Investing in the Digital TV Future

Transcription

1 Investing in the Digital TV Future 5 th Annual TMT Conference Barcelona, Spain 17 th -18 th November 2005

2 MEDIASET Group in Brief Profile Broadcasting Advertising 2004 Financials Developments One of the Largest media company in Europe and the leading free TV broadcaster in Italy. MS owns a 50.1% stake in Telecinco, the leading Spanish free TV broadcaster Leadership in audience shares both in Italy and Spain : Commercial Target: 24h 45.1%, Prime Time 45.6%, #1 Broadcaster in Italy Commercial Target: 24h 25.2%, Prime Time 27.0%, #1 channel in Spain Leadership in the TV Advertising market both in Italy and Spain : Market share 66.1% Italian TV Advertisin Market, #1 Broadcaster in Italy Market share 29.7% Spanish TV Advertisin Market, #1 Broadcaster in Spain Total Net Revenues: 3,434.0 ml Euro 31.8% EBIT margin Net Profit: ml Euro Dividend Paid in 2005: ml Euro Leader and first mover in DTT business development in Italy First broadcaster to launch PPV Premium Content using prepaid cards First mover in the DVB-H business development 2 2

3 MEDIASET Shareholders Geografical Breakdown Mediaset Shareholders Floating Shares (57,16%) Geografical Breakdown Others 5,5% MARKET 57,16% FININVEST 35.33% Retail 15,3% UK 7,9% Germany CAPITAL RESEARCH 5,21% BUYBACK 2,30% (at 11/11/2005) Target 3,81% 1,7% France 2,8% Italy 10,7% Usa 13,3% Source: Consob, Company estimates on Shareholder Identification (July 2005) 3 3 3

4 FOCUS ON CORE BUSINESS Potential Structural Growth. FTA Commercial TV: Structural Growth of the Italia ADV Market UK Ad-spend Nominal GDP = 1.14% UK Total ADV Market ITALIAN Total ADV Market Deregulation Privatisation Industry Evolution ITA Ad-spend Nominal GDP = 0.64% 2004 Digital Terrestrial TV: PPV Development 4 4 4

5 FOCUS ON CORE BUSINESS..Assessing all Opportunity TECHNOLOGICAL DEVELOPMENT GEOGRAFICAL EXPANSION DTT (Pay/Free) DTT Mobile Tv (DVB-H) ADSL Other digital platform Rights Trading PubliEurope FTA Business DTT Business Core Business Creativity/Content House Teleshopping DTT switch off date Cross Media Ownership VERTICAL INTEGRATION LEGAL FRAMEWORK 5 5

6 Broadcasting

7 EUROPEAN OVERVIEW Media coverage % on Adults (2004) ITALY GERMANY SPAIN UK FRANCE TV Daily reach RADIO Daily reach * 82.8 NEWSPAPER Issue reach MAGAZINES Issue reach CINEMA Weekly reach * weekly Source: European Marketing Book Warc

8 ITALIAN MEDIA SCENARIO TV is the most powerful media Coverage (.000) TV RADIO WEEKLIES MONTHLIES DAILIES Canale 5 Radio Deejay Sorrisi e Focus Corriere Network Canzoni TV della Sera Source: Auditel Year 2004 (adults 15+); Audiradio Year 2004 (adults 11+); Audipress 2004 (adults 14+) 8 8

9 ITALIAN MEDIA SCENARIO TV is the most powerful media 2004 TOTAL TV OFFER Total Audience (24 hours) TV Consumption (average daily viewing min.) 9.2 ml 234 min. Total Audience Trend, 24 Hours (.000) TV Consumption Trend, (min. per Day) Source: Auditel (24 hours) 9 9

10 Broadcasting Italian Business

11 MEDIASET Leader on Commercial Target CHANNELS 9M2005 AUDIENCE (Commercial target 15-54) 47.1% 36.0% 2.4% Others Local Channels Satellite DTT Cable 14.5% Source: Auditel (24 hours) 11 11

