Cairo Communication

CAIRO COMMUNICATION

Cairo Communication

Cairo Communication operates in the media business as a multimedia rep. advertising company selling advertising on commercial and pay television, magazines and internet, and as publisher of magazines and books (Editoriale Giorgio Mondadori) and of electronic contents for internet (“Il Trovatore”).

Advertising Publishing

Editoriale CAIROPUBBLICITA’ Giorgio Mondadori Magazines

CAIROTV

IL TROVATORE CAIROWEB Search engine

1 Cairo Communication Main shareholders

Urbano Cairo UT Belgium 12.8% Holding Free float 15.9% 26.2%

UT Communication 45.1%

Turnover trend (Euro million)

160

140

120

100 80 159 159 136 60 117* 40 86

20 49 17 0 30/09/96 30/09/97 30/09/98 30/09/99 30/09/00 30/09/01 9 Months 30/6/02

*At 30 June 2001 total revenues were Euro 131 m

2 The Italian advertising market

(Euro million) 8.000 +17% - 3,2% 7.000 +12% 6.000 +10% - 4,1% +8% +10% 5.000 +5% +16% -1% 0 +6% +9% 4.000 +9% +9% +23% 3.000 +26%

2.000

1.000

0 5 6 8 9 0 1 2 4 5 6 7 8 9 0 1 2 198 198 1987 198 198 199 199 199 1993 199 199 199 199 199 199 200 200

n.-Sept '0 Ja

The advertising market YoY growth %

-2 -3.6 * * -6.7 -4 -6.1 -10.3 -6

-8

-10

-12 Quarter Quarter Quarter 9 Months Dic. '01 Mar'02 Giu'02 June '02 * Source: ACNielsen ** In the twelve months as of September 2002 - 6,3%

3 Italian advertising market Short term trend

Total Tv (Oct 2001-Sep 2002)* -3.6 % ***

Monthly Magazines (Jan-Sep 2002)** - 6,7 %

Monthly on Tourism(Jan-Sep 2002)** -12.7 %

Weekly magazines (Jan-Sep 2002)** -10.2 %

* Source: AC Nielsen ** Source: FCP Fieg Jan-Sep ‘02 *** In the nine months as of June 2002 - 4,4 %

Evolution of EBITDA (Euro million)

6 11.0 10.5 * 4 8 5.6 2 2.4 0

-2 -0.2 30/09/97 30/09/98 30/09/99 30/09/00 30/09/01 9 Months 30/6/02

*At June 2001 the EBITDA was Euro 9.8 m

4 Cairo Communication Group net cash evolution (Euro m) Immobiledit* 100.0 6.9 7

80.0

60.0 97.6 91.9 95.7 40.0

20.0

0.0 30/09/00 30/09/01 9 Months 30/06/02 In the April-June ‘02 quarter the net cash increased by Euro 2.0 m, a clearly positive result taking into consideration the economic scenario which has increased the clients’ days of payments

* 100% controlled company but not consolidated and in the process to be liquidated

Turnover breakdown In %

100 7 7 5 Other 90 18 16 15 80

70 Egm 25 60 33 39 50

40 Tv 30 50 20 44 41 Magazines 10

0 30/09/00 30/09/01 9 Months 30/06/02

5 Cairo Communication The new contract with La7: high opportunity of growth

• Signed a three year contract (2003-2005) for the collection of advertising on commercial network La7. The contract will be automatically renewed for an additional three-year period if defined objectives are met. • La7, with audience share more than 2%, represents the only Italy’s commercial TV alternative to RAI and Mediaset. The target is a medium/high audience and the programming is focused on information and other quality programs • The audience from the Spring to October has grown 40%, from 1,5% to 2,1% thanks also to the team of anchormen and journalists (Andrea Monti, Giuliano Ferrara, Gad Lerner, Aldo Biscardi, Roberto Giacobbo, Monica Setta, Irene Pivetti)

Cairo Communication Growing trend of share from spring to autumn in 24 hours

Share: +0,6 Audience +46%

201.300

137.600

2,1% 1,5%

% shareSpring Autumn A.M.M.

Source: Data Auditel; % share 24 hours; (8/4-1/6; 29/9-09/11/2002)

6 Cairo Communication Key Programms of La7 A program of Andrea Monti (former editor of Panorama, the first Italian newsmagazine) about Science dealt with in a very spectacular way. From Genetics to climate changes, from astronomic discoveries to the new technologies, from the mind mysteries to the human body and the big mysteries of Universe: those and many others are the topics under the lens of Sfera, the scientific program of La7.

