INVESTOR DAY PARIS FEBRUARY 2, 2004 - … · INVESTOR DAY PARIS FEBRUARY 2, 2004. 2 ... n 27.4% share in multiThématiques (publisher of Planète, Ciné-cinémas, ... n Europe 2 199

INVESTOR DAY

PARIS

FEBRUARY 2, 2004

2

OUTLINE OF THE PRESENTATION

Ô 1 . Introduction Brigitte Gauthier-Darcet

Ô 2 . Audiovisual Brigitte Gauthier-Darcetn 2.1 Production / Distributionn 2.2 Theme Channels

Ô 3 . Radio Brigitte Gauthier-Darcet

Ô 4. Complementarity of Music Media Christophe Sabot

Ô 5 . New Media Fabrice Sergent

Ô 6. Multimedia advertising brokerage Constance Benqué

Introduction

4

Net Sales2002

1 . INTRODUCTION : Presentation of Lagardere Active

Ô A media group focusing on 5 strategic and complementary areasn Producer and distributor of TV programsn Publisher of theme channelsn Radio operator in France and 7 other countriesn Publisher of multimedia servicesn Multimedia advertising rep

Ô With a clear management approachn Combine growth with tight managementn Attract talents and promote creationn Secure short-term profitability without undermining the long term

MultimediaAdvertisingBrokerage

19,6%

Prod. Distrib.17,3%

Theme Channels

12,7%

Radio31,6%

New Medias18,8%

Production / Distribution

6

2 . 1 . Production / Distribution: Presentation of the Businesses

Ô 10 stock production companies :n GMT Productions (Napoléon, Julie Lescaut, Boulevard du Palais,…)n DEMD Productions (Nestor Burma, Joséphine Ange Gardien,…,

Le Bleu de l’Océan, 2003 summer serial on TF1)n …

168 hours produced in 2002 (revenue 57 M€)drama, documentaries, animation

all of them re-usable rights enriching our library

Ô 7 one-off production companies :n JLR Productions (20h10 Pétantes with Stéphane Bern for Canal +)n MAXIMAL Productions (C dans l’air for France 5)n B3COM (created by Benjamin Castaldi)

680 hours produced in 2002 (revenue 25 M€)ligth drama, magazines, gameshows, celebrity shows, real TV

only the formats may be resold after broadcast

7

2 . 1 . Production / Distribution: Business Model – Key Elements

Ô These companies address the entire market :n The 6 French terrestrial TV channels (TF1, France 2, France 3, France 5, M6, Canal +)n And some theme channels (Equidia, Match TV,...)

Ô Our library : 13 000 hours mainly fictions, documentaries, animation

Ô Although the instant audience measurementn Has no direct impact on the financing of the related production,n It is a key factor for the broadcasting channel’s advertising revenuen It helps building up broadcaster loyalty and is a key element of long term business

growth

Ô One of our skills is the know-how over financing big international co-productions,involving the main developed countries (in Europe, Canada and the United States),and using all existing aids such as tax shelters and tax credits.

8

2 . 1 . Production / Distribution: Competitive Position

Ô No. 1 producer of fiction, 23% market share in FranceNo. 2 approximately twice smaller

Ô No. 3 producer of one-off programs to be on air in 2003 (No. 5 in 2002)

Ô 30 of the most successful 100 audiences in 2003 (14 in 2002)29 of the 60 most successful audiences for fiction

Ô Awards from French and international juriesn 7 nominations for Emmy Awards in September 2003,n 5 awards at the “16ème Nuit des 7 d’Or” ceremony in November 2003.

Lagardere Active has become a leader in TV production

9

2 . 1 . Production / Distribution: SWOT Analysis

Ô Strengths Depth and variety of top talents

High quality programs

Good business profitability, due to tight management

Ô Weaknesses Still insufficient presence in animations and gameshows

Ô Opportunities Changes in regulations (access to TV advertising for thepreviously prohibited sectors,…)

Ô Threats “Producer” risk

10

2 . 1 . Production / Distribution: Growth Prospects

Ô Consolidate the Group’s pre-eminence in fiction

Ô Strengthen production of one-off programsn By a policy aimed at finding young talentsn Through the search for innovative formatsn By acquiring companies producing one-off programs in the gameshow

field

Ô Become a leading distributor in Europe through the acquisition ofexisting catalogs

Be the leading program supplier for French terrestrial TVfor both fiction and one-off programs.

