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Mediaset Group: Consolidated 1999 results

Net Profit of 656.7 bn lire (+19.2%)
Net revenues  3,966.9 bn lire (+8.6%)
Dividend proposal:  355 lire per share (+29.1%)
1st Q 2000: Advertising sales up by 17.7%



The Board of Directors of Mediaset, which met today under the Chairmanship of Fedele Confalonieri, has approved the consolidated annual report of the Mediaset Group for the year ended 31 December 1999.

The Mediaset Group's Consolidated 1999 Results

1999 was yet another year of success for the Mediaset Group with a marked increase compared to the already highly successful preceding years. The further improvement in margins was favoured by a 10.2% growth in advertising sales to third parties.

Mediaset's consolidated net revenues for 1999 came to 3,966.9 billion lire, an increase of 8.6% on the 3,653.6 billion of 1998.

The Group's operating costs showed a marginal increase of 2.9% rising from the 1,647.5 bn lire lire of 1998 to 1,695.5 bn lire for 1999.

Gross operating profit increased by 13.2%, from 2,006.1 bn lire in 1998 to 2,271.4 bn lire for 1999.

Operating profit went up from the 954.2 billion lire at the end of 1998, to 1,084.7 bn lire at the end of 1999, an increase of 13.7%. There was a significant increase in operating profit as a proportion of revenues to 27.3%.

The increase in operating profit and the positive effects deriving from the results of companies in which Mediaset has an equity stake (Albacom and companies of the Telecinco Group), in addition to net financial income, have led to a significant increase in pre-tax profit, which went up from the 979.2 bn lire of 1998 to 1,134.9 bn lire for 1999 (+15.9%). As a proportion of revenues, an increase from 26.8% to 28.6%.

The Mediaset Group's net profit grew to 656.7 billion lire - after amortisations and depreciations for 1,186.7 bn lire and tax provisions of 478 bn lire - a 19.2% increase on the 550.8 bn lire of the previous year. The tax rate was equal to 42.1% As a proportion of revenues this represents an increase from 15.1% of 1998 to 16.6% for 1999.

At the end of 1999 the Group's net financial position showed a surplus of 339.9 billion lire, compared with 683.5 billion lire at the end of 1998. This slight reduction in liquidity, in spite of positive current cash flow, is mainly attributable to the consistent equity investments made in the period.

Results of the Parent company

The 1999 results of the Parent company, Mediaset S.p.A., show net profits of 252.4 billion lire, after making amortisations and depreciations for 784.6 bn lire and tax provisions of 124.5 bn lire. The fall in profits registered by the Parent company compared with the previous year is the temporary consequence of the reorganisation of the Group's activities in the Media and Content Area. Sufficient reserves remain to guarantee a high level of dividend payment.

In fact, the Board of Directors has decided to propose to the Shareholders' Meeting, to be held on 20 April 2000, a dividend pay out of 355 lire per share, an increase of 29.1% on the 1998 dividend, and which is forecast to be paid from May 22, 2000.

MAIN EVENTS DURING THE YEAR

Television Broadcasting

The three channels Canale 5, Italia 1 e Retequattro reached a 1999 overall daily audience share of 42.6%. This is an extremely positive result, one point more than the previous year, and demonstrates Mediaset's sustained efforts mainly in the area of the production of serial fiction and news and current affairs.

Television Rights

In 1999, the Mediaset Group continued to strengthen its library of rights for both TV fiction and sport. In particular:

§ Warner Bros: a three-year agreement was signed 2000-2002 for exclusive Free-Tv rights with Warner Bros, one of the most important American Majors, that guarantees Mediaset access to successful films and first TV screenings from 2000.

§ Sports rights: a multi-year contract was signed (1999-2003) for live and encrypted broadcast rights for the next three seasons (1999-2003) of the Champions League. The total investment, net of the renegotiation of the current season, is of 683 billion lire. Exclusive rights for world championship motorcycle racing were also acquired for five seasons (2002-2006).

Foreign Television

§ Telecinco. On 30 June 1999, the subsidiary Mediaset Investment Sarl, finalised the acquisition of a 15% stake in Gestevision Telecinco S.A. e Publiespana S.A. for 314.2 billion lire. This increases Mediaset's interest in the Spanish group from 25% to 40%. 1999 was also another year of extraordinary growth for Telecinco. The operating margin increased to 31.6%, while operating profit rose by 46% from 18.5 to 27 billion pesetas (around 314 bn lire). Net profit was 18.4 bn peseta (around 214 bn lire), an increase of 52% on the previous year. These results confirm Telecinco's position as one of Europe's most profitable broadcasters.