JUN 2002: AM 500.039 SHR 3.6% OCTOBER 2002: AM 923.735 SHR 4.5%

Highlights, interviews and talkings about the hottest topics of soccer. A program of Aldo Biscardi which is on air from more than 20 years.

JUN-NOV 2002: AM 1.005.277 SHR 4.2%

Cairo Communication Key Programms of La7 Stargate of Roberto Giacobbo is a program addressing the big mysteries of archaeology and history. The announcer acts directly in the places where the mystery presented occurred, showing exclusive pictures, videos and tales, with the partecipation in Studio of journalists, scientists end experts of the sector.

JUN 2002: AM 612.0300

OCTOBER 2002: AM 939.842

Italian and international most prominent people and up to date events are addressed in 8 e mezzo, a journalistic in-depth program of Giuliano Ferrara.

OCTOBER 2002: AM 562.453 SHR 2.0%

MAY 2002: AM 448.713 SHR 1.7%

7 Cairo Communication

The new contract with La7: high opportunity of growth

• The objective of the agreement is on average for the three years Euro 90 mln of gross revenues, with average minimum guaranteed fees of Euro 45.8 mln per year (corresponding to gross revenues of Euro 66 mln), including in 2003 an entrance fee of Euro 7,5 mln. • Average gross revenues of Euro 90 mln are based on the estimation of growing revenues, starting from approximately Euro 75 mln in 2003, when minimum guarantee quota will be Euro 37,5 mln in addition to the entrance fee.

Cairo Communication

The new contract with La7: high opportunity of growth

• Mediaset boasts gross advertising revenues of Euro 55 mln per percentage point of share. The 2003 objective gross revenues of Euro 75 mln correspond to Euro 37,5 mln per percentage point of share. La7 advertising gross revenues already reached Euro 70 mln in year 2000 (with 2%share). • The new contract with La7 gives Cairo the possibility to utilize the skills and contacts developed by its sales force network with T+ without the addition of almost any indirect costs.

8 Cairo Communication The clients portfolio

Shared Exclusive Total clients clients Total

CAIRO 122 198 320

LA7 122 161 283

The combined portfolio includes 481 different clients compared to Publitalia’s, which currently amounts to 967 clients

Cairo TV Leader rep. advertising company in the Pay - TV sector • 10-year contract with Telepiù (expiration date 2007) with first negotiation and first refusal right • Exclusive agreements with Cartoon Network, Discovery Channel, Bloomberg Tv from 1 May 2002, CNN from July 2002, leading thematic channels for audience and editorial content in Italy and world wide • Expected double digit growth in FY 2002/2003. As of November 15th the backlog for October-December is 30% higher compared to the figures for the same period in the previous year. • In the first nine months 2002 Cairo TV obtained a positive result vs. a TV market performance of –4.4%

9 Cairo TV Backlog analysis At 15 November 2002 (Euro million) +30%

10 19,1 14,7

0 October-December '01 October-December '02

Cairo Tv-Evolution of turnover

Euro million

30 52.8 45.2* 20 40.6 31.0 10 18.6

0 30/9/98 30/9/99 30/9/00 30/09/01 9 Months 30/06/02

*At 30 June 2001 the turnover was Euro 45,1 m

10 Cairo TV The clients’ portfolio

Turnover Clients

1997 Euro 18 m 199 Clients

2001 Euro 56 m 320 Clients

Cairo TV Active Clients N° CLIENTS VALUE %

TV MARKET 1,434 Euro 4 bn 100

CAIROTV 320 Euro 56 m 1.4

MARKET SHARE ON ACTIVE 2.35% CLIENTS

11 Editoriale Giorgio Mondadori

• Strong increase in margins of the publishing division compared to the first 9 months of the previous period

• The April-June 2002 quarter obtained the best result in term of margins since the acquisition in 1999, during a decline in the advertising and in the news-stand circulation market.

Editoriale Giorgio Mondadori EBITDA

1 1.4 1.4 0.8 0

-1 -2.9 -2 -3.9

-3

-4 30/09/98 30/09/99 30/09/00 30/09/01 9 Months 30/06/02

*At 30 June 2001 the Ebitda was Euro 0,8 m

12 Editoriale Giorgio Mondadori The launch of three new magazines

• Launch of two new magazines within the spring 2003, with an expected average monthly circulation of at least 240.000 copies overall. The launch of a third magazine will be at the end of the summer 2003.

