFRIC issued IFRIC 19 – Extinguishing financial liabilities with equity instruments, which gives the guidelines regarding the posting of the extinguishing of a financial liability through the issuing of equity instruments. The interpretation establishes that if a company renegotiates the conditions of the extinguishing of a financial liability and its creditor accepts its extinguishing through the issue of shares of the company, then the shares issued by the company become part of the price paid for extinguishing the financial liability and they must be valued at fair value. The difference between the accounting book value of the extinguished financial liability and the initial value of the equity instruments issued must be posted to the Income Statement in the period. The interpretation must be applied from 1 January 2011. It is believed that the application of the interpretation will not have any significant impacts on the Financial Statements of the Company. On 6 May 2010 lo IASB issued a series of changes to the IFRS, i.e. “Improvements” that will be applicable from 1 January 2011. Below there are referred to those that will bring about a change in the presentation, recognition and valuation of the balances in the Financial Statements, while ignoring those that will only bring about terminological changes, or publishing changes, with minimum impacts in accounting terms, or those that have any effect on any standards or interpretations that are not applicable by the Company. IFRS 3 (2008) – Business Combinations: the amendment clarifies that the components of the interests belonging to minorities that do not give the legal right to the owners to receive a proportional amount of the net assets of the subsidiaries must be valued at the fair value, or according to what is asked for by the applicable accounting standards. Therefore, for example, a stock option plan given to employees must be valued, in the case of business combinations, in accordance with the rules contained in IFRS 2 and the amount of the equity of a convertible bond must be valued in accordance with the contents of IAS 32. Furthermore, the Standards Board went into detail regarding share-based payment plans that are replaced in the context of

315 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Financial Statements 2010 Mediaset S.p.A. – Explanatory Notes a business combination, adding a specific guide clarifying the accounting treatment of these matters. IFRS 7 – Financial Instruments: additional information: the change emphasises the interaction between the additional information of a qualitative type and that of a quantitative type that is asked for by the reporting standard regarding the nature and importance of the risks relative to the financial instruments. This should help the users of the Financial Statements to link together the various pieces of information presented and to be able to build up a general description regarding the nature and importance of the risks arising from the financial instruments. Furthermore, there has been cancelled the request for information about the financial assets that have achieved maturity, but that have been renegotiated, or written down, and that relative to the fair value of the collateral assets. IAS 1 – Presentation of the Financial Statements: the change asks that the reconciliation between the changes in each component of Net Equity be presented within the explanatory notes or in the tables attached to the Financial Statements. It is believed that the application of these changes will not bring about any significant impacts on the Financial Statements of the Company. On 7 October 2010 the IASB published some amendments to IFRS 7 – Financial Instruments: Additional information, applicable for the accounting periods that will begin on, or after, 1 July 2011. The amendments have been issued with the intention of improving understanding of the transfer transactions regarding financial assets, including the understanding of the possible impacts arising from any risk, whatsoever, that remains as the responsibility of the company that has transferred these assets. Furthermore, the amendments require more information to be provided in the case where a disproportionate amount of these transactions is put in place at the end of an accounting period. At the date of these Financial Statements the competent bodies of the European Union had not yet concluded the homologation process necessary for the application of the amendments.

4. Other information

Relations with the subsidiary, affiliated, parent and associated companies and related parties The Board of Directors on 9 November 2010 passed a resolution to adopt the “Procedure for the transactions with related parties” carried out by Mediaset S.p.A., either directly or through subsidiary companies, drawn up according to the principles laid down in the “Regulations containing measures for transactions with related parties” adopted by Consob (Italian SEC) with its resolution number 17221 of 12th March 2010. The procedure that is published on the company’s website: (www.mediaset.it/investor/governance/particorrelate) and contained in the “Report on Corporate Governance and the ownership structures”, establishes the rules for the identification, the approval, the execution and the publication of the Transactions with Related Parties” carried out by Mediaset S.p.A., either directly or through subsidiary companies, for the purpose of ensuring the transparency and the fundamental and procedural correctness of the transactions themselves, as well as those cases that are excluded from the application of these rules.

316 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Financial Statements 2010 Mediaset S.p.A. – Explanatory Notes The following tables show the details of the Balance Sheet and Income Statement relations caused by the transactions that have taken place with the subsidiary, affiliated, parent and associated companies, at normal arm’s length market conditions.

(values in thousand Euros)

Receivables and Intercompany Trade Other receivables Other current RECEIVABLES AND FINANCIAL ASSETS non current financial receivables and current assets financial assets financial assets receivables

Fininvest Group Parent Company - 9 1,258 - - Fininvest S.p.A. - 9 1,258 - - - 9 1,258 - -

Mediaset Group subsidiary companies - 5,069 19,886 3,198,578 5,425 Videotime S.p.A. - 11 - - 30 Mediaset Investment S.a.r.l. - 2 - - - R.T.I. - Reti Televisive Italiane S.p.A. - 4,759 5,456 1,952,637 5,395 Medusa Film S.p.A. - 25 3,507 - - Publitalia '80 S.p.A. - 83 2,564 - - Digitalia '08 S.r.l. - 47 1,601 - - Elettronica Industriale S.p.A. - 20 4,780 348,180 - Boing S.p.A. - 1 1,937 - - Media Shopping S.p.A. - 100 41 - - Mediaset Investimenti S.p.A. - 9 - 897,761 - Mediacinco Cartera s.l. - 3 - - - Med Due S.r.l. - 9 - - - 5,069 19,886 3,198,578 5,425

Mediaset Group affiliated companies -26- - - The Space Cinema 2 S.p.A. - 14 - - - Tivù S.r.l. - 10 - - - Capitolosette S.r.l. - 2 - - - -26- - -

Medaiset Group related companies -461- - Consorzio Campus Multimedia in-formazione - - 61 - - TED - Tv Educational S.r.l. in liquidazione - 4 - - - -461- -

Fininvest Group related companies - 167 236 - - Consorzio Servizi Vigilanza - 2 - - - Fininvest Gestione Servizi S.p.A. - 9 - - - Consorzio Elicotteri Fininvest (Cefin) - 5 - - - Pagine Italia S.p.A. - 2 - - - Arnoldo Mondadori Editore S.p.A. - 60 - - - Alba Servizi Aerotrasporti S.p.A. - 59 - - - Il Teatro Manzoni S.p.A. - 1 236 - - A.C. Milan S.p.A. - 30 - - - - 167 236 - -

Other related parties - 167 236 - - Supplementary pension funds (Mediafond) - 47 - - - - 167 236 - -

317 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Financial Statements 2010 Mediaset S.p.A. – Explanatory Notes

(values in thousand Euros)

Payables and non Other payables Trade Intercompany Other current PAYABLES AND FINANCIAL LIABILITIES current financial and current payables financial payables financial liabilities liabilities liabilities

Fininvest Group Parent Company -26--- Fininvest S.p.A. - 26 - - - -26---

Mediaset Group subsidary companies - 1,595 35,345 384,579 400,915 Videotime S.p.A. - 11 853 16,776 - Mediaset Investment S.a.r.l. ----372,371 R.T.I. - Reti Televisive Italiane S.p.A. - 1,529 7,163 - 28,535 Medusa Film S.p.A. - 24 4,567 24,831 - Publieurope Ltd. - - - 17,145 - Publitalia '80 S.p.A. - - 3,466 276,252 - Digitalia '08 S.r.l. - 31 4 21,536 - Elettronica Industriale S.p.A. - - 8,846 - - Boing S.p.A. ---5,143- Media Shopping S.p.A. - - 4,670 10,439 9 Mediaset Investimenti S.p.A. - - 1,272 - - Med Due S.r.l. ---5,910- Tao Due S.r.l. - - 4,504 6,546 - - 1,595 35,345 384,579 400,915

Mediaset Group affiliated companies ---7,365- Fascino Produzione e Gestione Teatro S.r.l. - - - 7,365 -

Fininvest Group related companies -222()- - Arnoldo Mondadori Editore S.p.A. - 2 - - - Mondadori Retail S.p.A. -40--- Alba Servizi Aerotrasporti S.p.A. - 180 - - - Mediobanca S.p.A. 90,051 2,400 - - 60,129 -222()- -

Other related parties -167236- - Directors with strategic responsibilities - 441 - - - Supplementary pension funds (Mediafond) - - 61 - - -167236- -

318 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Financial Statements 2010 Mediaset S.p.A. – Explanatory Notes

(values in thousand Euros)

(Charges)/proceed Operating Operating Financial Financial REVENUES AND COSTS s deriving from revenues costs charges proceeds investments

Fininvest Group Parent Company 15 755 - - - Fininvest S.p.A. 15 755 - - - 15 755 - - -

Mediaset Group subsidary companies 5,437 3,308 127,188 112,345 256,232 Videotime S.p.A. 21 37 156 106 - International Media Services Ltd. in liquidazione -- - -(76) Mediaset Investment S.a.r.l. 2 - 10,522 - - R.T.I. - Reti Televisive Italiane S.p.A. 4,700 3,240 114,381 96,089 192,308 Medusa Film S.p.A. 36 1 215 - - Publieurope Ltd. - 2 90 - - Publitalia '80 S.p.A. 150 - 1,230 - 64,000 Digitalia '08 S.r.l. 133 27 89 - Elettronica Industriale S.p.A. 42 - - 5,508 - Boing S.p.A. 1 - 33 - - Media Shopping S.p.A. 328 - 322 174 - Mediaset Investimenti S.p.A. 9 - - 10,428 - Mediacinco Cartera s.l. 5 - - - - Med Due S.r.l. 9 - 62 3 - Tao Due S.r.l. - - 88 37 - 5,437 3,308 127,188 112,345 256,232

Mediaset Group affiliated companies 16 - 20 1 - The Space Cinema 2 S.p.A. 3 - - - - Fascino Produzione e Gestione Teatro S.r.l. - - 20 1 - The Space Cinema 1 S.p.A.2---- Tivù S.r.l. 10---- Capitolosette S.r.l. 2 - - - - 16 - 20 1 -

Meidaset Group related companies 230- - - Consorzio Campus Multimedia in-formazione - 30 - - - TED - Tv Educational S.r.l. in liquidazione 2 - - - - 230- - -

Fininvest Group related companies 277 1,538 - - - Consorzio Servizi Vigilanza 3 - - - - Fininvest Gestione Servizi S.p.A. 15 21 - - - Consorzio Elicotteri Fininvest (Cefin) 8 - - - - Arnoldo Mondadori Editore S.p.A. 150 2 - - - Mondadori Retail S.p.A. - 46 - - - Alba Servizi Aerotrasporti S.p.A. 49 1,073 - - - Il Teatro Manzoni S.p.A. 2 371 - - - A.C. Milan S.p.A. 50 25 - - - Mediobanca S.p.A. - - 2,640 - - 277 1,538 - - -

Other related parties -- - Directors with strategic responsibilities - 3,587 - - - Supplementary pension funds (Mediafond) 84 10 ------

The most significant transactional relations that took place between Mediaset S.p.A. and the Group companies, the balances regarding which are summarised in the foregoing tables, were relative to the following: – The concession by the parent company Fininvest S.p.A. of the user licence for the Fininvest trademark, for a licence fee of 465 thousand Euros, which was totally paid during the financial year. – The building rents on the part of the subsidiary company R.T.I. S.p.A., amounting to 2,246 thousand Euros, of which 1,356 thousand Euros was paid during the financial year. – The contract for “ad hoc” air transport, both domestic and international, with the associated company Alba Servizi Aerotrasporti S.p.A. amounting to 1,067 thousand Euros of which 904 thousand Euros was paid during the financial year. – Management of administrative services by the subsidiary company R.T.I. S.p.A. amounting to 772 thousand Euros of which 599 thousand Euros was paid during the financial year.

319 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Financial Statements 2010 Mediaset S.p.A. – Explanatory Notes – The income from the contract for the services supplied by Central Communication and Information Management to the subsidiary companies for 3,635 thousand Euros received in January 2011. – Sponsorship contracts for the musical event “Aperitivo in concerto” with the associated company Il Teatro Manzoni S.p.A. for 371 thousand Euros totally during the financial year. – The loan put in place with the subsidiary company Mediaset Investment S.a.r.l. with the nominal value of 370.000 thousand Euros and expiry forecasted at 14 January 2011. The balance at 31 December 2010, amounting to 372,371 thousand Euros, includes the accrual for the interest of 2,371 thousand Euros. – The loan put in place with Mediobanca on 17 November 2005 for an initial amount of 160,000 thousand Euros which, after having exercised the relative contractual right, in November 2006, was taken to 210,000 thousand Euros and during 2010 it was partially reimbursed in two lots amounting to 30,000 thousand Euros each. The interest posted to the Income Statement is relative to the provisions posted with the amortised cost method and they amount to 2,097 thousand Euros. With the same contract there was also put in place a revolving credit line for the initial amount of 75,000 thousand Euros, was taken to the amount of 100,000 thousand Euros with the same exercising of the contractual right referred to above. This line was extinguished during the month of November 2010 and the interest paid during the financial year amounted to 544 thousand Euros. During the financial year 2010 the inter-company relations and transactions were also relative to the managing of the equity investments which, during the financial year, brought in receipts for dividends from the subsidiary companies Publitalia ’80 S.p.A. for 64,000 thousand Euros, R.T.I. S.p.A. for 192,308 thousand Euros. As well as these dividends were received from the indirect subsidiary company Gestevision Telecinco S.A. for 199 thousand Euros. Furthermore, Mediaset S.p.A. carries out a centralised service for managing the financial assets, also through the management of inter-company current account relationships that generated the followings:

interest payable to the following companies: – Publitalia ’80 S.p.A. 1,230 thousand Euros; – Videotime S.p.A. 156 thousand Euros; – Media Shopping S.p.A. 37 thousand Euros; – Digitalia ’08 S.r.l. 89 thousand Euros; – Medusa Film S.p.A. 215 thousand Euros; – Boing S.p.A. 33 thousand Euros; – Med Due S.r.l 62 thousand Euros; – Publieurope Ltd. 90 thousand Euros; – Tao Due S.r.l. 88 thousand Euros;

interest receivable from the following companies: – R.T.I. S.p.A. 30,141 thousand Euros; – Tao Due S.r.l. 37 thousand Euros; – Mediaset Investments S.p.A. 10,428 thousand Euros; – Elettronica Industriale S.p.A. 5,508 thousand Euros; – Med Due S.r.l. 3 thousand Euros; – Media Shopping S.p.A. 17 thousand Euros.

320 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Financial Statements 2010 Mediaset S.p.A. – Explanatory Notes In the section called “Other related parties”, in application of IAS 24, the main contents are for the relations with the Directors for the fees due to them. It is highlighted that dividends were distributed to the parent company Fininvest S.p.A. for 100,357 thousand Euros. Lastly, it is highlighted that, pursuant to the CONSOB Communications n° 1574 of 20 February 1997 and n° 2064231 of 30 September 2003, during 2010 Mediaset S.p.A. has not incurred any costs, relative to consultancy relationships, with any related company.

Treasury shares At 31 December 2010 the value of the treasury shares in the portfolio, acquired according to the resolutions passed by the Ordinary Shareholders’ Meetings of 16 April 2003, 27 April 2004, 29 April 2005, 20 April 2006, 19 April 2007, 16 April 2008, 22 April 2009 and 21 April 2010 amounted to 416.7 million Euros, unchanged compared to the figure at 31 December 2009, equivalent to 44,825,500 shares, to be used to fulfil the needs of the stock option plans and of the buyback, resolved upon. During the financial year, no treasury shares were bought or sold.

Stock option plans - share-based payments At 31 December 2010 there were the subject of valuation, for the purposes of IFRS 2, the stock option plans assigned in the financial years 2005, 2007, 2008, 2009 and 2010, relative to the assignment of rights relative to the ordinary shares of Mediaset. All of the plans come within the category of “equity-settled” plans, which means that they foresee the assignment of treasury shares that have been repurchased on the open market. The options resolved upon, in favour of assignee employees, are strictly linked to the achievement of financial performance targets by the company and also that the employee remains within the group for a pre-established period. The features of the five stock option plans are summarised as follows:

Plan 2005 Plan 2007 Plan 2008 Plan 2009 Plan 2010

Grant date 22/06/2005 28/06/2007 23/06/2008 29/09/2009 21/06/2010

Vesting from 01/01/2005 from 01/01/2007 from 01/01/2008 from 01/01/2009 from 01/01/2010 Period to 22/06/2008 to 28/06/2010 to 23/06/2011 to 29/09/2012 to 22/06/2013

Exercise from 23/06/2008 from 29/06/2010 from 24/06/2011 from 30/09/2012 from 23/06/2013 period to 22/06/2011 to 28/06/2013 to 23/06/2014 to 29/09/2015 to 22/06/2016

Fair Value EUR 1.74 EUR 0.72 EUR 0.30 EUR 1.35 EUR 0.68

Strike price EUR 9.6 EUR 7.87 EUR 4.86 EUR 4.72 EUR 4.92

Starting from 23 June 2008 no options have been exercised, relative to the stock option plan 2005. The exercising timeframe will expire on 22 June 2011. Starting from 29 June 2010 no options have been exercised, relative to the stock option plan 2007. During the year there was actuated the foreseen plan for 2010, assigning 3,420,000 options and the three-year exercising period regarding them will start from 23 June 2013. If there no longer exist the necessary conditions for the maturing of the options, e.g. the expiry of the exercising period or the exiting of the employee from the Mediaset Group, during 2010

321 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Financial Statements 2010 Mediaset S.p.A. – Explanatory Notes the exercising rights of 46,000 stock options expired, of which 16,000 relative to the 2005 plan and 30,000 relative to the 2009 plan. There follows the summary of the movements of the stock option plans:

Plan 2005 Plan 2007 Plan 2008 Plan 2009 Plan 2010 Total

Options outstanding at 1/1/2009 3,603,000 3,230,000 3,290,000 - - 10,123,000 Options issued during the year - - - 3,450,000 - 3,450,000 Options exercised during the year------Options expired/cancelled during the year(21,500)----(21,500) Options outstanding at 31/12/2009 3,581,500 3,230,000 3,290,000 3,450,000 - 13,551,500

Options outstanding at 1/1/2010 3,581,500 3,230,000 3,290,000 3,450,000 - 13,551,500 Options issued during the year----3,420,0003,420,000 Options exercised during the year------Options expired/cancelled during the year (16,000) - - (30,000) - (46,000) Options outstanding at 31/12/2010 3,565,500 3,230,000 3,290,000 3,420,000 3,420,000 16,925,500

The stock options are posted to the Financial Statements at their Fair Value: – 1.74 Euros for the options for the 2005 plan; – 0.72 Euros for the options for the 2007 plan, with the exclusion assigned to the employee of the subsidiary company Medusa Film S.p.A., which amounted to 0.77 Euros; – 0.30 Euros for the options for 2008; – 1.35 Euros for the options for 2009; – 0.68 Euros for the options for 2010. The Fair Value of the options was calculated using the binomial method. Specifically, the exercising of the stock options is incorporated into the model, assuming that this takes place as soon as the option price is found to be higher than a prefixed multiple of the exercising price. Any dilution of the quotations due to the issue of new shares is already discounted by the current market prices. The data used in the model are the following: – The spot price of the valuation day (reference price); – The historical 6 year volatility ex-dividend (calculated on the reference prices); – The expected dividend-yield calculated hypothesising as constant in the timeframe until expiry the dividend distributed during the year; – The curve of the Euro rates; – The exit-rate of the holders of the stock options is nil. The hypotheses regarding the sizing of the main numbers used in the calculation model are given in the table below:

Plan 2005 Plan 2007 Plan 2008 Plan 2009 Plan 2010

Average stock price EUR 9.735 euro EUR 7.60 EUR 4.347 EUR 4.85 EUR 5.085 Historical volatility 19.01% 16.34% 25.08% 45.39% 31.46% Risk-free rate 2.84% 4.86% 5.07% 3.00% 2.46% Expected dividend yield 2.06% 5.81% 12.15% 5.72% 10.32%

322 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Financial Statements 2010 Mediaset S.p.A. – Explanatory Notes Fiscal Consolidation There take part in the system of the Fiscal Consolidation, which is referred to in Article 117 and the following ones of the TUIR (Consolidated Income Tax Act), and according to which Mediaset S.p.A. is the consolidator, the following companies: Elettronica Industriale S.p.A., Videotime S.p.A., Publitalia ’80 S.p.A., Digitalia ’08 S.r.l., Boing S.p.A., Medusa Film S.p.A., Media Shopping S.p.A., Mediaset Investments S.p.A., R.T.I. S.p.A. and Taodue S.r.l.. Consob (Italian SEC) Issuers’ Regulations n° 11971 of 14 May 1999 and its successive changes Regarding what is laid down by In article 78 of the Consob Regulations n° 11971 of 14 May 1999 and its successive changes, information is given relative: to the fees paid to the Directors and the Statutory Auditors, to the Directors General and to the Executives with strategic responsibilities, also in subsidiary companies, to the stock options assigned to the Directors, to the Directors General and to the Executives with strategic responsibilities in the context of the Stock option plans for 2003/2005, 2006/2008 and 2009/2011, according to the criteria contained in tables 1) and 2) laid down by Attachment 3C of the aforesaid Regulations. No operations have been carried out in order to favour the acquisition or the subscription of shares, pursuant to article 2358, paragraph 3, of the Italian Civil Code.

