3rd quarter 2007: Premiere posts EBITDA of EUR 22.0 million and increases subscriber numbers to 4.17 million

Tuesday, November 6th, 2007 

Upward trend continues, key figures improve on Q2 2007:
“¢ Revenues up 8 percent to EUR 247.5 million
“¢ EBITDA doubled to EUR 22.0 million
“¢ Net income increase from negative EUR 32.6 million to EUR 0.1 million
“¢ Net growth of 700,221 customers, 4.173 million subscribers on September 30, 2007:
  – 3.531 million direct customers, up 57,992
  – 642,229 indirect Bundesliga subscribers through arena and Unitymedia
“¢ Positive operating cash flow of EUR 3.0 million

Forecast 2007:
“¢ 3.7 million direct Premiere subscribers, about 0.7 million through arena and Unitymedia
“¢ Revenues forecast to hit EUR 1 billion
“¢ EBITDA expected between EUR 80 million and EUR 100 million

MUNICH — Premiere continued the upward trend in the 3rd quarter 2007: the pay-TV operator posted an operating profit and substantially increased its subscriber numbers. Revenues topped the 2nd quarter 2007 figure by 8 percent reaching EUR 247.5 million (Q2 2007: EUR 229.1 million), operating costs grew slightly to EUR 225.5 million (EUR 218.9 million). Premiere managed to more than double EBITDA quarter-on-quarter: earnings before interest, taxes, depreciation and amortization were up EUR 11.8 million to EUR 22.0 million (EUR 10.2 million). After a net loss of EUR 32.6 million in the 2nd quarter 2007, Premiere achieved a balanced result with a net income of EUR 0.1 million in the 3rd quarter – a significant jump of EUR 32.7 million. A tax income of EUR 12.8 million contributed to the improvement in performance, which resulted from the necessary revaluation of deferred taxes due to the corporate tax reform 2008.

There was a clear increase in subscriber numbers quarter-on-quarter (3,473,174 on June 30): with a net growth of 700,221 customers in the 3rd quarter 2007, Premiere registered 4,173,395 subscribers as of September 30. Of this figure, Premiere serviced 642,229 indirectly with Football Bundesliga through the arena satellite platform and the cable platforms of Unitymedia and Kabel Baden-Wuerttemberg. The number of direct Premiere subscribers grew by 57,992 to 3,531,166. Year-on-year, Premiere also managed to increase subscriber numbers, going up 4.7 percent in direct subscriber numbers compared with Q3 2006 (3,372,932).

Michael Börnicke, CEO of Premiere AG: “I am pleased with the overall results of the 3rd quarter 2007, Premiere has continued the upward trend. After focusing on stabilizing customer relations in the past few quarters, Premiere was also able to increase revenues in the 3rd quarter. Premiere’s posting an operating profit and the positive operating cash flow of EUR 3.0 million are also very satisfactory.”

Revenues up 8 percent to EUR 247.5 million, costs rise slightly to EUR 225.5 million

In the 3rd quarter 2007, Premiere registered an 8 percent increase in revenues to EUR 247.5 million (Q2 2007: EUR 229.1 million). Operating costs increased slightly quarter-on-quarter to EUR 225.5 million (EUR 218.9 million).

Programming costs were reduced by EUR 10.9 million to EUR 133.2 million (Q2 2007: EUR 144.1 million.) Marketing and sales costs increased, primarily on account of the broadly based Bundesliga campaign, to EUR 32.9 million (EUR 23.3 million). In hardware, costs increased to EUR 35.8 million (EUR 26.4 million), due, among other things, to the sale of interactive digital receivers. Customer management costs were stable at EUR 15.7 million (EUR 15.1 million). Transmission and technology costs increased slightly to EUR 23.7 million (EUR 22.1 million), general administrative costs decreased to EUR 13.3 million (EUR 15.9 million). Depreciation on operating assets stood at EUR 11.3 million (EUR 11.0 million). Amortization of the subscriber base was at EUR 12.1 million, as in the previous quarter.