12 MEDIASET 3 Channels 1 Television 24Hours - adults Composition % men 60% 50% 40% 30% Italia 1 Others SAT Total TV La7 Rai3 Rai1 Rai2 Rete 4 20% Canale 5 10% 0% 40% 50% 60% 70% 80% Composition % Adults >35yrs Source: Auditel

13 Advertising

14 ADVERTISING EXPENDITURE IN EUROPE Total Ad Spend as % of GDP Adv. Market in Europe per Media segment, 2004 (%) 1,31 1,25 1,19 1,14 1,13 1,14 8,4 16,6 8,7 16,9 31,5 1,01 0,95 0,88 0,89 0,91 0,82 0,81 0,76 35,6 37,5 48,8 38,9 35,7 0,67 0,63 0,71 0,70 0,65 0,65 0,76 0,62 0,60 0,73 0,61 0,60 0,75 0,64 0,6 56,0 45,9 42,5 44,2 32, UK Germany Spain France Italy (*) Italy UK Germany Spain France TV Print Others (*) Cinema not monitored Source WARC, Advertising and Media Forecast, June 2005 Source: AC Nielsen, MMS, TNS, Infoadex net 14 14

15 ADVERTISING EXPENDITURE IN EUROPE Total Adv. Expenditure in Europe 2004 ( ml.) TV Adv. Expenditure In Europe 2004 ( ml.) Italy UK Germany Spain France Italy UK Germany Spain France Source: Nielsen, MMS TNSofres, Infoadex; 2004, Total TV, Print, Radio, Outdoor and Cinema (except for Germany where cinema is not monitored) Source: Nielsen/Mms/TNSofres

16 ADVERTISING EXPENDITURE IN EUROPE CPT Index Index Italy Spain UK France Germany Source: Nielsen/Auditel; Infoadex/Sofres; DDS; ZAW/GFK Irep/Mediametrie, Net advertising channel revenues, including agency commission, UK Pound/Euro exchange rate: 1 Euro = 0,68 - Target Adults - basis:

17 Advertising Italian Business

18 2005 8M Italian Advertising Market vs. previous year Total Market +2.3% Press +3.1% -1.6% Radio -3.5% Outdoor TV +2.5% +3.8% -2.2% Source: Nielsen AdEx estimates 18 18

19 MEDIASET M Publitalia Advertising Revenues +3.7% 2, ,086.2 ( ml.) 9M2004 9M

20 MEDIASET Last Advertising trend by Sector 9M 2005 (ml ) M vs M October 2005 vs October 2004 TELECOM % +7.5% AUTOMOTIVE % -2.0% FINANCE/INSURANCE % % RETAIL % % FOOD % -6.2% NON FOOD % -2.0% 20 20

21 Digital Terrestrial TV

22 DTT Development in Italy Coverage Number of DTT multiplexes Population Coverage 2 mux 80% - 65% 2 mux >70% 1 + (1) mux 70% - ( 65%) 1 mux 68% Sardinia and Valle d Aosta should be the first Regions to switch off the Analog trasmission: already by the end of 1 st Quarter 2006 (1) MUXs already Authorized but not yet Active Digital Terrestrial TV 22 22

23 DTT Development in Italy SET-TOP-BOX Penetration Estimates of over 3.2ml Decoders at the end of October 2005 Around 2ml MHP Decoders sold with State subsidies subsidies left to be reserved to Valle d Aosta and Sardinia (switch off January 2006) Profile of DTT STBs sold STBs Price History 40% MHP STBs sold without subsidy Subsidy Net Price Retail Price (gross of Sudsidy) 4% Zapper 56% MHP STBs sold with subsidy Jan 2004 Mar. 04 May 04 Sept 04 Dec 04 Apr 05 Today Source: Estimate by GfK Marketing Services Italia, May 2005 Digital Terrestrial TV Fonte: Stima GfK Marketing Services Italia

24 DTT Development in Italy Channel Offer Main analogue channels in simulcast Sport and sport news i i i i i SPORT i i i SOLOCALCIO News: financial, international, Kids Shopping Music channels i i i Cinema news Public service channels Religion Pay per View services i i i i i i Interactive Channels Note: Rete A multiplex is not included (broadcasting All Music, The Club, Camera, Senato ) because its current coverage is below 50% Sources: DGTVi; Sat-Net; Booz Allen Hamilton analysis Digital Terrestrial TV 24 24