Theme Channels

12

2 . 2 . Theme Channels: Presentation of the Business

Ô Properties: 9 channels broadcast mainly in Europe in 4 editorial categoriesn Music: MCM, MCM TOP, MCM POP, MCM 100% Belge, MEZZOn Children: Canal J, TiJin Daily life: La Chaîne Météon People : Match TVn 27.4% share in multiThématiques (publisher of Planète, Ciné-cinémas, Jimmy, etc.)

Ô Distributors: cable and satellite operators (CanalSatellite, TPS, Noos, etc.)

Ô Key figures: over 5 M cable and satellite subscribers nearly 28 M subscribers to our channels, incl. 10 M abroad

Ô Net revenue : 80% fees (from distribution platforms) 20% advertising

13

2 . 2 . Theme Channels: Competitive Position

Ô Children area

Canal Jn No. 2 theme channel, all theme channels viewers combinedn No. 1 children channel for 4-10 and 4-14 age group (7,9 %), all theme channels

viewers combined

TiJin No. 2 children channel for 4-10 age group (7,3 %), all theme channels viewers

combined

Canal J + TiJi combined enjoy a 42,9 % market share (4-14 age group)on children channels

Ô Music area

MCMn No. 1 theme channel for 15-24 age groupn No. 1 music channel for 4 + age group

14

2 . 2 . Theme Channels: SWOT Analysis

Ô Strengths Strong presence on key sectors for advertisers (children, music)Complementarity of TV music channels and radio stationsIncreasing number of subscribers to CanalSatellite

Ô Weaknesses Dependence on the distributorNot backed by a terrestrial TV channel

Ô Opportunities Opportunities for acquisition (trend towards market concentration)New distribution technologies : digital terrestrial TV, ADSL, etc.

Ô Threats Sharpening competition from other theme channels (Piwi, M6 Music, etc.)

and from terrestrial channels (development of Star Academy typeof formats, etc.)

15

2 . 2 . Theme Channels: Growth Prospects

Ô Growth potential :n Access to TV advertising for previously prohibited sectors

reserved until 2007 for cable and satellite channelsn Convergence between advertising market share (5%) / audience share (11%)n Constant growth of audience share : from 7% in 2000 to 11% in 2003

Ô Spin off new channels from successful ones (Canal Jà TiJi)

Ô Opportunities to acquire one or more channels in order to :n Enhance the product range in selected areas such as

l “children”, “music” and “daily life”n Promote the international growth of MCM

Become an unavoidable package providerfor all pay channel distributors

16

Audiovisual Summary

Over a 8 year period, Lagardere Active has collected :

Ô Strategic assets:n Talents: producers, anchors, channel executives n Products, brands, catalogsn Audiences

Ô A range of know-hows:n Creator of programmingn Distributorn Producer for theme channelsn Broadcaster of themes channelsn Advertising airtime rep

Constituting an independent entity, ready to contribute to the success of any new investment

in the Audiovisual field

Radio

18

3 . Radio: Presentation of the Business

Ô 3 national radio stations in France:n A general-interest News & Talk format

n A music “generation motor” for 15-34 age group

n A contemporary music station for 25-49 age group

In a very competitive French radio environment(15 private national broadcasters)

Ô 16 stations abroad, in 7 countries (Eastern Europe, Germany and South Africa):25 M daily listeners

19

3 . Radio: Business Model – Key Elements

Ô 85% of net revenue from advertising à a very cyclical businessMost costs are fixed (schedule, broadcast, promotion)n More than half of the costs are constituted by payroll chargesn Program generally set for the broadcast season (from september to june)n Cost of dual broadcasting (LW/FM) for Europe 1

Ô Unbalanced distribution of frequencies throughout France :n Europe 1 186 frequencies 51.6 M coverage on LW+FMn Europe 2 199 frequencies 39.5 M coverage on FMn RFM 162 frequencies 34.4 M coverage on FMRepresenting total potential coverage of 125.5 M < threshold of 150 MNote: NRJ 257 frequencies, France Inter 621 frequencies

20

3 . Radio: Competitive Position

Ô Very competitive environment in a context frozen by regulationsn 3 main private players: Lagardere Active, NRJ, RTL

n 3 small ones : Skyrock, RMC Info, Radio Classique, competing for growthn A 7th player, on the audience market only: the state-owned stations

Ô Market share (source: Médiamétrie – Nov. / Dec. 2003): no. listeners/d.