§ Epsilon Group. On 15 October 1999 the Mediaset Group and the Kirch Group signed a 'Joint Venture Agreement' which foresees, among other things, the establishment of a jointly-owned holding company which will control three sub-holdings operating in the three main commercial TV areas on a European level: Ø European network television Ø Advertising Ø production, distribution and trading of content

Diversification and development

The diversification and development area brings together the Group's new business activities (Thematic Channels, Teletext, Internet) and telecommunications.

§ New Business From the beginning of 2000, the activities have been managed by Mediadigit, a recently-established company, that will become the holding for the company's activities outside the traditional core business of television. Internet: Mediaset has had an Internet presence since the beginning of 1999, both in terms of editorial content, through the detination site 'Mediaset Online' and in advertising sales, conducted by Publitalia, also for third party sites. Thematic channels: that the major shareholder, Fininvest S.p.A., did not exercise its option its 10% stake in Telepiù does not prevent Mediaset from acting as a content provider (for thematic channels and sports rights). In September 1999, the subsidiary RTI S.p.A., signed an agreement with Telepiù to cede rights to a number of matches in the 1999-2000 season of the Champions League. An agreement was also reached with Stream for the distribution of new thematic channels during 2000. Two of these (Duel and Comedy Life) will make their debut on April 1, 2000 Teletext: The activities of Mediavideo, the teletext service of Mediaset channels launched in 1997, were consolidated with investments in software and content that have helped to generate regular use by 10 million viewers per week.

§ Telecommunications The Mediaset Group is also active in the fixed-line telecoms sector through its 19.5 % stake in Albacom S.p.A.. The company, whose other partners include BT, BNL and ENI, is now one of the most innovative and dynamic operators in the market.

Mediaset is also present in the mobile telecoms thanks to its 9% stake in Blu S.p.A. The company's partners, who include those of Albacom (British Telecom, ENI, through Italgas, BNL) and other national and international groups (Gruppo Autostrade, Benetton, Caltagirone and Distacom), provide the competence and strengths in technology, marketing and distribution which led to the award, on August 4, 1999, of Italy's fourth mobile licence.

EVENTS SUBSEQUENT TO 31 DECEMBER 1999

Approval of outline agreement for the Internet

The Board of Directors resolved to give a mandate to the Chairman and the Chief Executives to proceed with the outline agreement regarding a strategic stake in Jumpy S.p.A: (a subsidiary of the Fininvest Group). This stake is aimed at a merger (that would take place after the listing of Jumpy and before the end of 2001) between Jumpy and Mediaset subsidiary that owns the business activity Mediaset Online.

The strategic integration of Mediaset's internet activities with those of the major share holder aims to create a large-scale operator with a leadership position in the new economy.

An operator that would join the content and advertising leadership of Mediaset with the strength of the highest potential portal in Italy - Jumpy - around which will be concentrated the contributions and specific competencies - in content and services - of all the other internet activities of the companies of the Fininvest Group. In fact today's resolution lays the foundations for a major role in the Internet sector by a group that already possesses all the necessary key elements for success in Italy and abroad.

The following is a summary of the main points of the agreement:

1. Mediaset, together with other companies of the Fininvest Group, will take a stake of 0,5%, a the value of 31/12/99, will take part in the capital increase to be effected prior to the listing of Jumpy , and in any case between April and May 2000. Mediaset will also have (either directly or through a subsidiary) an option to acquire a further stake, up to a maximum of around 5% of the share capital of Jumpy S.p.A., by underwriting a capital increase at a price equal to that of the initial offering price established for the stock exchange listing of Jumpy Mediaset will also have the right to nominate a member of the board of directors of Jumpy S.p.A., a right that it will keep provided it maintains at least 4% stake in the company.

2. Mediaset (either directly or through a subsidiary ) will purchase, a the nominal value, a 50% stake in JumpyCast TV S.p.a., a company being established by JumpyCast, currently wholly-owned by Jumpy S.p.A. Jumpy cast TV aims to become one of Europe's leading operators in the production and distribution of television content on the Internet. It si foreseen that this initiative will be effected within three months of the listing.

3. After the listing of Jumpy, and before 31 December 2001, the aforementioned merger between Jumpy S.p.A: and the company (that will be a subsidiary of Mediaset) that owns Mediaset Online will take place. On the basis of results reached and a further joint evaluation, the merger could also involve all or part of Mediadigit, the recently established company that brings together the Mediaset Group's activities in the sphere of digital convergence.