323 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Financial Statements 2010 Mediaset S.p.A. – Explanatory Notes Table 1 Compensation paid to the Directors, Statutory Auditors, Directors General and to Executives with strategic responsibilities (*) (values in Euros)

Remunerations/Compensations Remunerations/Compensations Full name Position held in Mediaset S.p.A. in Mediaset S.p.A. in other Comapnies of Group

Emoluments The period during which End of Emoluments Presence Bnefits Compensation for Compensation Position at the office in subsidiaries the office was held mandate (4) at the office (5) fees (6) in kind employees (7) for employees companies

Confalonieri Fedele (2) Chairman of the Board 01.01.2010 - 31.12.2010 31.12.2011 1,524,000.00 28,500.00 11,067.00 2,063,907.07 102,000.00

Berlusconi Pier Silvio (2) Deputy Chairman 01.01.2010 - 31.12.2010 31.12.2011 1,016,000.00 13,000.00 2,211.09 871,125.08 66,000.00

Adreani Giuliano (2) Managing Director 01.01.2010 - 31.12.2010 31.12.2011 516,000.00 19,000.00 8,632.54 1,943,536.99 (8) 824,000.00

Berlusconi Marina Director 01.01.2010 - 31.12.2010 31.12.2011 16,000.00 7,000.00

Cannatelli Pasquale (3) Director 01.01.2010 - 31.12.2010 31.12.2011 16,000.00 10,000.00

Colombo Paolo Andrea Director 01.01.2010 - 31.12.2010 31.12.2011 16,000.00 22,000.00

Crippa Mauro (2) Director 01.01.2010 - 31.12.2010 31.12.2011 16,000.00 9,000.00 4,896.08 1,117,192.91

Ermolli Bruno Director 01.01.2010 - 31.12.2010 31.12.2011 16,000.00 17,500.00

Fausti Luigi (*) Director 01.01.2010 - 31.12.2010 01.03.2011 16,000.00 3,000.00

Giordani Marco (2) Director 01.01.2010 - 31.12.2010 31.12.2011 16,000.00 10,000.00 4,896.60 1,216,830.39 93,000.00

Messina Alfredo (2) Director 01.01.2010 - 31.12.2010 31.12.2011 16,000.00 15,000.00 90,000.00 324 Nieri Gina (2) Director 01.01.2010 - 31.12.2010 31.12.2011 16,000.00 18,000.00 4,896.60 1,087,380.81

Querci Niccolo' (2) Director 01.01.2010 - 31.12.2010 31.12.2011 16,000.00 10,000.00 4,896.68 1,427,202.39 (7)

Secchi Carlo Director 01.01.2010 - 31.12.2010 31.12.2011 16,000.00 31,500.00

Ventura Attilio Director 01.01.2010 - 31.12.2010 31.12.2011 16,000.00 35,000.00 Chairman of the Board Giussani Alberto 01.01.2010 - 31.12.2010 31.12.2010 93,000.00 of Statutary Auditors

Bianchi Martini Silvio Statutary Auditor 01.01.2010 - 31.12.2010 31.12.2010 62,000.00

Vittadini Francesco (2) Statutary Auditor 01.01.2010 - 31.12.2010 31.12.2010 62,000.00 114,700.00

(1) The Executives with strategic responsibilities of the Mediaset Group also hold the offices of company Directors in Mediaset S.p.A. (2) Other offices held in subsidiary companies as per the table that follows below. (3) For the office held the emolument is paid directly to the company involved. (4) The mandates of the members of the Board of Directors expire with the approval of the Financial Statements at 31.12.2011 and those of the members of the Board of Statutory Auditors expire with the approval of the Financial Statements at 31.12.2010. (5) The emoluments for the office of Director, resolved upon by the Shareholders’ Meeting of 22.4.2009 and the emoluments for the office of Directors with special assignments, as per article 2389, third paragraph, of the Italian Civil Code, resolved upon by the Board of Directors Meeting of 12.5.2009. No profit sharing is foreseen. (6) Presence fees for taking part in the Board of Directors Meetings and those of the following Committees: the Executive Committee, the Internal Controls Committee, the Corporate Governance Committee, the Compensation Committee and the Committee of Independents, as resolved upon by the shareholders’ Meeting of 22.4.2009. (7) Compensation for employees, including performance bonuses, the exact amount of which will be calculated and paid out after the approval of the Financial Statements and as a consequence of the achievement of the goals to which they are linked, as well as no competition commitments. (8) Compensation for employees, including performance bonuses and no competition commitments. (*) On 1 March 2011 the Independent Director Luigi Fausti tendered his resignation.

WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Financial Statements 2010 Mediaset S.p.A. – Explanatory Notes

Table 1-Part two Offices held by the Directors and Statutory Auditors of Mediaset S.p.A. in the Subsidiary Companies

Full name Position

Expiration of Company Position held Term of appointment appointment

Adreani Giuliano Publitalia '80 S.p.A. Chairman - M.D. 01.01.2010 - 31.12.2010 31.12.2010 (II) Digitalia '08 S.r.l. Chairman (III) 01.01.2010 - 31.12.2010 31.12.2010 (II) R.T.I. S.p.A. Director (I) 01.01.2010 - 31.12.2010 31.12.2010 (II) Medusa Film S.p.A. Director (I) 01.01.2010 - 31.12.2010 31.12.2010 (II) Gestevision Telecinco S.A. Director 01.01.2010 - 31.12.2010 01.04.2014 Publiespana S.A.U. Director 01.01.2010 - 31.12.2010 10.05.2011 Berlusconi Pier Silvio Med Due S.r.l. Chairman - M.D. (I) 01.01.2010 - 31.12.2010 17.02.2011 (V) R.T.I. S.p.A. Chairman - M.D. (I) 01.01.2010 - 31.12.2010 31.12.2010 (II) Publitalia '80 S.p.A. Director (I) 01.01.2010 - 31.12.2010 31.12.2010 (II) Medusa Film S.p.A. Director (I) 01.01.2010 - 31.12.2010 31.12.2010 (II) Gestevision Telecinco S.A. Director 01.01.2010 - 31.12.2010 01.04.2014 Publiespana S.A.U. Director 01.01.2010 - 31.12.2010 08.04.2013 Confalonieri Fedele Gestevision Telecinco S.A. Director 01.01.2010 - 31.12.2010 01.04.2014 Publiespana S.A.U. Director 01.01.2010 - 31.12.2010 10.04.2012 Crippa Mauro R.T.I. S.p.A. Director (I) 01.01.2010 - 31.12.2010 31.12.2010 (II) Giordani Marco R.T.I. S.p.A. Managing Director (I) 01.01.2010 - 31.12.2010 31.12.2010 (II) Media Shopping S.p.A. Chairman - M.D. (I) 30.09.2010 - 31.12.2010 31.12.2010 (II) Med Due S.r.l. Director (I) 01.01.2010 - 15.10.2010 Publitalia '80 S.p.A. Director (I) 01.01.2010 - 31.12.2010 31.12.2010 (II) Medusa Film S.p.A. Director (I) 01.01.2010 - 31.12.2010 31.12.2010 (II) Mediaset Investimenti S.p.A. Chairman (I) 01.01.2010 - 31.12.2010 31.12.2010 (II) Gestevision Telecinco S.A. Director 01.01.2010 - 31.12.2010 01.04.2014 Messina Alfredo Gestevision Telecinco S.A. Director 01.01.2010 - 31.12.2010 01.04.2014 Nieri Gina R.T.I. S.p.A. Deputy Chairman (I) 01.01.2010 - 31.12.2010 31.12.2010 (II) Querci Niccolo' R.T.I. S.p.A. Deputy Chairman - M.D. (IV) 01.01.2010 - 31.12.2010 31.12.2010 (II) Media Shopping S.p.A. Chairman (I) 01.01.2010 - 30.09.2010 Publitalia '80 S.p.A. Deputy Chairman (I) 01.01.2010 - 31.12.2010 31.12.2010 (II) Vittadini Francesco Digitalia '08 S.r.l. Statutory Auditor 01.01.2010 - 31.12.2010 31.12.2011 (II) Elettronica Industriale S.p.A. Chairman S.A. 01.01.2010 - 31.12.2010 31.12.2011 (II) Med Due S.r.l. Statutory Auditor 01.01.2010 - 31.12.2010 17.02.2011 (V) R.T.I. S.p.A. Chairman S.A. 01.01.2010 - 31.12.2010 31.12.2012 (II) Videotime S.p.A. Chairman S.A. 01.01.2010 - 31.12.2010 31.12.2011 (II)

(I) For the offices held the emolument is paid directly to the relative company. (II) In office until the date of the Shareholders’ Meeting that approves the Financial Statements. (III) The Chairman has renounced receiving the emolument from 1 July 2010. (IV) The Vice Chairman – Managing Director has renounced receiving the emolument. (V) The company Med Due S.r.l. was merged by incorporation into R.T.I. S.p.A. with legal effect from 17 February 2011.

325 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Table 2 Stock options assigned to the Directors, Directors General and the Executives with strategic responsibilities (*) (values in Euros)

Options held at the beginning Options assigned Options exercised Options expired Options held at the end of the year 01/01/2010 during the year 2010 during the year 2010 during the year 2010 of the year 31/01/2010

Market price Position Number of Exercice Expiry Number of Exercice Expiry Number Exercice Number Exercice Expiry at the Number of options Full name held options price date options price date of options price of options price date exercice

Fedele Confalonieri Chairman 340,000 1) 9.60 22.06.2011 5) 340,000 9.60 22.06.2011 5) 450,000 2) 7.87 28.06.2013 450,000 7.87 28.06.2013 450,000 3) 4.86 23.06.2014 450,000 4.86 23.06.2014 450,000 4) 4.72 29.09.2015 450,000 4.72 29.09.2015 450,000 4.92 22.06.2016 450,000 4.92 22.06.2016

Pier Silvio Berlusconi Deputy chairman 300,000 1) 9.60 22.06.2011 5) 300,000 9.60 22.06.2011 5) 360,000 2) 7.87 28.06.2013 360,000 7.87 28.06.2013 360,000 3) 4.86 23.06.2014 360,000 4.86 23.06.2014 360,000 4) 4.72 29.09.2015 360,000 4.72 29.09.2015 360,000 4.92 22.06.2016 360,000 4.92 22.06.2016

Giuliano Adreani Managing director 220,000 1) 9.60 22.06.2011 5) 220,000 9.60 22.06.2011 5) 270,000 2) 7.87 28.06.2013 270,000 7.87 28.06.2013 270,000 3) 4.86 23.06.2014 270,000 4.86 23.06.2014 270,000 4) 4.72 29.09.2015 270,000 4.72 29.09.2015 270,000 4.92 22.06.2016 270,000 4.92 22.06.2016

Mauro Crippa Director 62,000 1) 9.60 22.06.2011 5) 62,000 9.60 22.06.2011 5)

326 100,000 2) 7.87 28.06.2013 100,000 7.87 28.06.2013 100,000 3) 4.86 23.06.2014 100,000 4.86 23.06.2014 100,000 4) 4.72 29.09.2015 100,000 4.72 29.09.2015 100,000 4.92 22.06.2016 100,000 4.92 22.06.2016

Gina Nieri Director 62,000 1) 9.60 22.06.2011 5) 62,000 9.60 22.06.2011 5) 100,000 2) 7.87 28.06.2013 100,000 7.87 28.06.2013 100,000 3) 4.86 23.06.2014 100,000 4.86 23.06.2014 100,000 4) 4.72 29.09.2015 100,000 4.72 29.09.2015 100,000 4.92 22.06.2016 100,000 4.92 22.06.2016

Marco Giordani Director 62,000 1) 9.60 22.06.2011 5) 62,000 9.60 22.06.2011 5) 100,000 2) 7.87 28.06.2013 100,000 7.87 28.06.2013 100,000 3) 4.86 23.06.2014 100,000 4.86 23.06.2014 100,000 4) 4.72 29.09.2015 100,000 4.72 29.09.2015 100,000 4.92 22.06.2016 100,000 4.92 22.06.2016

Niccolò Querci Director 62,000 1) 9.60 22.06.2011 5) 62,000 9.60 22.06.2011 5) 100,000 2) 7.87 28.06.2013 100,000 7.87 28.06.2013 100,000 3) 4.86 23.06.2014 100,000 4.86 23.06.2014 100,000 4) 4.72 29.09.2015 100,000 4.72 29.09.2015 100,000 4.92 22.06.2016 100,000 4.92 22.06.2016

1) Stock options assigned in the financial year 2005 2) Stock options assigned in the financial year 2007 3) Stock options assigned in the financial year 2008 4) Stock options assigned in the financial year 2009 5) The Board of Directors on 28 June 2007 approved the change in the exercise dates to update to the new Plan Rules relative to the year 2005. (*) The executives with strategic responsibilities of Mediaset S.p.A. hold the office of Directors.

WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Financial Statements 2010 Mediaset S.p.A. – Explanatory Notes COMMENTS ON THE MAIN ASSET ITEMS

(values in thousand Euros)

5. Non-current assets

5.1 Real estate, plant and machinery The tables summarise the movements relative to the last two financial years of the original cost, the depreciation reserves, the write-downs and the net book value.

Technical and Land and Plant and Other tangible Tangible assets in Cost commercial Total building machinery assets progress equipment 01/01/2009 6,125 745 178 4,014 1 11,064

Additions --- 3 -3 Reclassifications - 1 - (1) - Disposals (10) (3) (6) (52) - (71) Adjustments --1 - - 31/12/2009 6,115 743 173 3,965 - 10,996

Additions 14 4 10 6 - 34 31/12/2010 6,129 747 183 3,971 - 11,030

Technical and Amortisation and Land and Plant and Other tangible Tangible assets in commercial Total building machinery assets progress depreciation equipment 01/01/2009 1,360 711 155 3,912 - 6,139 Disposals (10) (3) (6) (52) - (71) Amortisation 25 21 4 48 - 98 Adjustments (1) 1 1 1 - 31/12/2009 1,374 730 154 3,909 6,167 Amortisation 38 10 4 24 - 76 31/12/2010 1,412 740 158 3,933 6,243

Technical and Land and Plant and Other tangible Tangible assets in Net book value commercial Total building machinery assets progress equipment 01/01/2009 4,765 34 23 101 1 4,925 Additions --- 3 -3 Reclassifications - 1 - (1) - Amortisation (25) (21) (4) (48) - (98) 31/12/2009 4,741 13 19 56 - 4,829 Additions 14 4 10 6 - 34 Amortisation (38) (10) (4) (24) - (76) 31/12/2010 4,716 7 25 39 - 4,787

The changes compared to the previous financial year are the following:

Purchases in the financial year amounting to 34 thousand Euros;

depreciation amounting to 76 thousand Euros. The most significant item, land and buildings, totally consists of the office building located in Rome also used by the other Group companies.

32736 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Financial Statements 2010 Mediaset S.p.A. – Explanatory Notes 5.4 Other intangible fixed assets

Patents and Intangible assets in Other intangible Historical cost intellectual Trademarks Licenses progress and Total fixed assets property rights advances

01/01/2009 7,664 - 282 1,184 - 9,130

Additions - - 35 - 35 Reclassifications 21 - - (21) - - 31/12/2009 7,685 - 282 1,198 - 9,165 Reclassifications 35 - - (35) - - Disposals - - - (797) - (797) 31/12/2010 7,720 - 282 366 - 8,368

Patents and Intangible assets in Amortisation and Other intangible intellectual Trademarks Licenses progress and Total fixed assets depreciation property rights advances

01/01/2009 7,562 - 282 1,163 - 9,007 Amortisation and depreciation 76 - - - - 76 31/12/2009 7,638 - 282 1,163 - 9,083 Disposals - - - (797) - (797) Amortisation and depreciation 52 - - - - 52 31/12/2010 7,690 - 282 366 - 8,338

Patents and Intangible assets in Other intangible Net book value intellectual Trademarks Licenses progress and Total fixed assets property rights advances

01/01/2009 102 - - 21 - 123 Additions - - 35 - 35 Reclassifications 21 - - (21) - - Amortisation and depreciation (76) - - - - (76) 31/12/2009 47 - - 35 - 82 Reclassifications 35 - - (35) - - Amortisation and depreciation (52) - - - - (52) 31/12/2010 30 - - - - 30

The balance of the item Industrial patents and intellectual property rights amounted to 30 thousand Euros (47 thousand Euros at 31 December 2009). This item, which refers to software, increased by 35 thousand Euros, as a reclassification from the intangible assets in progress and decreased by 52 thousand Euros for the amortisation in the financial year. The item Intangible fixed assets in progress and advances paid partially used during the financial year refers to distribution advances 366 thousand Euros reduced by a write-down reserve for the same amount (1,163 thousand Euros in 2009.

5.5 Equity investments

Equity investments in direct and indirect subsidiary companies

31/12/2010 31/12/2009 Stake % book value Stake % book value share stock opt. total share stock opt. total Videotime S.p.A. 0% - 290 290 0% - 253 253 International Media Services Ltd. in liquidazione 99.95% - - - 99.95% 53 - 53 Mediaset Investment S.a.r.l. 100% 394,195 - 394,195 100% 394,195 - 394,195 R.T.I. - Reti Televisive Italiane S.p.A. 100% 534,219 4,114 538,332 100% 534,219 3,478 537,697 Medusa Film S.p.A. 0% - 195 195 0% - 117 117 Publitalia '80 S.p.A. 100% 51,134 3,087 54,222 100% 51,134 2,396 53,531 Digitalia '08 S.r.l. 0% - 94 94 0% - 72 72 Elettronica Industriale S.p.A. 0% - 111 111 0% - 111 111 Mediaset Investimenti S.p.A. 100% 850,000 - 850,000 100% 850,000 - 850,000

Investments in subsidiaries 1,829,548 7,891 1,837,440 1,829,601 6,428 1,836,029 Provision for investments in subsidiaries --

32837 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Financial Statements 2010 Mediaset S.p.A. – Explanatory Notes The increase compared to the previous financial year, amounting to 1,411 thousand Euros breaks down as follows: an increase of 1,492 thousand Euros relative to the amount matured in the financial year 2010 corresponds to the value of the stock options assigned to the employees of the direct and indirect subsidiary companies for the Stock option plans for 2007, 2008, 2009 and 2010. a decrease of 28 thousand Euros relative to the Stock option plan 2005 assigned to the employees of the direct and indirect subsidiary companies for option rights no longer exercisable for a total of 16,000 shares; a decrease of 53 thousand Euros relative to the total write-down of the equity investment in the subsidiary company International Media Services Ltd. in liquidation. The difference between the posted book value of the equity investment of 100% owned in Mediaset Investments S.p.A. and its accounting Net Equity amounted to 367,322 thousand Euros. The Balance Sheet value of this equity investment mainly reflects the trend of the valuation of the controlling equity investment owned in Gestevision Telecinco S.A., which in the separate Financial Statements of the subsidiary company is adjusted pursuant to IAS 39 to current Stock Exchange prices. This amount, which, by its very nature is an expression of the value that is realisable in the hypothesis of an immediate sale on the open market of minority holdings, does not necessarily constitute a dependable and complete measurement of the fundamental value of a strategic equity investment if it does not take into account the valuation of an appropriate control premium. Based on the market value of Gestevision Telecinco S.A. at the reference date of these Financial Statements and regarding which a further write-up was made after that date, this implicit premium would be equal to about 25%. During 2010 the market capitalisation of the Spanish subsidiary Gestevision Telecinco S.A. recorded an increase of 34% compared to the spot value at the end of the previous financial year. This increase, even if in the presence of the diluting effect (the holding in Gestevision Telecinco S.A. owned by the subsidiary company Mediaset Investments S.p.A. went down from 51.10% at 31 December 2009 to 41,218 % at 31 December 2010) consequent to the increase in the Share Capital of Telecinco reserved for the conferment of the television activities of Cuatro, which took place on 28 December 2010, which then translated into increase of the market value of the holding owned by Mediaset Investments S.p.A. amounting to 11%. At the end of the financial year 2010, Gestevision Telecinco S.A. achieved a growth in its net consolidated revenues of 30.3%, arriving at an operating result amounting to 219.4 million Euros (+78.7% compared to the figure for 2009), also laying down the foundation, through the finalising of a business combination with the free broadcaster Cuatro and the purchase of the equity investment of 22% in the pay operator Digital Plus, in order to consolidate its leadership position within its own competitive environment. The difference between the posted book value of the equity investments in R.T.I. S.p.A., Publitalia ’80 S.p.A. and Mediaset Investment S.a.r.l. and the respective accounting books Net Equity is positive. Attached there is laid out a specific list, indicating for each subsidiary company the information asked for pursuant to article 2427 of the Italian Civil Code paragraph 5.