n Cumulative audience 9.9% for Europe 1 4,909,0006.7% for Europe 2 3,314,0004.4% for RFM 2,193,000

n A total of more than 10 million listeners every day

Ô Internationally: No. 1 radio operator in Poland, Czech Republic, Romania,No. 2 in Russia, No. 4 in HungaryPositive operating income for the last 3 years

21

3 . Radio: SWOT Analysis

Ô Strengths Programming expertiseComplementary formats reaching every age groupAbroad: strong Group positions in a balanced portfolio of

countries

Ô Weaknesses Insufficient coverage of the country by our stations

Ô Opportunities Changes in regulation (categories, threshold, …)Satellite radio broadcasting (XM in the United States)Abroad: opportunity for consolidation (values at cyclical lowpoint)

Ô Threats Open access from 2007 to sectors (especially retail)where TV advertising is still prohibited

22

3 . Radio: Growth Prospects

Ô Continue to improve coverage, by obtaining new frequencies

Ô Internationally, consolidate our positions in countries where we arealready present, while studying the possibility of investing in newcountries

Ô Develop the complementarity of media between music radio andn Music TV channelsn Downloadingn Spin-offsn Interactivityn Concerts

Complementarity of Media

24

4 . Complementarity of Media

A Unique Radio Landscape

Ô The French radio landscape today:n A peculiar French situation that is not found in any other countryn 15 different national music and/or news stations

This situation is unique in the world today.

25


Segmentation of Content

Ô Radio is a business sector that is not exempt from the basic rules ofmarketing:

Create desire, be unique,

and make it known.

Ô Our every day policy:n Respect for the genetic codes of the brandn Respect for our promise concerning our productsn Regularity in the production of our programsn Evolution, never revolution, in our offer of programs.

This is also our competitors’ policy.

26


Segmentation of Content (continued)

Ô To survive and grow in the face of the combined offering of music andentertainment (mornings and evening talk shows) presented by ourcompetitors:n Be segmentedn Be differentn Be capable of inducing a feeling of “ownership”

“making it theirs”

Ô Europe 2 and RFM, two music stationsn Positioned in the cycle of the discovery and consumption of musicn Trend-setters on their own market segment

Ô Exploit our brands more intenselyn So that they become labelsn And also take on a marketing function.

27


Music Radio and Interactivity

Ô An intense listener/radio station relationship through the “participatorylinks” that arise from conventional resources, such as:n Fixed wire and mobile phones,n Text messaging,n Email,n The communities that we have developed on our Web sites.

Ô Make progress in the commercial use of databases identifying ourconsumers (useful for downloading as well as for music searches),while emphasizing:n The marketing of our games lines,n The use of text messaging for gameshows and talk show broadcasts.

28


Music Radio and Spin-offs

Ô Strong identifiable brands that are already producing lines of derivativeproducts:

CDs and DVDsÔ with Europe 2 “un maxx’ de bruit”

the “un maxx’ de frisson” collection

Ô with RFM “le meilleur du cinéma” or “night fever”

that constitute complementary sources of sales.

29


Music Radio and Downloading

Ô The commercial market for music downloads has no choice but to organize itself.

Ô We will be a media player in this process through the development of Virgin Méga.

Music Radio and Concerts

Ô The market for organizing concerts is changing particularly quickly.

Ô In this situation, our radio stations could rapidly develop a “concert branch”:1st example: Europe 2 Live,The first Radio & TV Show, simulcast on Europe 2 and MCM.

30

4 .Complementarity of Media

Music Radio and Music TV Channels

Downloading,Concerts,

Derivative products,Interactivity,

Are applied on the MCM channelsin the same way as in the FM business,

And by promoting synergies between the two fields.

New Media

32

5. New Media : Presentation of the Business

LAGARDERE ACTIVE BROADBANDNouveaux médias

Mobile

Minority shareholder :

LifestyleChat/Dating Pictures Music

Content Syndication

Scope of presentation :Géography :

Main services and brands :

rev.2002: Approx. m109 E

Internet

33

5 . New Media : Focus on mobile (1)

Ô Mobile device accelerate paying content services penetration !

logos

Single tonringtones

Bingo SMS

Fin 2002 2003 2004

Voice mailgreetings

Tele-greetings

Greetingcards

Coloredpictures

Polyphonicringtones

PremiumSMS

Real tones

JavaGames

MMS

Animatedpictures

Javaapplets

Karaoke

MP3downloads

Jeux Java 2.0

video clip

Live dating

34

Notes• Numbers include airtime revenue for operators• Projections for 2005 in line with recent publications from Jupiter Research and W2F

