M E D I A S E T G R O U P 2000: A Memorable Year
¨ Leadership in terms of audience
¨ Leadership in terms of advertising revenues
¨ Careful control of costs
¨ Development of multimedia
MEDIASET GROUP 2000: A Memorable Year
¨ Free-to-air generalist television will continue to play a central role in the media system
¨ Il Grande Fratello (Big Brother): the ante-chamber of convergence
¨ Television - a bridge connecting different media
MEDIASET GROUP 2000: A Memorable Year: Results
¨ Consolidated net revenues: 2,363.6 m Euro (+15.4% vs 1999)
¨ Operating profit: 691.5 m Euro (+23.4% vs 1999)
¨ EBIT Margin up from 27.3% to 30.1%
¨ Net profit: 423.5 m Euro (+ 24.9% vs 1999)
MEDIASET GROUP New Media
The Internet
¨ Cost-conscious investment strategy (light structure)
¨ Business approach based on interaction with and within television (TG5 & TG.COM) Thematic channels
¨ Low cost of conception and packaging
MEDIASET GROUP Diversification (Television is the hub)
¨ The core business will remain at the heart of the coming transformations
¨ Viewers will become less passive more interactive
¨ Enhanced TV: agreements and alliances with telecom companies to build an integrated platform
MEDIASET GROUP Regulatory Scenario
March 2001: Law approved for the shift to digital terrestrial This means:
¨ A precise time frame - 2006 - for the change-over
¨ Testing to be carried out by incumbent licence-holders
¨ The possibility of buying frequencies
¨ A reserve of 60% of additional broadcasting capacity allocated to the licence-holders that launch testing
MEDIASET GROUP Conclusions
¨ Core Business:
¨ Dependability and continued value creation
¨ TV: the key element in the development of digital technology and interactivity
¨ Content provider
¨ International partnership
¨ Leadership in digital TV
MEDIASET GROUP B R O A D C A S T I N G Summary
¨ 2000 Results
¨ Programming Strategy
¨ Costs Control: Efficiency and Performance Improvement
¨ 2001 Objectives
BROADCASTING Mediaset Total Viewers (%) 2000: Best Result of the Last 6 Years
Daily audience share (24 hours) 43.4 42.8 42.5 42.6
41.7 41.7
’95 ’96 ’97 ’98 '99 ’00
Soccer European Soccer World Soccer European Championship + Olympics Championship Championship +Olympics
BROADCASTING Canale 5 Total Viewers (%) 2000: Best Result in the “Auditel Age”
Daily audience share (24 hours)
22.5 21.4 21.9 21.2 21.2 20.5 19.6 20.8 20.3 18.4 18.4 18.4
16.3 16.4
’87 ’88 ’89 '90 ’91 ’92 ’93 ’94 ’95 ’96 ’97 ’98 '99 ’00
BROADCASTING Editorial Strategy Three Networks, One Television
¨ Leadership/Co-leadership in Individuals Target ¨ Leadership in Commercial Target
¨ Leadership in Young Target (Children, 15-24yrs, 25-34yrs)
¨ Focus on RAI Targets
BROADCASTING Editorial Strategy Three Networks, One Television
¨ Wider offer for viewers Effectiveness and ¨ Better service for ad investors Efficiency
¨ Co-ordination in programming to optimize costs
BROADCASTING Channel Positioning Three Networks, One Television
Male RAI 3 TOT. RETE 4 AUDIENCE CANALE 5 RAI 1
Female
Young Adults
BROADCASTING Channel Positioning Three Networks, One Television
2000 Daily audience share % COMMERCIAL TG. 15-24 YEARS 25-34 YEARS >65 YEARS (15-64 yrs) Canale 5 24.5 Canale 5 27.5 Canale 5 27.2 Rai 1 29.9 Rai 1 21.3 Italia 1 19.2 Rai 1 18.1 Canale 5 18.1 Rai 2 14.8 Rai 2 15.7 Italia 1 14.8 Rai 2 14.3 Italia 1 11.8 Rai 1 13.0 Rai 2 14.4 Rete 4 13.3 Rai 3 9.1 Rai 3 6.5 Rai 3 7.7 Rai 3 11.3 Rete 4 8.7 Rete 4 6.2 Rete 4 7.5 Italia 1 5.5 Tmc 1.9 Tmc 1.7 Tmc 2.0 Tmc 1.9