32938 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Financial Statements 2010 Mediaset S.p.A. – Explanatory Notes Equity investments in other enterprises

31/12/2010 31/12/2009

Stake % Book value Stake % Book value Auditel S.r.l. 6,45% 2 6,45% 2 Gestevision Telecinco S.A. 0,334% 11,161 - -

Investments in other companies 11,163 2

The item, compared to the previous financial year, increased by 11,161 thousand Euros. The change that took place breaks down as follows: – an increase of 7,283 thousand Euros for the reclassification of 1,000,000 shares of Gestevision Telecinco S.A. from equity investments held for trading to equity investments in other enterprises valued, pursuant to IAS 39, at fair value with the posting of the impacts in a specific reserve of the Net Equity, due to the change in the allocation by the Directors. At 30 November 2010 the market value of the shares of Gestevision Telecinco S.A. amounted to 7.283 Euros (10.10 Euros at 31 December 2009) for a total overall value of 7.283 thousand Euros, the valuation up to that date generated a net capital loss amounting to 2,817 thousand Euros. – an increase of 2,054 thousand Euros, which was the amount subscribed of the Share Capital increase with payment of 357,140 new shares at a unit price 5.75 Euros carried out by the subsidiary company Gestevision Telecinco S.A., following the acquisition of 100% of Sogecable (Cuatro) and of 22% of DTS Distribuidora de Television Digital S.A. (Digital +). – an increase of 1,824, which is the unrealised gain posted to a specific reserve in the Net Equity Reserve, generated by the valuation at fair value based on the market quotation at 30 December 2010 (bid price amounting to 8.224 Euros) of 1,357,140 shares owned at the end of the financial year. At 31 December 2010 Mediaset S.p.A. held, in Gestevision Telecinco S.A., an equity investment amounting to 0.334%. The ordinary shares of Gestevision Telecinco S.A. are quoted on the Stock markets of Madrid, Barcelona, Bilbao and Valencia and on the Spanish computerised Stock Market (SIB). 5.6 Receivables and Non-current financial assets

Balance as of Balance as of 31/12/2010 31/12/2009 Due Within From 1 Over Total 1 year to 5 years 5 years

Other non current receivables 203 20 183 - 203

Total 203 20 183 - 203

Basically, the item has not undergone any changes compared to the previous financial year and it refers to receivables for guarantee deposits amounting to 158 thousand Euros holdings in consortiums amounting to 45 thousand Euros, relative to the consortiums Consorzio Sardegna Digitale and Valle d’Aosta Digitale, as well as to the Campus Multimedia In-formazione.

33039 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Financial Statements 2010 Mediaset S.p.A. – Explanatory Notes 5.9 Assets for prepaid taxes The amount indicated in the table corresponds to the Balance Sheet amount relative to the receivable for prepaid taxes calculated based on the timing differences asset values posted in the Financial Statements values recognised for tax purposes. The balance of the item amounted to 3,357 thousand Euros (4,065 thousand Euros at 31 December 2009). The prepaid taxes are calculated based on the tax rates in force, which correspond to those that will be applied at the time when these differences will be reversed.

31/12/2010 31/12/2009 Initial balance 4,065 11,895

Tax recognized to Income Statement (224) (8,508) Tax charged to equity (484) 678 Final balance 3,357 4,065

The following table shows the detail of the movements, of the accounting period being looked at, relative to the Prepaid taxes.

31/12/2010 31/12/2009 Amount Amount of Tax of Tax temporary effect temporary effect differences differences

Assets for advance taxes on: Intangible fixed assets 71 22 79 24 Provision for litigation/labour disputes 6,413 1,769 6,198 1,710 Entertainment expenses 21 7 66 21 Compensation to directors 458 126 447 123 Provision for write-down of advance payment to distributors 366 118 1,163 376 Membership fees - - 40 11 Provision for bad debt subject to taxation 243 66 244 67 Hedge derivatives 3,279 1,036 5,160 1,553 Employee severance indemnity 775 213 653 180

Total for deferred tax assets 11,626 3,357 14,050 4,065 6. Current assets 6.2 Trade receivables This item at the end of the financial year breaks down as follows:

31/12/2010 31/12/2009 Due Within I From 1 Over 5 Total year to 5 years years

Receivables from customers 337 337 - - 332 Provision for bad debts (243) (243) - - (244) Total net receivables from customers 94 94 - - 87

Receivables from associates 167 167 - - 140 Receivables from subsidiaries 5,073 5,073 - - 4,622 Receivables from affiliated companies and joint ventures 26 26 - - 18 Receivables from holding companies 9 9 - - 9 Adjustments ----(1) Total 5,369 5,369 - - 4,876

33140 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Financial Statements 2010 Mediaset S.p.A. – Explanatory Notes Receivables from customers The item, net of the Bad Debts Reserve, increased compared to the figure at 31 December 2009 for an amount of 7 thousand Euros and contains the receivables of a commercial nature arising from sales and renting transactions mainly with domestic and international broadcasters and distributors. Overall they are posted for 94 thousand Euros (87 thousand Euros at 31 December 2009), equivalent to their nominal value of 337 thousand Euros, which is net of write-downs of 243 thousand Euros (244 thousand Euros at 31 December 2009) that represent the reasonable estimate of the loss in value of the receivables from third parties. The amount refers to receivables in existence in the previous financial year and already written down. The Bad Debts Reserve amounting to 243 thousand Euros (244 thousand Euros in 2009) decreased by 1 thousand Euros for usages during the financial year amounting to 3 thousand Euros net of the provision posted for 2 thousand Euros. The write-downs of the receivables are carried out on all those customer balances that have lowers percentage levels than they should have at the stage of the collection process undertaken by the specific company function and afterwards by its Legal Department

Trade receivables from associated companies The trade receivables from associated companies, amounting in total to 167 thousand Euros (140 thousand Euros at 31 December 2009) refer to receivables from companies of the Fininvest Group and they are mainly relative to services insurance and publishing consultancy.

Trade receivables from subsidiary companies The trade receivables from subsidiary companies in total amounting to 5,073 thousand Euros (4,622 thousand Euros at 31 December 2009) are relative to the services supplied by the Central Communication and Information Management, mainly to the subsidiary company R.T.I. S.p.A. for 4,759 thousand Euros, to the supply of graphics/advertising services and the cross charging of the commissions on sureties given to third parties in the interests of the subsidiary companies.

Trade receivables from affiliated companies and jointly controlled The trade receivables from affiliated companies and jointly controlled amounting to 26 thousand Euros (18 thousand Euros in 2009) including payables of commissions on sureties to the company The Space Cinema 2 S.p.A. per 14 thousand Euros and the cross charging of the fees of the Directors who have renounced their emoluments in favour of Mediaset S.p.A. for 12 thousand Euros mainly regarding the company Tivù S.r.l..

Trade receivables from parent companies The trade receivables from parent companies amounting to 9 thousand Euros (no change compared to the previous financial year) consists of charges made for insurance consultancy services that were carried out for the parent company Fininvest S.p.A..

33241 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Financial Statements 2010 Mediaset S.p.A. – Explanatory Notes

6.3 Taxation receivables The item breaks down as follows:

31/12/2010 31/12/2009

Receivables from tax authorities for IRES from tax consolidation 38,193 1,369 Receivables from tax authorities for IRAP 1,175 1,451 Other receivables from tax authorities 336 2,133

Total 39,704 4,953

The item shows receivables beyond 12 months for 336 thousand Euros (350 thousand Euros at 31 December 2009). The item receivables from the tax authorities for IRES (Corporate Tax) from the Fiscal Consolidation consists of the receivables taxes amounting to 151,127 thousand Euros net of the tax payable for IRES (Corporate Tax) amounting to 112.934 thousand Euros and it shows the net receivable from the tax authorities for IRES (Corporate Tax) on the overall total taxable income regarding the subsidiary companies belonging to the Fiscal Consolidation that has Mediaset S.p.A. as the consolidator. The item receivables from the tax authorities for IRAP (Regional Tax on Productive Activities) only refer to the receivable for IRAP (Regional Tax on Productive Activities) 2009 brought forward. The decrease compared to the previous financial year, amounting to 277 thousand, consists of the usage made for the payments of the withholding taxes. In the financial year being looked at there is no taxable base for IRAP (Regional Tax on Productive Activities) purposes.

6.4 Other receivables and current assets This item breaks down as follows:

31/12/2010 31/12/2009

Receivables due from employees 58 52 Advances 203 256 Receivables due to social security institutions 14 121 Other receivables 6,113 4 Receivables due from subsidiaries 19,886 30,494 Receivables due from affiliated companies 61 - Receivables due from holding companies 1,216 7,236 Deferred liabilities 1,000 1,555

Total 28,551 39,718

The item shows assets beyond 12 months for 227 thousand Euros (591 thousand Euros at 31 December 2009). It is believed that the fair value of the receivables is approximately the same as the accounting book value.

Miscellaneous receivables from subsidiary companies The item amounting to 19,886 thousand Euros consists of 13,690 thousand Euros for the receivables relative to the Group VAT Management, mainly from the subsidiary company R.T.I. S.p.A. for 5,456 thousand Euros, from the indirect subsidiary company Elettronica Industriale

33342 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Financial Statements 2010 Mediaset S.p.A. – Explanatory Notes S.p.A. for 4,780 thousand Euros, as well as from the subsidiary company Publitalia ’80 S.p.A. for 2,564 thousand Euros. For the remainder amounting to 6.196 thousand Euros the item consists of the receivables for IRES (Corporate Tax) from the Fiscal Consolidation from the subsidiary companies, Medusa Film S.p.A. for 3,507 thousand Euros, Digitalia ’08 S.r.l. for 1,112 thousand Euros and Boing S.p.A. for 1,577 thousand Euros, who participate in the Group tax charge relative to the Agreement for taking part in the National Consolidated taxation system.

Miscellaneous receivables from parent companies The receivables from the parent company Fininvest S.p.A., amounting to 1,216 thousand Euros (7,236 thousand Euros in 2009), refer to the request for reimbursement presented in 2009 by the parent company Fininvest S.p.A. for arrival of the ability to have the partial deductibility of the IRAP (Regional Tax on Productive Activities) paid both by Mediaset S.p.A. and its subsidiary companies taking part in the Fininvest Fiscal Consolidation in the tax year 2004. There was cashed in the receivable for 6,020 thousand Euros relative to the legal act of settlement with which Fininvest S.p.A. was freed from the obligations it took on regarding the guarantee that was given on 6 June 1996 and expired on 31 December 2002.

Receivables from other The item, amounting to 6,113 thousand Euros (4 thousand Euros in 2009), underwent an increase amounting to 6,109 thousand Euros, ascribable mainly to the restitution of the State aid relative to the contributions for the purchase of DTT decoders paid back to the Italian government in February 2010. Regarding this there are ongoing a series of pleas as can be seen from the comments below in the item “Funds for risks and charges”.

Prepayments The item being looked at is mainly relative to sponsorship services for the associated company Il Teatro Manzoni S.p.A, to costs for real estate rents payable mainly regarding the parent company Fininvest S.p.A., as well as to the costs incurred for getting medium/long term loans.

6.5 Inter-company financial receivables

Inter-company financial receivables from subsidiary companies These are relative to the current account relationships with the subsidiary companies of the Group the detail of which is the following:

31/12/2010 31/12/2009 Media Shopping S.p.A. - 1,688 Med Due S.r.l. - 182 Mediaset Investimenti S.p.A. 897,761 656,431 R.T.I. S.p.A. 1,952,637 2,028,560 Elettronica Industriale S.p.A. 348,180 322,780 Adjustments - (1)

Total 3,198,578 3,009,640

The current account relationships with the subsidiary companies are regulated by a framework contract that was stipulated on 18 December 1995 and which foresees that the interest rate to be applied is calculated with reference to the Euribor (average Euribor 1 month flat if receivable and average Euribor 1 month + 1% if payable).

33443 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Financial Statements 2010 Mediaset S.p.A. – Explanatory Notes 6.6 Other current financial assets

31/12/2010 31/12/2009 Investments in other companies hold for trading - 10,100

Financial activities for non hedging derivatives 33,935 8,453 Derivatives for forward transactions with third parties 28,510 3,205 Derivatives for forward transactions with subsidiaries 5,425 5,247 Total 33,935 8,453

Other current financial assets - 17,058

Total 33,935 35,611 Equity investments in other enterprises held for trading The item, relative to the shares of Gestevision Telecinco S.A., compared to the previous financial year, went to zero following the reclassification from equity investments in other enterprises held for trading to equity investments in other enterprises valued at fair value with the changes of value to Net Equity. Their valuation at 30 November 2010, was 7.283 Euros (10.10 Euros at 31 December 2009) for a total amount of 7,283 thousand Euros, generating, at that date, a net capital loss amounting to 2,817 thousand Euros.

Financial assets for non-hedging financial derivatives The item breaks down as follows:

Derivatives for foreign exchange risks This is the fair value of the financial derivatives, mainly futures contracts on currencies of the forward type purchased by Mediaset S.p.A. on the open market to hedge the risks coming from the fluctuations of foreign currencies both regarding highly probable future commitments and payables for purchases already finalised. The fair value of the futures contracts on foreign currencies is calculated as the discounted difference between the notional amount valued at the contract forward rate and the notional amount valued at the fair forward rate, i.e. the future exchange rate calculated at the date of the Financial Statements. Specifically, Mediaset S.p.A. gathers together the information relative to the balances that are exposed to an exchange risk of the subsidiary companies R.T.I. S.p.A., Media Shopping S.p.A. and Videotime S.p.A. and then, once there has been stipulated the financial derivatives contract on the market, it takes care to transfer it to them by means of the stipulation of an intercompany contract at the same conditions. These contracts, in the Financial Statements, cannot be qualified as hedging contracts pursuant to IAS 39 and they are, therefore, accounted for by posting the changes of the fair value to the Income Statement, in the items “Realised and unrealised gains an losses on exchange”.

Other financial assets The item zero compared to the previous financial year following the cashing in, in February 2010, of the financial receivable from British Telecommunications PLC for the sale of the equity investment in Albacom S.p.A..

33544 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Financial Statements 2010 Mediaset S.p.A. – Explanatory Notes 6.7 Banks, cash and equivalents

31/12/2010 31/12/2009

Bank and postal deposits 77,943 82,457 Cash in hand and cash equivalents 14 15

Total 77,957 82,472

The balance of 77,957 thousand Euros (82,472 thousand Euros at 31 December 2009) includes the current account relationships that are held with leading domestic and other banks, amounting to 77,943 thousand Euros (82,457 thousand Euros at 31 December 2009) and petty cash and tax stamped paper amounting to 14 thousand Euros (15 thousand Euros at 31 December 2009).

Net financial position The net financial position of Mediaset S.p.A. at 31 December 2010, compared to that of the previous financial year, is the following:

31/12/2010 31/12/2009

Cash 14 15 Bank and postal accounts 77,943 82,457 Securities and current financial assets - 10,100 Liquidity 77,957 92,572 Financial receivables from subsidiary companies 3,198,578 3,009,640 Total current financial receivables 3,198,578 3,009,640

Payables to banks (630,852) (714,812) Current payables and financial liabilities (388,998) (397,222) Financial payables to subsidiary companies (384,579) (374,531) Financial payables to affiliated companies (7,365) (1,132) Current financial debt (1,411,794) (1,487,697)

Current net financial position 1,864,740 1,614,516 Non-current financial payables and liabilities (1,066,478) (794,310) Non-current portion of net financial debt (1,066,478) (794,310)

Net financial position 798,262 820,206

The negative change that took place in the net financial position, amounting to 21,944 thousand Euros, was mainly caused by the financial disbursements relative to the payment of the dividends for 250,008 thousand Euros, to the investments for a total of 2,088 thousand Euros, of which 2,054 thousand Euros referred to the subscription of the Share Capital increase in Telecinco and to the cash flow absorbed by financial management. Regarding the financial incomes there is highlighted the cash received for the dividends from the direct and indirect subsidiary companies for 256,507 thousand Euros. These movements are given in more detail in the cash flow statement.

33645 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Financial Statements 2010 Mediaset S.p.A. – Explanatory Notes

COMMENTS ON THE MAIN NET EQUITY AND LIABILITIES ITEMS

(values in thousand Euros)

8. Net Equity The follow the comments on the main items that make up the Net Equity and the relative changes in them. 8.1 Share Capital At 31 December 2010 the Share Capital, fully subscribed and paid up for 614,238 thousand Euros, consisted of 1,181,227,564 ordinary shares with the nominal value of 0.52 Euros each. No change took place in the financial year being looked at. 8.2 Share premium reserve At 31 December 2010 the share premium reserve amounted to 275,237 thousand Euros. No change took place in the financial year being looked at. 8.3 Treasury shares This item contains the shares of Mediaset S.p.A. purchased under the terms of the resolutions passed by the Ordinary Shareholders’ Meetings of the company of 16 April 2003, of 27 April 2004, of 29 April 2005, of 20 April 2006, of 19 April 2007, of 16 April 2008, of 22 April 2009 and of 21 April 2010, which gave a mandate to the Board of Directors for purchases of up to a maximum of 118,122,756 shares (10% of the Share Capital). This mandate is valid until the approval of the Financial Statements at 31 December 2010 and, in any case, for a period that is no longer than 18 months from the date of the resolution of the Shareholders’ Meeting.

31/12/2010 31/12/2009 Number Book value Number Book value Treasury share - beginning balance 44,825,500 416,656 44,825,500 416,656 increases - - - - decreases - - - - Treasury share - final balance 44,825,500 416,656 44,825,500 416,656

At 31 December 2010 the posted book value of the treasury shares in portfolio amounted to 416,656 thousand Euros (no change compared to the previous financial year), equivalent to a 1,895,500 shares to be used for the stock option plans resolved upon and 42,930,000 shares purchased following the buyback resolutions of 13 September 2005 and 8 November 2005. No change took place in the financial year being looked at. There are no treasury shares in the portfolio at 31 December 2010 that are intended to be used for stabilising the market price of the share.

33746 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Financial Statements 2010 Mediaset S.p.A. – Explanatory Notes 8.4 Other reserves

31/12/2010 31/12/2009 Legal reserve 122,848 122,848 Extraordinary reserve 1,354,515 1,274,816 Reserve from mergers 8 8 Reserve for intercompany transactions 1,290,740 1,290,740 Reserve for profit/loss from treasury share trading (2,605) (2,605) Other available reserves 2,986 2,986 Adjustments (1) (1)

Total 2,768,491 2,688,792 Legal reserve At 31 December 2010 this reserve was 122,848 thousand Euros. No change took place in the financial year because the reserve has already reached 20% of the value of the Share Capital. Extraordinary reserve This amounted to 1,354,515 thousand Euros (1,274,816 thousand Euros at 31 December 2009). The increase compared to the previous financial year, amounting to 79,699 thousand Euros, is caused by the allocation of the profit for the financial year 2009 according to the resolution of the Shareholders’ Meeting of 21 April 2010.

Reserve for inter-company transactions This amounted to 1,290,740 thousand Euros (no change compared to the previous financial year) and it takes in both the capital gain recorded on the inter-company sale to the subsidiary company Mediaset Investments S.p.A. of the equity investment in Gestevision Telecinco S.A., which took place in the financial year 2005 for 825,206 thousand Euros and the dividend received in 2009 from the subsidiary company Mediaset Investment S.a.r.l. for 472,024 thousand Euros posted directly to a Reserve in Net Equity net of the fiscal impact amounting to 6,490 thousand Euros. The distributed dividend consisted of reserves of profits formed following the inter-company transaction and, therefore, in fulfilment of the principle of “under common control”, they were not posted to the Income Statement at the time when they were distributed. Reserve for gains/losses from the purchase and sale of treasury shares The item has a negative balance amounting to 2,605 thousand Euros and represents the negative impact of the transactions that took place in previous financial years net of the relative taxation. No change took place in the financial year being looked at. Other available reserves The item amounted to 2,986 thousand Euros and consist for 1,652 thousand Euros of the amount freed from the Employees Stock Option Reserve for the 2003 plan that became available because there have expired the option rights that were exercisable until 31 December 2007, for 1,419 thousand Euros, the amount freed from the Employees Stock Option Reserve for the 2004 plan that became available because there have expired the option rights that were exercisable until 22 June 2009, for 56 thousand Euros, the reserve for unrealised foreign exchange gains that became available net of the accounting entry of the negative reserve on coverage of the shares for 141 thousand Euros, which was the cost of the lack of the call on Mediaset shares purchased to cover the Stock option plan 2005, net of the fiscal impact amounting to 87 thousand Euros. No change took place in the financial year being looked at.

33847 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Financial Statements 2010 Mediaset S.p.A. – Explanatory Notes 8.5 Reserves from valuations

31/12/2010 31/12/2009 Hedging reserve collar on rates (2,243) (3,607) Employee stock options reserve 4,644 3,635 Subsidiary employee stock options reserve 7,891 6,428 Reserve for actuarial profit/(loss) (206) (118) Equity investments valuation reserve 1,323 -

Total 11,409 6,338

The Reserves for Stock option plans take in the other side of the accounting entry of the amount matured at 31 December 2010, calculated pursuant to the IFRS 2, for the three-year Stock option plans assigned by Mediaset S.p.A., both to its own employees and to the employees of direct and indirect subsidiary companies, in the financial years 2005, 2007, 2008, 2009 and 2010. The Reserve for actuarial profits and losses with a negative balance amounting to 206 thousand Euros (negative balance of 118 thousand Euros at 31 December 2009), takes in, net of the deferred taxes, the actuarial components relative to the valuation of the defined benefits plans, posted directly to Net Equity. The Valuation Reserve for equity investments, newly set up, amounted to 1,323 thousand Euros and takes in the other side of the accounting entry of the valuation at fair value amounting to 1,825 thousand Euros of the subsidiary company Gestevision Telecinco S.A. in existence at 31 December 2010, net of the fiscal impact amounting to 502 thousand Euros. At that date the unit value of 8.224 Euros gave rise to a total value of 11,161 thousand Euros equivalent to 1,357,140 shares which, compared with the posted book value, gave rise to what was posted to the reserve. The following table shows the movements that took place during the financial year for these reserves.

