Half Results Sanford C. Bernstein Fourth Annual Strategic Decisions Conference 2007 London, 26 th September 2007 1
Entertaiment Industry What has changed Technological Innovation is changing consolidated entertainments models Increase in the personalisation of the different forms of entertainments Increase in demand of premium content Audience is increasingly spreading across a multitude of different channels, internet site and free press and distribution platform such as mobile phones and even video games. Long Tail Effect of the modern entertainment 2
Traditional Broadcaster Macro Strategic Options 1. Pure Content provider and Content packager focus on the product low level of vertical integration platform agnostic 2. All-round Media Company Shift from product to client/viewer vertical integrated Access management 3
Mediaset Inclination towards Media Company Entrepreneurial approach First to understand importance of developing its business model on an international scale Control of the broadcasting infrastructure First among FTA Broadcaster to get into the Pay-TV market Recent acquisition on the Content side (Endemol, Medusa) Natural inclination towards Media Company 4
Entertaiment Industry The Long Tail Effect Impacts on the audience market Audience + - Generalistic Content Theme Content Niche Content Mass Market Audience Fragmented Audience Long Tail Audience Concentration Fragmentation 5
Entertaiment Industry The Audience Market Two main business models have proven to co-exist Audience Mainly Advertising (Analog/digital) Mainly Pay-TV(digital) Generalistic Content Mass Market Audience Theme Content Fragmented Audience Niche Content Long Tail Audience Concentration Fragmentation 6
Entertaiment Industry Mediaset s strategic approach Audience FTA TV: C5, I1, R4 (Mediaset Core Business) Multichannel: Boing, others to come Pay TV: Football, Movies, Series, others Generalistic Content Mass Market Audience Concentration Theme Content Fragmented Audience Niche: Home Shopping, Internet, Mobile, PCTV, VOD, User Generated Content Niche Content Long Tail Audience Fragmentation 7
FREE TO AIR MULTICHANNEL PAY TV NICHE CONCLUSIONS 8
Mediaset s Approach FreetoAir Television 24 hours Audience Share: Figures include analog, satellite (incl. SKY Italia homes) and DTT platforms 1H 2006 1H 2007 INDIVIDUALS 43.9% 41.6% 40.7% 41.1% COMMERCIAL TARGET (15-64 Years) 40.1% 43.0% 37.4% 43.6% Source: Auditel excl. SanRemo 9
Mediaset s Approach Free to Air Television Prime Time Audience Share (20:30-22:30) Figures include analog, satellite (incl. SKY Italia homes) and DTT platforms 1H 2006 1H 2007 INDIVIDUALS 45.4% 43.7% 40.9% 41.2% COMMERCIAL TARGET (15-64 Years) 42.6% 43.0% 40.9% 43.4% Source: Auditel excl. SanRemo 10
Mediaset s Approach Free to Air Television Sky Italia Audience Share: April June, 24 hours Individuals Audience Share (%) Sky Channels Fox Channels RAI SAT Discovery Channels SitCom Channels Other FTA Satellite TOTAL SATELLITE 2,6 0,7 0,2 0,2 0,1 5,6 9,4 1 channel audience > 0,5 16 channels audience 0,1 0,5 58 channels audience < 0,1 Source: Auditel 11
FREE TO AIR MULTICHANNEL PAY TV NICHE CONCLUSIONS 12
Mediaset s Approach Multichannel Boing Audience: First Kids Channel Individuals (Dtt) - 24 Hours Kids 4 14 (Dtt) 24 Hours 1.9% 9.9% 8.6% 1.1% September 06 September 07 September 06 September 07 Source: Auditel 13
Mediaset s Approach Multichannel Boing Audience: First Kids Channel Individuals - 24 Hours Kids (4 14) 24 Hours Boing 0.35 Boing 2.53 Disney Channel 0.33 Disney Channel 2.36 Playhouse Disney 0.24 Playhouse Disney 1.42 Disney Channel +1 0.16 Disney Channel +1 1.20 RaiSat Yoyo 0.06 RaiSat Smash 0.42 RaiSat Smash 0.05 RaiSat Yoyo 0.30 Source: Auditel, September 07 14
Mediaset s Approach Multichannel Further implementation of the family of channels strategy on DTT, in order to: Take advantage from the ongoing audience fragmentation Satisfy the viewers multichannel demand Build a multichannel offer at no incremental cost: new channels will mainly feature re-runs Further exploitation of existing library and production 15
FREE TO AIR MULTICHANNEL PAY TV NICHE CONCLUSIONS 16
Mediaset s Approach Pay TV Mediaset Premium Pay-TV present offer: FOOTBALL MOVIES SERIES REALITY SHOWS live broadcast of Serie A and UEFA Champions League matches the most recent international blockbusters the latest episodes of America s most famous Series 24 hours coverage of the currently playing shows OTHER EVENTS theater plays, concerts 17
Mediaset s Approach PayTV Mediaset Premium smart cards and recharges sale performance*: 000 s 10.000 9.000 8.000 7.000 6.000 5.000 4.000 3.000 2.000 1.000 1.282 1.438 2.048 1.798 2.628 1.922 2.730 1.951 2.820 4.338 2.092 2.369 5.380 2.574 6.266 End of Phase 1 2.794 6.911 7.933 2.918 8.202 2.998 1.561 9.188 1.994 9.413 2.135 0 Aug. Dec '05 Feb '06 Apr Jun '06 Aug Oct. Dec '06 Feb '07 Mar Jun '07 July '07 Aug 16/09/2007 SmartCard Sold to retailers Recharges Sold to retailers 18
