Nine month results 2005: Premiere increases EBITDA to EUR 109.8 million with net income of EUR 52.0 million

• Net income for the first time positive for a nine month period:
  Net earnings increase from a loss of EUR 55.8 million to a profit of EUR 52.0 million
• EBITDA grows by 70.8 percent to EUR 109.8 million
• Total revenues increase from EUR 719.7 million to EUR 778.7 million
• Revenues from core business rise by 12.9 percent reaching EUR 733.5 million
• 3,409,513 subscribers as at September 30, 2005
• Operating costs remain stable at EUR 668.9 million

3rd quarter 2005:
• Net income jumps from EUR 5.4 million to EUR 48.7 million
• EBITDA grows from EUR 43.6 million to EUR 60.6 million
• Total revenues increase from EUR 242.2 million to EUR 272.6 million
• Revenues from core business rise by 15.1 percent to EUR 254.6 million

Outlook for total year 2005:
•  3.55 to 3.60 million subscribers by the end of 2005
• Total revenues of over EUR 1.1 billion
• EBITDA forecast raised to between EUR 130 million and EUR 140 million
• CEO Georg Kofler: “Premiere is now well positioned to achieve its full year goals”

Munich, November 8, 2005. In the first nine months of 2005 the German pay-TV operator Premiere achieved strong growth in revenue and earnings. The EBITDA (earnings before interest, taxes, depreciation and amortization) improved by 70.8 percent against last year to reach EUR 109.8 million (9M 2004: EUR 64.3 million). Even after depreciation, amortization and before taxes and interest, earnings increased substantially: Premiere achieved EBIT of EUR 49.7 million (EUR 5.3 million). For the first time, Premiere posted positive net earnings over a nine month period: the pay TV operator attained net income of EUR 52.0 million. In the same period last year, there was a net loss of EUR 55.8 million. Earnings per share were up from minus EUR 1.19 to plus EUR 0.66. On the basis of the successful development in the 3rd quarter, Premiere confirms the forecast of between 3.55 and 3.60 million subscribers by the end of 2005. In addition, the EBITDA forecast range for the full year has been raised to between EUR 130 million and EUR 140 million. The previous range lay between EUR 110 million and EUR 140 million.

Revenues from the core business of program subscriptions, pay-per-view and advertising increased by 12.9 percent to reach EUR 733.5 million (EUR 649.4 million), and total revenues increased by 8.2 percent from EUR 719.7 million to EUR 778.7 million. Operating costs remained stable at EUR 668.9 million (EUR 655.4 million). During the first nine months of 2005, the number of Premiere subscribers increased by 162,341, totaling 3,409,513 customers on September 30, 2005. This means that Premiere has experienced much stronger growth than in the first nine months of 2004 (102,514). In a year-on-year comparison (September 30, 2004: 3,010,405) the pool of subscribers increased by 399,108 – representing an increase of 13.3 percent. The subscriber structure of Premiere is high quality: 88 percent of all customers subscribe to a premium package. The share of PREMIERE KOMPLETT subscribers rose from 17 percent in prior year to 32 percent as at 30 September 2005. 12 percent of customers subscribe to PREMIERE START.

Dr. Georg Kofler, CEO of Premiere AG: “Premiere made significant progress in the first 9 months of 2005 – in the operating business, in the strategy structure and in the financial results. The positive developments in the 3rd quarter make us increasingly confident of achieving the challenging full year targets that we set. Premiere is well prepared for the 2005 Christmas season. We are expecting net subscriber growth of between 150,000 and 190,000 in the 4th quarter 2005.”

Dynamic growth in 3rd quarter 2005:
• Net income jumps from EUR 5.4 million to EUR 48.7 million
• EBITDA climbs from EUR 43.6 million to EUR 60.6 million
• Total revenues increase from EUR 242.2 million to EUR 272.6 million

The positive results from the 3rd quarter 2005 contributed significantly to the good results of the first nine months. Net earnings improved dramatically from EUR 5.4 million to EUR 48.7 million. EBITDA increased by 38.9 percent to EUR 60.6 million (Q3 2004: EUR 43.6 million). Buoyed along by the 96,373-strong increase in subscriber numbers in the third quarter, core business revenues from program subscriptions, pay-per-view and advertising grew by 15.1 percent to EUR 254.6 million (EUR 221.3 million). Total revenues increased by 12.5 percent to EUR 272.6 million (EUR 242.2 million). Due to higher programming and marketing expenditure, operating costs increased slightly to EUR 212.0 million (EUR 198.6 million). After depreciation and amortization, Premiere achieved EBIT of EUR 39.9 million (EUR 24.0 million).

