As far as the commercial target group aged 2515-64 is concerned, Mediaset confirmed its leading position in the Full Day and in Day Time, while in Prime Time it suffered from the broadcasting of the Football FIFA World Cup in June (though it outperformed RAI by 0.2 percent). Not considering the World Cup, Mediaset confirmed its leadership in the target group.

In the Spring 2006 television guarantee period (from January, 29^th to March, 3^rd, excluding the week of the Sanremo Music Festival), Mediaset networks recorded a 24 hours audience share of 41.2%, a Day Time share of 41.0% and a Prime Time share of 41.9%. In the same period, as shown in the graph below, Mediaset strengthened its position structurally in the target group aged 15-64, which accounts for 70% of the Italian population and which is the most interesting group for advertisers. All the time brackets therefore increased their advantage over RAI networks.

In the period, Canale 5 confirmed its position as absolute leader both in Prime Time for all TV viewers, with an average share of 23.2%, and in all time brackets for the commercial target aged 15-64. Among the programmes that contributed to the season’s primacy of Canale 5 in terms of audience share, it is worth mentioning: Grande fratello 6 (31.6%), La fattoria (24.6%), Zelig Circus (27.1%), La corrida (26.8%). Excellent performance for Striscia la notizia (29.5%) and also for Cultura Moderna, the new programme by Antonio Ricci that has replaced Striscia la notizia since June 12^th - in the evenings when Football FIFA World Cup matches were not played, this programme achieved a 25% average share. Italia 1 maintained the 10.5% audience share it had already reached in Prime Time in the first quarter, thus outperforming RAI 2 once more (10,3%) and it was confirmed as the most watched television by children aged 4 - 14 (with a 24 hour share of 25.6%). Among the great number of productions proposed by Italia 1, there were Le Iene Show (13.3%) and Distraction (13.9%) as well as the significantly successful result obtained in the target group aged 15-24 with The O.C. (38.3%) and Veronica Mars (25.3%). Retequattro still ranked third, following RAI 1 and Canale 5 with a mature audience (it recorded a Full Day share of 11.7% with people over 65). It should be noted that Mike Buongiorno’s quiz show Il Migliore recorded almost 9%, Top Secret 9.6% and Kosmos un mondo di notizie 8.9%.

At June 30^th, 2006, RTI SpA produced about 47.3% of the television programmes broadcast by Mediaset Networks. Over the same period of the previous year, a decrease was recorded in the number of titles proposed, in spite of a 2.9% increase in hours of finished product. This increase is mainly attributable to New Programmes and Reality Shows.

As far as digital terrestrial television is concerned, in the first half of 2006, important investments were made both in contents and in broadcasting facilities.

Agreements were signed with Milan F.C., Inter F.C., Lazio F.C., Roma F.C., Livorno F.C. and Messina F.C. that grant Mediaset the Pay-per-View television rights for the matches that these clubs will be playing in the "Serie A" Premier League Italian Football Championship during the 2007-2008 and 2008-2009 seasons, including also an option for the next season. These rights were acquired for all the distribution platforms (excluding UMTS for Lazio F.C., Inter F.C., Livorno F.C. and Messina F.C.). Mediaset also retained the option (as was the case for the satellite rights of Juventus F.C., Inter F.C., Roma F.C. and Lazio F.C. sold to SKY) to sell the rights of the broadcasting platforms on which it will not develop its own commercial offer. Through these agreements and the contract already signed with Juventus F.C. in December 2005, Mediaset acquired the necessary rights to enable a Mediaset Premium offer coverage of over 70% of Italian football supporters’ requirements in the years to come.

During the second quarter, after obtaining the authorisation from the relevant authorities, the subsidiary company Elettronica Industriale S.p.A. purchased the broadcasting network of Europa TV, as established in the agreement signed at the end of 2005. The equipment and the frequencies purchased will be digitalised and, in compliance with the agreements signed with the main Italian mobile phone operators, they will be used for the creation of a new open platform that will broadcast mobile digital television thanks to the innovative DVB-H technology. Mediaset will thus have the possibility of playing a major role both as network operator and content provider in the project for the launch in Italy in the second half of 2006 of the first offer of mobile television in Europe.

- In the first half of 2006 the consolidated net revenues of the Telecinco Group reached EUR 523.3 million, showing a 2.8% increase over the same period of the previous year.

- The revenue increase, combined with a limited growth of charges, enabled the Telecinco Group to record an Operating profit of EUR 264.4 million, with a 3.0% growth over the same period of 2005 and an increase in operating profitability that went from 50.4% in the first half of 2005 up to 50.5% in the first half of 2006.

- Net profit amounted to EUR 186.4 million with a 6.01% increase over June 2005.

The excellent results achieved by Telecinco in the first half of the year confirmed the solidity and the strength of the Group’s commercial and publishing model, also in the new Spanish television market which is characterised by the presence of two new non-encryptedfree-to-air channels: Cuatro, which became operational effective at the end of 2005, and Sexta that started its television operations in June as the only channel entitled to broadcast the matches of the FootbalFIFA l World Cup in Germany, besides to Cuatro and the pay television.

Gross television advertising sales for Telecinco established a record in terms of sales revenues with EUR 511.9 million, that is, a 3.0% growth over the first six months of 2005.