24724123320317094

858587108131191

332326320312301285

050

100150200250300350400

2001 2002 2003 2004 2005 2006Internet Enabled Not Internet Enabled

Western European MobileSubscribersMM

Source Morgan Stanley Equity Research

262727272728

976543

353433323131

0

10

20

30

40

2001 2002 2003 2004 2005 2006

Voice Data

Western European Mobile ARPU€/Month

1812

3

1

12

2

32

15

05

10152025303540

2002 2005

P2P Browsing Premium

Western European Mobile DataMarket(1)

€ Bn

28%CAGR



1.8

1.0

0.0

0.5

1.0

1.5

2.0

2002 2005

Western European Market forRingtones/Logos(2)

€ Bn

23%CAGR


5 . New Media : Mobile Data Market Europe vs USA

Note• Numbers include airtime revenue for operators

140113

8347

130

4261

81106

128128

183174164153141

128

0

50

100

150

200

2001 2002 2003 2004 2005 20062.5/3G Phones No 2.5/3G

US Mobile SubscribersMM


474951525353

532211525253535454

20

30

40

50

60

2001 2002 2003 2004 2005 2006

Voice Data

US Mobile ARPU$/Month

2.50.6

1.5

0.4

2.8

0.6

6.8

1.5

012345678

2002 2005

P2P Browsing Premium

US Mobile Data Market (1)

$ Bn

66%CAGR



403

17

0

100

200

300

400

500

2002 2005

US Market for Ringtones$ MM

187%

CAGR

Source IDC, May 2003

EUROPE USA

35

STATISTICS BILLING

WAP Imode Java BREW

MOBILE OPERATORS CONNECTIVITY

FRONT OFFICES

COMMUNITIESCOMMUNITIES CONTENTCONTENT

5 . Business Models

Magazines

Wap

2) Marketing expertise :- mobile operators distribution - advertising on print, TV, radio

1) Technical expertise

àSUBSCRIBERSàPAY PER VIEW

36

5. New Media : Competitive Position

International

Local

HostingPublishing

ProsodieJamba

NewtechADTAGL123 MM

Itouch

Computel

Jet MMATS

Broadsystem

Match.com

Zingy

InfoSpace

37

Ô New growing and profitable marketsÔ Good match with other Group’s assets : Virgin, magazines…Ô Global markets, centralized technology, R&D and hostingÔ New technologies fosters operators’ growth as well :

UMTS…

Ô Increase of space/ copyrights costsÔ Fast sector consolidationÔ Need of fast critical mass reach

Ô Internal mobile expertiseÔ Operating practice on the audiotex markets since 1994Ô Operating presence in 4 key countriesÔ Track record in mass market advertising since Club-InternetÔ Direct access to privileged data on music industry (Virgin,

MCM, Europe2) and image/pictures businesses (Gamma,Paris Match)

Ô Brand ownership and promotion capacity

Ô No mobile carrier’s ownershipÔ No large TV station ownershipÔ No music / movie majors’ ownership within the Group

Ô ThreatsÔ Opportunities

Ô Strengths

Ô Weaknesses

5 . New Media : SWOT Analysis

38

5 . New Media : Growth Prospects (2) / Conclusion

Ô Existing brands, products, expertise and technologies with localpresence in 4 countries.

Ô Fast growing market overall, withl Late US growthl Opportunity to consolidate existing businesses in Europe

Ô … Strong opportunity to strengthen and extend our leading positionsas key content providers to mobile users and mobile operators.

Lagardere ActiveAdvertising Sales Company

40

6. Lagardere Active Publicité The French advertising market

Ô 8.6 Billion Euros invested in the French media market in 2003

National TV29,0%

Cable TV1,5%

Radio7,4%

Magazines16,9%

National Daily Press15,3%

Other press17,1%

Outdoor Advertising

11,3%

Cinema0,8%

Internet0,7%

Source : Estimate LAP january 2004

(+)

(+)

(+)

(+)

41

Since 1999, Lagardere Active Publicité has experienced a steady rise of itsmarket share.

6. Lagardere Active Publicité’s markets

The audiovisual sales company of the Lagardere Group is positionned onboth an « historical » market and two « emerging » markets.