First 9 months 2005: Core business grows by 12.9 percent to EUR 733.5 million
• Revenues from program subscriptions rise by EUR 77.0 million to EUR 680.6 million
• Pay-per-view revenues climb to EUR 22.3 million
• Advertising revenues rise by EUR 5.8 million to EUR 30.6 million
• Churn rate drops to 11.9 percent

Despite the continuing difficult economic environment, Premiere’s core business of program subscriptions, pay-per-view services and advertising grew strongly in the first nine months of 2005. Revenues rose by EUR 84.0 million to EUR 733.5 million (9M 2004: EUR 649.4 million) - representing an increase of 12.9 percent. 

Revenues from program subscriptions climbed by 12.8 percent to EUR 680.6 million (EUR 603.6 million). The churn rate dropped from 16.0 percent to 11.9 percent. Due to seasonal effects Premiere is anticipating a churn rate for the whole year of between 13 and 13.5 percent.

Pay-per-view revenues increased by 6.0 percent to EUR 22.3 million (EUR 21.0 million), revenues from advertising grew by 23.3 percent to EUR 30.6 million (EUR 24.8 million). Premiere was able to compensate for the loss of revenues from print advertising as a result of the discontinuation of Premiere's program guides in spring 2004 through increases in revenues from TV advertising and direct marketing. With the launch of the new customer magazine “Premiere” on October 1, 2005, Premiere is once again set to generate revenues from print advertising. 

Revenues from hardware and technology sales, which are not part of the core business, continued to decline as planned. Income from receiver rentals and sales fell to EUR 37.1 million (EUR 49.8 million), other revenues fell to EUR 8.1 million (EUR 20.5 million).

Healthy cost structure
Despite the double digit percentage growth in revenues from the core business, operating costs for the first nine months increased only slightly by 2.0 percent to EUR 668.9 million (EUR 655.4 million). There are two exceptional effects contained in the operating costs: The IPO costs of EUR 9 million incurred in the first quarter are offset by the positive effects arising from the outsourcing of various business units in the third quarter as described below. The depreciation on operating assets stood at EUR 23.9 million (EUR 22.8 million). Amortization of subscribers stood as planned at EUR 36.2 million, as in the previous year.

Balance sheet substantially improved:
• Ratio of equity to total assets rises to 60.8 percent
• Net debt reduced substantially from EUR 370.2 million to EUR 119.7 million

Premiere balance sheet has improved substantially following its successful IPO and excellent results. The sharp increase in equity of EUR 382.5 million, as on September 30, 2005, to a total of EUR 801.4 million (December 31, 2004: EUR 418.9 million) was due in particular to the capital increase from the IPO. Equity was further increased by net income of EUR 52.0 million. The ratio of equity to total assets at the end of the 3rd quarter 2005 stood at 60.8 percent (2004: 32.3 percent). Net debt fell in the first nine months from EUR 370.2 million to EUR 119.7 million.

Course set for future with new organization and personnel:
• Hans Mahr as head of Sports and New Business division from September
• IT and call center activities successfully outsourced
• Organizational restructuring completed: 970 employed directly by Premiere, additional 246 full time employees at the ‘center-
 of-competence’ call center in Schwerin

In the first nine months of 2005, Premiere set its future course with regard to its organization and personnel. Since September 1 2005, Hans Mahr, one of the most experienced and creative television executives in Germany, is responsible for sports programming and the acquisition of sports rights. He will also be in charge of driving ahead the development of new Internet and mobile phone offerings. 

On September 1, 2005, Premiere transferred its operative IT activities to Atos Origin, a world leader in the provision of IT services. Also on September 1, the subsidiaries Premiere Service Center Hamburg GmbH and Telecenter Lübeck GmbH were transferred to the walter TeleMedien Gruppe. With the outsourcing of its IT and the majority of its subscriber service activities, Premiere was able to complete the organizational restructuring that was started in 2002. As of September 30, 2005 Premiere had 970 full time employees. In addition, come the 246 employees at its subsidiary, Service Center Schwerin, the last remaining call center belonging to Premiere. This call center works highly effectively and acts additionally as a ‘center-of-competence’ for third party call center services. 
 
First-class TV: radical focus on exclusivity and quality
• Programming strategy: It’s only on Premiere
• Premiere as co-producer of top international series
• Premiere secures all live TV rights for soccer’s UEFA Champions League from 2006 to 2009

Premiere will in the future differentiate itself even more from the free-to-air TV competition through exclusive and high-quality programming. Both actual and potential subscribers should realize even more that “it’s only on Premiere”. In the area of fiction, Premiere has exclusive contracts with all Hollywood majors and important independent studios. In addition, Premiere is strengthening its position in the area of series as a supplier of exclusive premium content by co-financing, for the first time, international productions of spectacular series such as Rome and Over There. In the sports arena, Premiere secured comprehensive broadcast rights in June for the soccer FIFA World Cup 2010™ in South Africa, of which 18 matches are exclusive. Premiere will be the only broadcaster in Germany and Austria to show all 64 games of the FIFA WORLD CUP 2010™, 18 of them exclusively. In August, Premiere secured all live TV rights to the UEFA Champions League for the seasons 2006/2007 to 2008/2009. The top games of the Champions league will in the future in Germany only be seen on Premiere. Premiere has, for example, secured the top game of the week, the so-called first pick. Premiere has also acquired extensive TV rights for the highlights program, which will directly follow the live broadcasts of the UEFA Champions League. 