This result enhanced the strength of Telecinco broadcasting schedules. While maintaining an effective control policy over costs – that increased only by 2.6% compared to the same period of the past year (an increase under the inflation rate which has been forecasted for the current year in Spain) – Telecinco consolidated its leadership in terms of audience share against competitors with a 24 hour share of 21.3%, outperforming Antena 3 by almost 1 percentage point (20.4%) and TVE 1 by 2.64 percentage points (18.7%).

Telecinco recorded a leading position also in the most important time bracket for advertising purposes, that is, in Prime Time (9 p.m. to midnight). In this segment, Telecinco secured a 21.6% share against 20.0% for Antena 3 and 18.5% for TVE 1. This percentage grew even higher, up to 24.2%, in the commercial target referred to this time bracket, where 3.6 more percentage points were gained over Antena 3 (20.6%) and 9.1 compared to TVE 1 (15.1%).

Also in the Full Day, Telecinco (23.2%) significantly outperformed both Antena 3 (21.1%) and TVE 1 (15.1%).

The excellent results achieved in terms of audience share confirmed the good quality and the continuity of Telecinco’s programme schedule which is still characterised by the supremacy of in-house produced programmesproductions in 2006 (82.3% of the programme schedule broadcast in the first half of 2005). More specifically, the strength of Telecinco’s television schedule comes from: Spanish fiction productions such as Hospital Central, Aida, El Comisario, Los Serrano and 7 Vidas; reality shows such as Gran Hermano and Supervivientes; foreign television series such as CSI Las Vegas, CSI Miami and CSI Nueva York, Salsa Rosa and Camera Cafè. All these titles lay the foundations for a wide range of entertaining programmes, which account for eight of the ten most watched programmed in Spain in the period. Finally, worth mentioning is the exceptional success recorded by the Grand Prix races of the Formula 1 Championship that, with an average audience share of 49.2%, outperformed the already brilliant results achieved during the previous season.

The analysis of the income statement and of the consolidated financial and balance sheet situation was also performed – in accordance with that established by IAS 14 on segment reporting – by separately highlighting the contribution to the financial and economic results of the two geographical areas where the Mediaset Group operates, Italy and Spain, considered as "primary segments" and by supplying the most important figures required by areas of operation, identified as "secondary segments".

As far as these last are concerned, as already specified in the Report on Operations in the first quarter of 2006, starting from the current year, as a result of the significant investments made to implement digital multiplexes and the clear corporate / organisational identity acquired partly after obtaining the Italian licence as network operator through the subsidiary Elettronica Industriale S.p.A., network operator activities were analysed separately, instead of being included in core television operations in Italy as had previously been the case. In order to guarantee comparability, the figures of the segment of the past year were consistently reviewed.

The income statement, the balance sheet and the cash flow statement detailed here below were reviewed and reclassified compared to those adopted for the Annual Report in order to show "interim financial reporting result level" and aggregates of the most significant economic and financial figures needed to understand the operational performance of the Group and of the single areas of operation. For these figures, which are not included yet in EU Gaap and that were drafted in compliance with that established in the recent Consob Communication no. 6064293 dated July 28^th, 2006 and in the CESR Recommendation dated November 3^rd, 2005 (CESR/o5-178b) regulating alternative performance indicators ("Non Gaap Measures"), we provided a description of the criteria adopted to prepare them and the notes referring to the items in the mandatory tables.

Lastly, it should be noted that the results of the Group and of its areas of operation are submitted to seasonal evolutions, since most advertising revenues are concentrated in the first part of the year as well as the costs of the pPay- per- viView television schedule referring to football events.

Economic results

The income statement highlights the cost and revenue components of EBIT which are generated by the disposal of consolidated stakes that, due to the kind of operation and the significance of their amounts, are to be considered as non recurrent. With reference to the periods being analysed, the specified revenues were generated by the disposal of minority interests (1.9% in 2005, 0.03% in 2006) held in the subsidiary company Gestevision Telecinco S.A

Operating profit and EBITDA were calculated and booked inclusive of non-recurring components and non-monetary cash costs/revenues (amortisation and write-downs, reinstatement/write-ups of current and non-current operations).

As already specified in the Report on Operations in the first quarter of 2006, some items of the income statement in the first half of 2005 were reclassified, mainly the items referring to certain costs, previously included in Revenues, which are now directly deducted from personnel expenses and services, while the revenues arising from dividend payouts, previously included in Financial revenues were reclassified in the item Income/ (expenses) from Equity Investments.

(amounts in EUR millions)

Here follows an analysis of the percentage impact on consolidated net revenues of a few significant items of the Group’s income statement.

The table below shows the percentage on consolidated net revenues of some key Income Statement components.

Here follows a description of the contribution to EBIT of Italian operations in the areas of operation that have been identified in accordance to IAS 14, considering their importance and the organisation and business structure of the Group.

The areas of operation identified are:

- Free to Air commercial television: the Group’s traditional core business, includes the operations related to advertising sales and programme scheduling for the three nationwide networks currently broadcast analogically and the operations linked to non-encryptedfree-to-air own channels broadcast by means of digital terrestrial technologies;

- Network Operator, these operations are related to the management of an analogue broadcasting network for non-encryptedfree-to-air own channels and of digital terrestrial broadcasting platforms (multiplexes), including the network which was taken over in the second quarter 2006, open to the main mobile phone operators and intended to support the offer of mobile digital terrestrial television using DVB-H technologies

- Other ancillary areas of operation serving and related to the core business activity (Internet, teletext, selling services selling and content providing to mobile phone operators, non television advertising concessionslicenses, TV television sales).

