MEDIASET GROUP 3rd Italian TM Conference 24th May, 2002 www.gruppomediaset.it
Mediaset Strategic Approach.Where is the Money? Fedele Confalonieri, Chairman CORE BUSINESS CORE BUSINESS CORE BUSINESS 1996 1997 1998 1999 2000 2001 2002 2 Mediaset Group
MEDIASET GROUP Broadcasting www.gruppomediaset.it
2002 4M Audience Share CANALE 5 Leadership in Prime Time Prime Time 25.1% 25.3% 25.5% 23.8% Canale 5 24.4% 21.4% 22.4% RAI 1 23.2% January February March April Source: Auditel Individuals Excluding Sanremo Week 4 broadcasting
2002 4M Audience Share ITALIA1: Growing Audience Shares 12.9% 13.5% 13.8% PRIME TIME 9.9% 10.1% 11.0% 11.2% DAY TIME 11.4% January February March April Source: Auditel Individuals 5 broadcasting
2002 4M Audience Share ITALIA1: Growing Audience Shares on Younger Target 15.8% 16.9% 17.4% PRIME TIME 11.9% 16.1% 18.1% 18.2% DAY TIME 18.9% January February March April Source: Auditel; Target age 15-34 6 broadcasting
2002 4M Audience Share Mediaset is Reducing the Gap vs RAI Prime Time 49.5% 49.2% 47.6% 45.8% 7.9% 1.4% 44.4% 43.1% 41.6% 42.2% RAI Mediaset 1999 2000 2001 4M 2002 Source: Mediaset, Auditel Total Viewers 7 broadcasting
2002 Broadcasting Strategy 5 Key-drivers to Higher efficiency Fiction Cost Control Library Full Exploitation: Decrease in First-runs TV Productions Optimization: Decrease in Volume and Cost per Hour Strict Efficiency Control for Each Program (Costs/Revenues) New Policy in TV Rights 8 broadcasting
2002 Broadcasting Strategy Strict Efficiency Control for Each Program (Costs/Revenues) AUDIENCE Non-replaceable TG NEWS PASSAPAROLA SOCCER SEMBRA IERI DISTRETTO DI POLIZIA Replaceable DISPOSABLE PRODUCTS AREA Negative Positive PROFIT CONTRIBUTION 9 broadcasting
Medium-term Strategy TV Rights New Policy Past Since 1999 Present Strong TV rights acquisition policy Increasing in-house production (news, entertainment, fiction) Acquisition policy tailored to channel requirements Decrease in the number of output/volume deals More focused rights purchase 2002: -100 m TV Rights Investments vs 2001 10 broadcasting
MEDIASET GROUP Advertising www.gruppomediaset.it
2001 Italian TV Advertising Mediaset Increased its Market Share 2000 2001 LA7 2.2 OTHERS 1.3 RAI LA7 1.9 OTHERS 1.3 RAI 62.6 33.9 65.5 31.3 MEDIASET MEDIASET Source: Adex Nielsen 12 advertising
2001 Italian Advertising Mediaset Increased its Share on Total Advertising Market 2000 2001 RADIO 4.6% OTHERS 5.1% PRESS RADIO 4.2% OTHERS 5.2% PRESS RAI 17.5% 40.5% RAI 16.0% 41.0 32.3%MEDIASET 33.6% MEDIASET Source: Adex Nielsen 13 advertising
2001 Italian TV Advertising Mediaset Outperformed the Market Growth versus Previous Year -4.0% +0.5% TOTAL TV MARKET MEDIASET -11.5% RAI -16.7% LA7 Source: Adex Nielsen 14 advertising
2002 1st Quarter Italian TV Advertising Market D % vs 1Q 2001 D % vs 1Q 2000-2.3% -2.4% -1.2% -32.1% TOTAL TV MARKET MEDIASET RAI LA7 +1.6% +3.6% -0.5% -41.3% Source: Adex Nielsen 15 advertising
Mediaset: New Clients Acquisition Policy ACTIVE CLIENTS NEW CLIENTS IN 2001 2000 1,033 New Clients 292 2001 1,079 Revenues 116 ml Euro Average Inv. 0.4 ml Euro 16 advertising
Publitalia: Advertising Demand Trend NEW CLIENTS IN 1Q2002 New Clients Revenue Average Inv. 73 22 ml Euro 0.30 ml Euro 17 advertising
Mediaset: Advertising Investments by Sector (m ) GROCERY AUTOMOTIVE FINANCE/INSURANCE TOURISM & TRAVEL TELECOMS 2001 1,086 209 90 36 255 vs. 2000 +3.1% +15.7% +31.3% + 17.7% -26.8% 18 advertising
Mediaset: Advertising Investments by Sector 1Q 2002 1Q 2001 FOOD NO FOOD AUTOMOTIVE TELECOM FINANCE/ INSURANCE MEDIA / PUBLISHING OTHERS -10.1% +20.8% +2.2% -12.2% -1.6% -24.9% -1.6% +19.0% -8.5% +7.4% -13.9% +88.2% -8.5% +9.5% 19 advertising
Publitalia TV Advertising Revenues Quarterly Growth Trend (ml Euro) % on Total 2001 Revenues 2000 vs. 1999 2001 vs. 2000 2002 vs. 2001 1 Q 29.2% +17.5% +6.0% -3.7% 2 Q 29.6% +12.8% +2.7% 3 Q 15,3% +13.6% -1.4% 4 Q 25.9% +6.1% -7.8% 20 advertising
MEDIASET GROUP Financials www.gruppomediaset.it