• New Magazines will be edited by Andrea Biavardi, one of the most talented editor for magazine in Italy. He was the editor for more than three years of the monthly magazine Vera, which topped circulation with him in 1999. Biavardi was also the editor of the two newspapers La Nazione and Il Giorno, and eventually he founded and edited for almost three years the monthly magazine Men’s Health, the most successful male magazine launched in the last years.

Editoriale Giorgio Mondadori The launch of three new magazines

• The new magazines will target different publishing market segments from those where Giorgio Mondadori is involved and will reach a larger public. • The editing of the new magazines will not imply remarkable increase in the cost structure of Editoriale Giorgio Mondadori and also they will allow the utilisation of present Editoriale Giorgio Mondadori’s personnel in the new magazines (about 30% of personnel required for the new titles)

13 Editoriale Giorgio Mondadori Three profitability hypothesis for the first two launches

Hypothesis I Hypothesis II Hypothesis III (Eur/mln) (Eur/mln) (Eur/mln) Price 2,6 2,6 2,6 Circulation 240.000 300.000 500.000 Circulation revenues 5.316 6.646 11.076 Advertising revenues 5.165 6.197 8.263 Total revenues 10.481 12.843 19.339 Borderò Journalists and production expenses 5.021 5.452 7.169 Other direct costs 75 75 75 Total direct costs 5.096 5.527 7.244 Advertising and launch costs 2.582 3.099 3.615 Gross margin 2.803 4.217 8.480

Editoriale Giorgio Mondadori

• Further efficiency improvements will be obtained through changes in the organisational structure and process • Significant improvements in margins will be also obtained thanks to the expected increase in the advertising revenues

• In February 2003 there will be the launch of the US edition of Bell’Italia, in partnership with a local publisher. The initiative is particularly interesting also for its possible extension to other countries.

14 TOURISM - NEWS-STANDS CIRCULATION

TITLES 1999 2001 AUG01-JUL02 DOVE 61.382 39.337 36.711 GENTE VIAGGI 62.553 35.682 38.292 GULLIVER 48.685 27.396 19.725 MERIDIANI 35.524 32.811 29.529 PANORAMA TRAVEL 74.804 37.828 35.106 TRAVELLER 44.000 24.000 19.365 TUTTOTURISMO 28.633 42.265 34.471 TOTAL 355.581 239.319 213.199 - 33% -40%

TOURISM - EGM NEWS-STAND CIRCULATION

TITLES 1999 2001 AUG01-JUL02

BELL’ITALIA 49.000 43.250 40.861

BELL’EUROPA 31.625 30.208 26.676

IN VIAGGIO 16.250 23.542 22.894

TOTAL 96. 875 97.000 90.431

+0.1% -6.6%

15 Cairo Pubblicità Focus on development of EGM’s magazines

• Focus on the development of EGM’s magazines advertising, creating value for Cairo Communication Group

• High advertising potential of EGM’s titles. Some comparable magazines have higher advertising revenues (even two times) with lower results in terms of circulation

• Development of the advertising of two new magazines which will be launched within the spring 2003

Cairo Communication Summary

•COMMERCIAL TV: The new contract with La7 will give a boost to Cairo Communication’s revenues and margins and gives Cairo the opportunity to expand into a huge advertising business, that of television which is worth

approximately Euro 4 bln.

•PAY TV : year 2002 will continue to show a positive trend; we estimate double digit growth for FY 02/03

16 Cairo Communication Summary

• EDITORIALE GIORGIO MONDADORI: • launch of three new magazines in 2003 • increase in advertising revenues • further efficiency improvements in the organisation process and with the use of existing resources for the new magazines.

• Net profit forecasted in FY 2001/2002 will allow Cairo Communication to double the dividend up to 0.8 Euro per share (compared to 0,4 Euro per share distributed last year), with a yield of about 4%

CAIROCOMMUNICATION Spa - Capitale Sociale Euro 40.030.000 - Via Tucidide, 56 - 20134 Milano Italy Tel. 02 748131 - Fax 02 70100102 - Mail: [email protected] - http:\\www.cairocommunication.it