June 8, 2005 - Merrill Lynch Lynch Merrill – TMT Conference Conference TMT TMT conference – June 8, 2005 2005 8, June - 1 Disclaimer - Merrill Lynch Lynch Merrill All forward-looking statements are TF1 management’s – present expectations of future events and are subject to a Conference TMT number of factors and uncertainties that could cause actual results to differ materially from those described in the – forward-looking statements. 2005 8, June - 2 1 - Ø Introduction Lynch Merrill TF1 Group’s channels – TMT Conference Conference TMT TF1 Channel Advertising Theme channels – June 8, 2005 2005 8, June Other businesses Strategy and outlook - 3 3 months 2005 key figures - IFRS 3 months 3 months P&L account (€M) Change 2005 2004 713.9 713.4 + 0.1% Turnover - Incl. TF1 channel net advertising 430.0 425.1 + 1.2% Lynch Merrill Other activities 283.9 288.3 - 1.5% Programming costs (229.6) (203.3) + 13.0% – TMT Conference Conference TMT Operating profit 100.2 119.1 - 15.9% % turnover 14.0% 16.7% Net profit (attributable to the Group) 60.9 70.9 - 14.1% % turnover 8.5% 9.9% – June 8, 2005 2005 8, June Balance sheet (€M) 31 Mar. 05 31 Dec. 04 Change Shareholders equity 1,025.4 975.5 + 5.1% - Financial net debt 442.7 413.7 + 7.0% Gearing 43% 42% 4 2 IFRS impacts on 2004 consolidated accounts • On Turnover: + €14.2 M Reversal of Dec 03 reclassification of provision for goods returns - Merrill Lynch Lynch Merrill • On net profit: + €4.6 M Incl: Stock-options charges - €3.8 M – TMT Conference Conference TMT Own equity derivative instruments - €1.2 M Cancellation of Goodwill amortisation + €8.5 M • On Balance sheet: + €44.0 M – June 8, 2005 2005 8, June Incl: Own equity derivative instruments - €7.0 M Cancellation of Goodwill amortisation + €8.5 M Head office restatement + €30.9 M - Derivative Financial instruments + €6.7 M Deferred taxation + €4.4 M 5 - Introduction Lynch Merrill TF1 Group’s channels – Ø TF1 Channel Conference TMT Advertising Theme channels – Other businesses 2005 8, June Strategy and outlook - 6 3 A growing audiovisual market TV is the most popular media 86% of French people watch TV every day - 3 out of 4 watch every day Lynch Merrill Growth of the daily viewing time – In 16 years: Conference TMT 209' + 47 minutes for Women <50 204' 203' 202' + 30 minutes for Indiv 4+ 196' 204' 200' 189' 189' 199' 187' 197' – 184' 193' 181' 2005 8, June 180' 179' 180' 189' 177' 177' 174' 183' 177' 174' 170' 171' 168' - 166' 4 ans + Fem<50 rda 163' 163' 164' 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Source: M édiamétrie 7 Audience share – 5 months 2005 Individuals 4+ Women < 50 - Other TV Other TV Lynch Merrill 11.9 10.7 (+1.0pt) (+1.4pt) – 13.1 Conference TMT (+0.5pt) 32.1 20.1 (+0.8pt) 35.4 (-0.3pt) 1.8 (-0.5pt) 3.2 3.9 1.4 – 3.0 2005 8, June 14.5 19.5 (-0.5pt) 3.5 10.2 15.6 (-0.7pt) (-0.8pt) (-1.1pt) - Canal+ France 5 ARTE Source : M édiamétrie January-May 2005 vs January-May 2004 8 4 TF1: the best resistance to pay TV penetration Audience share Current market* Cable & sat ** - (i.e. 24,8% pay TV environment Degree Lynch Merrill penetration) (100% pay TV penetration) of resistance TF1 31.8 % 24.5 % 77% 20.5 % 14.4 % 70% France 2 – TMT