Charged to Hedged item Balance as of Increase/ Fair Value Deferred Balance as of income initial value 01/01/2010 (decrease) variations taxes 31/12/2010 statement adjustment

Hedging reserve collar on rates (3,607) - (1,424) 376 2,929 (517) (2,243) Employee stock option reserve 3,635 1,009 - - - - 4,644 Subsidiary employee stock option reserve 6,428 1,464 - - - - 7,891 Reserve for actuarial income(loss) (118) (122) - - - 34 (206) Equity investments valuation reserve - - - - 1,825 (502) 1,323 Total 6,338 2,351 (1,424) 376 4,754 (985) 11,409

Hedging reserve collar on interest rates The amount shown corresponds to the entire fair value of the two derivatives since it is the lower in absolute value between the accumulated value of the derivatives and the variations in the fair value of the underlying asset. The item Hedging reserve collar on interest rates, with a negative balance amounting to 2,243 thousand Euros (negative balance of 3.607 thousand Euros at 31 December 2009) takes in, net of the fiscal impact, the effective part of the valuation at fair value of two derivatives contracts for the collar on interest rates, negotiated to hedge the interest rate risk on the loan opened for an initial value amounting to 210.000 thousand Euros, stipulated in November 2005 with Mediobanca.

33948 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Financial Statements 2010 Mediaset S.p.A. – Explanatory Notes At 31.12.2010 the value of the remaining balance of the loan in question and of the two derivatives amounted to 150,000 thousand Euros. The transfers to the Income Statement of the total overall value amounting to 1,424 thousand Euros relative to the payment of the difference calculated between the Euribor at 3 months taken at pre-established due dates and at the definitive one of the contract (CAP 4.50%) were classified into the item Realised financial charges.

8.6 Profits (losses) brought forward The item shows a negative balance amounting to 808,413 thousand Euros (negative balance 807,854 thousand Euros at 31 December 2009) and it consists of the combined impact of all the adjustments that were made with reference to the First Time Application and the positive result of the financial year 2005. Among the adjustments the most significant is represented by the capital gain accrued from the inter-company sale of the equity investment in Gestevision Telecinco S.A. amounting to 825,774 thousand Euros. The increase amounting to 560 thousand Euros is due to the recalculation at 1 January 2010 of the value of the reserve from the valuation of the financial derivatives for managing the interest rate risk, in application of the changes to IAS 39 (in force starting from the financial years that begin from 1 July 2009 or afterwards) relative to the technical changes regarding the showing and accounting for the effective part of the change in value of the hedging instrument. As asked for by the measures regarding Company Law Come the following table shows in detail the items contained in the Net Equity indicating the possibility of the usage and of the distribution of the reserves:

Summary of utilization in the three past fiscal years

Amount Possibility of Amount to Loss Other utilization distribute coverage

Share capital 614,238 = - - - Own shares (416,656) = - - - Share premium reserve 275,237 A B C 275,237 - - Reserve from merger 8 A B C 8 - - Legal reserve 122,848 B - - - Extraordinary reserve 1,354,515 A B C 529,309 - - Reserve for intercompany transactions 1,290,739 = - - - Reserve for profit/loss from treasury share trading (2,605) = - - - Other available reserves 2,986 ABC 2,986 - - Revaluation reservene 11,409 = - - - Reserve from FTA (808,413) = - - - Total 2,444,306 807,540 -- Legend: A – for Share Capital increases B – for loss coverage C – for distribution to the shareholders Article 1, paragraph 33, letter q) of the Finance Law for 2008 suppressed the paragraph 4, letter b), of article 109 of the TUIR (Consolidated Income Tax Act) that foresees the possibility of being able to deduct, outside of the accounting system, some income components that are not posted to the Income Statement. Due to the effect of the abrogated measure there continues to remain a limitation on the possibility of distribution of the reserves for 1,133 thousand Euros that originates from the deductions, outside of the accounting system, that have been carried out until 31 December 2007 and that are not the subject of the optional amnesty system governed by article 1, paragraph 48, of the Finance Law for 2008. 34049 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Financial Statements 2010 Mediaset S.p.A. – Explanatory Notes 8.7 Profit (loss) for the financial year This item takes in the net profit for the financial year amounting to 213,032,495.78 Euros (329,706,995.23 Euros at 31 December 2009).

9. Non-current liabilities

9.1 Employee Leaving Indemnity Benefits to employees that fall, according to the relative Italian legislation, into the Employee Leaving Indemnity (ELI) are considered by IAS 19 as “post employment benefits” of the type “defined benefit plans” and are therefore subject to the “Projected Unit Credit Method” actuarial methodology. The procedure for the calculation of the amount of the obligation of Mediaset S.p.A. towards its employees was carried out by an independent actuary, according to the following procedural steps:

Projection of the Employee Leaving Indemnity already accrued at the valuation date and of the amounts that will be accrued until the time when the employment relationship is terminated or when the accrued amounts are partially paid out as an advance on the Employee Leaving Indemnity.

Discounting at the valuation date of the expected cash flows that Mediaset S.p.A. will pay out in the future to its employees. The valuation of the Employee Leaving Indemnity according to IAS 19 was carried out “ad personam” and with a closed population, i.e. analytical calculations were made on each employee, present at the valuation date in Mediaset S.p.A., without considering any future entries into the company. The model of the actuarial valuation is based on the so-called technical bases, which represent the demographic, economic and financial assumptions regarding the parameters included in the calculation.

34150 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Financial Statements 2010 Mediaset S.p.A. – Explanatory Notes Summarised the assumptions used and confirmed for the financial year 2010 were the following:

Demographic hypotheses

Life expectancy 2006 ISTAT (Italian National Statistical Institute) life expectancy table, broken down by age and gender

Probability threshold for Percentages for retirement, resignation/dismissal, expiry of employee labour contract Mediaset S.p.A. termination were derived from corporate data analysis. The probability rates adopted are broken down by age, gender and labour category (white collar, managers and executives/journalists). For personnel with a labour contract with a defined expiration date, the development time horizon was brought to the expected expiration date of the contract and it was assumed that there are no early expenses with respect to the expiration. The actuarial evaluations considered a development time horizon of 60 years of age for women and 65 years for men.

Advances on the Employee The frequencies of advances and the average percentages of the employee Leaving Leaving Indemnity Indemnities requested as advances were derived from observing the historic data of the Company.

Supplementary retirement fund Employees who decide to allocate their Employee Leaving Indemnity entirely to pension funds relieve the Company of any obligations in terms of Employee Leaving Indemnity and the corresponding amounts are not subject to valuation. For all the other employees, the choices actually made by them, updated as at 31 December 2010 were considered instead.

Economic/financial hypotheses

Inflation rate The inflation scenario is in line with the latest Economic-Financial Planning Document available as at the valuation date which specifies a programmed inflation rate of 1.5% for the years 2011 and beyond.

Discount rates The discount rate adopted was determined with reference to the market yield of the "blue chip" company bonds at the evaluation date, by using the "Composite" rate curve of the securities issued by the Euro area "Investment Grade"- class A-rating Corporate issuers (source: Bloomberg) as at 31st December, 2010.

As already commented on in the section dedicated to the valuation criteria, as a result of the changes introduced by Italian Law n° 296 of 27 December 2006 (“Finance Law 2007”) and the subsequent implementation Decrees and Regulations, the amounts of Employee Leaving Indemnity accrued prior to 31 December 2006 will continue to be kept by the company in a specifically defined benefit plan (with an obligation for the already accrued benefits to be subject to actuarial valuation), while the amounts accrued from 1 January 2007, based on the choice of the employees, made during the first half-year of 2007, will be allocated to supplementary pension funds or transferred by the company to a treasury fund directly managed by the Italian National Social Security Institute (INPS) starting from the moment in which an employee makes the choice, as defined contribution plans (which are no longer subject to actuarial valuation). The actuarial valuation shows a value of the Employee Leaving Indemnity Fund at 31 December 2010 amounting to 4,154 thousand Euros, with a decrease of 103 thousand Euros compared to the balance of the previous financial year.

34251 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Financial Statements 2010 Mediaset S.p.A. – Explanatory Notes The movements of the fund during the financial year were the following:

Fund provision as of 01/01/2010 4,257

Amount accrued and charged to income statement 58 Reserve transferred from subsidiaries, affiliated and associates companies 42 Employee severance pre-payments for the period (62) Employee severance indemnities paid during the year (229) Actuarial gain/loss 122 Reserve transferred to subsidiaries, affiliated companies and associates (34)

Fund provision as of 31/12/2010 4,154 9.2 Deferred tax liabilities The amount indicated in the table corresponds to the balance of the payables for deferred taxes calculated on the basis of timing differences between the values entered in the Financial Statements and the corresponding values recognised for tax purposes. The deferred taxes are calculated based on the tax rates currently in force that corresponds to those that will be applied at the time when these differences will be reversed.

31/12/2010 31/12/2009 Beginning balance 402 629

Tax recognized to Income Statement 28 (227) Tax charged to equity 502 - Final balance 932 402

The following table shows the detail of the movements of the accounting period being looked at relative to the deferred taxes.

31/12/2010 31/12/2009 Amount Amount of Tax of Tax temporary effect temporary effect differences differences

Liabilities for deferred taxes on: Provision for bad debts 233 64 233 64 Tangible fixed assets 2 1 2 1 Equity investments valuation reserve 1,825 502 - - Employee severance indemnity 1,330 365 1,228 337

Total deferred tax liabilities 3,390 932 1,463 402

The balance of the item amounted to 932 thousand Euros (402 thousand Euros at 31 December 2009). The increase refers to the provision posted to realign the fiscally accepted value to the statutory accounts one of the valuation of the equity investment in Gestevision Telecinco S.A..

34352 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Financial Statements 2010 Mediaset S.p.A. – Explanatory Notes 9.3 Financial payables and liabilities

Balance as of 31/12/2010 Balance as of Due 31/12/2009 within 1 from 1 over 5 Total year to 5 years years

Bond issue 295,967 - - 295,967 - Loans not supported by real guaranttees Mediobanca 90,051 - 90,051 - 150,021 San Paolo Imi 14,187 - 14,187 - 42,969 Intesa Sanpaolo stipulated on 15/03/07 99,983 - 99,983 - 99,895 Intesa Sanpaolo stipulated on 19/07/07 99,933 - 99,933 - 99,903 Lines of credit Intesa Sanpaolo stipulated on 15/03/07 100,061 61 100,000 - 100,030 Intesa Sanpaolo stipulated on 19/07/07 100,061 61 100,000 - 100,026 Credito Bergamasco stipulated on 30/10/09 - - - - 100,103 Intesa Sanpaolo stipulated on 03/04/08 100,027 27 100,000 - 100,017 Banca Popolare di Bergamo 70,003 3 70,000 - - Banca Nazionale del Lavoro 50,016 16 50,000 - - Unicredit 45,017 17 45,000 - - Other derivates Collar on interest rates - Royal Bank of Scotland 586 - 586 - 673 Collar on interest rates - UBM 586 - 586 - 673

Total 1,066,478 185 770,326 295,967 794,310

The item increased by a total of 272,168 thousand Euros and below its breakdown is commented on. The item Bond Issue, newly set up, refers to the issue of a 7 year bond for a total nominal value amounting to 300,000 thousand Euros carried out by Mediaset S.p.A. on 1 February 2010, posted to the Financial Statements by applying the amortised cost method based on the internal yield rate of 5.2315%. On 21 January 2010, there was finalised the placement of the bond issue, which was reserved only for qualified investors, resolved upon by the Board of Directors of Mediaset on 15 December 2009. Banca IMI, BNP Paribas and Deutsche Bank AG, in their positions as Joint Lead Managers, handled the placement operation. The bonds, traded on the Luxembourg Stock Exchange have the following characteristics: 1. A unit denomination of 50,000 Euros and multiples of 1,000 Euros up to 99,000 Euros. 2. Expiry date is 1 February 2017. 3. The gross yearly fixed coupon is 5%. 4. The issue price is 99.538%. This operation has enabled the lengthening of the average due date of the overall debt of Mediaset S.p.A.. On 30 October 2009 there was stipulated a contract for the conceding of a credit line which had, as the agent bank, Credito Bergamasco S.p.A., for a notional amount of 100,000 thousand Euros with the expiry date of 29 April 2011. At 31.12.2010 this credit line had not been used. On 29 July 2010 there was stipulated a contract for the conceding of a credit line which had, as the agent bank, Unicredit Corporate Banking S.p.A., for a notional amount of 75,000 thousand Euros with the expiry date of 28 January 2012. At 31.12.2010 this credit line was classified among the non-current financial payables, only for the part being used, for the notional amount of 45,000 thousand Euros. 34453 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Financial Statements 2010 Mediaset S.p.A. – Explanatory Notes On 12 November 2010 there was stipulated a contract for the conceding of a credit line which had, as the agent bank, Banca Nazionale del Lavoro S.p.A., for a notional amount of 50,000 thousand Euros with the expiry date of 11 May 2012. At 31.12.2010 this credit line was fully used. On 19 November 2010 there was stipulated a contract for the conceding of a credit line which had, as the agent bank, Banca Popolare di Bergamo S.p.A., for a notional amount of 130,000 thousand Euros with the expiry date of 18 May 2012. At 31.12.2010 this credit line was classified among the current financial payables, only for the part being used, for the notional amount of 70,000 thousand Euros. At 31 December 2010 loan contract were in existence that were stipulated during 2007 and 2008 with Intesa Sanpaolo S.p.A. and that are forecasted to expire in 2012 and 2013, respectively, are subject to verification of the following financial covenant: – net financial position/EBITDA lower or equal to 2 to be checked on a half-yearly basis based on Mediaset consolidated data. To date this parameter has been met. As at the same date, loan contracts existed that were stipulated in 2006 with San Paolo IMI S.p.A. expiring in 2012, is subject to verification of the following financial covenants: - net financial position/EBITDA lower or equal to 4, to be checked on a half-year basis based on Mediaset consolidated data. - net financial position/Equity lower or equal to 2 to be checked on a half-year basis based on Mediaset consolidated data. To date these parameters have been met. Relative to the contracts stipulated in 2007 with initial expiry in 2012, on 04.02.2010, following the exercising of the optional rights defined at contractual level, this expiry date was prolonged till 2013. The contract in existence with Mediobanca S.p.A. and stipulated in 2005, with expiry in 2013, is subject to verification of the following financial covenants: - net financial position /EBITDA no higher than 1.5 to be checked on a half-year basis based on Mediaset consolidated data. - EBITDA/net financial losses no lower than 10 to be checked on a half-year basis based on Mediaset consolidated data. To date these parameters have been met. For the loans, as well as for the credit lines, in the event that the financial covenants are not met, Mediaset S.p.A. must reimburse the portions used. For all the loans the first date for the revision of the interest rate during 2011 is the following: – 28 February 2011 for the loan from Mediobanca; – 28 March 2011 for the loan from San Paolo IMI; – 17 January 2011 for the loan from Intesa Sanpaolo stipulated on 15 March 2007; – 3 February 2011for the loan from Intesa Sanpaolo stipulated on 19 July 2007.

34554 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Financial Statements 2010 Mediaset S.p.A. – Explanatory Notes The following table shows the International Rate of Return (IRR), the financial charges posted to the Income Statement for the loans and the fair value of the loans calculated at the year-end market rates:

Financial IRR Fair value charges

Mediobanca loan 1.26% 2,097 150,738 San Paolo IMI loan 1.38% 740 43,089 Intesa Sanpaolo loan stipulated on 15/03/2007 1.00% 802 100,437 Intesa Sanpaolo loan stipulated on 19/07/2007 1.04% 817 100,529

For the loan from San Paolo IMI and the loan from Mediobanca, the relative fair values are calculated on the total overall value of each loan, including, respectively, also 28,826 thousand Euros and 60,129 thousand Euros reclassified among the current financial payables.

9.4 Funds for risks and charges The breakdown and the movements of these funds are the following:

Initial balance Financial Other Reclassificati Final balance as as of Provisions Utilization charges movements ons of 31/12/2010 01/01/2010 Fund for future risks 143 194 - 7 - - 344 Total 143 194 - 7 - - 344

The fund for risks and charges amounting to 344 thousand Euros (143 thousand Euros at 31 December 2009) increased, compared to the previous financial year, by 201 thousand Euros and represents the non-current amount of the actions for reimbursement of damages and other disputes ongoing at the end of the financial year. As to criminal case 22964/2001, also known as the “Television Rights Trial” it is highlighted that it is pending for the facts of tax fraud concerning the income tax declarations for the years 2001, 2002 and 2003, as well as for other hypothetical accusations that do not touch on Mediaset’s accounting position, i.e. money laundering. It is highlighted that on 27 December 2010 the Tax Receipts Agency served the Assessment Notice, with which there was adjusted, for IRPEG (Corporate Tax) and IRAP (Regional Tax) purposes, the taxable income for the financial year 2001 amounting to 15,580 thousand years, as a consequence of the lack of recognition of the amortisation of the television rights that are the subject of the criminal proceedings referred to above. Because, in the current state of affairs, the relative risk is believed to be a fairly remote one the posting of a specific provision has not been necessary.

34655 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Financial Statements 2010 Mediaset S.p.A. – Explanatory Notes

10. Current liabilities

10.1 Payables to banks The Payables to banks break down as follows:

Balance as of 31/12/2010 Balance as of Due 31/12/2009 from 1 to over 5 Total within 1 year 5 years years

Financial liabilities due to banks 711 711 - - 33 Lines of credit 541,186 541,186 - - 626,123 Loans not supported by real guarantees San Paolo Imi 28,826 28,826 - - 28,649 Mediobanca 60,129 60,129 - - 60,007

Total 630,852 630,852 - - 714,812

The item went down by 83,960 thousand Euros on a total basis and it is mainly relative to the short-term credit lines in existence at 31 December 2010. During the financial year the usage of the contracts, with leading banks relative to these credit lines, went down. These credit lines are at variable rates and refer to advances with very short- term revocation and with expiry dates usually fixed at one year, but renewable. It is believed that the fair value coincides with the posted book value. At 31 December 2010 62.4% of the available credit lines was committed. The value contained among the loans not supported by collateral guarantees refers to the short-term portions of the loan contracts stipulated, respectively, in 2006 with San Paolo IMI and in 2005 with Mediobanca. The amounts of 28,826 thousand Euros for San Paolo IMI and 60,129 thousand Euros for Mediobanca include the amounts of the interest and the two repayments of amounts of the principal forecasted for San Paolo IMI on 28 March 2011 and on 28 September 2011 and for Mediobanca on 30 May 2011 and on 29 November 2011.

10.2 Trade payables Below we comment on the breakdown and the movements in the period of the items that make up this grouping:

31/12/2010 31/12/2009 Due within 1 from 1 to over 5 Total year 5 years years Due to suppliers 5,047 5,047 - - 3,573 Due to subsidiaries 1,595 1,595 - - 584 Due to affiliated companies and joint ventures ---- 1 Due to associates 222 222 - - 279 Due to holding companies 26 26 - - 26 Total 6,890 6,890 - - 4,463 Payables to suppliers The item shows an increase of 2,427 thousand Euros and there are no payables due over 12 months. The Trade payables to subsidiary companies mainly refer to payables to the subsidiary company R.T.I. S.p.A. relative to the supply of administrative services for 207 thousand Euros and to sub-letting services for 1,096 thousand Euros.

34756 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Financial Statements 2010 Mediaset S.p.A. – Explanatory Notes The Trade payables to associated companies mainly consist of payables for transport services from the associated companies, specifically from Alba Servizi S.p.A.. The Trade payables to parent companies mainly refer to payables regarding the recharging of the costs for Directors emoluments from the parent company Fininvest S.p.A.. It is believed that the fair value of the payables is very close to the accounting book value.

10.3 Funds for risks and charges The breakdown and the movements of these funds are as follows:

Beginning Financial Other Final balance as balance as of Provisions Utilization Adjustments charges movements of 31/12/2010 01/01/2010 Fund provision for future 6,055 14 - - - - 6,069 Total 6,055 14 - - - - 6,069

The item takes in losses and potential liabilities that are, presumably, realisable within 12 months. The increase compared to the previous year, of 14 thousand Euros, refers almost totally to the provision posted for the risk having to repay the State aid to the Italian Government, in relation to the State contributions regarding the purchases of the DTT decoders, sanctioned by the European Commission with its decision n° C2006-6634 of 24 January 2007. On this issue, appeals are pending before the European Court of Justice against the ruling of the 1st Level Court that confirmed the above decision and the Civil Court of Rome against the payment order of the Ministry of Communications of 12 November 2009

10.4 Taxation payables The breakdown of the item is the following:

31/12/2010 31/12/2009 Withholdings on employee wages and salaries 915 894 Withholdings on freelance staff fees 132 177 Other payables due to Tax Authority - 28 VAT Group 9,070 - Revenue for VAT 5 35 Adjustments 1 1

Total 10,123 1,135

The item shows, compared to the previous financial year, an increase of 8,988 thousand Euros, mainly for the item “Group VAT” that was a receivable balance in the previous financial year.