(amounts in EUR millions)

It should be noted that the items Inter-segment revenues and Inter-segment operating costs show the net contribution from the evaluation of the services provided by or received from the different areas of operation. More specifically, the Inter-segment revenues from the Network Operator segment refer to the use of the analogue broadcasting network by non-encrypted channels (free to air television) and to the capacity of the digital multiplexes used to broadcast Mediaset Premium events and used by digital terrestrial channels; the Inter-segment operating costs of the Free to Air television area of operation, generated by the use of the broadcasting network, are booked net of the value for the exploitation of publishing contents, technical services and facilities by other areas of operation.

In the first half of 2006 consolidated net revenues from Italian operations were substantially in line with those of the same period in the previous year. As shown more in detail in the table below, the decrease in television revenues was offset by the increased revenues generated by Pay-per-View operations and other non television operations.

(amounts in EUR millions)

More specifically, the decrease in revenues from free to air television operations is attributable to decreased gross advertising revenues from Mediaset networks, totalling a decrease of EUR 22.0 million, 1.4% down on the same period of the previous year, as a consequence of the fall recorded in the second quarter due to a number of events (Easter holidays, political elections in Italy, Football FIFA World Cup) which negatively influenced advertising investments.

As far as Pay per View television operations are concerned, Mediaset Premium commercial offer generated revenues from the sale of prepaid and scratch cards totalling EUR 33.4 million in the period being analysed – which corresponded to the second half of the first season of the Mediaset Premium offer – against EUR 15.2 million in the first half of 2005. It should be noted that the amounts generated by the sale of prepaid and scratch carts by card re-sellers (and similarly industrial and distribution costs) were booked according to the period of residual validity of the prepaid and scratch cards sold. In the same period of the previous year, net revenues totalling EUR 4.7 million (relating to the sale of ADSL exploitation rights for the encrypted television rights of the football matches in the second part of 2005 Italian Football Championship and the 2005-2006 season of the main "Serie A" italian Premier League clubs) were also booked with reference to this area of operation.

The increase in net revenues from non television operations was generated by TV sales under the Mediashopping brand and advertising sales relating to media other than television, since – starting from January 1^st, 2006 – revenues arising from the supply of satellite thematic channels to SKY were reduced to zero, due to the renegotiation of the agreement with the same company.

The operating costs of domestic operations showed an increase of EUR 84.6 million over the same period of the previous year, mainly as a result of the significant growth already recorded in the first quarter (+ EUR 64.6 million).

The main items of operating costs are personnel expenses and purchases, services and other costs which are detailed below.

The increase in personnel expenses, equal to EUR 9.8 million compared to the first half of 2005, is mainly due – as shown in the tables below – to the increase in average workforce, resulting from both the increased production volume required by television operations and the addition of 115 employees after the acquisition of the operations of the Home Shopping Europe Group in the second half of 2005. This item also includes the costs related to employees’ stock option plans, which were booked – in accordance with IFRS 2 standards – for EUR 2.6 million in the period being analysed (EUR 3.2 million in the same period of the previous year).

The total of purchases, services and other costs showed an increase of EUR 74.9 million in the first half of 2006 over the same period of the previous year. This variation was significantly impacted by the considerable growth in costs recorded in the first quarter (+ EUR 59.6 million compared to 2005), mainly attributable to the launch two weeks in advance of generalist programme schedules and to the costs generated by events which were not included in the schedules of the first part of 2005, including the production of the "Serie A" programme on Sundays and the reality shows Grande Fratello and La Fattoria.

During the second quarter, television costs were substantially in line with those of the same period of 2005. More specifically, overall television costs, including those elements relating to personnel expenses and amortisation, depreciation and write-downs of television rights and other fixed assets, showed a 6.1% increase over the first half of 2005, much lower than the percentage (11.9%) recorded in the first quarter.

The residual change in operating costs in the first half of the year refers to the other areas of operation. In particular, EUR 7.9 million of the residual change is due to non-recurring costs for the corporate reorganisation linked relating to the transfer within the group of network operator activities from RTI S.p.A. to Elettronica Industriale S.p.A. while the remaining part is attributable to the start-up of TV sales operations mainly performed through Mediashopping channel broadcast on digital terrestrial television.

The main increase in amortisation, depreciation and write-downs of television rights refer to the free to air and encrypted television rights of the reality shows which were not included in the schedules of the first half of 2005 and to the rights of the sports events, entertainment programmes and movies broadcast only on Mediaset Premium. The main increase in amortisation, depreciation and write-downs of other fixed assets refer to the investment in digital equipment and frequencies, especially those incurred occurred in the second half of 2005 for the implementation of the second digital terrestrial multiplex and in the second quarter of 2006 for the broadcasting network devoted dedicated to mobile television.

Here follows the income statement referring to Spanish operations which correspond to the consolidated figures of the Telecinco Group.

(amounts in EUR millions)

The table below details the percentage impact on consolidated net revenues of some key Income Statement items referring to Spanish operations.

In the first half of 2006, the consolidated net revenues generated by the Telecinco Group increased by EUR 14.3 million over the same period of the previous year.

The table below details the revenues of the Telecinco Group, highlighting its most significant items:

(amounts in EUR millions)

The increase in revenues is mainly due to the performance of advertising revenues from television rights referring to Telecinco, which reached EUR 511.9 million, thus showing a 3.0% increase.

Other advertising revenues, which recorded a 15% growth in the period, refer to advertising revenues from non-television media (Internet, teletext).

