Q1 2008: Premiere increases revenues to EUR 251.5 million

Thursday, May 15th, 2008 

MUNICH — In Q12008 Premiere’s (PRE.XE) revenues climbed up by 12.1 percent to EUR 251.5 million (Q1 2007: EUR 224.3 million). Operating expenses rose to EUR 248.6 million (EUR 186.6 million), mainly due to payments for the sublicense for the broadcasting of Bundesliga football and currency fluctuations. EBITDA (earnings before interest, taxes, depreciation and amortization) stood at EUR 2.8 million (EUR 37.8 million). The net result was a negative EUR 28.1 million (EUR 4.5 million).

Q1 2008 performance was affected in particular by piracy. The gap in the encryption system slowed down revenues and subscriber growth. As of March 31, 2008, Premiere had 4,242,467 subscribers (March 31, 2008: 3,460,572), of which 621,908 were indirect arena customers. Compared to Q1 2007 figures, the number of direct subscribers rose by 4.6 percent to 3,620,559. Compared to last year’s year-end figures, Premiere registered a slight decrease of 36,204 customers (December 31, 2007: 4,278,671). The circumvention of the encryption system slowed down new business in particular. In the reporting period, Premiere gained 140,447 new direct subscribers; that is 76,585 fewer or 35.3 percent less than in the same quarter last year (Q1 2007: 217,032).

Michael Börnicke, CEO of Premiere AG: “Q1 2008 results met our expectations. As in Q4 2007, our operating result was affected by criminal hackers. The gap in our encryption system influenced revenues and subscriber numbers. By the end of Q3 2008, we will have resolved this issue. I am anticipating strong growth once we have implemented a new and secure encryption system.”

In the first months of 2008, Premiere established the basis for sustained growth in all key areas. The company is following a dual strategy to combat criminal hackers. In Q2 2008, alongside a new version of Nagravision, Premiere will introduce the encryption technology NDS Videoguard® for the satellite transmission of its pay-TV programming. Premiere is taking this step to protect its exclusive film and sports programming by using the latest developments of the two leading providers of encryption technology worldwide. All new receivers will be equipped with NDS Videoguard®. Premiere concluded a contract with the NDS group for the satellite transmission of its pay-TV programming on March 31, 2008.

In addition to using the best technology available to prevent illegal reception, Premiere is taking all legal action possible. Premiere scored an important victory in early May when the Munich-based premium pay-TV operator obtained an injunction from the Hamburg District Court against the import of specific patchable free-to-air receivers. Premiere is also preparing to take comprehensive legal action for damages against the importer and against all individuals involved in these dealings. After this partial victory Premiere will continue its efforts and take all legal steps against these criminal actions.

Contract with Kabel Deutschland extends distribution through 2012

Premiere has achieved a great level of planning security for the future with the signing of a new contract with Kabel Deutschland (KDG): Premiere has secured cable distribution through 2012 for its programming in about nine million TV households in the 13 German states where Kabel Deutschland operates. This includes the HDTV packages and all pay-per-view and video-on-demand services. Premiere will continue to maintain its customer relations and customer services in the KDG territory directly.

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