Successful launch of Premiere Star: 105,000 customers after the first month

Premiere Star, Premiere’s first pay-TV package distributed exclusively via satellite, was launched in early September. Premiere Star bundles and markets existing and new pay-TV channels, including high-quality theme channels for every age and all interests. With currently 14 channels, Premiere Star offers first-class contents, including live US sports, comedy, children’s programming for all ages, feature film highlights, lifestyle and entertainment. The new package got off to a good start: within one month Premiere had marketed around 105,000 Premiere Star subscriptions to existing and new customers. Premiere aims to attract 200,000 Premiere Star customers per year.

Extended contracts with key partners ensure programming exclusivity
“¢ Output deal with Paramount extended
“¢ Formula One rights secured until end of 2010
“¢ TV contract with Deutsche Eishockey Liga extended ahead of time to 2012

Premiere has extended its output deal with Paramount Pictures, securing its position as the leading pay-TV operator: with this extended agreement, Premiere now has long-term contracts with all major Hollywood studios. The output deal with Paramount guarantees Premiere the exclusive first broadcasting rights for all blockbusters and the most important TV productions of the studio. The contract comprises the broadcasting rights for all important transmission modes: satellite, cable, IPTV and mobile devices.

In sports, Premiere also managed to secure important rights and will remain the only German TV operator to show all Formula One races live and without commercial breaks for the next three years. Premiere has closed a corresponding deal with the Formula One Management (FOM) of Formula One boss Bernie Ecclestone. The agreement extends to the end of 2010 and grants the pay-TV operator the exclusive pay-TV rights for all platforms (cable, satellite, IPTV, internet and mobile) for Germany, Austria and Switzerland. Starting next season, Premiere will also be the first German TV operator to offer Formula One on a pay-per-view basis as a live stream on the Internet on vod.premiere. For the next five years, Premiere will also be covering the top German ice hockey league live and exclusively. The contract with the Deutsche Eishockey Liga (DEL) was extended ahead of time up to the end of the 2011/2012 season. Until 2012, Premiere will be showing 750 hours of live coverage of Germany’s top ice hockey league.

Forecast 2007:
“¢ 3.7 million direct Premiere subscribers, about 0.7 million through arena and Unitymedia
“¢ Revenues forecast to hit EUR 1 billion
“¢ EBITDA expected between EUR 80 million and EUR 100 million

By year end 2007, Premiere forecasts 3.7 million direct Premiere subscribers with an additional figure of around 0.7 million customers who receive the Bundesliga by Premiere through the arena and Unitymedia platforms. For the business year 2007, Premiere expects revenues to hit EUR 1 billion. Börnicke: “In the 3rd quarter, Premiere promoted sales of top tier package combinations by offering purchase incentives. 70 percent of customers who ordered a Bundesliga subscription, for example, opted for a Komplett package. Although a large portion of the revenues will only start coming in in the 4th quarter on account of the purchase incentives, this move has strengthened our basis for long-term revenue growth.” EBITDA of between EUR 80 million and EUR 100 million is expected.

Outlook 2008

Premiere expects continued positive business development in the year 2008. Börnicke: “Our objective is sustainable growth and Premiere is in the best position to achieve this. The extended contracts with key licensors strengthen our position as the leading pay-TV operator in Germany and Austria. Premiere has all the premium pay-TV rights and we market these nationwide through all the relevant transmission means. The accelerated digitization of TV households opens up new additional growth potential which Premiere will benefit from directly.”

In the bidding process for the Bundesliga rights scheduled to commence in April 2008, Premiere sees good chances to achieve more exclusivity. Börnicke: “The bidding process will begin much later than expected and an agency has been commissioned to manage the process. We cannot rule out that this new development could impact potential and existing subscriber behavior. We want to keep an eye on this development before updating our forecast for 2008. We plan to publish the update with reporting the annual figures 2007 on February 14, 2008.”