The operating costs of the Telecinco Group showed an increase of EUR 3.9 million over the same period of 2005.

Personnel expenses of the companies belonging to the Telecinco Group showed a EUR 1.6 million increase over the same period of the previous year.

The tables below show the evolution of personnel in the Telecinco Group in the relevant periods.

Overall costs for purchases, services and other costs recorded growth of EUR 2.3 million in the first half of 2006 over the same period of the previous year.

EBITDA recorded an increase of EUR 10.5 milllion in the first half of 2006 over the same period of the previous year; the percentage impact on net revenues went from 65.3% in the first half of 2005 up to 65.5% in the same period of 2006.

The overall costs of the Telecinco Group, including also amortisation and write-downs, showed an extremely slow growth totalling 2.6% in the first half of 2006. Before costs of EUR 5.4 million incurred for digital channels, this growth was a mere 1% in the period.

In the first half of 2006, EBIT for the Spanish segment recorded a EUR 7.8 million increase; operating profitability went to 50.5%, up from 50.4% in the previous year.

Below follows the analysis of the other items of the income statement with reference to the whole Mediaset Group.

The decreased EBIT in the first half of 2006 as well as the other trends previously commented with reference to geographical segments were attributable to the capital gains of EUR 43.1 million recorded in the first quarter of 2005 as a result of the disposal of a 1.9% stake in Telecinco. Operating profitability amounted to 32.7%, compared to 40.3% in the first half of 2005.

The decreased negative net balance of financial income – despite the increase in the average consolidated debt position (, which was mainly attributable to the amount of EUR 400 million paid for the purchase of treasury shares in the last quarter of 2005 –) was due to the net income generated by a fair value assessment of the hedging instruments and their relevant hedged debt positions in currency (type of hedging on which hedge accounting is not applied in compliance with IAS 39).

In the period EBIT is net of estimated income taxes, in accordance with the criterion of measurement specified by IAS 34, adopting the tax rate that is estimated due to be applied at the end of the ongoing fiscal year.

The Tax Rate of the Group (which in the first half of 2005 was positively affected by the fact that the capital gains obtained from the disposal of a 1.9% stake held in Gestevision Telecinco were not taxable) showed a lower performance in the first half of 2006 compared to the tax rate estimated on a yearly basis. This was mainly due to the deferred tax assets generated by the redefinition of the tax reference value for the intangible assets included in the framework of the reorganisation operations within the Group.

Here follows the Balance Sheet Summary of the Group and the balance sheet by geographical segment. The tables were restated with respect to the schemes proposed in the Annual Report statements and presented in a layout highlighting current and non current assets and liabilities, with a view to underlining two macro aggregates, that is, Net invested capital and Net financial position. The net financial position consists of Gross financial liabilities minus Cash in hand and cash equivalents as well as Other financial assets.

In this summary table, assets restated at December 31^st, 2005 as non current assets held for sale were included in their original categories (that is, television rights, other fixed assets, equity investments and other financial assets).

Equity investments and other financial assets include the assets that in the Balance Sheet belong to Equity investments in related joint control and affiliatedand jointly controlled companies and Other financial assets (though this item is limited to non current equity investments and receivables and does not include Financial receivables and Financial assets available for sale which belong to the Net financial position).

Net wWorking capital and other assets and liabilities includes current assets (excluding Cash in hand and cash equivalents and current financial assets which are part of the item Net financial position), deferred tax assets and liabilities, provisions for risks and charges, due to suppliers and tax liabilities.

An analysis of the main components of the Net financial position is detailed in the explanatory notes below.

(amounts in EUR millions)

Below is a summary of the main balance sheet changes occurred in the first half of 2006 with respect to December 31^st, 2005.

The increase in television rights is mainly attributable to the capitalisation of encrypted television rights for about EUR 330 340 million in the period being analysed, starting from the 2007-2008 and 2008-2009 seasons of "Serie A" Italian football league clubs and referring to Milan F.C, Inter F.C., Lazio F.C., Roma F.C., Livorno F.C. and Messina F.C. Except for the satellite television rights of Inter F.C., Lazio F.C. and Roma F.C., these items include the right of broadcasting of all the main distribution platforms. For some of these rights, Mediaset is entitled to exercise the option to sell them to third parties, in case they are not included in its commercial offer. With reference to the conclusion of these agreements, it should also be noted that rights of first negotiation and pre-emption purchased in 2004, and previously booked in other intangible assets for an amount of EUR 51.4 million were restated in television rights as ancillary charges to main rights.

The main changes in Other fixed assetstangible and intangible fixed assets, beside the amortisation, depreciation and write-downs for the period, were due for EUR 192.4 million to the purchase of the broadcasting network from Europa TV and for EUR 73 million to the acquisition of the first negotiation and pre-emption rights for the 2009-2010 football season of Milan F.C., Inter F.C., Lazio F.C., Roma F.C. (encripted television rights), including the already mentioned reclassification for EUR 51.4 million.

The decrease in Equity investments and other financial assets is attributable to the disposal of the 2.73% stake held in Hopa S.p.A. after exercising the put option which was granted by Fingruppo when this stake was originally bought, and to the disposal of interests held by Mediaset S.p.A. in an investment trust managed by ABS Finance Fund, an open-end investment company.

The change in Net wWorking capital and other assets and liabilities is mainly attributable to the increase in trade payables resulting from the previously illustrated investments for the period referring to multiyear encrypted television rights.