The tax authorities on account of VAT The item refers to the adjustment of the VAT reductions on the depreciable and amortisable assets that has become necessary because the pro-rata change in them was more than 10 percentage points compared to the previous financial year.

10.5 Inter-company financial payables This item, refers to the current account relationships with the subsidiary, affiliated and jointly controlled companies.

34857 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Financial Statements 2010 Mediaset S.p.A. – Explanatory Notes Regarding the conditions for the conceding of inter-company loans and financing reference should be made to what has already been given in the assets section at point 6.5 called Inter- company financial receivables.

Inter-company financial payables to subsidiary companies

31/12/2010 31/12/2009

Videotime S.p.A 16,776 30,955 Boing S.p.A. 5,143 3,615 Media Shopping S.p.A. 10,439 - Med Due S.r.l. 5,910 - Medusa Film S.p.A. 24,831 70,896 Medusa Video S.p.A. - 1,207 Tao Due S.r.l. 6,546 26,674 Publieurope Ltd. 17,145 13,612 Publitalia '80 S.p.A. 276,252 227,008 Digitalia '08 S.r.l. 21,536 565 Adjustments 1 (1)

Total 384,579 374,531 Inter-company financial payables to affiliated and jointly controlled companies

31/12/2010 31/12/2009

Fascino Prod. Gest. Teatro S.r.l. 7,365 1,132

Total 7,365 1,132 10.6 Other financial liabilities

31/12/2010 31/12/2009 Bond issued 14,091 - Financial liabilities for non hedging derivates 8,901 Third party forward derivatives 5,672 5,677 Subsidiary forward derivatives 28,544 3,223 Total 34,215 8,901

Financial liabilities for hedging derivates 4,387 Derivates for collar on interest rates forward third parties 2,537 4,387 Total 2,537 4,387

Other short term financial payables 372,371 392,835

Total 423,214 406,123

The item Bonds Issued, newly set up, represents the current part of the accrued interest at 31 December 2010 on the bond issued on 1 February 2010 for a nominal value di 300,000 thousand Euros, already commented on in the item “Non-current payables and financial liabilities”. The item Financial liabilities for non-hedging financial derivatives amounting to 34,215 thousand Euros is relative to the negative fair value of the derivatives on exchange rates, detailed in the table.

34958 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Financial Statements 2010 Mediaset S.p.A. – Explanatory Notes The item Derivatives for collars on rates to third parties amounting to 2,537 thousand Euros (4,387 thousand Euros at 31 December 2009), represents the current amount of the fair value at 31 December 2010 relative to two collar derivatives, stipulated as hedging operations to cover the interest rate risk regarding the loan in existence with Mediobanca. The item Other short-term financial payables, in the previous financial year, amounted to 392,294 thousand Euros and referred to the loan opened with the subsidiary company Mediaset Investment S.a.r.l. including the amount of the interest accrued at the expiry date amounting to 2,294 thousand Euros. In January 2010 the loan was cancelled and then renegotiated for the same amount, i.e. 390,000 thousand Euros, with the forecasted expiry date of 14 January 2011. The conditions of the contract are the following: – Reference rate for calculating the inters is the Euribor at 3 months/365 + 200 basis points; – Quarterly payment of the interest at the due dates of 15 April, 15 July, 15 October and 14 January. – The principal is repayable, either wholly or partially, at any time, whatsoever. – The expiry date of the contract is 14 January 2011. During 2010 two amounts of 10,000 thousand Euros each were repaid, in the month of March and in the month of July. The remainder of the loan with the principal amounting to 370,000 thousand Euros was prolonged, with the letter dated 12 January 2011 for one year, taking the expiry date to 13 January 2012. The reference interest rate Il indicated, which is used to calculate the interest is the same as that of the previous contract and its settlement was taken to the same due dates. The item at 31.12.2010 amounting to 372,371 thousand Euros is also inclusive of the relative amount of interest accrued at the due date.

10.7 Other current liabilities 31/12/2010 31/12/2009 Due to employees for wages and salaries, accrued holiday pay and expenses 5,073 4,107 Due to insurance companies 102 54 Due to Shareholders for dividends 55 72 Due to Social Security institutions 1,187 1,161 Due to Directors 482 454 Due to Statutory Auditors 271 271 Other liabilities due to third parties 220 214 Other liabilities due to subsidiaries 35,287 18,982 Deferred income 59 -

Total 42,736 25,315 Miscellaneous payables to subsidiary companies The item breaks down as follows:

VAT payable transferred from the subsidiary companies to Mediaset S.p.A. in the context of the Group VAT management system, mainly relative to the subsidiary company Medusa Film S.p.A., for 4,817 thousand Euros.

35059 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Financial Statements 2010 Mediaset S.p.A. – Explanatory Notes

payable for IRES (Corporate Tax) from the Fiscal Consolidation amounting to 29,223 thousand Euros to the subsidiary companies that take part in the Group tax charge relative to the Agreement for taking part in the National Consolidated taxation system.

payable for 1,172 thousand Euros to the subsidiary companies regarding the reimbursement request due to the partial deductibility of the IRAP (Regional Tax on Productive Activities) that has now become available, relative to the tax paid by the companies in the Fininvest Fiscal Consolidation for the tax year 2004.

Payables to Pensions and Social Security Institutions This item, which amounted to 1,187 thousand Euros (1,161 thousand Euros at 31 December 2009), refers to the payables to Pensions and Social Security Institutions for the amounts relative to the wages and salaries of the month of December, for both the company’s and the employees’ amounts due. The detail is the following:

31/12/2010 31/12/2009

Inps 488 488 Inail - 3 Enpals 350 327 Inpdai/Inpgi 62 67 Fpdac 278 267 Casagit 9 9

Total 1,187 1,161

35160 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Financial Statements 2010 Mediaset S.p.A. – Explanatory Notes

COMMENTS ON THE MAIN ITEMS IN THE INCOME STATEMENT

(values in thousand Euros)

12. Revenues

12.1 Revenues from sales and services The total of the item amounted to 5,207 thousand Euros (4,915 thousand Euros at 31 December 2009) and compared to the previous financial year it showed an increase of 292 thousand Euros. The types of revenues are the following:

2010 2009 Other services 5,025 4,283 Leasing and rental - 4 Sales commissions 181 581 Out of period income from sales and services 1 47

Total 5,207 4,915 Other supplies of services The item consists mainly of the services supplied by the Central Communications and Information Management to the subsidiary company R.T.I. S.p.A. for 3,635 thousand Euros, of the supply of graphics/advertising services to the subsidiary companies R.T.I. S.p.A. for 450 thousand Euros, Publitalia ‘80 S.p.A. for 80 thousand Euros and Digitalia ‘08 S.r.l. for 120 thousand Euros, as well as the supply of direct business to Media Shopping S.p.A. for 325 thousand Euros.

Commissions The item refers to the commissions on the securities and guarantees given in favour of the subsidiary companies for 181 thousand Euros. The revenues are detailed as follows:

2010 2009 Revenues for service 4,820 Services to Group companies 5,207 4,872 Services to third parties - 43

Total 5,207 4,915

The following table details the revenues by geography:

2010 2009 Italy 5,207 4,915

Total 5,207 4,915

35261 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Financial Statements 2010 Mediaset S.p.A. – Explanatory Notes 12.2 Other revenues and incomes The item breaks down as follows:

2010 2009 Other revenues 3 3 Capital game - 5 Inexistences 36 1,080 Other proceeds 362 6,388

Total 401 7,476 Non-existent liabilities The item is mainly constituted by the elimination of expired contractual payables to suppliers.

Other incomes The item mainly consists of the rental income of the building located in Rome from the subsidiary company R.T.I. S.p.A. for 350 thousand Euros.

13. Costs

13.1 Personnel cost The following table compares the number of the employees at 31 December 2010 and at 31 December 2009:

Employees to Year average Employees to 31/12/2010 2010 31/12/2009

Managers 35 35 35 Middle managers 53 51 49 Office staff 132 134 135 Journalists 3 4 5

Total 223 224 224

The breakdown of the Personnel cost is shown in the table below:

2010 2009 Wages and salaries 22,035 20,173 Social security charges 5,970 5,348 Other personnel expenses 5,503 4,815 Ancillary personnel expenses 1,189 1,113 Out of period (income)/expenses on personnel expenses 1 (65) Recovery on personnel expenses (311) (313)

Total 34,387 31,071

The Personnel costs for the financial year being looked at amounted to 34,387 thousand Euros (31,071 thousand Euros at 31 December 2009). The net increase amounting to 3,316 thousand Euros is due both to the increase in the average manpower and to the normal contractual movements.

35362 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Financial Statements 2010 Mediaset S.p.A. – Explanatory Notes The item Other Personnel costs mainly consist of the costs for Stock option plans relative to the years 2007, 2008, 2009 and 2010 amounting to 1,009 thousand Euros and the compensation to the Directors who are employees of the company for 2,691 thousand Euros (2,686 thousand Euros in 2009).

13.5 Supplies of services The item breaks down as follows:

2010 2009 Maintenance and repairs 136 292 Trasport and storage 110 92 Consultants fees and external staff 14,207 10,022 Utilities and logistics 703 612 Advertising, public relations and hospitality 1,152 1,250 Insurance costs 562 512 Travel and expense accounts 1,855 1,731 Administrative and E.D.P. service costs 1,574 1,805 Fees to Directors and Statutory Auditors 1,119 1,105 Other costs from television activities 25 27 Bank charges and commissions 2,667 1,785 Other services 874 599 Out of period (income)/expenses on services 67 88 Recovery on service expenses (130) (69)

Total 24,921 19,851

The item Consultancy and collaborations mainly consists of legal services for 3,207 thousand Euros, as well as other professional services for 9,699 thousand Euros, of which 7,200 thousand Euros to Mediobanca for its consultancy activities carried out regarding the acquisitions of Cuarto and Digital Plus by Gestevision Telecinco, already commented on in the item “Equity investments in other enterprises”, as well as technical evaluations and certifications for 884 thousand Euros. The costs for accounting audit services amounted to 694 thousand Euros of which those relative to the attestation of Annual Consolidated Tax Declaration Form and Model of the 770 (Annual Tax and Social Security Declaration for Employees) amounted to 5 thousand Euros. We highlight that other services were supplied by the external auditing company, amounting to 190 thousand Euros, such as the consultancy activities regarding the Bond Issue, which is not contained in the item technical evaluations and certifications because it was capitalised. Companies belonging to its network supplied no other services. The item Advertising, public relations and entertaining includes advertising costs and sponsorship costs for 631 thousand Euros, of which 371 thousand Euros regarding the associated company Il Teatro Manzoni S.p.A.. The item Administrative and EDP service mainly refers to administrative services for 1,189 thousand Euros of which 772 thousand Euros from the subsidiary company R.T.I. S.p.A.. The Emoluments to Directors and Statutory Auditors contains compensation to the Directors for 848 thousand Euros (834 thousand Euros in 2009) and to the Statutory Auditors for 271 thousand Euros (271 thousand Euros in 2009).

35463 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Financial Statements 2010 Mediaset S.p.A. – Explanatory Notes Lastly, the item Expenses for banking and financial services includes both the expenses and commissions on sureties for 203 thousand Euros (513 thousand Euros in 2009) and the banking expenses and commissions for 2,465 thousand Euros (1,272 thousand Euros in 2009).

13.6 Usage of third party property This item breaks down as follows:

2010 2009

Leases and rentals 3,424 3,054 Royalties 558 558 Out of period (income)/expenses on utilization 4 10

Total 3,986 3,622

The item Real estate Leases and rentals represents the cost for the renting of office equipped space located in Milan and Rome mainly charged by the subsidiary company R.T.I. S.p.A. for an amount of 2,259 thousand Euros. The item Royalties, amounting to 558 thousand Euros, mainly consisted of the cost incurred for the use of the Fininvest trademark, which was unchanged compared to the previous financial year.

13.7 Provisions

2010 2009 Fund provision for future risks 208 5,950

Total 208 5,950

This item refers to the provision posted during the financial year being looked at and already commented on in the section “Funds for risks and charges”. 13.8 Other operating expenses This item breaks down as follows:

2010 2009 Sundry tax charges 138 191 Out-of-period expenses and non-existent liabilities 2 121 Other operating costs 1,420 7,918 Out of period (income)/expenses on sundry operating costs - 11 Recovery on sundry operating costs (13) (480)

Total 1,547 7,761

The item Other operating expenses mainly consists of association fees for 496 thousand Euros, gifts and donations for 412 thousand Euros, costs for subscriptions and magazines for 301 thousand Euros, costs of the amounts due for consortiums for 30 thousand Euros as well as the costs for transactions, negotiations and conciliations amounting to 96 thousand Euros.

35564 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Financial Statements 2010 Mediaset S.p.A. – Explanatory Notes

13.9 Amortisation, depreciation and write-downs This balance is relative to the amortisation of the intangible and tangible fixed assets.

2010 2009 Depreciation of tangible assets 76 98 Amortisation of other intangible assets 52 76 Write-down of the current assets 2 -

Total 130 174

The item shows a decrease of 44 thousand Euros and is represented mainly by the depreciation of tangible fixed assets for 76 thousand Euros and the amortisation of intangible fixed assets for 52 thousand Euros.

15. (Charges)/incomes from financial assets

15.1 Financial charges

2010 2009

Interests due on Mediaset c/a tw subsidiaries 2,000 2,894 Interests due on Mediaset c/a tw affiliated companies and joint ventures 20 55 Interests due on short term loans 14,128 37,678 Interests due on long term loans 2,811 6,261 Interests due on IRR 4,456 8,984 Interests due on Bond issue 14,091 - Losses on currency exchange 102,614 105,374 Losses on currency re-valuation 74,292 71,019 Other charges 4,863 3,619 Loss on securities 7,399 4,430 Out of period(income)/expenses on financial charges - (1)

Total 226,674 240,313

The item amounted to 226,674 thousand Euros with a decrease, compared to the previous financial year, of 13,639 thousand Euros.

Interest payable on short-term loans The item mainly consists of the interest accrued on the short-term loan from the subsidiary company Mediaset Investment S.a.r.l. amounting to 10,522 thousand Euros. Furthermore, there was also posted interest payable on loans opened with Banca Popolare di Bergamo for 780 thousand Euros, with Banca Intesa for 702 thousand Euros, with Mediobanca for 544 thousand Euros and with Banca Nazionale del Lavoro for 478 thousand Euros.

Interest payable on medium/long term loans The item mainly consists of the interest accrued on the medium/long term loans opened with Banca Intesa for 2,373 thousand Euros.

35665 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Financial Statements 2010 Mediaset S.p.A. – Explanatory Notes

Interest payable IRR (Internal Return Rate) The item consists of the interest payable on the loans calculated according to the amortized cost method and it breaks down as follows: – for 2,097 thousand Euros payable to Mediobanca; – for 740 thousand Euros payable to S. Paolo Imi; – for 1,619 thousand Euros payable to Intesa San Paolo.

Foreign exchange gains and losses The total result for the financial year relative to the realised and unrealised foreign exchange gains and losses amounted to a negative value of 7 thousand Euros (negative for 1,266 thousand Euros at 31 December 2009) and shows the results of the hedging activities on exchange rates, that is dealt with in the stipulation of equalised trading contracts in favour of the subsidiary companies R.T.I. S.p.A., Media Shopping S.p.A. and Videotime S.p.A.. Pursuant to IAS 39, they cannot be qualified as hedging contracts pursuant to IAS 39 and they are, therefore, accounted for by posting the changes of the fair value to the Income Statement.

Write-ups and losses on securities The item, shows the unrealised net loss amounting to 2,817 thousand Euros, that comes from the valuation at fair value of the shares of Telecinco in the portfolio at 30 November 2010 amounting to 7.283 Euros per share (10.10 Euros fair value at 31 December 2009) calculated on 1,000,000 shares. The net loss is accounted for as a capital loss for 7,399 thousand Euros and as a write-up for 4,582 thousand Euros, as the adjustment at fair value relative to the same number of shares. In the month of December, the shares were reclassified from shares held for trading to Equity investments in other enterprises, as already commented on previously.

15.2 Financial incomes

2010 2009

Interests due on Mediaset c/a tw subsidiaries 46,134 60,026 Interests due on Mediaset c/a tw filiated companies and joint ventures 1 26 Interests due on current accounts 245 519 Proceeds from security trading 199 865 Ptoceeds from currency exchange 102,603 104,925 Proceeds from currency re-valuation 74,296 70,202 Other financial proceeds 598 557 Security re-valuation 4,582 6,980

Total 228,658 244,100

The item shows an overall a decrease of 15,442 thousand Euros mainly relative to the lower interest receivable on the inter-company account, only partially set off by the increase relative to the item gains on exchange rates.

Incomes from the purchase/sale of securities The item is represented by the dividends distributed by the indirect subsidiary company Gestevision Telecinco S.A. for 199 thousand Euros (865 thousand Euros in 2009).

35766 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Financial Statements 2010 Mediaset S.p.A. – Explanatory Notes Financial incomes different from the foregoing The item amounted to 598 thousand Euros (557 thousand Euros in 2009) ed takes in, mainly, the value of the ineffective part relative to the valuations on the financial derivatives for collars on the interest rates amounting to 519 thousand Euros. The following table shows the financial incomes and charges split into the categories laid down by IAS 39 and the other that are not contemplated both for the current financial year being looked at and for the previous one:

IAS 39 categories 31/12/2010 31/12/2009 Liabilities at amortised cost (36,971) (55,866) Receivables and loans 46,452 61,066 Financial instruments held for trading (7,438) (1,284) 2,043 3,916 Other financial income and charges (58) (130) Total 1,985 3,786 15.3 Incomes/(charges) from equity investments

Dividends from subsidiary companies The item consists of the dividends distributed by the subsidiary companies for 256,308 thousand Euros (369,207 thousand Euros in 2009) with a decrease of 112,899 thousand Euros. The detail is in the table below:

2010 2009 Mediaset Investment S.a.r.l. - 17,976 R.T.I. - Reti Televisive Italiane S.p.A. 192,308 269,231 Publitalia '80 S.p.A. 64,000 82,000 Total dividends from subsidiaries 256,308 369,207 International Media Services Ltd. in liquidazione (76) - Total other income/(expenses) from equity investments (76) -

Total 256,232 369,207

During the financial year the equity investment in the subsidiary company International Media Services Ltd., in liquidation, was totally written off for the amount of 76 thousand Euros.

16. Income taxes for the financial year

2010 2009 Charges/(proceeds) for IRES from tax consolidation (14,944) (21,482) Fund provision for IRAP - 119 Total current taxes (14,944) (21,363) Fund provision for deferred tax liabilities 28 - Utilization of the deferred tax liabilities fund - (227) Total deferred tax liabilities 28 (227) Utilization of credit from deferred tax assets 409 10,318 Deferred tax assets (186) (1,810) Total deferred tax assets 224 8,508 Adjustments 1-

Total (14,692) (13,082)

The item with a negative balance amounting to 14,692 thousand Euros (a negative balance of 13,082 thousand Euros at 31 December 2009) takes in the posting of the income amounting to 35867 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Financial Statements 2010 Mediaset S.p.A. – Explanatory Notes 14,944 thousand Euros, in observance of what is laid down by the Agreement for exercising the option regarding the National Consolidated tax system regarding the governance of the relations between the parties that have joined in it. The item is adjusted for the usages for prepaid taxes appertaining to the financial year for an overall total of 409 thousand Euros, partially set off by both the provision posted for prepaid taxes amounting to 186 thousand Euros and for deferred taxes amounting to 28 thousand Euros. For the purpose of obtaining the non application of the CFC (Tax system for foreign subsidiaries) legislation, governed by article 16, paragraph 8, part two and 8, part three of the T.U.I.R. (Consolidated Income Tax Act), regarding which, at a first, the legislation in question would appear to be applicable to the subsidiary company Mediaset Investment S.a.r.l., it is our intention to present a request for clarification to the Tax Authorities. Below there is given the reconciliation table between the standard corporate tax rate and the effective one:

IRES 31/12/2010 31/12/2009

Ordinary applicable tax rate 27.50% 27.50%

Effect of increase (decrease) differences against ordinary tax rate Free-tax income -1.44% -1.37% Dividends -33.76% -28.49% Permanent differences 0.29% 0.29%

Actual tax rates -7.41% -2.07%

We remind you that both in the financial year being looked at and the previous one the company did not have a taxable base for IRAP (Regional Tax on Productive Activities) purposes.

35968 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Financial Statements 2010 Mediaset S.p.A. – Explanatory Notes 19. Investment commitments and guarantees

Sureties given These are guarantees given for 47,962 thousand Euros (92,143 thousand Euros at 31 December 2009), of which 47,273 thousand Euros in the interests of subsidiary and affiliated companies and 689 thousand Euros in the interests of third parties. Regarding the sureties in favour of the subsidiary companies we highlight the bank guarantees and sureties issued in the interests of the subsidiary company R.T.I S.p.A. in favour of the UEFA for 15,100 thousand Euros. The decrease in this case was due to the cancellations of the sureties issued in the interests of the subsidiary company R.T.I. S.p.A. in favour of the football clubs Juventus F.C. S.p.A., F.C. Internazionale S.p.A., A.S. Roma S.p.A..