BROADCASTING Programming Strategy Maximum Efficiency & Performance Improvement
¨ Increase in in-house production hours (Fiction & Entertainment)
¨ Reduction in high-cost and low-profitability products (Champions League)
¨ Revenues from the sale of programming rights
BROADCASTING Cost of Programming & Commercial Productivity: Examples
AVERAGE PRODUCT GRP AUDIENCE COST INDEX PER MINUTE INDEX
¨ Champions’ League match 5,503 100 100 24/5/00 “Real Madrid - Valencia”
¨ Film 20/3/00 5,548 60 114 “Independence Day”
¨ Fiction 27/4/00 5,519 40 142 “Valeria Medico Legale”
¨ Entertainment 13/2/00 5,548 16 *127 “La sai l’ultima?” *excluding TV promotions
BROADCASTING Cost of Programming Examples: Canale 5 Programming in Autumn 2000
SUN MON TUE WED THU FRI SAT
¨ Forecast In-house Film Champ. Champ. Fiction In-house In-house
¨ Broadcast “ “ Fiction “ Big Broth “ “
¨ Total saving -16 million Euro
¨ Total GRP +72%
BROADCASTING Cost of Programming & Mediaset Group Net Revenues
+11.5% +8.6% Net Revenues +8.8% Cost of Programming +5.2% +10.4% +5.7%
’97 ’98 '99 ’00
BROADCASTING Cost of Programming 2000 vs. 1999, 1999 vs. 1998, 1998 vs. 1997
98 vs 97 99 vs 98 00 vs. 99
¨ Total costs before sale +10.4% +8.2% +7.6% of rights
¨ Revenues from sale of 20.1 40.8 rights (m Euro)
¨ Total costs after sale of +10.4% +5.7% +5.2% rights
BROADCASTING 2001 Objectives
¨ Control of Programming Costs
¨ Management Strategy
¨ Development = Brand Extension
BROADCASTING Control of Programming Costs
% costs increase lower than % adv. revenues increase
Tactical Strategic ¨ Cancelling or ¨ Long series prod. vs. postponing some Rights acquisitions productions: ¨ Joint-venture production ¨ Prime time specials ¨ Development of in-house ¨ Day time specials formats
¨ Revenues from the sale of programming rights
BROADCASTING Management Strategy
¨ Motivation
¨ Team working Internal Growth ¨ Cost control
¨ Innovation
Consistency with our strategy: Three Channels, One Television
BROADCASTING Development= Brand Extension
¨ Free TV is fundamental to launch/sustain new products
¨ Mediaset (43% share) either owns or can build strong brands
¨ Brand extension activities have 3 main objectives: - to create “incremental” revenues - to optimize internal resources - to reinforce Generalist TV
BROADCASTING Brand Extension Example
1.Free Programming
6. Press 2.Thematic (weeklies/monthlies) Brand Digital Channel Extension 5. Events 3. Internet
4. Merchandising
BROADCASTING 2001: January - March audience share
24 hours vs 2000 Prime Time vs 2000
MEDIASET 44.7 +2.2 45.4 +5.1
RAI 46.8 -1.6 46.6 -4.0
CANALE 24.9 +2.8 26.4 +4.9
RAI 1 25.1 +1.3 24.8 -1.6
Source: Auditel (at 10/3/01)
BROADCASTING A D V E R T I S I N G Summary
¨ 2000 Achievements
¨ 2001 Initial Results
¨ Future Developments
ADVERTISING Summary
¨ 2000 Achievements
¨ 2001 Initial Results
¨ Future Developments
ADVERTISING Publitalia: TV Advertising Revenues in 2000 (million Euro) + 268
2,467
2,199
1999 2000
ADVERTISING Excellent Results for the 3rd Consecutive Year (million Euro)
+ 657 m Euro
2000 268
1999 198
1998 191
ADVERTISING Tv Market Growth versus previous year
TOTAL MARKET +12.4%
PUBLITALIA +12.6%
SIPRA +12.0%
TMC +10.5%
Source: Nielsen
ADVERTISING Publitalia’s Competitive Capacity
