• Premiere, its bank syndicate and News Corp have agreed on a new long-term financing structure
• Renegotiated debt facilities of €525m conditional on new equity of €450m
• €450m rights issues to be backstopped by News Corp
• News Corp’s commitment is subject to certain conditions, most importantly to the availability of the new debt facilities and an exemption by BaFin from the requirement to submit a mandatory takeover offer in the event News Corp’s shareholding in Premiere reaches or exceeds 30 percent
• A leading independent international public accounting firm has confirmed the need for financial restructuring and the feasibility of the new business plan
• Premiere to make considerable investments in programming, customer facing technology, marketing and customer service to enhance the offer and attract new subscribers
• In 2009 negative cash flow in a range of €250m to €275m and significant EBITDA loss expected
• Proceeds of the capital increase will be used to execute new strategic plan with expected EBITDA and cash flow break-even by the end of 2010
• Premiere targets to be profitable from 2011 onwards

Munich, 23 December 2008  Premiere, its bank syndicate and News Corp agreed on a new financing structure to secure Premiere’s funding needs. This would enable Premiere to implement its new business plan resulting from the strategic review. The business plan is designed to secure the future of the company by growing the number of monthly contract subscribers and increasing their average program revenue per subscriber to achieve sustained profitability. News Corp and the bank syndicate fully support the financial restructuring based on the business plan.

Mark Williams, CEO of Premiere AG: “The successful implementation of the financing structure that we have agreed with our bank syndicate and News Corp is a prerequisite to the survival of Premiere. Following the recapitalization, we will make investments in the programming offer, customer facing technology, marketing and customer service to enhance the company’s offer and attract new customers.”

Under the new financing arrangement, the existing debt facilities would be replaced by new long-term facilities with a total amount of €525m, conditional upon two capital increases which are intended to provide Premiere with new equity in the amount of €450m.

The first capital increase, which is intended to satisfy short-term funding needs, is structured as a rights offering and involves the issue of up to approximately 10.2m shares of authorized capital and is expected to raise at least €25m. News Corp has agreed to take up such number of shares at a minimum subscription price of €3.19 to ensure gross proceeds of not less than €25m without increasing its shareholding above 29.9 percent. The bank syndicate has also agreed to provide up to an additional €25m short-term bridge funding in January 2009 which will be reduced to the extent the proceeds of the first capital increase exceed €25m. These short-term financing measures in combination are intended to provide €50m to satisfy funding needs through to the completion of the second capital increase.

The second capital increase, which will also be structured as a rights issue, is intended to raise the amount necessary in order to reach a total of €450m new equity. News Corp has agreed to backstop the second equity raising. This commitment is subject to certain conditions, most importantly the availability of the new long-term bank facilities and an exemption from the requirement to submit a mandatory takeover offer by BaFin in the event News Corp’s shareholding in Premiere reaches or exceeds 30 percent. News Corp’s commitment is further subject to the absence of a material adverse change in Premiere’s business and the subscription price being at €1, the legally required minimum price or a higher price agreed between Premiere and News Corp prior to the second rights offering. The second capital increase will require the approval of an extraordinary shareholders’ meeting which is planned for the first quarter of 2009. News Corp has agreed, subject to certain conditions, to vote in favor of the capital increase. Premiere expects to receive the funds from the second capital increase in the second quarter of 2009.

The replacement debt facilities of €525m consist of a term loan of €275m with a duration until December 2013 and a revolving credit and guarantee facility of €250m, with a duration until June 2013.

New long-term financing to ensure Premiere continues as a going concern
Due to Premiere’s negative operating profits and cash flows, the company was unable to remain within its financial covenants, resulting in the need to obtain a waiver from its lenders. Without a new financing agreement, Premiere’s bank syndicate could have requested immediate repayment of the existing bank facilities at expiry of the covenant waiver. This could also occur in the event that the new financing agreement cannot be implemented due to non fulfillment of any of the conditions.

A leading independent international public accounting firm has confirmed the need for restructuring. It has also reviewed and confirmed the feasibility of Premiere’s new business plan as supported by the new financing arrangements.

Premiere to make considerable investments in programming, customer facing technology, marketing and customer service
The new business plan is based on a fundamental overhaul of the business in order to reach sustainable growth and profitability. It comprises four core elements:
First, Premiere will invest in improving its programming offer by expanding the number and variety of channels as well as increasing the high definition offering.