Forward financial transactions Mediaset S.p.A. directly operates with institutional counterparts to hedge foreign exchange risks for itself and its subsidiary companies. The structure of the business activities of Mediaset Group shows how central commercial television operations are. This means that the Group needs to avail itself of the major international producers of films and sporting events in order to purchase television rights, which are mostly denominated in foreign currencies, such as the US Dollar with exposure to market risks arising from variations in exchange rates. To reduce such risks, financial derivatives contracts are used, as explained below. In the Mediaset Group, treasury activities are basically centralised in Mediaset S.p.A., which operates both in the Italian domestic and the foreign markets. The Board of Directors of Mediaset S.p.A. has defined the policy governing the financial operations that foresee the quantifying by its Financial Management of the maximum exchange rate and interest rate risks that the company can take on and a list of the characteristics of the parties who can be considered as suitable counterparts. The item, amounting to 1,393,598 thousand Euros (1,054,767 thousand Euros at 31 December 2009), is relative to operations on foreign currencies to hedge the foreign exchange risk on currency transactions. Lastly, it is highlighted that the derivative contracts stipulated with third parties for exchange risk hedging purposes are to be considered as being equally offset by those that have been stipulated with the subsidiary company R.T.I. S.p.A., with the subsidiary company Media Shopping S.p.A. and with the subsidiary company Videotime S.p.A.. Other information Furthermore, it should be noted that the contracts to hedge interest rate fluctuation risks, i.e. financial derivatives for collars on interest rates, relative to the medium/long term loan stipulated in 2006 at a variable rate and already commented on in the item “Non-current payables and financial liabilities”, commit Mediaset S.p.A. to pay amounts at preset dates that are calculated on the difference between the 3.17% Floor rate established in the contracts and the variable market rate at the reference date of reference, should these ever be below this threshold. Conversely, it commits the counterparts of the said contracts involved to pay to Mediaset S.p.A., at the same preset dates, the amounts calculated based on the difference between the 4.50% Cap rate and the market rate at the reference date, should the market rate be above this threshold.

36069 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Financial Statements 2010 Mediaset S.p.A. – Explanatory Notes 20. Additional information on financial instruments and risk management policies Classes of financial instruments Below there is given the detail of the financial assets and liabilities asked for by IFRS 7 split into the categories laid down by IAS 39 both for the current financial year being looked at and for the previous one. financial year 2010 IAS 39 categories

Financial Financial Financial instruments Receivables instruments Book BALANCE SHEET ITEM instruments Notes held for and loans held to value held for sale trading maturity

NON CURRENT ASSETS Other financial assets Other equity investments - - - 11,163 11,163 5.5 Financial receivables - 158 - - 158 5.6

CURRENT ASSETS Trade receivables Customers - 94 - - 94 6.2 Mediaset Group companies - 5,099 - - 5,099 6.2 Fininvest and Mediolanum Group companies - 176 - - 176 6.2 Current financial assets Non hedge derivatives - third parties 28,510 - - - 28,510 6.6 Non hedge derivatives - subsidiaries 5,425 - - - 5,425 6.6 Cash and cash equivalents Bank and postal deposits - 77,943 - - 77,943 6.7 Cash in hand - 14 - - 14 6.7 Intercompany subsidiary financial receivables - 3,198,578 - - 3,198,578 6.5

TOTAL FINANCIAL ASSETS 33,935 3,282,062 - 11,163 3,327,160

IAS 39 categories

Financial Liabilities at Book BALANCE SHEET ITEMS instruments held Notes amortised cost value for trading

NON CURRENT LIABILITIES Financial payables and liabilities Banks - 769,339 769,339 9.3 Bond issue - 295,967 295,967 9.3 Hedge derivatives - third parties 1,172 - 1,172 9.3

CURRENT LIABILITIES Payables due to banks Banks - 89,666 89,666 10.1 Credit lines - 541,186 541,186 10.1 Tarde payables Suppliers - 5,047 5,047 10.2 Mediaset Group companies - 1,595 1,595 10.2 Fininvest and Mediolanum Group companies - 248 248 10.2 Other financial liabilities Financial payables due to subsidiaries - 372,371 372,371 10.6 Bond issue - 14,091 14,091 Hedge derivatives - third parties 2,537 - 2,537 10.6 Non hedge derivatives - third parties 5,672 - 5,672 10.6 Non hedge derivatives - subsidiaries 28,543 - 28,543 10.6 Intercompany financial payables - subsidiaries/associa - 391,944 391,944 10.5

TOTAL LIABILITIES 37,924 2,481,454 2,519,378

36170 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Financial Statements 2010 Mediaset S.p.A. – Explanatory Notes

financial year 2009 IAS 39 categories

Financial Financial Financial instruments Receivables instruments Book BALANCE SHEET ITEM instruments Notes held for and loans held to value held for sale trading maturity

NON CURRENT ASSETS Other financial assets Other equity investments - - - 2 2 5.5 Financial receivables - 157 - - 157 5.6

CURRENT ASSETS Trade receivables Customers - 87 - - 87 6.2 Mediaset Group companies - 4,640 - - 4,640 6.2 Fininvest and Mediolanum Group companies - 149 - - 149 6.2 Current financial assets Sahres 10,100 - - - 10,100 6.6 Non hedge derivatives - third parties 3,205 - - - 3,205 6.6 Non hedge derivatives - subsidiaries 5,247 - - - 5,247 6.6 Financial receivables - - - 17,058 17,058 6.6 Cash and cash equivalents Bank and postal deposits - 82,457 - - 82,457 6.7 Cash in hand - 15 - - 15 6.7 Intercompany subsidiary financial receivables - 3,009,640 - - 3,009,640 6.5

TOTAL FINANCIAL ASSETS 18,552 3,097,145 - 17,060 3,132,757

IAS 39 categories

Financial Liabilities at Book BALANCE SHEET ITEMS instruments held Notes amortised cost value for trading

NON CURRENT LIABILITIES Financial payables and liabilities Banks - 792,964 792,964 9.3 Hedge derivatives - third parties 1,345 - 1,345 9.3

CURRENT LIABILITIES Payables due to banks Banks - 88,689 88,689 10.1 Credit lines - 626,123 626,123 10.1 Tarde payables Suppliers - 3,573 3,573 10.2 Mediaset Group companies - 584 584 10.2 Fininvest and Mediolanum Group companies - 306 306 10.2 Other financial liabilities Financial payables due to subsidiaries - 392,294 392,294 10.6 Financial payables due to third parties 541 - 541 10.6 Hedge derivatives - third parties 4,387 - 4,387 10.6 Non hedge derivatives - third parties 5,677 - 5,677 10.6 Non hedge derivatives - subsidiaries 3,223 - 3,223 10.6 Intercompany financial payables - subsidiaries/associa - 375,663 375,663 10.5

TOTAL LIABILITIES 15,173 2,280,196 2,295,369

36271 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Financial Statements 2010 Mediaset S.p.A. – Explanatory Notes Fair value of financial assets and liabilities: calculation models used Below there are shown the amounts corresponding to the fair value of the classes of financial instruments broken down based on the methodologies and the calculation models used determine them, both for the current financial year being looked at and for the previous one. financial year 2010

Mark to Model Book Mark to Total fair Notes value Market Black&Scholes's Binomial value DCF Model model model

Payables due to banks (858,294) - - - (859,793) (859,793) 9.3/10.1 Bond issue (310,058) (309,353) ---(309,353) 9.3/10.6 Non hedge derivatives Forward contracts - third parties 22,838 - - - 22,828 22,828 6.6/10.6 Forward contracts - subsidiaries (23,119) - - - (23,119) (23,119) 6.6/10.6 Hedge derivatives Third party plain vanilla options (3,709) - - - (3,709) (3,709) 6.6

financial year 2009

Mark to Model Book Mark to Total fair Notes value Market Black&Scholes's Binomial value DCF Model model model

Payables due to banks (881,620) - - - (884,326) (884,326) 9.3 Secutities 10,100 10,100 ---10,100 6.6 Non hedge derivatives Forward contracts - third parties (2,472) - - - (2,472) (2,472) 6.6/10.6 Forward contracts - subsidiaries 2,024 - - - 2,024 2,024 6.6/10.6 Hedge derivatives Third party plain vanilla options (5,732) - - - (5,732) (5,732) 6.6

The fair value of the Payables to banks was calculated without any hypothesis regarding the credit spread of the company. The fair value of securities quoted on an active market is based on market prices at the closing date of the Financial Statements. The market prices used are bid/ask prices according to the relevant position, i.e. asset or liability. As far as corporate bond (listed at Luxembourg Stock Exchange) concerns, the market value of 103.76 at 30 December 2010 is represented by the Tel Quel price which includes, beside the exchange price, the accrual in interest to be paid. The fair value of securities not quoted on an active market and of the trading derivatives is determined using the most widely employed evaluation models and techniques, or using the price assessed by several independent experts. The fair value of trade payables due within the financial year was not calculated since it is estimated that their accounting book value is very close to fair value. As a result, the accounting book value of these payables, for which the fair value was calculated, also includes the portion due within 12 months from closing date of the Financial Statements Furthermore, it is highlighted that those financial assets and liabilities whose fair value cannot be calculated objectively were not entered in this table.

36372 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Financial Statements 2010 Mediaset S.p.A. – Explanatory Notes The financial assets and liabilities recorded in the Financial Statements at fair value were further classified according to the hierarchy set out by the standard: a) level I: prices quoted on active markets for identical instruments. b) level II: different variables from prices quoted on active markets observable both directly (in the case of the prices) and indirectly (i.e. derived from the prices). c) level III: variables not based on observable market values.

BALANCE SHEET ITEM Book value level I level II level III Fair Value Notes Derivatives with no hedging cash flow: - Forward contracts - third parties 22,838 22,838 22,838 6.6/10.6 - Forward contracts - subsidiaries (23,119) (23,119) (23,119) 6.6/10.6 Derivatives for cash flow hedge: - Third party plain vanilla options (3,709) (3,709) (3,709) 9.3/10.6

The company identified only 2 hierarchical levels for the instruments valued at fair value, because it does not apply valuation models that are not based on observable market values.

Financial charges and incomes as per IAS 39 Below there are shown the amounts of the financial charges and incomes split by the categories laid down by IAS 39. financial year 2010

Profit/(loss) From Fair Net IAS 39 categories From interest At Fair Value on exchange Value reserve profit/(loss) rates Financial instruments held for trading 199 (7,615) - (22) (7,438) Liabilities at amortised cost (36,987) --16(36,971) Receivables and loans 46,452 ---46,452 Total IAS 39 categories 2,043

Other (charges)/income - (58) - - (58) Total 1,985

financial year 2009

Profit/(loss) From Fair Net IAS 39 categories From interest At Fair Value on exchange Value reserve profit/(loss) rates Financial instruments held for trading 865 (877) - (1,272) (1,284) Liabilities at amortised cost (55,873) --7(55,866) Receivables and loans 61,066 ---61,066 Total IAS 39 categories 3,916

Other (charges)/income - (130) - - (130) Total 3,786 Capital management The objectives of Mediaset S.p.A. in relation to capital management are based on safeguarding the Group’s ability to continue, all at the same time, to ensure the return to shareholders, to protect the interests of the stakeholders and the observance of the covenants and maintain an optimal capital structure.

36473 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Financial Statements 2010 Mediaset S.p.A. – Explanatory Notes Types of financial risks and the linked hedging activities The Mediaset S.p.A. Executive Committee defined the Group’s policies for financial risk management, aimed at reducing exposure to exchange rate, interest rate and liquidity risks, which the Group is exposed to. These activities, for the purpose of optimising the structure of the operating costs and the dedicated resources dedicated, is centralised in the group parent company Mediaset S.p.A., the company to which there is entrusted the task of collecting the information regarding the positions subject to risk and carrying out any relative hedging operations. For this purpose, Mediaset S.p.A. directly operates in the market and carries out a control and coordination activity to manage the financial risks of the Group companies. The choice of the financial counterparts is aimed at those with high credit rating ratings while, at the same time, ensuring that there is a limited exposure concentration with them. Exchange rate risk Mediaset S.p.A. carries out a function of intermediation regarding the managing of the exposure to financial risks that are linked to exchange rate fluctuations regarding the acquisition of television rights, to which the direct subsidiary company R.T.I. S.p.A. is mainly subject and which are predominantly carried out in US Dollars. Mediaset S.p.A. collects information regarding any exchange rate risk positions of its subsidiary R.T.I. S.p.A. and, after stipulating the derivative contract on the market, transfers it to the same subsidiary through an inter-company contract at the same terms and conditions. The types of derivative contracts mainly used are forward purchase contracts and acquisitions of options contracts. Mediaset S.p.A. accounts for these contracts, with the market and with the subsidiary company R.T.I. S.p.A., by qualifying them as financial intermediation contracts and, therefore, they are accounted for by posting the changes in the fair value to the Income Statements as “realised and unrealised gains and losses on foreign” in the item Financial incomes/(charges). The fair value of forward contracts on currencies is calculated as the discounted difference between the notional amount valued at the contract forward rate and the notional amount valued at the forward rate calculated at the closing date of the Financial Statements. The fair value of exchange rate options is calculated using the Black & Sholes formula for the plain-vanilla options, while the binomial method is used for the barrier options. The sensitivity analysis on exchange rates was not carried out, since the activity related to it does not generate significant effects, because it exclusively derives from an activity of financial intermediation, as already commented on. Below is a table of the financial derivatives giving the notional value of the relative contracts.

Interest rate risk The structure of the Mediaset Group centralises all the financial resources in the group parent Mediaset S.p.A. through the use of daily automatic movements of a cash pooling system to which almost all the Group companies belong. The group parent Mediaset S.p.A. is wholly entrusted for the intake on the market through the stipulation of medium/long term loans, as well as for the formalising of committed and uncommitted credit lines. The interest rate risk, to which Mediaset S.p.A. is exposed, mainly originates from financial payables at variable rates, which expose the company to a cash flow risk. The objective of the

36574 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Financial Statements 2010 Mediaset S.p.A. – Explanatory Notes company is to limit the fluctuation of the financial charges that impact the financial result, limiting the risk from a potential rise in interest rates. Mediaset S.p.A. manages this risk by relying on derivative contracts stipulated with third parties aimed at pre-determining or limiting cash flow fluctuations due to changes in the interest rates on medium/long term loans. The timeframe considered significant for the management of the interest rate risk is established as the minimum term of 18 months. Mediaset S.p.A. uses Hedge Accounting, starting from the stipulation date of the derivative contract until its cancellation or maturity date, Mediaset S.p.A. applies the hedge accounting method, documenting with a specific report, i.e. the hedging relationship, of the risk hedged against and its purposes, periodically checking its effectiveness. Specifically, the cash flow hedge method is applied pursuant to IAS 39. Based on this method, the effective component of the change in the value of the derivative is accounted for in a reserve in Net Equity, which is used to adjust the value of the interest in the Income Statement when it occurs. The evaluation of the effectiveness aims at demonstrating the high correlation between the technical/financial characteristics of the hedged liabilities, i.e. maturity, amount, etc., and those of the hedging instrument through the making specific retrospective and forecast tests by using the Dollar off-set and volatility reduction measure methods, respectively. The fair value of the options (interest rate collar) on interest rates is calculated by using the Black & Scholes formula. The derivatives portfolio consists of two zero-cost collars. Below are the cap and floor barrier levels as well as the relative maturity date.

Cap Floor Expiry

Collars on interest rates for notional amounting to EUR 150 million 4.50% 3.17% 29/05/2013

Sensitivity analysis The financial instruments exposed to the interest rate risk were the subjects of a sensitivity analysis at the drafting date of these Financial Statements. The hypotheses, which are the basis of the model, are the following:

to the medium/long term payables there was applied the asymmetrical variation of 100 bps rise and 30 bps drop at the date of the resetting of the internal rate of return (IRR) that was recorded during the financial year;

for the short-term payables and medium/long term revolving payables and the other current financial balances there was recalculated the amount of financial charges by applying the asymmetrical variation of 100 bps rise and 30 bps drop to the values posted in the Financial Statements;

for the collars on interest rates the fair value was recalculated by applying an asymmetrical shift of 100 bps rise and 30 bps drop to the curve of the interest rates, at the closing date of these Financial Statements. The ineffective part was calculated based on the average ineffectiveness recorded during the financial year. Furthermore, there was taken into account any activation of the financial derivative at each date of verification of the underlying interest rate, with the consequent posting of the cash flow hedge reserve to the Income Statement;

36675 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Financial Statements 2010 Mediaset S.p.A. – Explanatory Notes

the variation applied, compared to that of the previous financial year, is no longer symmetrical, because the curve of the very short-term interest rates has values that are close to zero. The table below shows, in summary form, the change in the financial result for the year and in the Net Equity as a result of the sensitivity analysis carried out, net of the consequent fiscal impacts that were calculated on the basis of the standard tax rate in force at 31 December 2010:

Economic Shareholders' equity Total Shareholders' Years Variation b.p. Performance reserve equity

100 9,624.0 -337.0 9,287.0 2010 -30 -2,591.0 -188.0 -2,779.0 100 6,978.3 1,023.3 8,001.6 2009 -30 -2,507.4 30.9 -2,476.5

Credit risk With regard to third party financial counterparts, compared to the other Group companies, Mediaset S.p.A. does not have significant concentrations of either a liquidity risk or a solvency risk. The following tables highlight how, because of the type of the counterpart, the trade receivables and the financial receivables due from third parties, compared to the companies of the Group and the relative Bad Debts Reserve posted to the accounting books in the financial year, is an amount that is so insignificant that it can be ignored. financial year 2010

RECEIVABLES Total net Net overdue amount Bad CLASSES receivables 0-30dd 30-60dd 60-90dd Over Total debt

Trade receivables Other receivables 94 - - 18 290 308 243 Receivables due from Fininvest Group companies 176 - - - 46 46 - Receivables due from Mediaset Group companies 5,099 - - - 48 48 - Total 5,369 - - 18 384 402 243

Financial receivables Bank deposits 77,957 Non hedge derivatives - third party 28,510 Non hedge derivatives - subsidiaries 5,425 Intercompany financial receivables 3,198,578 Total 3,310,470

financial year 2009

RECEIVABLES Total net Net overdue amount Bad CLASSES receivables 0-30dd 30-60dd 60-90dd Over Total debt

Trade receivables Other receivables 87 - - 8 293 301 244 Receivables due from Fininvest Group companies 149 15 - - 35 50 - Receivables due from Mediaset Group companies 4,640 - 6 - 35 41 - Total 4,876 15 6 8 363 392 244

Financial receivables Other financial assets 27,158 Bank deposits 82,457 Non hedge derivatives - third party 3,205 Non hedge derivatives - subsidiaries 5,247 Intercompany financial receivables 3,009,640 Total 3,127,707

36776 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Financial Statements 2010 Mediaset S.p.A. – Explanatory Notes Furthermore, it is highlighted that the company has issued guarantees, mainly with a mere signature, for the amount of 47,962 thousand Euros (92,143 thousand Euros at 31 December 2009), of which 47,273 thousand Euros in favour of third parties in the interests of the subsidiary companies. We point out that the biggest surety was issued in the interests of the subsidiary company R.T.I. S.p.A. in favour of the UEFA for 15,100 thousand Euros. The big drop compared to the previous financial year was caused by the cancellation of the sureties, issued in the interests of the subsidiary company R.T.I. S.p.A., in favour of the leading Football Clubs. In the following table there are shown the movements of the Bad Debts Reserve, both for the current financial year being looked at and for the previous one.

31/12/2010 31/12/2009 Beginning balance 244 248 Allowances for the period 2 - Uses for the period (3) (4) Final balance 243 244 Liquidity risk The liquidity risk is related to the difficulty of procuring the funds to be able to face up to financial commitments. This can arise from the insufficiency of the available resources in order to be able to face up to financial commitments within the preset timeframes and at the due dates, in the case of any unexpected revocation uncommitted financing or credit lines, or in the event that the company has to settle its financial liabilities before their natural due dates. As already mentioned previously, the Group’s treasury activities are centralised in Mediaset S.p.A.., which operates both in the domestic market and in foreign markets, through the use of automatic cash pooling movements on a daily basis. The management of the liquidity risk implies the following:

the maintenance of a substantial balance between committed and uncommitted lines of financing in order to avoid liquidity strains in the event that requests for repayment of the usage is asked for by the credit providing counter.

the maintenance of an average financial exposure over the period of the financial year within an amount that is basically to two thirds of the total amount that has been made available to the company by the credit system in general.

the availability of financial assets that can be liquidated quickly in order to be able to face up to any unforeseen cash needs. The companies of the Group, following a specific measure issued by Mediaset S.p.A., for the purpose of optimising liquidity management, concentrate payment dates of almost all their suppliers at the times when they receive their largest cash intakes.