Conference Conference TMT France 3 15.2 % 9.0 % 59% France 5 3.0 % 1.4 % 47% M6 12.5 % 8.4 % 67% – June 8, 2005 2005 8, June : The best resistance to the market fragmentation - The market fragmentation widens the gap between TF1 and its competitors * Source: Mediamétrie - 2004, ind. 4+ ** Source: Mediacabsat 8 (September 2004 – February 2005) 9 Controlled cost: + 3.5%/year over 10 years Evolution of programming costs - 1994 Lynch Merrill 1995 1996 1997 – 1998 Conference TMT 1999 2000 2001 2002 – June 8, 2005 2005 8, June 2003 2004 0 100 200 300 400 500 600 700 800 900 €M - 2005: + 3% max. (vs +3.9% previously) 2006: ~ + 3% (excl. Football World Cup) Detailed programming costs in appendices 10 5 - Introduction Lynch Merrill TF1 Group’s channels – TF1 Channel Conference TMT Ø Advertising Theme channels – Other businesses 2005 8, June Strategy and outlook - 11 Advertising: sectorial breakdown Change January to April 2005 vs Jan-Apr 04 FOOD - 5.5% Weight = 29.2% - Merrill Lynch Lynch Merrill COSMETICS 14.3% - 0.6% AUTOMOTIVE 9.8% + 12.5% – TMT Conference Conference TMT PUBLISHING 8.7% - 3.0% HOUSE CLEANING 6.4% - 0.9% SERVICES 6.2% + 28.0% – June 8, 2005 2005 8, June TELECOMMUNICATION 6.1% + 22.6% NEWS - MEDIA 3.3% - 16.6% - CULTURE & LEISURE 2.6% + 9.0% Source : TNS Secodip – 2005 vs 2004 – January to April 12 6 Advertising outlooks TV advertising growth forecasts for 2005 - +3.5% according to France Pub +3.1% according to Ad Barometer Lynch Merrill TF1 channel advertising revenue – TMT Conference Conference TMT - H1 2005: slightly negative net advertising revenue – New sectors 2005 8, June - Press in 2004 - Retail in 2007 - - Cinema ? - Sectors with advertising potential 13 - Introduction Lynch Merrill TF1 Group’s channels – TF1 Channel Conference TMT Advertising Ø Theme channels – Other businesses 2005 8, June Strategy and outlook - 14 7 TF1 Group: leading the theme channels market Theme channels audience share * New channels in 2005: TF1 Group: - 6 channels in the top 12 Lynch Merrill Audience Audience Subs Ad rev. Q1 target share* 31.12.04 05 vs 04 – Men 15-49 years old Conference TMT 1.5 % 5.7 M + 31% AB+ people AB+ people 1.1 % 5.3 M + 10% Women 15-34 1.0 % 2.7 M + 24% – June 8, 2005 2005 8, June Women < 50 1.1 % 4.4 M x 3,4 Individuals 15-49 0.6 % 2.4 M + 2% - AB+ people 0.2 % 2.1 M + 31% AB+ people 0.1 % 4.2 M ns * Source: Médiamétrie audience share / MédiaCabSat 8 / Audience share / Individuals aged 4 and above / Whole base 15 - Introduction Lynch Merrill TF1 Group’s channels – TF1 Channel Conference TMT Advertising Theme channels – Ø Other businesses 2005 8, June Strategy and outlook - 16 8 Eurosport International Key figures (1) - Q1 2005 revenue: €56.1 M (- 2.8%) Lynch Merrill 54 countries - 19 languages TV households: 95 M incl. ~ 50% paying subs – (1) 2004 EBIT margin: 11.5% (+ 0.6 pt) Conference TMT 22.7 M European viewers (2) / day in 2004 About 2,500 hours of sports events in 2004 – June 8, 2005 2005 8, June The channel of the Olympics and International events - (1) Eurosport International revenue (excl. Eurosport France) (2) Sources: GfK/BARB/CKO-INTOMART/MMS/Gallup/Sofres/AGB Polska - Ind. 6+ in cable/sat homes (Ger + UK + Swe + Den + Pol + Spa), all TV homes (NL) 9:00 - 25:00 Network audience. 