Mediaset Financial Overview 2001 Operations Overview (m ) Total Net Revenues Ebit Ebit Margin TV Operations 2,173.4 582.6 26.8% MULTIMEDIA Operations 37.0-9.3 n.a. NON TV Operations 50.3 12.8 25.4% Epsilon (1H2001 only) 29.4 1.0 n.a. 2,290.4(*) 587.2 25.2% (*) excluding Sale of Rights 22 financials
Mediaset Financial Overview Focus on TV Operations (m ) 2001 2000 1999 Total Net TV Revenues Advertising (3rd parties) Other TV Revenues (*) Commissions 2,173.4 2,423.3 112.5 (362.4) 2,172.5 2,422.4 103.2 (353.1) 1,956.0 2,165.0 106.6 (315.6) Total TV Costs Personnel Other operating costs Amort. & Depreciation Sale of Rights (1,590.9) (275.0) (658.4) (718,3) 60.8 (1,495.4) (280.5) (592.7) (651.6) 29.3 (1,401.5) (279.7) (521.3) (611.0) 10.5 EBIT from TV Operations 582.6 677.1 554.5 margin 26.8% 31.2% 28.3% (*) excluding Sale of Rights 23 financials
Mediaset Financial Overview TV Operating Leverage Trend (m ) Total Net TV Revenues 1,793.4 Total TV Costs 1,312.9 EBIT from TV Operations 480.5 +9.1% 1,956.0 +6.8% 1,401.5 +15.5% 554.5 +11.1% +0.0% 2,172.5 2,173.4 +6.4% +6.7% 1,590.9 1,495.4 +22.1% -14.0% 677.1 582.6 1998 1999 2000 2001 24 financials
Mediaset Group Cash Flow Statements (m ) 2001 1Q 2002 1Q 2001 125.3 (297.6) 1,162.3 (1,279.1) (180.8) (283.2) - 207.7 (373.1) (247.8) Net Financial Position 1/1 Free Cash flow Cash flow from operations Investments Others movements Dividends Equity movements Change in Consolidation Area Total Net Cash Flow (247.8) 200.5 380.8 (120.5) (59.8) - - - 200.5 125.3 73.4 390.3 (255.2) (61.7) - - - 73.4 Net financial Position End Period (47.3) 198.7 25 financials
MEDIASET GROUP Digital Terrestrial Television (DTT) www.gruppomediaset.it
DTT Opportunity Penetration in Italy and Europe 10000 9000 8000 7000 6000 5000 4000 3000 2000 1000 0 Digital TV Growth in Europe DIGITAL TV HOUSEHOLD ( 000) Total digital TV '00 '01 '02 '03 '04 '05 DTT Satellite Cable Italy Digital TV in Europe in 2005 23% 5% DIGITAL TV HOUSEHOLD share in % 0% 38% 18% 12% 20% 20% 15% 21% Germany France 11% 17% Spain 19% 23% 27% UK DTT Cable Satellite Source: datamonitor 27 DTT
DTT Opportunity Regulatory Framework: No Threats for Incumbent REGULATORY FRAMEWORK Law on the transition on DTT has been approved in March 2001. In November 2001 Italian Authority published regulation for DTT 3 different roles have been identified:network Operator, Content Provider and Service Provider Mediaset can buy extra frequencies to start the DTT trial phase before 2004 The shift to DTT is set to 2006 Mediaset, La7 and Rai lead the transition on DTT in Italy 28 DTT
DTT Opportunity Q4 2002 Mediaset will start testing on DTT MAIN OBJECTIVES 29 Increase in programm s audience share and viewing persistence, thanks to interactivity Interactive advertising: value increase for the adspender thanks to interaction with the TV viewer Additional revenue streams from interactive games (pay per play), T-commerce and betting (if permitted by the law) Revenues inflow from telephone traffic DTT Click Here to Start
DTT Opportunity Q4 2002 Mediaset will start testing on DTT Canale5 Digital Interactive Contents Companion Channels Interactive Services EPG (TV Portal) Interactive Teletext/ TV Portal Enhanced All-News Channels Messaging (T-mail, SMS, Chat) Grande Fratello, Il milionario, Striscia la notizia Interactive News and Sport Interactive Advertising and Promotions And / or Italia1 Digital 3rd Party Services (T-Commerce, T- Banking, ecc) Walled Garden, 30 DTT
MEDIASET GROUP Focus on Core Business Profitability, Assessing Any Growth Opportunity www.gruppomediaset.it
Focus on the Core Business Profitability Assessing Any Growth Opportunity Library Exploitation Fiction Trading Fiction re-sale BroadBand CORE BUSINESS 3G mobile Brand Extension All Library Exploitation Telphone Traffic DTT PubliEurope Tele5 increase stake Free2Air Content Provider Other Source of Revenues 32 Mediaset Group
MEDIASET GROUP 3rd Italian TM Conference 24th May, 2002 www.gruppomediaset.it