FIRST 9 MONTHS LAST 3 MONTHS +16.0% +15.4%
+6.0% +3.8%
TV MARKET PUBLITALIA TV MARKET PUBLITALIA Source: Nielsen
ADVERTISING A Fundamental Support: Our Audience Share
October - December: Mediaset leader in 24 hours
MEDIASET RAI % vs 2000 % vs 2000
24 hours 45.8 +2.3 45.7 -1.9 Prime time 45.9 +2.9 46.5 -2.0 Day time 45.8 +2.2 45.4 -1.8
Source: Auditel; Target Individuals
ADVERTISING Tv Consumption (minutes per day) + 2.7%
230 224 221 214 214 212 212 207 201 191 191 181
178 179
’87 ’88 ’89 ’90 ’91 ’92 ’93 ’94 ’95 ’96 ’97 ’98 ’99 ’00 Source: Auditel - Target individuals
ADVERTISING Tv Viewers (daily million) + 4.5%
46.073
44.102
1999 2000
ADVERTISING Publitalia: Advertising Demand Trend
ACTIVE CLIENTS NEW CLIENTS IN ‘00
1999 1,044 ¨ New Clients 280
2000 1,045 ¨ Revenue 180 m Euro
¨ Average Inv. 0.6 m Euro
ADVERTISING Mediaset: Advertising Investments by Sector (million Euro)
2000 %vs ’99
¨ GROCERY 1,053 +5.2%
¨ NEW SECTORS 467 +58.8%
¨ AUTOMOTIVE 181 +8.9%
¨ OTHERS 766 +3.8%
ADVERTISING Mediaset: Focus on New Sectors (million Euro)
2000 % vs ’99
¨ TELECOMS 348 +70%
¨ FINANCE/INSURANCE 68 +52%
ADVERTISING Mediaset: Advertising Investments by Sector
OTHER GROCERY SECTORS GROCERY OTHER SECTORS 33.6 31.1 45.5 42.7
7.3 7.6 18.9 AUTOMOTIVE 13.4 AUTOMOTIVE NEW SECTORS NEW SECTORS
1999 2000
ADVERTISING Mediaset: New Media Revenues (in million Euro) 16.0
+10.5 m Euro 11.8 + 191 % 5.5
INTERNET 2.3
MEDIAVIDEO 3.2 4.2
1999 2000
ADVERTISING Mediaset: 2000-year Growth (in million Euro) 283 1 MEDIAVIDEO OTHERS 15 10 INTERNET 4 ADVERTISING BOARD TV 268
ADVERTISING Summary
¨ 2000 Achievements
¨ 2001 Initial Results
¨ Future Developments
ADVERTISING Telecinco: Audience Share Trend 2000 TVE ANTENA3 24.9 24.5 23.2 22.8 21.5 23.0 20.3 19.7
1999 2000 1999 2000 TELE5 % Total Audience 23.5 25.0 21.0 22.3 % Commercial Target
Commercial Target: 13-55 years, high, middle and mid. low income for towns > 10.000 pop. 1999 2000
ADVERTISING Spanish Tv Advertising trend 2000 vs 1999 in million Euro 2,227 2,041
620 645 +9.1% 568 558 476 498 +9.1% +15.6% +4.5%
‘99 ‘00 ‘99 ‘00 ‘99 ‘00 ‘99 ‘00 TOTAL NATIONAL TV TVE ANT3 TELE5
ADVERTISING Telecinco Financial Results Consolidated pro-forma figures (in million euro) 1999 2000
¨ Net consolidated Revenues 512.7 610.7 +19.1%
¨ Operating costs (350.5) (368.6) +5.2%
¨ EBIT 162.1 242.1 +49.3%
¨ Pre-Tax Profit 149.5 228.1 +52.6%
¨ Net Profit 110.5 154.7 +40.0%
ADVERTISING Telecinco: One of the Most Profitable Free Tv in Europe (in million euro) 39.6% Ebit Margin
31.6% 27.0%
111.2 162.3 242.1
1998 1999 2000
ADVERTISING Summary
¨ 2000 Achievements
¨ 2001 Initial Results
¨ Future Developments
ADVERTISING Market Reference Framework Increase in Consumption Propensity
«One should spend everything, without caring «One should buy only what is really needed» about saving» (% very+quite favourable) (% very much favourable)
18 30 28 26 16 24 22 20 14 18 16
12 14 1991 1993 1994 1996 1997 1999 2000 1989 1991 1993 1994 1996 1997 1999 2000
Source:GPF & A.
ADVERTISING Market Reference Framework Advertising: an increasingly fundamental asset
«I have recently hesitated before letting «Advertising can help in making a product myself be influenced by advertising» selection» (% favourable) (% very favourable)
48 66 46 64 44
42 62
40 60 38 58 36
34 56 1997 1999 2000 1996 1997 1999 2000
Source:GPF & A.
