Q1 2008: Premiere increases revenues to EUR 251.5 million

• Revenues increase 12.1 percent quarter-on-quarter
• EBITDA at EUR 2.8 million
• 4,242,467 subscribers as of March 31, 2008:
3.621 million direct customers: net growth of 4.6 percent

Foundation laid for sustained growth:  
• New and secure encryption system by end of Q3 2008
• Contract with Kabel Deutschland extends distribution through 2012
• New pricing structure and new Chief Marketing & Sales Officer as of July 1, 2008
• Substantial program enhancements:
- DFB Pokal starting this summer on Premiere
- Movies on Premiere at the same time as DVD release
• Börnicke: “We anticipate strong growth once security gap has been closed.”

Munich, May 15, 2008. In Q12008 Premiere’s 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.”

Foundation laid for sustained growth:  
• New and secure encryption system in place by end of Q3 2008
• Contract with Kabel Deutschland extends distribution through 2012
• New Chief Marketing & Sales Officer and new pricing structure starting July 1, 2008
• Substantial program enhancements:
- DFB Pokal starting this summer on Premiere
- Movies on Premiere at the same time as DVD release

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.

New pricing structure and new Chief Marketing & Sales Officer as of July 1, 2008
Starting this July, Premiere will seek to improve growth with new pricing and packaging. The new structure is more simple and straightforward and features four first-class packages: Premiere Fussball Bundesliga, Premiere Sport, Premiere Film and Premiere Family can be purchased in combination or individually. All packages cost EUR 19.99 per month with a 24-month contract (EUR 24.99 with a 12-month contract) and can be combined freely. Two additional packages, Premiere HDTV and Premiere Star, which can be booked individually or in combination with the four program packages, will also be available.

The new packages are positioned more clearly, easier to communicate and should therefore sell better. The combination packages offer great savings of up to 44 percent and are an attractive incentive to subscribe to Premiere’s complete range of programming. The new pricing and packaging will clear the path for sustained subscriber growth and increased average revenue per user. (Editorial note: You will be provided with an additional release covering the new prices and packages.)

Premiere AG’s supervisory board appointed Oliver Kaltner as the new Chief Marketing & Sales Officer of Premiere AG on April 30, 2008. He is an experienced marketing and sales executive with demonstrated expertise in Home Entertainment and comes to Premiere from Sony Deutschland GmbH where he was also responsible for product management and played a central role in the strategic realignment of Sony’s marketing structure.

Substantial program improvements:
- DFB Pokal starting this summer on Premiere
- Movies on Premiere at the same time as DVD release

Premiere added a trophy to its live broadcasting rights and will be showing the DFB Pokal this summer. Assuming the deal is approved by the Federal Cartel Office, the contract with the DFB (German Football Association) will run from the beginning of the 2008/2009 season until the end of the 2011/2012 season. Premiere will show all 63 games live and in the live highlights format from the first round through to the final in Berlin’s Olympiastadion. At least one match per round will be broadcasted in HDTV. As with the Bundesliga, right after the final whistle, Premiere will also show match highlights in detail in the football highlights show “all games, all goals” – the fastest round up on German television. The “triple play“ consisting of the DFB Pokal, Bundesliga and UEFA Champions League means Premiere will have the most comprehensive live coverage of the three most exciting football contests on German television.

Fiction programming has also become even more attractive. In April 2008, Premiere became the first pay-TV provider in Germany to offer movies from America’s Warner Bros. studios on demand at the same time as the DVD release. By moving up the video-on-demand window, pay-per-channel is brought forward by about three months. This means subscribers can watch Hollywood blockbuster movies even earlier than before on the video-on-demand services at Premiere Direkt and Premiere Direkt+ or with a subscription to Premiere Film. Premiere anticipates other studios will follow the example Warner Bros. has set.

Strong growth anticipated once security gap has been closed
Premiere expects strong growth once the security gap has been closed. Börnicke: “In H1 2008, we are focusing on the strategic alignment of our business. We have made significant progress and have achieved all of our targets. With News Corporation, we have a strong and experienced investor at our side that will provide us with operative and strategic support. All piracy issues will be resolved latest by the end of Q3. We have succeeded in making our programming even more attractive and have secured distribution for our programs. New pricing and packaging will clear the path for sustained subscriber growth and increased ARPU. Premiere is well positioned to achieve sustained growth.”

Contact for press:
Torsten Fricke 
Tel.: +49 89/99 58-63 50  

Stefan Vollmer
Leiter Unternehmenskommunikation
Tel.: +49 89/99 58-63 77
Contact for investors and analysts:
Christine Scheil
Leitung Investor Relations
Tel.:+49 89/99 58-10 10

Susan Eckenberg
Senior Manager Investor Relations
Tel.:+49 89/99 58-10 11

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.

Key Figures Q1 2008

Overview key figures Q1 2008 for download (pdf)