17 Drivers for profitability Revenue growth for Eurosport channel Improvement of the pan-European advertising market share - Positive change for fees revenue Lynch Merrill - Increase in paying households - New distribution contracts (Central, Eastern and Southern Europe …) – TMT Conference Conference TMT - Distribution on new platforms (DTT, ADSL …) Additional revenue thanks to market expansion & new activities Europe: Eurosport 2 – June 8, 2005 2005 8, June Outside Europe (Asia…): Eurosportnews FIA World Touring Car Championship Development of the offer at marginal cost - Optimise the Group’s know how Develop internal synergies for production 18 9 TPS: a growing business Q1 2005 key figures Revenue: €95.6 M (+ 3.9%) - DTH and ADSL subs: 1.369 M Lynch Merrill Improvement of the offer ü 55 % of market share on US studio movies (Warner, MGM, Paramount's, Dreamworks, Touchstone…) – TMT Conference Conference TMT ü English Premier League French basket ball Boxing: Don King – ü New channels in 2005 : Ushuaïa TV, Eurosport 2, M6 Music Rock … 2005 8, June New distribution platforms - ü Agreement with Neuf Telecom on ADSL ü Pay DTT in September 2005 19 TPS*: breakeven in 2004 for the satellite activity 2000 2001 2002 2003 2004 3 2 -4 Breakeven - -9 Lynch Merrill -23 -37 EBITDA: 2000 EBIT: 2003 €M Satellite net profit: 2004 Operating profit – -83 Conference TMT -99 Net profit -112 -122 Satellite net profit 2004: €14 M – June 8, 2005 2005 8, June €M 250 TPS: debt reduction 224 171 - 2002 2003 2004 * Figures at 100% 20 10 Audiovisual rights: a promising year - A diversified Lynch Merrill line up with exceptional movies – 4 movies above 1 M viewers in theatre Conference TMT – Distribution in video in H2 2005 2005 8, June Key figures 2004 - a record year: - Number of units sold in Q1 2005: 5.4 M (+ 38%) 19.7 M units 2004 EBIT margin: 10.5% (+ 2.5 pts) sold 21 - Introduction Lynch Merrill TF1 Group’s channels – TF1 Channel Conference TMT Advertising Theme channels – Other businesses 2005 8, June Ø Strategy and outlook - 22 11 Conclusion - Ø Remain leader for TF1 channel and theme Lynch Merrill channels in France – TMT Conference Conference TMT Ø Keep on developing programme and service distribution – June 8, 2005 2005 8, June Ø Maintain Eurosport position as the first pan- European channel - 23 Uses of cash M&A operations 2001: Eurosport (€375 M) + Série Club (€23 M) - 2002: TPS (€297 M) Lynch Merrill 2003: Publications Metro France (€12 M) 2004: Sportitalia + Prima TV (€35 M) + Histoire (€4 M) – A shareholder friendly dividend policy Conference TMT 89% 76% 72% 0.6564% 0.65 0.65 0.65 0.65 63% Dividend / share (in €) – Pay-out ratio 2005 8, June 2000 2001 2002 2003 2004 Share buy-back programme - 500,000 shares acquired and cancelled in 2004 for €11.9 M 1,370,000 shares acquired and cancelled beginning 2005 for €32.5 M 24 12 : in a good position to face competition ü Leadership of TF1 core channel 7 ad breaks per day - Merrill Lynch Lynch Merrill ü Powerful ad breaks reach more than 5 M viewers ü Investments in leading programmes – TMT Conference Conference TMT Annual programming