ADVERTISING Publitalia Bookings - Jan./ Feb. 2001 (million Euro) +26 m Euro + 6.1 % 449 423
2000 2001
ADVERTISING Publitalia: First-2-months Positive Aspects
¨ ACTIVE CLIENTS 481 + 27
¨ BANK/INSURANCE SECTOR +189%
¨ AUTOMOTIVE MARKET +15.7%
¨ GROCERY SECTOR +7.8%
¨ FOOD SECTOR +15.5%
ADVERTISING Mediaset: an Important Contribution from Audience Share
2001: Mediaset Leader in Prime Time
PRIME TIME 24 HOURS
JAN. FEB. JAN. FEB.
¨ MEDIASET 46.1 47.3 45.2 45.9
¨ RAI 45.5 44.8 46.1 45.8
Source: Auditel; Target Individuals
ADVERTISING Mediaset: an Important Contribution from Audience Share
2001: Canale 5 Undisputed Leadership
PRIME TIME 24 HOURS
JAN. FEB. JAN. FEB.
¨ CANALE 5 26.4 27.9 25.1 25.8
¨ RAI 1 23.5 22.6 24.1 24.1
Source: Auditel; Target Individuals
ADVERTISING Canale 5’s Brand Perception
1991% 2000 % ’00 vs 91% Canale 5 is the network:
¨ I would be least willing to give up 20.9 37.0 +16.1
¨ Most in tune with audience needs 16.9 29.1 +12.2
¨ With the newest, up-to-date 29.4 41.7 +12.3 programmes
¨ I watch most often 25.8 42.8 +17.0
¨ That will be most successful 26.4 33.2 +6.8 in the future
Source:GPF & A.
ADVERTISING Mediaset: New Media Revenues (Jan.-Feb. 2001) (million Euro) 1.5 1.3 + 0.2 m Euro 0.8 + 15.4% INTERNET 0.7
MEDIAVIDEO 0.6 0.7
2000 2001
ADVERTISING Summary
¨ 2000 Achievements
¨ 2001 Initial Results
¨ Future Developments
ADVERTISING The New Scenarios After the Start of Digital Terrestrial Broadcasting
¨ By 2010 Tv will be digital
¨ New national and international players
¨ DTT will entail a Tv evolution
¨ Mediaset will remain a major player
ADVERTISING Our “Mission”: to Become Leader in Digital TV
¨ To strengthen our leadership in the core business: Italy and Spain
¨ To play a leading role in the new opportunities offered by digital THEMATIC CHANNELS
INTERACTIVITY
ADVERTISING Our “Mission”: to Become Leader in Digital TV
CORE BUSINESS
¨ To maintain the acquired levels of profitability (cost control) and to continue to innovate both in content and advertising.
¨ To exploit the potential of our brands (merchandising) DIGITAL OPPORTUNITIES
¨ To develop channels for specific targets
¨ To exploit the possibilities offered by interactivity
¨ To launch new services
ADVERTISING F I N A N C I A L
62 Mediaset Financial Overview Consolidated Full Year Results (m Euro)
1999 2000
¨ Net consolidated revenues 2,048.7 2,363.6 +15.4%
¨ Operating costs (875.7) (1,006.4) +14.9%
¨ EBITDA 1,173.1 1,357.2 +15.7%
¨ Amortization and depreciation (612.9) (665.7) +8.6%
¨ EBIT 560.2 691.4 +23.4%
¨ Pre-tax profit 586.1 647.9 +10.5%
¨ Net profit 339.2 423.4 +24.9%
FINANCIAL Mediaset Financial Overview Italian Business (m Euro)
1999 2000
¨ Total Net Revenues 2,048.7 2,284.5 +11.5%
¨ Operating costs (875.7) (939.0) +7.2%
¨ EBITDA 1,173.1 1,345.5 +14.7%
¨ Amortization (612.9) (657.5) +7.3% & depreciation
¨ EBIT 560.2 688.0 +22.8%
FINANCIAL Mediaset Financial Overview Italian Activities Operating Profit (m Euro)
30.1% Ebit Margin 27.3% 26.1%
688.0 560.2 492.8
31 dic.98 31 dic.99 31 dic.00
FINANCIAL Mediaset Financial Overview Italian Business Revenues (m Euro)
1999 2000
¨ Advertising (third parties) 2,165.0 2,422.4 +11.9%
¨ TV operations 117.1 132.5 +13.0%
¨ Multimedia 10.6 29.0 n.a.