36877 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Financial Statements 2010 Mediaset S.p.A. – Explanatory Notes The following tables shows, aged by contractual due dates, looking at a worst case scenario, and at undiscounted values, the Company’s financial obligations, considering the closest date when payment is asked from the company and indicating the numbers of the relative explanatory notes to the Financial Statements for each class, both for the current financial year being looked at and also for the previous one.

financial year 2010

Time Band Total Book Balance sheet items financial Notes value 0- 3 4-6 7-12 1-5 over 5 flows months months months years years Financial liabilities

Loans and payables due to banks 770,511 466,389 773 1,669 306,393 - 775,224 9.3 Bond issue 310,058 15,000 - - 60,000 330,000 405,000 9.3/10.1 Credit lines and payables due to banks 630,852 556,365 30,194 44,579 - - 631,138 10.1 Financial payables due to subsidiaries 372,371 372,766 - - - - 372,766 10.6 Payables due to suppliers for professionals 1,360 1,360 - - - - 1,360 10.2 Payables due to suppliers for technical invetments 2 2 - - - - 2 10.2 Payables due to other suppliers 3,685 3,673 12 - - - 3,685 10.2 Payables due to Mediaset Group companies 1,595 1,595 - - - - 1,595 10.2 Payables due to Fininvest Group and Mediolanum Group companies 248 248 - - - - 248 10.2 Intercompany financial payables - subsidiaries/associates 391,944 391,944 - - - - 391,944 10.5 Total 2,482,626 1,809,342 30,979 46,248 366,393 330,000 2,582,962

Derivative instruments valued at Third party non hedge derivatives contract (22,838) 26,189 265,563 181,683 163,241 - 636,676 6.6-10.6 (currency-denominated purchases) exchange rate

valued at end- Third party non hedge derivatives of-period - (26,345) (277,844) (176,593) (175,214) - (655,996) (currency availability) exchange rate

valued at Subsidiary non hedge derivatives contract 23,119 (25,906) (265,563) (181,683) (163,241) - (636,393) 6.6-10.6 (currency-denominated sale) exchange rate

valued at end- Subsidiary non hedge derivatives of-period - 26,342 277,844 176,593 175,214 - 655,993 (currency transfer) exchange rate

Third party hedge derivatives 3,709 811 811 1,305 1,952 - 4,879 10.6 (rates risk) Total 3,990 1,091 811 1,305 1,952 - 5,159

financial year 2009

Time Band Total Book Balance sheet items financial Notes value 0- 3 4-6 7-12 1-5 over 5 flows months months months years years Financial liabilities

Loans and payables due to banks 792,964 400,956 693 1,730 397,448 - 800,828 9.3 Credit lines and payables due to banks 714,812 641,454 30,147 44,500 - - 716,101 10.1 Financial payables due to subsidiaries 392,294 392,705 - - - - 392,705 10.6 Payables due to suppliers for rights 7 7 - - - - 7 10.2 Payables due to suppliers for professionals 1,463 1,463 - - - - 1,463 10.2 Payables due to suppliers for technical investments 45 45 - 45 10.2 Payables due to other suppliers 2,058 2,055 3 - - - 2,058 10.2 Payables due to Mediaset Group companies 585 585 - - - - 585 10.2 Payables due to Fininvest Group and Mediolanum Group companies 305 305 - - - - 305 10.2 Intercompany financial payables - subsidiaries/associates 375,663 375,663 - - - - 375,663 10.5 Due to other financier 541 541 - - - - 541 10.6 Total 2,280,737 1,815,779 30,843 46,230 397,448 - 2,290,301

Derivative instruments valued at Third party non hedge derivatives contract 2,472 87,245 205,064 5,043 191,537 - 488,888 6.6-10.6 (currency-denominated purchases) exchange rate

valued at end- Third party non hedge derivatives of-period - (88,666) (203,156) (4,810) (188,409) - (485,042) (currency availability) exchange rate

valued at Subsidiary non hedge derivatives contract (2,024) (87,333) (205,093) (5,043) (191,247) - (488,716) 6.6-10.6 (currency-denominated sale) exchange rate

valued at end- Subsidiary non hedge derivatives of-period - 88,919 203,184 4,810 188,409 - 485,323 (currency transfer) exchange rate

Third party hedge derivatives 5,732 1,169 1,169 2,005 5,025 - 9,368 10.6 (rates risk) Total 6,180 1,334 1,168 2,005 5,315 - 9,821

36978 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Financial Statements 2010 Mediaset S.p.A. – Explanatory Notes It is highlighted that within the items loans, payables to banks and credit lines within 3 months there are included 400,000 thousand Euros regarding medium/long term revolving credit lines in consideration of the expiry of the current draw down at the closing date of these Financial Statements. The difference between the values entered in the Financial Statements and the total of the cash flows is mainly linked to the calculation of interest on the contract duration of the payables due to banks. Furthermore, with reference to loans valued using the amortised cost method, the interest calculation methodology foresees the use of the nominal rate instead of the actual rate of return. Regarding the relative to the financial derivatives, it is pointed out that the contractual exchange rate means the forward rate defined at the date of the stipulation of the contract effective date, while the exchange rate at the end of the financial year means the spot rate at the closing date of these Financial Statements. For a better presentation in the table, in consideration of the financial intermediary activity in the management of the exchange rate risk carried out by Mediaset S.p.A., there have also been entered the positive cash flows coming from the sales of foreign currency to the subsidiary company R.T.I. S.p.A..

For the Board of Directors The Chairman

37079 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Financial Statements 2010 Mediaset S.p.A. – Explanatory Notes

ATTACHMENTS

The following attachments contain additional information that was not given in the Explanatory Notes of which they form an additional part.

Table of the financial derivatives at 31 December 2010.

List of equity investments in subsidiary and affiliated companies at 31 December 2010, as per Article 2427, n° 5, of the Italian Civil Code.

Disclosures pursuant to Article 149, part twelve, of the Consob Issuers Regulations.

37180 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399

Table of the financial derivatives at 31 December 2010 (values in thousand Euros)

Underlying Interest rates and certificates of indebtedness Exchanges rates

Type of transactions

Notional Fair ValueNotional Fair Value value value Pos. Neg. Pos. Neg.

Unlisted OTC derivatives ---

Fiancial derivatives:

372 - forwards contracts vs. third parties USD purchases - - - 915,879 28,043 5,668 USD sales - - - (39,862) 467 - - forwards contracts vs. third parties GBP purchases - - - 338 - 4 - forwards contracts vs. Group USD purchases - - - 39,406 - 460 USD sales - - - (915,419) 5,421 28,084 - forwards contracts vs. Group GBP sales - - - (338) 4 -

- collar on interest rates 150,000 3,709 - - -

Total 150,000 - 3,709 4 33,935 34,216

WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399

List of the equity investments in subsidiary and affiliated companies at 31 December 2010 (Article 2427 n° 5 of the Italian Civil Code)

(values in thousand Euros)

Shareholders' Equity Result for the year Difference

Share Face value Total Pro-quota Total Pro-quota % Number Book Value as per Name Head office Capital per sahre amount amount held of share value art. 2426 (4) c.c. B-A B-C held

(A) (B) (C)

Subsidiary Companies

Publitalia '80 S.p.A. Milano Euro 52,000 0.52 153,883 153,883 75,979 75,979 100% 100,000,000 51,134 - (102,749) -

R.T.I. S.p.A. Roma Euro 500,000 0.52 1,308,811 1,308,811 315,905 315,905 100% 961,538,475 534,219 - (774,592) -

373 International Media Services Ltd. in liquidazione Malta Euro 52 1.03 - - (106) (106) 99.95% 49,999 - - - -

Mediaset Investment S.a.r.l. Lussemburgo Euro 79,607 52.00 448,872 448,872 (19,844) (19,844) 100% 1,530,900 394,195 - (54,677) -

Mediaset Investimenti S.p.A. Milano Euro 500,000 4,166.67 482,678 482,678 13,704 13,704 100% 120,000 850,000 - 367,322 -

WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399

Disclosures pursuant to article 149, part twelve, of the Consob Issuers Regulations

(values in thousand Euros)

Contractual fees written up for Types of assignment Entity providing the service Recipient the financial year 2010

Auditing Reconta Ernst & Young S.p.A. Holding-Mediaset S.p.A. 614 Auditing Reconta Ernst & Young S.p.A. Subsidiaries 1,318 Auditing Ernst & Young network Subsidiaries 386 Certification services Reconta Ernst & Young S.p.A. Holding-Mediaset S.p.A. (1) (2) 185 Certification services Reconta Ernst & Young S.p.A. Subsidiaries (1) 42 Certification services Ernst & Young network Subsidiaries (3) 102

Total 2,647 (1) Attestation services of the Yearly Tax Declaration and the 770 forms (2) Attestation services for the Bond issue (3) Attestation services relative to the acquisition of the company Sociedad General De Television Cuarto S.A.U.

374 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399

Mediaset S.p.A. Table of the relevant equity investments as per article 125 of the Consob Regulations n° 11971/1999 and successive changes (reference date 31 December 2010)

Company Country Total owned Type of stake Shareholder Stake % Name share % ownership % Ares Film S.r.l. Italy 30.00% indirectly owned R.T.I. S.p.A. 30.00% Atlas Media S.A.U. Spain 100.00% indirectly owned Agencia de Televisión Latino-Americana de Servicios y Noticias España SAU 100.00% Agencia de Televisión Latino-Americana de Servicios y Noticias España S.A.U. Spain 100.00% indirectly owned Gestevision Telecinco S.A. 100.00% Agencia de Televisión Latino-Americana de Servicios y Noticias Pais Vasco S.A.U. Spain 100.00% indirectly owned Agencia de Televisión Latino-Americana de Servicios y Noticias España SAU 100.00% Auditel S.r.l. Italy 26.67% indirectly owned R.T.I. S.p.A. 20.22% directly owned Mediaset S.p.A. 6.45% Beigua S.r.l. Italy 24.50% indirectly owned Elettronica Industriale S.p.A. 24.50% BigBang Media SL Spain 30.00% indirectly owned Gestevisión Telecinco S.A. 30.00% Boing S.p.A. Italy 51.00% indirectly owned R.T.I S.p.A. 51.00% Canal Factoria de Ficción S.A.U. Spain 100.00% indirectly owned Gestevisión Telecinco S.A. 100.00% Capitolosette S.r.l. Italy 48.96% indirectly owned R.T.I. S.p.A. 48.96% Cinecittà Digital Factory S.r.l. Italy 15.00% indirectly owned Medusa Film S.p.A. 15.00% Class CNBC S.p.A. Italy 10.90% indirectly owned R.T.I S.p.A. 10.90% Compania Independiente de Noticias De Television SLU Spain 100.00% indirectly owned Sociedad General de Television Cuatro S.A.U. 100.00% Conecta 5 Telecinco, SAU Spain 100.00% indirectly owned Gestevision Telecinco S.A. 100.00% Digitalia 08 S.r.l. Italy 100.00% indirectly owned Publitalia '80 S.p.A. 100.00% DTS Distribuidora de Television Digital S.A. Spain 22.00% indirectly owned Gestevision Telecinco S.A. 22.00% Edam Acquisition Holding I Cooperatief U.A. Holland 33.33% indirectly owned Mediacinco Cartera S.L. 33.33% Elettronica Industriale S.p.A. Italy 100.00% indirectly owned R.T.I S.p.A. 100.00% Fascino Produzione Gestione Teatro S.r.l. Italy 50.00% indirectly owned R.T.I. S.p.A. 50.00% Gestevisión Telecinco S.A. Spain 41.55% indirectly owned Mediaset Investimenti S.p.A. 41.22% directly owned Mediaset S.p.A. 0.33% Grupo Editorial Tele 5 SAU Spain 100.00% indirectly owned Gestevision Telecinco S.A. 100.00% International Media Services Ltd. in liquidazione Malta 99.95% directly owned Mediaset S.p.A. 99.95% La Fabrica De La Tele S.L. Spain 30.00% indirectly owned Agencia de Televisión Latino-Americana de Servicios y Noticias España SAU 30.00% Med Due S.r.l. Italy 100.00% indirectly owned R.T.I. S.p.A. 100.00%

375 Mediacinco Cartera S.L. Spain 100.00% indirectly owned Gestevision Telecinco S.A. 75.00% indirectly owned Mediaset Investment S.a.r.l. 25.00% Mediamond S.p.A. Italy 50.00% indirectly owned Publitalia '80 S.p.A. 50.00% Mediaset Investment S.a.r.l. Luxemburg 100.00% directly owned Mediaset S.p.A. 100.00% Mediaset Investment Belgium s.p.r.l. in liquidazione Belgium 100.00% indirectly owned Mediaset Investment S.a.r.l. 100.00% Mediaset Investimenti S.p.A. Italy 100.00% directly owned Mediaset S.p.A. 100.00% Media Shopping S.p.A. Italy 100.00% indirectly owned R.T.I. S.p.A. 100.00% Mediavivere S.r.l. Italy 50.00% indirectly owned R.T.I. S.p.A. 50.00% Medusa Film S.p.A. Italy 100.00% indirectly owned Med Due S.r.l. 100.00% Mi Cartera Media S.A.U. Spain 100.00% indirectly owned Agencia de Televisión Latino-Americana de Servicios y Noticias España SAU 100.00% Nessma SA Luxemburg 25.00% indiretta proprieta Mediaset Investment S.a.r.l. 25.00% Nessma Broadcast S.a.r.l. Tunis 25.00% indirectly owned Mediaset Investment S.a.r.l. 25.00% Pegaso Television INC USA 43.71% indirectly owned Gestevision Telecinco S.A. 43.71% Premiere Megaplex S.A. Spain 50.00% indirectly owned Gestevisión Telecinco S.A. 50.00% Producciones Mandarina S.L. Spain 30.00% indirectly owned Agencia de Televisión Latino-Americana de Servicios y Noticias España SAU 30.00% Publiespaña S.A.U. Spain 100.00% indirectly owned Gestevision Telecinco S.A. 100.00% Publieurope Ltd. United Kingdom 100.00% indirectly owned Publitalia '80 S.p.A. 100.00% Publimedia Gestion S.A.U. Spain 100.00% indirectly owned Publiespaña S.A.U. 100.00% Publitalia '80 S.p.A. Italy 100.00% directly owned Mediaset S.p.A. 100.00% R.T.I. S.p.A. Italy 100.00% directly owned Mediaset S.p.A. 100.00% Sociedad General de Television Cuatro S.A.U. Spain 100.00% indirectly owned Gestevision Telecinco S.A. 100.00% Sogecable Editorial SLU Spain 100.00% indirectly owned Sociedad General de Television Cuatro S.A.U. 100.00% Sogecable Media SLU Spain 100.00% indirectly owned Sociedad General de Television Cuatro S.A.U. 100.00% Sportsnet Media Limited Cayman Island (United Kingdom Colony) 12.00% indirectly owned Mediaset Investment S.a.r.l. 12.00% Taodue S.r.l. Italy 100.00% indirectly owned Med Due S.r.l. 100.00% TED-TV Educational S.r.l. in liquidazione Italy 100.00% indirectly owned R.T.I. S.p.A. 100.00% Tivù S.r.l. Italy 48.16% indirectly owned R.T.I. S.p.A. 48.16% Telecinco Cinema, SAU Spain 100.00% indirectly owned Gestevisión Telecinco S.A. 100.00% Titanus Elios S.p.A. Italy 30.00% indirectly owned Videotime S.p.A. 30.00% Videotime S.p.A. Italy 98.98% indirectly owned R.T.I. S.p.A. 98.98% X Content S.r.l. in liquidazione Italy 100.00% indirectly owned Medusa Film S.p.A. 100.00%

WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399

WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 MEDIASET S.p.A.

2010 Annual Report Reports of the Statutory Auditors and External Auditors

WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399

WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 BOARD OF STATUTORY AUDITOR’S REPORT TO THE SHAREHOLDERS’ MEETING OF MEDIASET

Dear Shareholders,

The Financial Statements at 31st December 2010, made available by the Board of Directors on 22nd March 2010 and submitted for your approval closed with a profit of 213,032,496 Euros and the Consolidated Financial Statements, presented together with the yearly ones, closed with a profit, appertaining to the Group of 352.2 million Euros.

Both sets of Financial Statements have been drawn up observing the relative legal measures, the International Accounting Standards (IAS) homologated by the European Commission and the measures issued by Consob (Italian SEC). Regarding these matters the Board of Statutory Auditors, also through meetings with the External Auditing Company, has ascertained that the Financial Statements fully reflect the general principles laid down by the legislation, rules and regulations cited above and has examined in depth the application methodologies of some of them, with specific reference to the methodology of carrying out the checks regarding the possible loss of value of non-current assets, i.e. the impairment tests.

In their respective Reports on Operations the Directors have illustrated the progress and trend of the Company’s and the Group’s operations, also broken down by activity sectors and geographical areas, and they have supplied information regarding Human Resources and the forecasted evolution of operations and they given a detailed description of the various types of risks, both of a financial or other natures, to which the Company and the Group are exposed, as well as the policies for mitigating them, and the system of Corporate Governance. Also the most outstanding Income Statement, Financial and Balance Sheet operations, which the Board of Statutory Auditors believes have been carried out according to law and the Articles of Incorporation, are described in the Board of Director’s Report on Operations.

During the financial year the Board of Statutory Auditors has carried out all relative the surveillance activities laid down by law, while also taking into account the indications contained in the Self- Regulation Code of Borsa Italiana (Italian Stock Exchange). Summarised, our activities were carried out through the following:

- Constantly watching over the observance of the law, the Articles of Incorporation and the respect of the principles of correct administration. - Participation in the meetings of the Board of Directors, of the Executive Committee and of the Committees set up according to the Self-Regulating Code. - Periodic meetings with high level executives of the Company and the Group in order to acquire information regarding the progress and trend of general operations and on the most outstanding Income Statement, Financial and Balance Sheet operations. - The analyses of the main aspects of the organisational structure of the Company, for the purpose of ascertaining its adequacy. - Gaining knowledge regarding the internal controls, risk management and the administration/accounting systems, for the purpose of ascertaining their adequacy and their trustworthiness in being able to correctly reflect the operational facts, through meetings or exchanges of information with the External Auditing Company, the Internal Controls Manager, the Assigned Executive for the drafting of the company’s accounting documents and the participation in all of the meetings of the Internal Controls Committee and of the Corporate Governance Committee. WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 - The reviewing of the work plan and the findings from the checks carried out by the Internal Auditing function. - Watching over the legal audit of the yearly accounts and the consolidated ones and on the independency of the External Auditing Company. - Checking of the procedures put in place by the Board of Directors for evaluating the independency of the Directors designated as being independent. - Joint examination with the Internal Controls Committee of the relevant transactions with correlated parties. - The examination of the directives issued by the Company to its subsidiary companies in order that these latter supply the company with the information necessary to fulfil the relative disclosure obligations laid down by law and meetings with the Chairmen of the Boards of Statutory Auditors of the two main subsidiary companies. - Watching over the financial disclosures and informational process. - Direct test checks carried out to the extent considered necessary.

We herewith state that from the work carried out by us, as summarised above, there have not emerged any omissions, facts subject to censure, or irregularities, or instances of inadequacy of the organisational structure, of the internal controls system or of the administration/accounting system that require to be communicated to you or to the Regulatory Authorities and that during the year there have not come in, from the shareholders, any accusations, pursuant to article 2408 of the Italian Civil Code, or any submissions.

During the financial year the Company has not conferred upon the External Auditing Company assigned with the legal audit of the accounts any other assignment, apart from that of the accounting audit.

The Board of Statutory Auditors, on 30th March 2010, gave its positive professional opinion regarding the approval by the Shareholders’ Meeting regarding the addition to the audit fee for additional activities compared to the audit services already approved by the Shareholders’ Meeting of 16th April 2008.

In accordance with some specific Consob (Italian SEC) measures, the Board of Statutory Auditors also highlights the following: - That the procedures adopted by the company for the transactions with correlated parties, approved by the Board of Directors on 9th November 2010, with the favourable opinion of the Board of Statutory Auditors, conform to the principles contained in the Consob Regulations number 17221 of 12th March 2010. - The inter-company and related parties transactions which are described in the Explanatory Notes to the Financial Statements and the Consolidated Financial Statements, to which we ask you to make reference regarding this subject, have not presented any criticalities. - The aforesaid transactions have been sufficiently illustrated in the Explanatory Notes to both the Company and Consolidated Yearly Financial Statements and they are congruous and respond to the Company’s interests. - From the analyses carried out no transactions have been found that could be considered to be either atypical or unusual. - The Company has adhered to continuously updated the Self-Regulating Code of the Corporate Governance Committee for quoted companies and, over the years, it has continuously updated it in order to maintain it in line with the relative current best practices. - The obligation to provide disclosures, information and documentation to the Board of Statutory Auditors, which is referred to in article 150, paragraph 1, of the Legislative Decree 58/1998, has been correctly and properly fulfilled by the Directors following the due WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 periodicity, also through the information and data given to it during the Board of Directors Meetings, which the Board of Statutory Auditors has always participated in. - The Board of Directors met 10 times, the Executive Committee 9 times and the Board of Statutory Auditors 15 times. - The proposed dividend appears wholly sustainable considering the Group’s financial result, its debt to equity ratio and the foreseeable future generation of cash.

Taking into account the foregoing and the information received from the External Auditing Company, the Board of Statutory Auditors does not find that there is any impediment to the approval of the Financial Statements for the year ended at 31st December 2010 and to the dividend distribution proposal for the amount formulated by the Board of Directors.