The changes in Shareholders’ equity detailed in the Statement of Changes below are mainly attributable not only to the net profit of the period and to dividend payouts, but also to the increase of EUR 25.1 million as a result of the sale of treasury shares related to Stock Option Plans reserved to the Group’s employees, the changes in provisions for Cash flow hedges and the use of the provision which includes the cost of Stock Option Plans regarding the amount accrued starting from the year in which those share were assigned.

Below are separate balance sheet results for the two geographical segments, Italy and Spain, in the periods being analysed.

It should be noted that the balance sheet situation regarding Italian operations includes – in Equity investments and other financial assets – the book value of the stake held in Gestevision Telecinco, which is eliminated at the end of the consolidation process. As a consequence, the item Group shareholders’ equity includes the dividends received by Telecinco that, in order to be simple and clearer, were not specified in the income statement figures by geographical segment.

(amounts in EUR millions)

The table below shows a summary of the balance sheet situation of the Group at June 30^th, 2006 highlighting the effects deriving from the line-by-line consolidation of investments in the Telecinco Group.

(amounts in EUR millions)

The summary of the cash flow statement by geographical segment, in order to assess the contribution of financial movements in the two periods, is shown below. This table too was restated with respect to the scheme suggested by IAS 7 which is used for preparing the mandatory cash flow statements, highlighting the changes occurred in the Net financial position, which is the most significant item for understanding whether the Group is able to meet its financial obligations.

(amounts in EUR millions)

The Group’s free cash flow amounted to EUR 166.1 million decreasing by EUR 210.9 million with respect to the same period of 2005, due to the payment of EUR 262 million in 2006 for the acquisition of pre-emption rights for the 2009-2010 season of the main "Serie A" football clubs and the investment in the broadcasting network purchased from Europa Tv.

Including these investments, in Italy the free cash flow increased by about EUR 55 million over the same period of 2005, mainly as a result of decreased tax payments.

In 2006 divestments were related to the disposal of the library of thematic channels as part the renegotiation of the agreement reached with SKY Italia at the end of 2005 and to the disposal of broadcasting equipment; in the same period of 2005, divestments were related to the disposal of the ADSL exploitation of encrypted television rights on the matches of some "Serie A" Italian Premier League clubs.

In the first half of 2006 equity investments generated net revenues for EUR 48.7 million mainly related to the sale of the stake held in Hopa; in the same period of the previous year, proceeds of EUR 76.6 million had been obtained from the sale of a 1.9% stake in Telecinco, while net expenses totalling EUR 29.7 million referred to the disposal of the stake held in Albacom.

Please note that a 15% rate was withheld on the dividends paid out by Telecinco to Mediaset in 2006 and that this amount will be recovered next year.

In Spain, free cash flow amounted to EUR 207.5 million increasing by EUR 18.1 over the same period of 2005

Reconciliation between shareholders’ equity and period results for Mediaset S.p.A. with consolidated data

Foreseeable developments

- In July and August (from July 10^th to September 2^nd, 2006, excluding the period at the end of the FootballIFA World Cup), in the commercial target group aged 15-64, Mediaset networks outperformed RAI networks in all time brackets, thus confirming the absolute leadership of Canale 5 while Italia 1 ranked third.

In the same period, considering all TV viewers, Mediaset networks recorded an average 24 hours share of 40.5%, a Prime Time share of 41.1% and a Day Time share of 40.2%.

In Prime Time Canale 5, with an average audience share of 21.1% equalled RAI 1, while Italia 1, with 12.9% and 12.6% respectively, outperformed RAI 2 in Day time and in the 24 hours.

- At the end of the first eight months of the year Telecinco confirmed its leading position in Spain both in Day Time where it recorded a 21.3% share and in Prime time with a 21.5% share. More specifically, Telecinco was for the first time ever the most watched channel also in August with an average audience share totalling 20.6%, thus outperforming Antena 3 and TVE1 that suffered from the competition from the new channels Quatro Cuatro and Sexta.

- After the first eight months of the year, the performance of advertising sales in Mediaset networks proved to be in line with the first half of 2006 .

- As far as the Mediaset Premium offer is concerned, to date over 2.1 million smart cards and about 3.2 million scratch cards have been sold.

- Based on the decreased result achieved at the end of the first half of the year and the figures which are now available, we believe that this fiscal year will record consolidated EBIT operating profit lower than the past year. The amount of this change will mainly depend on the performance of television advertising sales in Italy and in Spain, which is now difficult to quantify since we do not know how the advertising market will evolve in the months to come. The second part of the year should benefit from an increased contribution from Pay per view operations and from the launch in autumn of mobile television services based on DVBH technologies.

CONTENT AND CHANGES OF THE MAIN ASSET ITEMS
(amounts in EUR millions)

3.1 Property, Plant and Equipment

The main period increases concern the following types of assets:

- plant and equipmentmachinery: these mainly refer to broadcasting and transmission systems, EUR 3.7 million of which regard the new digital technology infrastructures;

- tangible assets under formation and advances: regarding projects in progress attributable for EUR 33.8 million to the network dedicated to mobile television. The remaining part of the increases can be attributed to analogue television broadcasting systems, analogue stations and various equipment.

Item Property Land and building includes the value of an office building in Rome and object of financial leasing recognised in the accounts as follows:

The following tables show the main information regarding this contract:

Below are the changes regarding the period under investigation. It is worth noting that the item other movements includes reclassifications regarding the capitalisation of advances previously paid to supplier (classified in previous years under other intangible assets) for which during the year contracts have been stipulated of production has been completed, contracts have been cancelled or rights have contractually expired.

