Board of directors approves first quarter 2006 report

05/05/2006 - 00:00 PM

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Revenues: €43.8 million, up 24.1% (28.8% on a like-for-like basis) compared with the first quarter of 2005

Capital expenditures amount to € 45.4 million, (€ 15.3 million for the first quarter 2005), representing around 40% planned investments for the year

EBITDA: -€28.0 million, aligned with the corresponding period in 2005 (-€27.3 million)

Net result: -€26.3 million, in line with the 2005 net result excluding discontinued operations (-€26.6 million for the first quarter of 2005)

LA7 Free to Air: advertising revenue (18.7%) and audience share up sharply (15%)

MTV Free to Air: revenues up 7.8%, boosted by revenues from new platforms (€4.0 million, compared with €1.9 million in 2005)

Digital Terrestrial: revenues equal to €5.3 million for the first quarter of 2006 (€0.9 million in 2005)

Around one million prepaid digital terrestrial football cards distributed

New FLUX multimedia project launched


Milan, May 4, 2006 – Today the Telecom Italia Media Board of Directors, chaired by Riccardo Perissich, examined and adopted the Report on results as of March 31, 2006.

In January 2006 the Group completed its rationalization process – begun in 2005 – by selling the Buffetti Group and merging La7 Televisioni S.p.A. into Telecom Italia Media S.p.A. This restructuring process and last year’s major investment programme have helped Telecom Italia Media to consolidate its position on Italy’s media market. The company is now well-placed to seize opportunities arising from rapid new platform evolution (DTT, DVB-H, etc.). With a higher profile as a multiplatform multimedia content provider, the Group is one of the most dynamic players on the Italian market.


Telecom Italia Media Group results for the first quarter of 2006

First-quarter consolidated revenues amounted to €43.8 million, up 24.1% (28.1% on a like-for-like basis) compared with €35.3 million registered during the corresponding period in 2005.

First-quarter 2006 EBITDA was equal to -€28.0 million, essentially the same as for the corresponding period in 2005 (-€27.3 million). Earnings were boosted by improved Free to Air TV margins, the roll-out of new free channels on Digital Terrestrial (such as La7 Sport), and reduced overhead costs (down €2.3 million compared with 2005) following the La7/TI Media merge

Operating income amounted to -€41.0 million (-€35.9 million for the first quarter of 2005). Operating income was impacted by the above-mentioned operational changes, higher amortizations and depreciations on the new television network acquired during the second half of 2005 and on additional investments on frequencies and infrastructures made in 2006.

The net result corresponded to -€26.3 million. This was in line with the 2005 net result excluding discontinued operations (-€26.6 million). The contribution from discontinued activities accounted for €9 million in the first quarter of 2005.

Capital expenditures for the first quarter of 2006 amount to € 45.4 million (€ 15.3 million for the first quarter 2005), representing around 40% planned investments for the year; out of € 45.4 million, around € 38 million have been invested on the DTT platform and € 7.6 million on Free-to-Air Television.

Net cash position at March 31, 2006 amounted to €428.1 million (€436.1 million) at year-end 2005). Changes to the financial position were generated by €28.4 million in cash absorption from operations and €45.4 million in capital expenditures offset by €65.8 million realized from the Buffetti Group sale.


First-quarter 2006 results breakdown by business unit


Free to Air Television

Free to Air Television earnings for the first three months of 2006 improved on the same period in 2005. Revenues of €36.7 million (13.4% up on the first half of 2005) were driven by sharp growth in domestic advertising revenue, which rose 12.1% compared with the first quarter of 2005.
Breakdown:

La7 achieved significant 15% audience growth, up from 2.5% in the first quarter of 2005 to 2.9% in the first quarter of 2006. Gross advertising revenue grew by 18.7%, boosting earnings over the period with revenues of €21.1 million, up 17.3 % compared with the first half of 2005. EBITDA consequently rose €1.3 million (13.6%) compared with the previous year, while operating income posted €0.8 million growth (up 5.2% compared with the preceding year). Efficiency gains helped to reach such results.

MTV consolidated its position with a 7.8% increase in revenues, thanks to domestic advertising and to its multichannel/multi-platform strategic approach. Revenues from new platforms during the quarter accelerated further, from 6% on total revenues (€1.9 million in 2005) to 24% (€4.0 million in 2006). Profitability improved: EBITDA rose €0.5 million, while operating income increased by €0.4 million.


DTT Television

In the first quarter of 2006, revenues grew by a strong €5.3 million, predominantly from the sale of pay-per-view events and smart cards. This compares with €0.9 million for the corresponding period in 2005. As at March 31, 2006, around 1 million prepaid cards for Digital Terrestrial football were in circulation, of which 61% were active.

As far as profitability is concerned, pay-per-view TV margins are improving, though still remaining in negative territory, while operating costs rose with the start-up of new free channels such as La7 Sport on which advertising revenues are at development phase and tightly dependent on decoder penetration.

Trials continued in the first quarter of the new FLUX multimedia interactive project, which launched officially in early April. The FLUX TV channel, branded MTVFlux, is currently broadcasting in analog before its move to Digital Terrestrial. This multiplatform environment offers revolving content ranging from music to graphics, design, animation, video games and short films.

Network Operator Telecom Italia Media Broadcasting S.r.l., which took over the “Digital Multiplex” unit of the company from TI Media in late March, invested €31 million in building a new terrestrial distribution network that extends the digital television signal nationwide using SDH technology.


News

In the first quarter of 2006, the News Unit (the APCOM wire agency) realized revenues of €2.1 million, a 92.7% increase on the first quarter of 2005. This achievement was driven by new services (New Europe News Bulletins and new services for mobile telephony) and by new contracts.

The financial results for the first quarter 2006 will be illustrated to the Financial Community during a conference call to be held today May 4th 2006 at 17.30 (CET). Journalists may follow the presentation by dialling: +39 06 33485042. A replay service has been made available for 48 hours after the end of the presentation: please dial +39 06 334843 (access code 108514#).

Telecom Italia Media - Consolidated statement of income

Telecom Italia Media - Consolidated balance sheet

Telecom Italia Media - Key data of the business unit and activities