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 TMC ITALIA 1 RAI 2 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.