FREE TO AIR MULTICHANNEL PAY TV NICHE CONCLUSIONS 19
Mediaset s Approach NicheAudience Home Shopping Internet based platform Digital Merchandising (VAS) Mobile Participation TV DVB-H / UMTS coming soon Merchandising Music 20
Mediaset s Approach Home Shopping Mediaset s home shopping business: Direct Marketing Retail Internet C5, I1, R4 Windows 24h Channel on Dtt & Satellite Catalogue and Print Production and post Production Facilities Retailing and Marketing Customer Service Delivery and Logistics Over 20 ml tv contacts each day Over 1.3 ml clients 60% Revenues from Windows and 24h Channel From Jan. to Sept. 2007: - 30.000 average orders per month - 100 euro, average revenue per order 21
Mediaset s Approach Internet platform Through internet platform Mediaset offers: MULTIPLATFORM NEWS SERVICE COMMUNITIES and USER GENERATED CONTENT VIDEO ON DEMAND 22
Mediaset s Approach Internet platform TGCOM provides real time news through its website and its mobile update service MULTIPLATFORM NEWS SERVICE Unique Users: 4.400.000 per month Page Impressions: 147.000.000 per month Source: Nielsen NetRatings 23
Mediaset s Approach Internet platform COMMUNITIES and SELF GENERATED CONTENT Unique Users: up to 3.600.000 per month Page Impressions: up to 100.000.000 per month 120 SECONDS 120 SECONDS Wanna-be reporters can share and publish their work on this section of the TGCom website 6 COME 6 6 COME 6 Viewers can shoot their own Italia 1 channel promotional video. The best works will be broadcast on FTA LE IENE LE IENE On the website of one of Mediaset most popular tv shows people can share funny videos and candid cameras TALENT 1 TALENT 1 Singers, dancers and young film directors can promote themselves by sharing their perfomance samples on the web Source: Nielsen NetRatings 24
Mediaset s Approach Internet The best content from all Mediaset platforms is also available on demand through its PC Television service VIDEO ON DEMAND Unique Users: up to 1.200.000 per month 45 million videos watched and 350.000 new unique users since launch in April 2007 DOWNLOAD AND PLAY Content available for download upon payment (e.g. TV Series: EUR 1.99 per episode) STREAMING WITH ADVERTISING Content can be viewed on line with advertising windows Source: Nielsen NetRatings 25
Mediaset s Approach Internet Video on demand: current content offer Italian Fiction Italian Fiction Carabinieri, Distretto di Polizia, American American TV TV Series Series The Closer, The OC, Smalville, Nip/Tuck Live Football Live Football Matches Matches Movies Movies The Serie A league 3 most exciting matches of the day National and international blokbuster movies Entertainment Entertainment shows shows Re-runs of Mediaset s best entertainment programming 26
Mediaset s Approach Mobile Big Brother: more than 80.000 videos downloaded during the last edition ACCESS CONTENTS One integrated offer of textual and audiovisual content: developed as a wap-based mobile site delivered via the Mobile Operators portals under one umbrella brand Mediaset.it TV services: program guide, indepth information, programming Videos from the best TV shows: Grande Fratello, Amici, Scherzi a Parte.. Videonews: Tg5, Tgcom, Studio Aperto 27
Mediaset s Approach Mobile (DVB-H) Transmission Network Content - 3 Commercial Channels - Series A Championship - Champions League - 3 Commercial Channels - Series A Championship - Boing (kids channel) 28
FREE TO AIR MULTICHANNEL PAY TV NICHE CONCLUSIONS 29
Conclusions Mediaset s Strategic Priority Focus on Core Business Enhance the value of specific target audience and emphasize the uniqueness of commercial TV target Consolidate the present programming cost discipline Increase exploitation of our brand and content Enhancing Multichannel strategy (FTA) Increasing premium content (PPV) Enlarge DTT platform Test valuable business model in the niche audience area (independently from the platform) Opportunistic approach in M&A CONTENT GEOGRAPHY ACCESS 30
Half Results Sanford C. Bernstein Fourth Annual Strategic Decisions Conference 2007 London, 26 th September 2007 31
Investor Relations Department: Tel: +39 02 2514.7008 Fax: +39 02 2514.6719 Email: ir@mediaset.it WebSite: www.gruppomediaset.it/investor/ Forward-looking Statements Statements contained in this document, particularly the ones regarding any Mediaset Group possible or assumed future performance, are or may be forward looking statements and in this respect they involve some risks and uncertainties. Mediaset Group actual results and developments may differ materially from the ones expressed or implied by the above statements depending on a variety of factors. Any reference to past performance of Mediaset Group shall not be taken as an indication of future performance. This announcement does not constitute an offer to sell or the solicitation of an offer to buy the securities discussed herein. 32