2008 Shareholders’ Guide Mediaset SpA Sede legale 20121 Milano Via Paleocapa, 3 Tel. +39 02 8541.1 Direzione 20093 Cologno Monzese (Mi) Viale Europa, 48 Tel. +39 02 2514.1 2007 A profi le of the Mediaset Group Founded (under the name of Telemilano): 1978 Became a public listed company (under the name of Mediaset): 1996 Headquarters: Milan, Italy Main countries of business: Italy, Spain Employees: 6,306 Shareholders (on 31 December 2007): Fininvest (36.0%) - Market (60.2%) - Treasury stock (3.8%) Consolidated net revenues in 2007 (€m): 4,082.1 Operating profi t for 2007 €( m): 1,149.0 Net profi t for 2007 €( m): 506.8 Mediaset Group: Operating profi tability 2007 2 8 .1 % 5 A profile of the Mediaset Group 5 financial instruments and risk management policies 179 Corporate boards 9 • Business combinations 191 The Group and its 2007 results 10 • Share-based payments 192 • Transactions with related parties The main companies of the Mediaset Group 195 17 • Other information 196 Financial highlights 18 • List of equity investments included in the Group’s consolidated financial The history and activities statements as at 31 December 2007 198 of the Mediaset Group 20 Cerification of the consolidated financial Italy 22 statement pursuant to art. 81-ter out of • Advertising 23 Consob Regulation nr. 11971 dated May • Commercial FTA TV 24 14, 1999 and subsequent amendments • TV drama and film production 30 and integrations 199 • Digital terrestrial 32 • New business 40 Report of the External Auditors 203 Spain 42 Mediaset S.p.A. • Advertising 43 Financial Statements as • Commercial FTA TV 44 at 31st December 2007 • The new digital world 45 Directors’ Report on Operations 207 Endemol 46 • Information on the ownership structure (Art. 123-BIS of t.u.f.) 211 International advertising 48 • Report on operations Training initiatives 50 Financial highlights 214 Balance sheet and financial position 216 A commitment to culture and society 52 • Main corporate transactions 217 Notice of convocation 55 • Human resources 217 • Other information pursuant to Art. 2428 Mediaset Group of the Italian Civil Code 219 Consolidated Financial Statements • Other information 225 as at 31st December 2007 • Directors’ Report to the Shareholders’ Director’s Report on Operations 63 general meeting 226 • The general economic situation 68 • Attached: Annual Report of the Board • Development of the regulatory of Directors on Corporate Governance 245 framework in the television industry 70 2007 Annual Report • Mediaset on the stock market 73 • Main corporate operations Fianancial Statements and equity investments 77 • Balance Sheet 286 • Evolution of operations by segment • Income Statements 288 of activity 79 • Cash Flow Statements 289 • Human resources 99 • Statements of changes • Analysis of results by geographical in Shareholders’ equity 290 areas of operation • Balance Sheet pursuant to Economic results 104 Consob decision no. 15519 Balance sheet and financial position 115 dated July 27th, 2006 291 • Table of reconcilement between the • Income Statements pursuant to Group’s consolidated Shareholders’ Consob decision no. 15519 dated equity and the parent company July 27th, 2006 293 Shareholders’ equity 119 Explanatory notes • Subsequent events after • General information 294 31 December 2007 120 • Adoption of international • Forseeable developments 121 accounting principles 294 Consolidated Financial Statements • Summary of accounting standards • Consolidated balance sheet 124 and valuation criteria 294 • Consolidated income statement 126 • Additional information 300 • Consolidated cash flow statement 127 • Comments on the main assets items 304 • Movements in consolidated • Comments on the main Shareholders’ Sharaholders’ equity 128 equity and liability items 312 • Consolidated balance sheet and income • Comments on the main statement according to Consob decision income statement items 323 n. 15519 dated 27 July 2006 129 • Investment commitments 331 and guarantees Notes • Additional information on financial • General information 132 instruments and risk management policies 332 • General drafting criteria and accounting • Attachments 340 standards for the preparation of the financial statements 132 Table of equity investments pursuant • Summary of significant accounting to Art. 125 of Consob regulation no. policies and valuation criteria 132 11971/199 and subsequent changes 343 • Main company operations and changes Reports of the Statutory Auditors in the consolidation area during the year 145 and External Auditors 345 • Segment report 147 • Comments on the main assets items 151 Certification of the annual financial • Comments on the main Shareholders’ statement pursuant to art. 81-ter equity and liabilities items 164 out of Consob Regulation no. 11971 • Comments on the main income dated May 14, 1999 355 statement items 173 Excerpt of the resolutions made by • Additional disclosures about Mediaset Shareholders’ General Meeting 359 Corporate boards Board of directors . Chairman Fedele Confalonieri Deputy chairman Pier Silvio Berlusconi Chief executive Giuliano Adreani Directors Marina Berlusconi Pasquale Cannatelli Paolo Andrea Colombo Mauro Crippa Bruno Ermolli Luigi Fausti Marco Giordani Alfredo Messina Gina Nieri Carlo Secchi Attilio Ventura Executive committee . Fedele Confalonieri Pier Silvio Berlusconi Giuliano Adreani Gina Nieri Internal control committee . Luigi Fausti (Chairman) Alfredo Messina Carlo Secchi Remuneration committee . Bruno Ermolli (Chairman) Paolo Andrea Colombo Attilio Ventura Net profit 2007 Governance committee . Attilio Ventura (€m) Paolo Andrea Colombo Luigi Fausti Statutory auditors . Francesco Antonio Giampaolo (Chairman) Francesco Vittadini (Standing statutory auditor) Riccardo Perotta (Standing statutory auditor) Giancarlo Povoleri (Substitute) External auditors . Deloitte & Touche SpA 8 506.8 9 The Group Fedele Confalonieri, Chairman and its 2007 results For Mediaset, 2007 was a year of change in which the company made a decisive shift in order to adapt to an environment quite different to that in which it was founded. Starting with the competitive scenario. The media business is undergoing vast changes, the most obvious signs of which have been the success of Sky on the satellite platform, the development of the internet towards models increasingly based on video content and mobile TV. The underlying trend is for the personalisation of content by users, a trend that will accelerate with future generations of viewers. The world’s leading television operators are, as a result, at a crossroads. Either they cling desperately to the existing model, defending entrenched positions in a damage limitation exercise to hold off the moment when they lose their leadership. Or, alternatively, they make a great leap forward; turning defence into attack. Mediaset has opted for the second path. We are now confronted with a competitor that can control an unlimited number of channels on the satellite platform: it enjoys a most favourable antitrust treatment and, while operating on a pay model, it is subject to the same advertising limits as free-to-air television. But even in this complex scenario, at Mediaset we believe we can look to the future with confidence. Commercial free-to-air TV in Italy is in rude health, with over 90% of the total audience and a vitality unheard of in the United Kingdom and France. But already in 2001, we were engaged in the development of digital terrestrial, an extraordinary and natural competitor of satellite, and an effective way of shifting our offer into a multichannel world. The acquisition of frequencies, significant investments in Mediaset Group technology and innovation, such as the pre-paid card. employees And then there is the launch of the new free digital channels and live football coverage that we have used to launch our premium pay-per-view offer, inventing a new way of exploiting premium content. Finally, and this takes us right up to 2008, the ultra-competitive pay-TV package “Premium Gallery”, the very best of cinema and TV, on air, 24 hours a day. And our innovative drive - which, in terms of economic resources has meant investments of around €1.5 billion - continues. The next stage will be the expansion of the digital platform to cover the entire country, anticipating the date for the analogue switch-off at the end of 2012. And all this without compromising our economic stability, depriving our core business of resources or making risky acquisitions, of people or companies. 10 6 ,3 0 6 11 Our strategic aims are clear. Pier Silvio Berlusconi, Deputy chairman. First: to maintain our leadership in free-to-air generalist TV. Second: to develop a multichannel and multiplatform offer. Third: to carve out a position of strength in the content market. We are convinced that the big audiences will remain with free-to-air generalist TV, and along with the audience, the largest share of advertising. But Mediaset will increasingly become a pay-TV, multichannel, multiplatform broadcaster. Only a couple of years ago our revenues derived exclusively from advertising. Today we can now count on revenues from a range of sources. On the content side, it is sufficient to make a single consideration. Content is the fuel that drives the media industry, and, much like oil, is a rare and valuable resource. As platforms multiply, there is a growing discrepancy between the potential of communication networks and what can effectively be delivered in terms of editorial, audiovisual and advertising content. The development, creation