Milan, 25th March 2011

The Board of Statutory Auditors

Alberto Giussani

Silvio Bianchi Martini

Francesco Vittadini

WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399

WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399

WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 MEDIASET S.p.A.

2010 Annual Report Certification of the financial statement pursuant to art. 154-bis of Legislative Decree 58/98 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399

WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Attestation of the Yearly Financial Statements pursuant to article 154, part two, of the Legislative Decree 58/98

• to the adequacy relative to the characteristics of the Company and • the effective application

of the administrative and accounting procedures for building up the Yearly Financial Statements, during the financial year 2010.

2. The evaluation of the adequacy of the administrative and accounting procedures for building up the Yearly Financial Statements as at 31 December 2010 was carried out based on the rules and methodologies defined by Mediaset S.p.A. in line with the model Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission which represents a body of general reference principles for the system of internal controls that is generally accepted at international level. 3. Furthermore, it is also attested that:

3.1 The Yearly Financial Statements: a) are drawn up in conformity with the applicable International Accounting Standards recognised within the European Community, pursuant to the regulation (EC) n° 1606/2002 of the European Parliament and Council, of 19th July 2002, as well as with the measures issued to actuate article 9 of the Legislative Decree n° 38/2005; b) reflect the balances in the books and the accounting postings. c) are suitable and appropriate in order to give a true and fair view of the Balance Sheet, Income Statement and Financial situations of the Issuer and of the group of companies included within the consolidation.

22nd March 2011

For the Board of Directors The Assigned Executive for the drafting The Chairman of the company accounting documents

(Fedele Confalonieri) (Andrea Goretti) WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Summary tables of the essential economic and financial data of Mediaset subsidiary companies WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Mediaset S.p.A.

Summary tables of main economic and financial data of companies included in the consolidation area (amounts in EUR thousand)

TED TV Elettronica Mediaset X-Content Publitalia '80 Digitalia '08 R.T.I. Videotime Mediashopping Medusa Film Med Due S.r.l. Educational Industriale Investimenti S.r.l. in Taodue S.r.l. ASSETS S.p.A. S.r.l. S.p.A. S.p.A. S.p.A. S.p.A. (**) S.r.l. in S.p.A. S.p.A. liquidazione (*) liquidazione

Non current assets Property, plant, equipment and other tangible assets 1,937 75 115,481 297,671 67,850 - 468 338 - - 288 - Television and movie rights - - 2,316,283 - - - - 116,464 - - 4,752 - Goodwill and other intangible assets 5,876 20 111,630 513,603 271 - 1,668 57,248 - 18 5,020 - Equity investments and other financial non current assets 30,776 - 859,232 283 8,910 1,379,179 1 3,024 - 370,000 13 - Deferred tax assets 11,481 3,314 60,362 26,588 1,809 4 802 13,728 - 26 304 -

TOTAL NON CURRENT ASSETS 50,069 3,409 3,462,988 838,145 78,840 1,379,182 2,938 190,801 - 370,044 10,377 -

Current assets

Inventories - 3,944 63,237 5,612 6,115 - 6,089 1,060 - - 926 - Trade receivables 629,830 66,464 888,169 39,562 87,334 - 4,541 76,723 35 - 3,522 857 Other receivables and current assets 75,236 3,464 82,976 12,674 4,002 1,280 5,382 9,909 40 7,612 - Intercompany financial receivables 276,252 21,536 - - 16,776 - 10,439 24,863 - 70,788 6,559 - Current financial assets - - 13,747 - 14 - 12 14,941 - - 1 - Cash and cash equivalents 13 1,994 1,733 15 - 42 690 265 3 - 7 1,732

TOTAL CURRENT ASSETS 981,332 97,402 1,049,863 57,862 114,241 1,322 27,153 127,759 78 70,789 18,627 2,589

Non current assets held for sale ------

TOTAL ASSETS 1,031,401 100,812 4,512,851 896,007 193,080 1,380,504 30,091 318,560 78 440,832 29,004 2,589

(*) As of 2009 Annual Report (**) As of 2010 Annual Report

WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Mediaset S.p.A.

Summary tables of main economic and financial data of companies included in the consolidation area (amounts in EUR thousand)

TED TV Elettronica Mediaset X-Content SHAREHOLDERS' EQUITY AND Publitalia '80 Digitalia '08 R.T.I. Videotime Mediashopping Medusa Film Med Due S.r.l. Educational Industriale Investimenti S.r.l. in Taodue S.r.l. S.p.A. S.r.l. S.p.A. S.p.A. S.p.A. S.p.A. (**) S.r.l. in LIABILITIES S.p.A. S.p.A. liquidazione (*) liquidazione

Shareholders' equity Share capital 52,000 17,080 500,000 363,167 52,010 500,000 10,000 120,000 60 92,510 51 10 Share premium reserve ------277,500 2,056 - Treasury shares ------Other reserves 38,399 1,865 399,748 42,821 15,402 (579,350) 8,000 5,343 80 - 11 3,217 Valuation reserve (228) (122) 14,545 (456) (1,457) 548,324 104 (82) ---- Retained earnings (12,268) (2,012) 78,614 23,254 31,878 - - - 12 (276) (1) - Net profit for the period 75,979 2,622 315,905 23,450 8,910 13,704 (3,937) 33,827 (84) 70,030 14,070 (3,228)

TOTAL SHAREHOLDERS' EQUITY 153,883 19,433 1,308,811 452,236 106,742 482,678 14,167 159,088 69 439,764 16,187 (1)

Non current liabilities Post-employment benefit plans 22,003 2,198 37,629 9,589 20,906 - 241 714 - - 40 - Deferred tax liabilities 1,129 - 11,011 33,896 2,719 - 114 185 - - 3 - Financial liabilities and payables - - 660 - - - 312 2,945 ---- Provisions for non current risks and charges 11,187 414 28,751 1,255 608 - - - - - 575 -

TOTAL NON CURRENT LIABILITIES 34,319 2,612 78,052 44,740 24,233 - 668 3,845 - - 619 -

Current liabilities Due to banks 2 238 1 - 2 44 - Trade payables 793,925 73,961 999,289 40,501 48,490 22 14,626 88,642 7 44 8,673 1,587 Provisions for current risks and charges - - 19,112 - 1,058 - 10 3,837 - - - 1,003 Current tax payables 2,252 363 17,403 1,004 2,182 - 67 691 - 921 1,682 - Intercompany financial payables - - 1,952,637 348,180 - 897,761 - 54,708 ---- Other financial liabilities 24,776 26 4,735 - 30 - - 2,947 - - 8 - Other current liabilities 22,244 4,417 132,574 9,345 10,346 44 553 4,801 3 102 1,791 -

TOTAL CURRENT LIABILITIES 843,200 78,767 3,125,988 399,031 62,105 897,826 15,256 155,628 10 1,068 12,199 2,590

Liabilities related to non current assets held for sale ------

TOTAL LIABILITIES 877,519 81,379 3,204,040 443,771 86,338 897,826 15,924 159,472 10 1,068 12,817 2,590

TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 1,031,401 100,812 4,512,851 896,007 193,080 1,380,504 30,091 318,560 78 440,832 29,004 2,589

(*) As of 2009 Annual Report (**) As of 2010 Annual Report

WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Mediaset S.p.A.

Summary tables of main economic and financial data of companies included in the consolidation area (amounts in EUR thousand)

TED TV Elettronica Mediaset X-Content Publitalia '80 Digitalia '08 R.T.I. Videotime Mediashopping Medusa Film Med Due S.r.l. Educational Industriale Investimenti S.r.l. in Taodue S.r.l. INCOME STATEMENT S.p.A. S.r.l. S.p.A. S.p.A. S.p.A. S.p.A. (**) S.r.l. in S.p.A. S.p.A. liquidazione (*) liquidazione

Revenues Revenues from sales of goods and services 2,355,594 125,696 2,824,825 220,564 219,534 - 60,202 216,216 - - 58,294 554 Other revenues and income 1,009 164 45,790 7,031 5,538 - 8,582 5,566 10 - 866 10

TOTAL NET REVENUES 2,356,603 125,860 2,870,615 227,595 225,072 - 68,783 221,782 10 - 59,159 564

Costs Personnel expenses 80,220 6,390 203,138 36,485 79,642 - 1,742 5,507 - - 1,075 74 Purchases, services, other costs 2,148,527 112,775 1,300,946 77,224 113,861 237 70,977 63,373 94 167 33,033 3,712 Amortisation, depreciation and write-downs 8,834 2,302 922,379 70,067 15,364 - 1,736 104,652 - 5 3,546 - Impairment losses and reversal of impairment on fixed assets ------

TOTAL COSTS 2,237,581 121,466 2,426,463 183,776 208,867 237 74,455 173,531 94 172 37,653 3,787 Gains/(Losses) from disposal of non current assets ------

EBIT 119,022 4,393 444,152 43,819 16,205 (237) (5,672) 48,251 (84) (172) 21,506 (3,223)

Income/(Losses) from financing activity Financial losses (3,661) (55) (87,998) (5,732) (472) (10,428) (470) (1,431) - (3) (55) (9) Financial income 1,538 105 57,977 409 237 19 659 3,011 - 15 89 3 Income/(expenses) from equity investments - - 44,424 - 885 24,624 - - - 71,124 - -

Total Income/(Losses) from financing activity (2,123) 50 14,402 (5,323) 649 14,215 189 1,580 - 71,137 34 (5)

EBT 116,899 4,443 458,554 38,496 16,854 13,978 (5,483) 49,831 (84) 70,964 21,540 (3,228) Income taxes 40,920 1,821 142,649 15,046 7,944 274 (1,547) 16,004 - 934 7,470 -

NET PROFIT FROM CONTINUING OPERATIONS 75,979 2,622 315,905 23,450 8,910 13,704 (3,937) 33,827 (84) 70,030 14,070 (3,228) Gains/(Losses) from disposal of assets available for sale ------

NET PROFIT FOR THE PERIOD 75,979 2,622 315,905 23,450 8,910 13,704 (3,937) 33,827 (84) 70,030 14,070 (3,228)

(*) As of 2009 Annual Report (**) As of 2010 Annual Report

WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Mediaset S.p.A.

Summary tables of main economic and financial data of companies included in the consolidation area

Mediaset Mediaset Grupo Connecta 5 Invesment Publieurope Gestevision Canal Factoria Telecinco Atlas Espana Mi Cartera Atlas Media Atlas Pais Mediacinco Publiespana Advanced Publimedia Sogecable Sogecable Investment Editorial Tele Telecinco Sogecuatro Cin Tv ASSETS Belgium Ltd. Telecinco S.A. de Ficcion S.A. Cinema S.A.U. S.A.U. Media S.A.U. S.A.U. Vasco S.A.U. Cartera S.L. S.A.U. Media S.A.U. Gestion S.A.U. Media Editorial S.a.r.l. 5 S.A.U. S.A.U. S.p.r.l.

Non current assets Property, plant, equipment and other tangible assets 1 - 170 44,761 - - - 3,062 - 0 - 99 - 714 - 156 - 382 1 - Television and movie rights - - - 149,682 - - 41,759 ------73,824 - - - Goodwill and other intangible assets 21 - - 2,316 - - 41 994 - - - 247 - 966 - 70 610 - 463 - Equity investments and other financial non current assets 22,639 - - 1,417,219 - - - 1,817 - 11 - 54,865 - 125 - 1 5,005 4 0 - Deferred tax assets - - - 110,135 - - - 334 ----115,696 1,044 - 250 16,669 2,534 86 -

TOTAL NON CURRENT ASSETS 22,661 - 170 1,724,114 - - 41,800 6,207 - 11 - 55,212 115,696 2,849 - 477 96,108 2,920 549 -

Current assets

Inventories - - - 2,285 - - 6 8 - - - 1 ----9,408 0 1 0 Trade receivables 520 - 5,950 154,522 1,205 - 2,640 23,918 13,340 40 - 2,104 16 146,466 - 8,983 116,433 11,063 119,790 368 Other receivables and current assets 383 - 96 13,508 1 0 342 26 - 68 15 22 - 146 - 52 1,015 12 49 - Intercompany financial receivables 409,585 - 17,113 ------Current financial assets 4,354 - - 144,069 5,404 584 3,153 9,353 85 415 824 - 33,555 110,753 - 19,593 3,844 - 12,041 131 Cash and cash equivalents 11,914 - 352 27,535 39 1 121 242 5 131 24 88 13 21,002 0 893 29,262 446 8,095 2

TOTAL CURRENT ASSETS 426,756 - 23,511 341,920 6,649 585 6,262 33,546 13,430 653 863 2,215 33,584 278,367 0 29,521 159,962 11,521 139,977 501

Non current assets held for sale ------

TOTAL ASSETS 449,417 - 23,681 2,066,034 6,649 585 48,061 39,753 13,430 664 863 57,427 149,280 281,216 0 29,999 256,070 14,442 140,526 501

WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Mediaset S.p.A.

Summary tables of main economic and financial data of companies included in the consolidation area

Mediaset Mediaset Grupo Connecta 5 Invesment Publieurope Gestevision Canal Factoria Telecinco Atlas Espana Mi Cartera Atlas Media Atlas Pais Mediacinco Publiespana Advanced Publimedia Sogecable Sogecable Investment Editorial Tele Telecinco Sogecuatro Cin Tv SHAREHOLDERS' EQUITY AND LIABILIT Belgium Ltd. Telecinco S.A. de Ficcion S.A. Cinema S.A.U. S.A.U. Media S.A.U. S.A.U. Vasco S.A.U. Cartera S.L. S.A.U. Media S.A.U. Gestion S.A.U. Media Editorial S.a.r.l. 5 S.A.U. S.A.U. S.p.r.l.

Shareholders' equity Share capital 79,607 7,697 203,431 120 300 160 902 61 421 420 62 240,000 601 - 61 6,011 1,442 3 3 Share premium reserve 327,951 - 1,083,626 - - 5,371 822 - - - 1,301 - 4,683 - 692 62,771 - - - Treasury shares - - (84,747) ------Other reserves 61,158 9,275 207,209 (1,477) 286 (25,601) (1,827) 829 208 443 12 (256,782) (10,836) - 1,022 (11,873) (1,194) 1,205 287 Valuation reserve ------Net profit for the period (19,837) - 2,345 113,934 4,879 (2) (4,278) 5,657 (198) (1) (0) 4,311 (125,243) 51,215 - 1,156 (2,158) (1,566) (2,462) -

TOTAL SHAREHOLDERS' EQUITY 448,879 - 19,317 1,523,453 3,523 584 (24,347) 5,552 693 628 862 5,685 (142,025) 45,662 - 2,931 54,751 (1,318) (1,254) 290

Non current liabilities Post-employment benefit plans ------Deferred tax liabilities --9------Financial liabilities and payables - - - 837 - - 28,795 -----290,884 ------Provisions for non current risks and charges - - - 143,238 - - 753 4,621 - - - 50 ----13,283 900 - -

TOTAL NON CURRENT LIABILITIES - - 9 144,075 - - 29,547 4,621 - - - 50 290,884 - - - 13,283 900 - -

Current liabilities Due to banks ------Trade payables 237 2,433 113,601 2 0 1,366 9,842 96 36 1 1,185 196 10,408 - 7,460 113,162 4,881 2,192 32 Provisions for current risks and charges 19------36,020 - 2,879 - - 18,508 - Current tax payables 21 - 519 17,079 912 1 55 816 4 - - 143 18 682 - 266 14,377 823 1,138 178 Intercompany financial payables - - - 63,727 2,212 - 592 3,294 3,351 - - 1,872 139 165,429 - 15,853 43,305 2,771 116,073 - Other financial liabilities - - - 196,401 - - 40,385 13,227 9,274 - - 48,419 - 19,593 - - 12,261 3,838 7 - Other current liabilities 280 - 1,403 7,679 - - 464 2,401 13 - - 72 68 3,422 0 609 4,931 2,546 3,862 -

TOTAL CURRENT LIABILITIES 538 - 4,355 398,506 3,126 1 42,861 29,579 12,737 36 1 51,691 421 235,553 0 27,068 188,036 14,859 141,780 211

Liabilities related to non current assets held for sale ------

TOTAL LIABILITIES 538 - 4,364 542,581 3,126 1 72,409 34,200 12,737 36 1 51,741 291,305 235,553 0 27,068 201,319 15,759 141,780 211

TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 449,417 - 23,681 2,066,034 6,649 585 48,061 39,753 13,430 664 863 57,427 149,280 281,216 0 29,999 256,070 14,442 140,526 501

WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Mediaset S.p.A.

Summary tables of main economic and financial data of companies included in the consolidation area

Mediaset Mediaset Grupo Connecta 5 Invesment Publieurope Gestevision Canal Factoria Telecinco Atlas Espana Mi Cartera Atlas Media Atlas Pais Mediacinco Publiespana Advanced Publimedia Sogecable Sogecable Investment Editorial Tele Telecinco Sogecuatro Cin Tv INCOME STATEMENT Belgium Ltd. Telecinco S.A. de Ficcion S.A. Cinema S.A.U. S.A.U. Media S.A.U. S.A.U. Vasco S.A.U. Cartera S.L. S.A.U. Media S.A.U. Gestion S.A.U. Media Editorial S.a.r.l. 5 S.A.U. S.A.U. S.p.r.l.

Revenues Revenues from sales of goods and services - - 18,491 663,989 6,762 - - 6,316 - - - 4,453 - 772,440 - 22,363 ---- Other revenues and income 279 - 28 35,047 476 0 22,791 41,567 - - - 691 19 7,349 - 2,794 ----

TOTAL NET REVENUES 279 - 18,519 699,036 7,238 0.0 22,791 47,883 - - - 5,144 19 779,789 - 25,157 ----

Costs Personnel expenses 309 - 3,023 52,176 - - 1,044 14,045 - - - 752 228 13,616 - 2,664 3,082 2,237 3,517 - Purchases, services, other costs 1,184 15 12,267 501,466 268 3 27,117 27,124 4 4 0 3,913 591 695,134 - 20,828 ---- Amortisation, depreciation and write-downs 9 - 36 (955) 0 - (273) (55) - (3) 0 381 (12) 473 - (8) ---- Impairment losses and reversal of impairment on fixed assets ------

TOTAL COSTS 1,502 15 15,326 552,687 268 3 27,888 41,114 4 1 0 5,046 807 709,223 - 23,484 3,082 2,237 3,517 - Gains/(Losses) from disposal of non current assets ------

EBIT (1,223) (15) 3,193 146,349 6,970 (3) (5,097) 6,769 (4) (1) (0) 98 (789) 70,566 - 1,673 (3,082) (2,237) (3,517) -

Income/(Losses) from financing activity Financial losses (904) - (20) (3,755) (0) - (773) (253) (278) (0) - (1,626) (1,984) (245) - (8) ---- Financial income 14,009 17 115 73,829 0 - 25 1,202 - - - 5,839 4 2,461 - 7 ---- Income/(expenses) from equity investments (29,375) - - (100,760) ------(176,148) (85) ------

Total Income/(Losses) from financing activity (16,270) 17 95 (30,687) 0 - (749) 948.6 (278) (0) - 4,213 (178,129) 2,130 - (1) ----

EBT (17,493) 2 3,288 115,662 6,971 (3) (5,845) 7,718 (282) (1) (0) 4,311 (178,918) 72,696 - 1,673 (3,082) (2,237) (3,517) - Income taxes 2,344 943 1,728 2,091 (1) (1,568) 2,061 (85) (0) - - (53,675) 21,481 - 516 (925) (671) (1,055) -

NET PROFIT FROM CONTINUING OPERATIONS (19,837) 2 2,345 113,934 4,879 (2) (4,278) 5,657 (198) (1) (0) 4,311 (125,243) 51,215 - 1,156 (2,158) (1,566) (2,462) - Gains/(Losses) from disposal of assets available for sale ------

NET PROFIT FOR THE PERIOD (19,837) 2 2,345 113,934 4,879 (2) (4,278) 5,657 (198) (1) (0) 4,311 (125,243) 51,215 - 1,156 (2,158) (1,566) (2,462) -

WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399 Mediaset S.p.A.

Financial statement of subsidiaries valued at cost

(values in EUR)

International Media ASSETS Services Ltd. (*) Non current assets Receivables 58 Cash and Bank deposit 120,939 TOTAL ASSETS 120,997

International Media LIABILITIES Services Ltd.

NET SHAREHOLDERS' EQUITY Share Capital 51,646 Equity reserves 45,522 Net profit/(loss) for the period (19,437) TOTAL NET SHAREHOLDERS' EQUITY 77,731

Current payables 43,266 TOTAL LIABILITIES 43,266

TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 120,997

International Media INCOME STATEMENT Services Ltd.

OPERATING REVENUES 0 OPERATING COSTS Commercial costs 7,339 Generic expenses 1,750 Personnel expenses 11,174 TOTAL OPERATING COSTS 20,263

EBITDA (20,263)

FINANCIAL INCOME 1,271

EBT (18,992) Income taxes (445) NET RESULT FOR THE PERIOD (19,437)

(*) As of 2003 Annual Report WorldReginfo - cc8b9ce0-5c88-4fc3-a701-b74e08b1c399