Second, Premiere will invest in customer facing technology to improve usability and convenience of the overall service. A step change in navigation and the introduction of user friendly PDR type recording devices will dramatically increase the usability of the service and thus the subscriber experience.

Third, Premiere will adopt a clear and simple package and pricing structure and migrate all subscribers to this new structure. The new packaging and pricing will be based on a buy-through model where all subscribers first access the breadth and compelling variety of programs and channels available on Premiere, then have the possibility to access additional premium movies and sports packages. The migration of subscribers to the new packaging structure will considerably reduce complexity and costs as well as enabling much more effective customer communications.

Fourth, Premiere will overhaul the customer experience by reducing complexity at every step and delivering faster and more responsive customer service.

In order to accelerate monthly contract subscriber growth, these changes will be supported by significantly enhanced marketing and sales execution by optimizing retail sales, including merchandising and promotional support, and developing direct sales channels.

EBITDA and cash flow targeted to break even by the end of 2010 and profitability targeted from 2011 onwards
The subscriber base has remained broadly stable during Q4 2008 as stronger sales compared to Q4 2007 were offset by the loss of heavily discounted and Flex subscribers. Whilst the loss of these subscribers with a low average return per subscriber (“ARPU”) has increased average ARPU of the customer base, churn for Q4 will be slightly higher than in Q3 as a result.

For 2008, Premiere expects a reported EBITDA loss in the range of €40m to €60m. The 2008 EBITDA result includes one-time gains of approximately €60m. Net debt at the end of 2008 is expected to increase to approximately €320m from €307m at the end of the previous quarter.

In order to cover operating losses and to make the necessary investments, considerable funds will be required in 2009. Thus Premiere expects a negative cash flow in the range of €250m to €275m and a significant EBITDA loss in 2009. Revenue growth is expected to be limited to approximately €50m in 2009, excluding the impact from divesting Home of Hardware. Additional expenditure is necessary in 2009, comprising approximately €35m additional costs of Bundesliga and sports programming, an increase in other programming costs of approximately €40m, additional sales & marketing costs of approximately €65m and higher transmission and other costs of approximately €10m.

Premiere targets to achieve EBITDA and cash flow break even by the end of 2010 and to be profitable from 2011 onwards.

First capital increase from existing authorized capital to fund short-term liquidity needs
The first capital increase will make use of the existing authorized capital and increase the registered share capital of Premiere by up to 10,226,636 shares from 112,460,000 to 122,683,636 shares.
Existing Premiere shareholders will be granted subscription rights with a subscription ratio of 1 new share for each 11 existing shares. The minimum subscription price will be €3.19 per new share. It will be increased if the volume-weighted average share price of Premiere from the beginning of the subscription period on 30 December 2008 until close of trading on 8 January 2009, less a discount of 2 percent, is higher than €3.19. The final subscription price will be published on 8 January 2009 after close of trading.

The subscription offer for the first capital increase will be published on 29 December 2008 and will be available on Premiere’s website. The subscription period is expected to begin on 30 December 2008 and to end on 12 January 2009. No subscription rights trading and therefore no public offer will take place. The new shares are expected to be included in trading on 15 January 2009.
ABN AMRO Bank N.V. and UniCredit (Bayerische Hypo- und Vereinsbank AG) will lead manage the first capital increase. The parent company of ABN AMRO Bank N.V., The Royal Bank of Scotland plc, and UniCredit (Bayerische Hypo- und Vereinsbank AG) are also lenders to Premiere AG.

Premiere has been advised by Lazard in negotiating the long-term financing agreement.

Contact for press:
Torsten Fricke
Vice President Corporate Communications
Tel.: +49 89/99 58-63 50
torsten.fricke@premiere.de

Contact for investors and analysts:
Christine Scheil
Vice President Investor Relations
Tel.: +49 89/99 58-10 10
christine.scheil@premiere.de

This press release contains statements regarding future developments that have been based on current evaluations and have been made to best of the knowledge of the management of Premiere AG. Such statements with regard to future developments are subject to known and unknown risks, uncertainties and other factors that could cause the profit situation, profitability, value development or the performance of Premiere AG or the success of the media industry to diverge from those profit situations, profitability, value development or performance results that are assumed expressly or implied or described in these statements regarding the future. Considering these risks, uncertainties and well as other factors, readers of these documents should not rely in an incommensurate manner on these statements dealing with future developments. Premiere AG has no obligation to behave in keeping with such statements regarding future developments or to alter its behavior to accommodate future events and developments.