Overall increases in the six months amount to EUR 775.6 million (EUR 402.1 million in the first half of 2005) and refer to purchases for EUR 637.5 million, capitalisations of advances previously paid to suppliers (change included under item other movements) for EUR 89.0 million and the reclassification for EUR 51.4 million of the first negotiation and pre-emption rights (accounted for at 31 December 2005 under other intangible intangible fixed assets) due to the signing in the first half of 2006 of the agreements with Milan, Inter, Roma and Lazio about the encrypted television rights for these clubs for the sport seasons 2007/2008 and 2008/2009.

Rights that have not become effective at 30 June 2006 amount on the whole to EUR 665.1 million (EUR 488.3 million at 31 December 2005). The change is mainly attributable to the capitalisation in the first half of the year of the encrypted rights for the seasons 2007/2008 and 2008/2009.

Changes in the first half of the year in differences arising from consolidation refer to the purchase of the remaining shareholding stakes in Videotime S.p.A., a fully consolidated company consolidated on a line-by-line basis, and to the disposal of 0.034% of the stake held in Gestevision Telecinco S.A.

3.4 Other Intangible Fixed Assets

Patents and intellectual property rights mainly refer to software.

Trademarks mainly refer to the "Jumpy" brand, registered in 2001, due to the acquisition of the Jumpy S.p.A. branch concerning the publishing operations of its online portal.

Concessions include investments for the acquisition of frequencies from third parties for the development of broadcasting platforms for Digital Terrestrial Television. Increases in the period under examination mainly refer to the purchase of frequencies from Europa TV that will be destined assigned to the development of the broadcasting network for mobile digital television (DVBH technology) for an amount of EUR 186.1 million plus ancillary charges for EUR 5.6 million. Further increases for the period refer to the acquisition of frequencies destined used to increase the coverage of existing multiplex broadcasting systems.

Item intangible assets under formation and advance payments, at 30 June 2006, mainly consist of advance payments made to suppliers for the acquisition of television rights, advances paid for dubbing services and for options on the completion of programmes and production start-ups. Increases for the period refer to advances paid to suppliers of TV rights and to advances for the production of long serial dramas and amount to EUR 89.3 million.

Decreases mainly resulted from the completion of productions and the finalisation of contracts under negotiation at 31 December 2005, with subsequent reclassification to television rights for EUR 84.1 million.

Item other intangible assets almost exclusively refers to the option right for the purchase of encrypted television rights of the main domestic football clubs for the season 2009/2010. Period increases of EUR 73.2 million refer in almost their entirety to these option rights, whereas decreases for EUR 52.4 million are mainly attributable to the reclassification under television rights of the first negotiation and pre-emption rights acquired in 2004, because of the agreements stipulated in the first half of the year with Milan, Inter, Roma and Lazio as was described in the comment to the item television rights.

3.6 Other Financial Fixed Assets

The main change in equity investments refers to the sale of Hopa S.p.A. (EUR 45.7 million) to Fingruppo Holding S.p.A. (which occurred on 3 February 2006) by exercising the sale option envisaged in the stake purchase contract, and to the acquisition by Gestevision Telecinco S.A. of a 15% interest stake in the share capital of Alba Adriatica S.L. and Kulteperalia S.L., for EUR 9.5 million and EUR 1.5 million, respectively.

Financial receivables refer for EUR 49.2 million to the receivable due from British Telecom regarding the sale of the equity investment in Albacom S.p.A., carried out on 4 February 2005., Aas was already commented in the Financial Statements at 31 December 2005, a provision for risk for EUR 34.6 has been assessed with reference to this receivable and due to be received in 2009, f. That amount has been determined on the basis of a difference between the actual value of the same found and EUR 14.6 – the minimun value considered at the time of the closing of the equity investment disposal transaction. Other receivables refers for EUR 4.5 million to a loan paid by parent company Publitalia ’80 to company Radio e Reti S.r.l. and for EUR 1.2 million to loans granted by Gestevision Telecinco S.A. to associated companies.

The change in assets securities available for sale refers to the sale of all the quotas in fund management company ABS Finance Fund.

4 CURRENT ASSETS

4.1 Inventory

At the end of the period, this item consisted of:

Raw and ancillary materials, consumables and supplies primarily include spare parts for radio and television equipment; the write-down concerns slow-moving items, which have been written down to their estimated realisable value.

Work in progress and semi-finished products primarily consist of screenplays and television productions in progress.

Finished goods and products primarily include:

- television productions held by R.T.I. S.p.A. and the Telecinco Group totalling EUR 19.7 million (EUR 14.5 million at 31 December 2005);

- products for "goods exchange" operations carried out by Promoservice Italia S.r.l. for EUR 0.7 million (EUR 0.7 million at 31 December 2005),

- smart card stocks regarding Mediaset Premium operations for EUR 0.5 million (EUR 1.2 million at 31 December 2005);

- products for teleshopping activities for EUR 2.2 million (EUR 2.0 million at 31 December 2005);

- pay-per-view television rights, that will expire in less than one year, for EUR 1.1 million.

4.2. Other Receivables and Current Assets

Other receivables mainly include:

- Receivables due from taxation authorities for EUR 26.8 million, EUR 21.9 million of which almost entirely regard an amount due to Mediaset Investimenti S.p.A. for withholding taxes on dividends received from subsidiary company Gestevision Telecinco S.A.;

- Advances to suppliers, outside contractors and agents paid to advertising area consultants and to suppliers, artists and other professionals for television productions for EUR 25.3 million (EUR 14.9 million at 31 December 2005);

- Receivables from factoring companies without recourse, which had not been settled by the factoring company at period end, for EUR 60.0 million (EUR 63.8 million at 31 December 2005).