4. The size of Mediaset's stake following the merger will be determined on the basis of an exchange value to be determined by independent experts. Mediaset will increase its representation on the Board of Directors of Jumpy S.p.A. proportionate to its equity stake in the company.

In the meantime, the strategic agreement between the two groups will be based on two important criteria:

a) non exclusive rights to Mediaset's library of rights for the Internet b) exclusive rights for advertising sales for Publitalia .

a) Mediaset will stipulate a contract with Jumpy S.p.A: for the non exclusive use of rights, on the Internet and wireless networks, of audiovisual material in the entertainment, fiction , news, cinema and other sectors, already acquired or produced by Mediaset (and/or its subsidiaries) and for those rights that may be acquired or produced by Mediaset (and/or its subsidiaries) after the date of the present contract. Mediaset will stipulate a contract with Jumpy S.p.A: for the non exclusive use of rights, on the Internet and wireless networks, of audiovisual material in the entertainment, fiction, news, cinema and other sectors already acquired or produced by Mediaset. Rights will be paid by Jumpy with a "revenue sharing" mechanism, conferring to Mediaset 50% of advertising revenues collected through acquired contents (net of agency commissions). The contract between Jumpy S.p.A. and Mediaset S.p.A. last 5 years.

b) Jumpy and Publitalia, prior sharing commercial targets to achieve year by year, are committed to extend the present advertising contract (expiring on the 31.12.2000), with periodical renewal at market conditions.

In the context of a reorganisation of the corporate structure and the activities connected to the core television business, in January 2000, Elettronica Industriale S.p.A. - a wholly-owned subsidiary of RTI S.p.A. - sold to a third party the area of its business concerned with the design and assembly of signal broadcast equipment. Elettronica Industriale will maintain its role in the design and maintenance of the signal broadcast network.

In the new media area:

§ Mediaset has taken a 10% stake in Class Financial Network S.p.A. the producer of Cfn, a thematic channel dedicated to financial information that will be available on Stream from April 2000.

FORECAST FOR THE CURRENT YEAR

Advertising sales for the first quarter of 2000 confirm the positive trend of the previous year. In fact, bookings registered by Publitalia '80 for the 1st Q are up by 17.7% compared with the same period of 1999.

For the rest of the year growth prospects remain extremely positive, both in terms of television advertising and new media, where growth rates are particularly significant.

In the first three months of 2000, Mediaset channels have registered and average daily audience share of 42.6%.

Highlights from the consolidated income statement (*)

                                1999bn lire 1998bn lire 1999m euro              1998m euro

Revenues from sales and services 3,889.6 3,584.0 2,008.81 1,850.98
Other revenues and income 77.3 69.6 39.92 35.95
Total consolidated net revenues 3,966.9 3,653.6 2,048.73 1,886.93

Operating costs 1,695.5 1,647.5 875.66 850.87

Gross operating profit 2,271.4 2,006.1 1,173.07 1,036.06

Amortisations and depreciations 1,186.7 1,051.9 612.88 543.26
Operating profit 1,084.7 954.2 560.19 492.80

Financial income (charges) 36.0 38.0 18.59 19.62
Income (charges) from investments 4.7 (12.2) 2.43 (6.30)
Profit before extraordinary items 1,125.4 980.0 581.21 506.12

Extraordinary income (charges) 9.5 (0.8) 4.91 (0.42)
Pre-tax profit 1,134.9 979.2 586.12 505.70

Income taxes (478.0) (427.4) (246.87) (220.73)
Net profit 656.9 551.8 339.25 284.97

Profit (loss) for minority interests (0.2) (1.0) (0.10) (0.52)

Profit (loss) for the Mediaset Group 656.7 550.8 339.15 284.45




Highlights from the consolidated balance sheet (*)
          1999bn lire 1998bn lire 1999m euro 1998m euro





Television rights 3,336.4 2,579.6 1,723.11 1,332.27
Other tangible/intangible assets 771.9 801.2 398.65 413.77
Financial assets 1,055.9 339.1 545.33 175.13
Net working capital & other assets/liabilities (1,127.6) (375.8) (582.36) (194.10)
Severance indemnity reserve (156.4) (142.0) (80.77) (73.34)
Net invested capital 3,880.2 3,202.1 2,003.96 1,653.73

Net financial position 339.9 683.5 175.54 353.01

*************************** ******** ******** ******** ********

Shareholders' equity and minority interest 4,221.1 3,885.6 2,179.50 2,006.74



(*) these figures are still subject to certification by the external auditors and the Statutory Board of Auditors

Milano, March 28, 2000

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