25 DTT Opportunity Digital Terrestrial TV

26 DTT OPPORTUNITY Mediaset Model FREE-TO-AIR TELEVISION Commercial TV 3 generalistic channels funded by advertising (Analog, DVB-T, DVB-H) Multichannel Theme Channel funded by targeted advertising or telesales (DVB-T, DVB-H) Interactivity Interactive and Enhanced advertising Interactive services (DVB-T, DVB-H) NETWORK OPERATOR Renting of Spectrum on proprietary Digital Terrestrial Transmitting Network to: non-captive TV content provider (DVB-T) mobile operators (DVB-H) PAY TV Premium Content Access through: Pay-per-View Pay-per-Time Pay-per- Category (DVB-T, DVB-H) Digital Terrestrial TV

27 - Free-To-Air TV - Digital Terrestrial TV

28 FTA TV Enhanced TV Offer Program Info live Entertainment Original language Games Additional Tv Streams TV Guide (EPG) Services/ Public Utility Commerce Interactive ADV Teletext Digital Terrestrial TV 28 28

29 FTA TV Multichannel, first FTA Kids Channel Individuals - 24 Hours Kids (4 15) 24 Hours 13.8% 2.1% 10.0% 1.7% May 2005 October 2005 May 2005 October 2005 Source: Auditel Digital Terrestrial TV 29 29

30 FTA TV Multichannel, Home Shopping Channel MediaShopping Direct Marketing Corner Internet C5, I1, R4 Windows Catalogue 24h DTT Channel Production and post Production Facilities Retailing and Marketing Customer Service Delivery and Logistics 120 employed people Around clients 29% Revenues from Publitalia - Telesales - 60 spots From Jan. to Sept (*): average sales per month - 80 euro, average revenue per Sale (*) Canal D, analog FTA Terrestrial Channel with 65% coverage Digital Terrestrial TV 30 30

31 - Network Operator - Digital Terrestrial TV

32 NETWORK OPERATOR Digital Terrestrial Broadcasting Digital Terrestrial Network DVB-T DVB-H Digital Terrestrial Set-Top-Box Mobile Handset, PDA, Portable TV Open Platform Limited Broadcasting Capacity Ideal for FTA Broadcasting Channel multiplication 2 MUX. already hosting 3 rd party channels 4 6 Mbps per channel 4 6 channels per Multiplex Open Platform Tv content can be broadcast in original format and DVD quality Low power consumption for handset Needs only a small antenna kbps per channel channels per Multiplex Digital Terrestrial TV 32 32

33 NETWORK OPERATOR Mobile TV, Possible Business Scheme Content Aggregator Broadcaster Commercial Agreement Mobile Operators Digital terrestrial Network Mobile Network Broadcast Free/PPV Tv Content Return Path Billing Unicast & on-demand Content End Users Digital Terrestrial TV 33 33

34 NETWORK OPERATOR Mediaset Agreements with Mobile Operators Under a non-exclusive Commercial Agreement MEDIASET will provide Mobile Operators with: Network Content Free-to-Air Premium Transmission Capacity on Mediaset DVB-H Network (from September 2006) 3 Generalistic Channels (from September 2006) Mediaset Serie A matches (from September 2006) European Champions League (from September 2006) Digital Terrestrial TV 34 34

35 Pay-per-View MEDIASET PREMIUM Digital Terrestrial TV

36 PAY PER VIEW First Pre-paid card Offer on TV BENEFITS FOR VIEWERS No dish required No Subscription Pay for what you watch Clear and simple technology BENEFITS FOR MEDIASET Focused Investments Defensive Move Driver for DTT Penetration Additional Revenues Credit recharged on the Card 4 1 Credit used watching Mediaset Premium Content Credit sent OTA (Over the Air) to the STB 3 2 Credit Purchased (on-line / off line) Digital Terrestrial TV