At 31 December 2005 this item included also EUR 18.0 million related to the payment of the advance for the acquisition of Europa TV frequencies as mentioned on the relative preliminary agreement..

In item prepayments and accrued income, the most significant items refer to:

- the encripted right for Champions League matches for season 2006/2007, equal to EUR 26.5 million (EUR 16.2 at 31 December 2005) acquired from company Union des Associations Europeennes de Football. The same amount at 31 December 2005 related instead to free-to-air rights for the remaining matches of the 2005/2006 sport season.;

- rights for the highlights of "serie A" (premiitalian Premier League)ership) football matches for seasons 2006-2008, equal to EUR 123.1 million (EUR 157.2 million at 31 December 2005) acquired from the Football leagueLega Calcio (italian national football federation), that are recognised in the income statement when the specific event occurs;

- the costs for smart cards which are equal to EUR 8.7 million recorded for the correlation with revenues regarding their sales (EUR 10.0 million at 31 December 2005).

The change in item financial assets for trading derivatives mainly refers to the receipt closing regarding the equity swap contract stipulated in 2003 by and between Mediaset and a major Italian bank and concluded in the first half of 2006.

Item financial assets for hedging derivatives refers to the fair value of derivative instruments used by the Group for the purposes of its hedging activities of currency exposures connected to commitments for future purchases of television rights denominated in foreign currency (forecast transaction).

The item non hedging financial assetsfinancial assets for derivatives with no hedging purpose refers to the fair value of derivative instruments that hedge trading receivables denominated in foreign currency. Those financial instruments have no hedging purpose according to the hedging accounting discipline envisaged by IAS 39variations of fair value of the elements recorded in the financial statements.

The change over 31 December 2005 of financial assets for trading derivatives refers both to the effect of increases and decreases of derivative instruments utilized used by the Group to hedge future purchases of television rights and to hedge items recognised in the financial statements, as well as to the effect of changes in fair value mainly attributable to the change of the spot exchange rate of reference.

5. NET FINANCIAL POSITION

Here follows a detail of net financial position, an aggregated item composed by financial liabilities minus cash and cash equivalents and other current financial assets.

Current financial assets refer to floated bonds and investment fund quotas totalling EUR 33.9 million and financial assets for non hedging trading derivatives for EUR 1.6 million.

The change in Securities available for sale refers to the disposal of quotas of the fund management company ABS Finance Fund, held on 31 December 2005 by the parent company Mediaset S.p.A., for an overall amount of EUR 84.7 million.

The change in item Due to banks – non current liabilities is attributable to new loan contracts that were stipulated in the first half of the year; in particular, a loan contract was stipulated with Istituto S.Paolo Imi S.p.A. for a notional amount of EUR 100.0 million, that requires the check of the following financial covenants:

1. net financial position /EBITDA not higher than 4, to be checked every six months;

2. EBITDAnet financial position/net financial chargestotal shareholders’ equity not lower than 102, to be checked every six months.

So far, these requirements have been fulfilled.

This item also includes EUR 235.0 million regarding the medium/long-term loan contract stipulated with Mediobanca S.p.A. in 2005, EUR 75.0 million of which as credit line. Also this contract, as was described in the financial statements at 31 December 2005, is subject to the check of the following financial covenants, that have been fulfilled to date:

1. net financial position /EBITDA not higher than 1.5 to be checked every six months;

2. EBITDA/net financial charges not lower than 10, to be checked every six months.

The change in item Due to banks (current liabilities) refers to both the opening of new credit lines with major banks, and to the repayment totalling EUR 60.0 million, regarding the five-year loan contract stipulated in 2002 with major banks.

Item Due to other financial institutions (non current liabilities) refers to liabilities towards lease companies for EUR 2.1 million and for EUR 2.7 million to soft loans granted to the Telecinco Group.

Item Due to other financial institutions (current liabilities) refers to liabilities towards factoring companies for EUR 5.8 million, to the current liabilities towards lease companies for EUR 0.7 million, for financial liabilities for non hedging derivatives totalling EUR 1.4 million, financial liabilities towards related parties for EUR 5.6 million regarding bank accounts managed on behalf of these companies by the parent company Mediaset S.p.A. and for EUR 0.3 million to the current liability of the soft loan granted to the Telecinco Group.

6. NON CURRENT ASSETS AND LIABILITIES FOR SALE

The changes in these items compared to 31 December 2005 can be attributed to the conclusion of the sale of digital equipment, to the sale to Sky of the library of television rights regarding theme channels and to the liquidation of the 11.76% stake held by subsidiary Mediaset Investment S.a.r.l in Euromedia Lux Two.

MEDIASET GROUP 2006 INTERIM REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

CONTENT AND CHANGES IN THE MAIN ITEMS OF THE INCOME STATEMENT
(EUR millions)

10. Revenues

For a detailed breakdown of revenues, refer to the tables already described in the Report on operations

11. Personnel Expenses

Personnel expenses went from EUR 219.4 million in the first half of 2005 to EUR 231.0 million in the first half of 2006 with an overall increase of EUR 11.6 million.