Ô1 « historical » advertising market :n Radio with a national and local commercialisation

Ô 2 « emerging » advertising markets with high growth potential:n television thematical channelsn internet sites

42

Ô RadioOn a highly concentrated market (3 major players : LAP, IP, NRJ)Lagardere Active Publicité owns very strong brands and is present onevery level.

n A historical leading role (2nd commercial radio, commercialcoverage share) with an innovative format : News & Talk.

n A musical network composed of and reinforced by thecommercialisation of , leading offer ahead of NRJ.

n A presence on every market with strong positions :l on the national market with a leading position in terms of audience (34% of

commercial coverage share),l on local markets, a challenger position

Between 1998 and 2003, on the national market : Turnover +54% while themarket is up 30%

6. LAP’s position on these different markets

43

Ô Televison :n Large commercial portfolio (26 cable TV and 5 local or regional TV) composed

of television channels edited by the group and channels owned by other groups(primarly AB group) which makes LAP the leading sales rep with 30% coverageshare.

n Leading channels targetting the most interesting people : children with Canal Jand TiJi, the 15-34 with the MCM+ offer, the Housewives-50 with RTL 9.

Ô Web sites :n A specific positionning : only sales rep which commercialises a portal

(Club-Internet) and strong internet brands (Europe1.fr, Europe2.fr, leRoutard.com,etc.)

n A systematic approach of prolonging our TV and Radio actions on ourwebsites (cross-media)

Between 2001 and 2003 : Turnover +32% for a market up 6% (estimate)

Between 2001 and 2003 : Turnover +20% for a market down 10% (estimate)

6. LAP’s position on these different markets

44

6. Lagardere Active PublicitéMarket conditions

Ô Clients’ media strategies are becoming more and more complex(search of opportunities, simultaneous work on different targets, etc…)

Ô Investments based on more and more quantitative criteria ;the effective audience ; with a more and more accurate expertise of theMedia agencies (buying agency).

Ô Clients expect increased expertise in terms of service : refined target groups with an efficiency that has to be proven.

45

A performing back office allowing optimisation of revenues & profits

6. Lagardere Active Publicité’s strengths

Ô Owned by a major media company

Ô Powerful media brands with very strong added value which can besold as a global media : cross-media

Ô A dynamic team with very ambitious objectives :

n more turnover and market share

n A guarantee of efficiency and perfect services

46

Annexes

47

6. Lagardere Active PublicitéThe French advertising market

Ô In 2002, companies have invested 29,3 Billion euros for their communicationin France which represents a small increase (+0.6%) after the strongincreases until 2000 (up to +8%) and the steadiness of 2001.

Ô 2% of the national GDP is devoted each year to above-the-line andbelow-the-line media (direct marketing, promotion,etc).

Ô The French advertising market makes up for 4% of the internationaladvertising market and 20% of the european advertising market.

Ô The French media have a great growth opportunity since France ranksin the european average with 489€ invested by inhabitants.

48Source : Irep 1998-2002 – estimate LAP for 2003

1998 1999 2000 2001 2002 2003Mkt share

2003Var 2003 vs

1998Var 2003 vs

2001

press 3 499 3 861 4 150 3 987 3 866 3 789 44% 8% -5%télévision 2 473 2 684 3 046 2 867 2 921 3 038 35% 23% 6%outdoor 1 026 1 089 1 174 1 129 1 085 1 031 12% 0% -9%radio 575 645 716 654 713 749 9% 30% 14%cinema 52 69 82 72 74 67 1% 28% -7%

total 7 626 8 348 9 086 8 709 8 659 8 673 100% 14% 0%

Millions of euros

6. Lagardere Active PublicitéAdvertising income of the major media from 1998 to 2003

49

6. Lagardere Active PublicitéSectorial breakdown of the brutto radio turnover

Distribution24%

Telecom 16%

Services10%Culture and

leisure8%

Publishing8%

Media8%

Transport8%

Food6%

Tourism4%

Other8%

Source : Secodip janvier-december 2003

50

6. Lagardere Active PublicitéRanking of commercial stations

12,1

8,1

6,9

5,4

5,2

4,1

3,8

3,5

3,4

2,6

2,5

1,8

1,1

0,8

RTL

EUROPE

1 NRJ

NOSTALG

IE

SKYR

OCK

CHERIE

FM

EUROPE

2 RFM

FUN RADIO RTL

2RM

C

R & Chans

ons MFM

R. Clas

sique

Source : Médiamétrie 75 000+ November-december 2003 – Base 13 years + (commercial coverage share)

Documents

INVESTOR DAY PARIS FEBRUARY 2, 2004 - … · INVESTOR DAY PARIS FEBRUARY 2, 2004. 2 ... n 27.4% share in multiThématiques (publisher of Planète, Ciné-cinémas, ... n Europe 2 199