37 PAY-PER-VIEW New Mediaset Premium Card Cards 2-size Mediaset Premium card: - 30 Euro (o/w 5 Euro plastic card) - 10 Euro (o/w 5 Euro plastic card), bundled with Set-Top-Box offer Mediaset Premium Club, for Commercial Premises (Pubs & Clubs) Mediaset Premium is available in consumer electronic stores Mediaset Premium Cards will expire 30 th June 2007 Credit Recharge 6 Credit size from 10 Euro to 100 Euro, Recharge fee from 10% to 0%, respectively Credits can be recharged through: - Credit Card calling Mediaset Premium Call Centre or connecting to Mediaset Premium Website - Scratch Cards, available in more than point of sales: - Consumer electronics stores -Kiosk - In Lottomatica and Sisal sale points; recharge codes will be printed directly from terminals Credits have to be activated via a dedicated Call Centre or Website. Digital Terrestrial TV

38 PAY PER VIEW Live Serie A Offer SERIE A 05/ 06 - Mediaset Premium Offer 10 Teams 190 matches in a season 100 Tier 1 matches (4 top Clubs) 90 Tier 2 matches 38 DIRETTA PREMIUM SERIE A season started 28 th August 2005 Juventus Messina Milan Livorno Inter Siena Roma Lazio Sampdoria Treviso Pricing 5 Euro per match 79 Euro, Team Seasonal Ticket + Diretta Premium 99 Euro, All Matches + Diretta Premium 760 Euro Mediaset Premium Club, All Matches + Diretta Premium Digital Terrestrial TV 38 38

39 PAY PER VIEW Movie Offer Movies - Mediaset Premium Offer 4 Movies per day (Monday Friday) Titles in 05/ 06 season Movies are available with: Original Language Subtitles 5.1 Dolby Digital Audio PPV From 2 Euro (library) to 4 Euro (1 st run on TV) Movie Offer started 28 th August 2005 First window available on TV Box Office months DVD Sale DVD Rental PAY per VIEW PAY TV FTA TV Digital Terrestrial TV 39 39

40 PAY PER VIEW Mediaset Premium. Coming up! Reality Shows Concerts Fiction Comic shows Theatre plays Musical from September 2006: all UEFA Champions League matches Others coming up! Digital Terrestrial TV 40 40

41 MEDIASET PREMIUM Update on PPV Take off From 15 th July 2005 to.. 3Q st October 2005 Mediaset Premium Smart Cards Sold to Retailers N Recharges sold to Retailers Cashed in 49.2 ml Euro 55.0 ml Euro PPV Revenues Recognized 6.8 ml Euro Digital Terrestrial TV

42 MEDIASET DTT Project Development DTT Penetration PHASE 3 (2006) PHASE 2 (2H2005) PHASE 1 (1H2005) Mobile TV Business (DVB-H) Pre-paid card and MHP Integration Introduction of other pre-paid funcions (Es. Pay per time) Launch of new PPV Content (Reality, Movies, etc.) Introduction of Seasonal Ticket or Package Ticket Launch of Rechargeable cards Launch of PPV Offer on a Key content (Soccer) Launch of a new theme channel (Boing) Launch of DTT Platform Creation of a Digital Terrestrial Infostructure Digital Terrestrial TV

43 Financials

44 MEDIASET GROUP Leading Indicators ( ml.) (4) Ebit Margin (ROS) (1) (%) 28.1% 30.8% 26.1% 25.2% 28.0% 33.7% Net Profit ( ml.) Free Cash Flow (2) ( ml.) Earnings per Share ( ) Dividend per Share ( ) Distributed Dividend ( ml.) Pay-out Ratio (%) 64% 67% 67% ( 3) 68% 74% 81.7% (5) (1): Italian TV Operations (2): Italian Business, excluding Associates Investments and Tele5 Dividend (3): excluding Kirch Media extraordinary provisions (4): IAS/IFRS (5): 89.7% before IAS/IFRS 44 44

45 MEDIASET Use of Cash: FCF vs Dividends (FCF from Core Activities; IAS/IFRS from 2004) 448,7 448,9 370,5 FCF Dividend 216, ,2 247,8 219,8 247,4 282,9 271,3 123,

46 Investing in the Digital TV Future 5 th Annual TMT Conference Barcelona, Spain 17 th -18 th November 2005