¨ Non - TV operations 73.7 55.2 (25.1%)
¨ Commissions (317.7) (354.7) +11.6%
TOTAL Net Revenues 2,048.7 2,284.5 +11.5%
FINANCIAL Mediaset Financial Overview Italian Business Operating Costs (m Euro)
Labour cost trend
+ 3.5% + 3.9% 289,3 -0.4% 279,5 288,1 269
1997 1998 1999 2000
FINANCIAL Mediaset Financial Overview Italian Business Operating Costs (m Euro)
1999 2000
¨ Commercial costs (82.0) (87.9) +7.3%
¨ In-house production (336.1) (383.9) +14.2%
¨ Transmission costs (28.8) (35.2) +22.2%
¨ Overheads (72.3) (85.7) +18.5%
¨ Multimedia activities (6.9) (18.6) n.a.
¨ Other non Tv costs (60.4) (39.4) -34.7%
TOTAL Italian Costs (586.4) (650.8) +11.0%
FINANCIAL Mediaset Financial Overview Italian Business (m Euro)
1999 2000
In-house production costs (336.1) (383.9) +14.2%
¨ In-house production costs (297.6) (313.5) +5.3%
¨ Tv concession fee (0.9) (16.2) n.a.
¨ SIAE costs (37.6) (42.2) +12.2%
¨ Soap costs* - (12.1) n.a.
* In ‘99 Soap Opera costs were in TV rights amortisation
FINANCIAL Mediaset Financial Overview Italian Business (m Euro)
1999 2000
Transmission costs (28.8) (35.2) +22.2%
¨ Capitalised Costs in 1999 3.1 --- n.a. ¨ Lay off provision --- (3.1) n.a.
¨ Total running comparable costs (31.9) (32.1) +0.6%
FINANCIAL Mediaset Financial Overview Italian Business (m Euro)
1999 2000
Overheads (72.3) (85.7) +18.5%
¨ Witholding tax --- (7.6) n.a. ¨ Running costs (72.3) (78.1) +8.0%
FINANCIAL Mediaset Financial Overview Italian Business Amortisation and Depreciation (m Euro)
657.5 +7,3% 612.9 DEPRECIATION - 4.5% 87.8 AND OTHER 92.0 AMORTISATION 137.2 SPORTS 92.8 + 47.8%
TV RIGHTS AMORTISATION FICTION 428.1 + 1.0% 432.5
1999 2000
FINANCIAL Mediaset Financial Overview Financial income & Associated Companies (m Euro)
1999 2000
Net financial income/charges 18.6 (52.4)
Total Associated companies 2.4 10.0
¨ TELECINCO (40% stake) 21.8 41.7
¨ ALBACOM (19.5% stake) (19.3) (25.8)
¨ PKS Group (24.5% stake) --- (5.2)
¨ BLU (9% stake) & others (0.1) (0.7)
FINANCIAL Mediaset Financial Overview Net Profit (m Euro) 17,9% Net profit Margin
16,6% 423.4 15,1% 339.2 284.5
1998 1999 2000 Net Profit:2000 + 24.9% vs 1999
FINANCIAL Financial Overview Cash flow statements (excl. Epsilon) (m Euro)
1998 1999 2000
¨ Free Cash flow 122.6 (12.4) 159.0
¨ Cash flow from operations 846.7 950.4 1,142.4
¨ Investments (563.8) (1,384.9) (799.3)
¨ Others movements (160.3) 422.1 (184.1)
¨ Dividends (139.5) (167.1) (216.2)
¨ Equity movements 2.0 2.0 2.7 Total Net cash flow (14.9) (177.4) (54.5)
FINANCIAL Financial Overview Investments (m Euro)
1999 = 1,384.9 2000 = 799.3
77.4 394.3 57.8 116.7
932.8 605.2
Associates TV Rights Technical & immaterial
FINANCIAL Financial Overview Earnings per share (Lit.) TO BE APPROVED BY AGM 9th April 2001
1997 1998 1999 2000
¨ Number of shares (million) 1,176.1 1,178.5 1,180.3 1,181.2
¨ Earnings per share 393.2 467.4 556.4 694.1
¨ Net dividend per share 230 275 355 465
¨ Pay out ratio 58.5% 58.8% 63.8% 67.0%
FINANCIAL