More growth through innovations:
• Successful launch of PREMIERE WIN
• New definition of television: PREMIERE HD to start on December 3, 2005

Premiere launched the PREMIERE WIN channel on August 1, 2005. PREMIERE WIN broadcasts approximately eight hours daily of live horse racing from the USA, Canada, South Africa, Germany and Austria. Viewers can place live bets on the races via telephone, mobile phone text message or internet. Kofler: “PREMIERE WIN is already a professional theme channel with a good look, unique content and clear positioning”. By the end of 2005 it is expected to have over 30,000 registered users and betting receipts of more than EUR 10 million. Based on current plans, PREMIERE WIN is expected to achieve operating break-even at EBITDA level in Q4 2006. The set-up losses are anticipated to remain under EUR 10 million. 

Kofler: “The positive experience with PREMIERE WIN has strengthened our resolution to further develop the betting and gaming business. As before, we are sticking to our goal of establishing PREMIERE WIN as one of the top brands in the German speaking betting market.” Premiere is aiming for an unprecedented unique triple play in betting and gaming: under the brand PREMIERE WIN a wide range of betting and gaming options will be offered via television, internet and betting-counters in Premiere sports bars. Already by the 1st quarter 2006, the first PREMIERE WIN counters will be opened in selected Premiere sports bars. In total as at 30 September 2005, Premiere had more than 13,500 licensed sports bars.  

Around 30 years after the breakthrough of color television in Germany, a new television era will begin on December 3, 2005: Premiere will be launching three channels in the high definition television format HDTV. Heading the launch of the new TV era will be the sports program PREMIERE PHILIPS HD SPORT: on December 3 at 3.30 p.m., Premiere will be broadcasting the Bundesliga game of the top teams VfB Stuttgart versus FC Bayern München live. The channels PREMIERE HD FILM and DISCOVERY HD will be launched on the same day. Under the PREMIERE HD umbrella brand, Premiere will offer three HD subscriptions: PREMIERE HD FILM (movies and series), PREMIERE HD SPORT (top sports from home and abroad) and PREMIERE HD THEMA (documentaries from Discovery). Viewers can subscribe to the HD subscriptions as a supplement to their standard subscriptions. In combination with the PREMIERE KOMPLETT package, all three subscriptions are available from only EUR 12 a month. As an introductory offer, Premiere will offer the new HD subscriptions free of charge for a promotional period until the end of January 2006.

Outlook for full year 2005:
• 3.55 to 3.60 million subscribers by the end of the year
• Total revenue for 2005 to top the EUR 1.1 billion mark
• EBITDA forecast raised to between EUR 130 million and EUR 140 million

Following the successful first nine months, Premiere confirms its forecasts for the whole year. The pay-TV operator is expecting further strong growth in subscriber numbers during the Christmas season in the 4th quarter. By the end of 2005, Premiere is expecting total subscriber numbers of between 3.55 and 3.60 million. This represents a net growth of up to 190,000 subscribers in the 4th quarter. For the full year 2005, Premiere is still expecting total revenues to top EUR 1.1 billion. On the basis of the positive business development so far, Premiere has raised the forecast for the full year EBITDA to between EUR 130 million and EUR 140 million.

For inquiries, please contact:
Dirk Heerdegen      
Vice President Corporate Communications  
Company Spokesman      
Tel.: +49 89/99 58-63 50    
dirk.heerdegen@premiere.de     

Stefan Vollmer      
Head of Financial and Business Communications 
Tel.: + 49 89/99 58-63 77    
stefan.vollmer@premiere.de     

Shane Naughton
Deputy CFO
Vice President Investor Relations
Tel.: +49 89/99 58-1100
shane.naughton@premiere.de

Christine Scheil
Director Investor Relations
Tel.: + 49 89/99 58-1010
christine.scheil@premiere.de

This press release contains forward-looking statements based on the currently held beliefs and assumptions of the management of Premiere AG, which are expressed in good faith and, in their opinion, reasonable. Forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, financial condition, performance, or achievements of Premiere AG, or media industry results, to differ materially from the results, financial condition, performance or achievements expressed or implied by such forward-looking statements. Given these risks, uncertainties and other factors, recipients of this document are cautioned not to place undue reliance on these forward-looking statements. Premiere AG disclaims any obligation to update these forward-looking statements to reflect future events or developments.

Key financials

Key financials for the first nine months and the 3rd quarter 2005.

Quarterly Report Q3 2005

Quarterly report and presentation for download