Other costs mainly include the cost for the Stock Option Plans, equal to EUR 3.8 million (EUR 4.0 million in the first half of 2005), EUR 1.2 million of which regarding the plans assigned by the Telecinco Group, the costs for the canteen EUR 2.9 (EUR 2.7 million at 30 June 2005) and emoluments to directors belonging to Group companies for EUR 2.5 million (EUR 1.7 million at June 2005)

12. Purchases, Services and Other Costs

13. Capital Gain/(Loss) fromon the dDisposal of Equity Investments

This item, equal to EUR 1.3 million (EUR 43.1 million at 30 June 2005) includes the income obtained in 2005 as well as in the first half of 2006, refers to the income obtained following with reference to the sale of minority stakes (1.9% in the first half of 2005 and 0.034% in the first half of 2006) of the stake held in the subsidiary Gestevision Telecinco S.A.

14. Financial Charges

Item charges on employee benefits refers to the interest cost regarding the calculation of the termination benefit as is envisaged by IAS 19.

15. Financial Income

Items Foreign exchange gains and foreign exchange losses include both the non effective elements resulting from the assessment of derivative instruments regarding hedging operations with respect to currency exposures connected to commitments for the future purchase of rights which are treated in the accounts under a hedge accounting regime in line with IAS 39, and the effects of the fair value assessment of derivative instruments hedging changes in exchange rate debts and changes in the same debt, (assessed based on the exchange rate at 30 June 2006, ) for which hedge accounting is not activated.

16. Result of Equity InvestmentsIncome/(expenses) from equity investments

This item includes the share of net profit/ (loss) of the companies accounted for byon the basis of the equity method, including possible value loss or recoveries, write-downs of equity investments classified as available for sale included in the item other non current financial assets, allocations to the provision for risks on equity investments, income from the receipt of dividends and capital gains/losses on disposals.

Dividends included the dividends received from HOPA S.p.A. during the first half of 2005, a stake that was sold in the first half of 2006.

In the first half of 2005, item capital gains/(losses) from disposals write-downs of financial assets available for sale included the write-down for EUR 1.1 million, on of the interest stake held in Euromedia Lux Two.

17. Income Tax for the Period

Income taxes in the half year, of EUR 220.7 million, include current taxes of EUR 252.3 million and EUR 31.6 million regarding the positive net balance between charges and income calculated on temporary differences, mainly attributable to the recognition of advance-paid taxes following the redefinition of tax values of intangible assets transferred within company and business reorganisation operations in the Group matched by uses of advance-paid taxes allocated in previous years for the write-down of equity investments.

18. Earnings per Share

The calculation of the basic and diluted earnings per share is based on the following data:

19. SEGMENT REPORT

19.1 Primary Sectors (Geographical Areas)

The following tables show the main income statement and balance sheet data directly attributable to the two geographical segments at 30 June 2006.

The relationships between the two segments almost exclusively refer to the dividends distributed by subsidiary company Gestevision Telecinco. Data regarding inter-segment revenues refer to the cancellation elimination of the stake held in Gestevision Telecinco, whose book value is recognised under the assets of geographical segment Italy, with subsequent recognition of the consolidation difference.

Non monetary Non monetary expensescosts refer to allocations to provisions for risks and charges and to the costs for share stock option plans.

19.2 Secondary Sectors (Areas of Operation)

The operating segments defined in geographical area Italy, considering the actual significance and the organisation and business structure of the Group are the following (as was already described in the Report on operations):

- Free To Air TV, the Group’s traditional core business, which includes operations regarding advertising sales and producing programme schedules for the three national networks currently broadcast in the analogue mode, and own non encrypted channels distributed by means of the digital terrestrial technology;

- Pay per View television operations, regarding the supply of pay television events and programmes identified with the Mediaset Premium brand;

- Network Operator, operations connected to the management of the broadcasting network, for the transportation and broadcasting of the analogue signal of own non encrypted channels and the digital terrestrial broadcasting platforms (multiplex), including the network purchased in the second quarter 2006 open to major mobile telephone companies and destined to convey the offer of digital terrestrial television in mobility by means of the DVB-H technology;

- other operations, ancillary to the main one (the Internet, teletext, sale of services and content providing to mobile telephone companies, non television advertising concessions, remote shopping).

Comments regarding the breakdown and changes in revenues from the areas of operation mentioned are already included in the Report on Operations.

Main secondary segment operations operating assets refer to television rights; and are related toare as follows:

- for the Free-to-air area, the library (films, dramas, short TV series, television series, cartoons), self-produced long dramas, entertainment rights, news and sports programmes that feed the three general channels;

- for the Pay-per-view area, the sports, cinema and entertainment rights reserved to the Mediaset Premium’s offer. In particular, sports rights include the broadcasting rights for the main Serie A italian premier league football clubs, with starting date in the football seasons 2004/2007 (purchased in 2004 and 2005) and 2007/2009; the investments in the first half of 2006 are mainly attributable to the purchase of the rights of Milan, Inter, Roma, Lazio, Livorno and Messina for which, with the exclusion of satellite rights of Inter, Roma and Lazio (purchased by Sky), Mediaset holds all the rights for the existing broadcasting platforms, reserving the right to sell uses exploit that may not fall within its own commercial offer.

Other investments refer:

- for pay-per-view television operations, for EUR 73.0 million, to option rights for the purchase of encrypted television rights regarding major football national clubs for the 2009/2010 season.

20. RELATED PARTIES’ TRANSACTIONS

We inform you that the commercial relationships with the companies listed in the table above were subject to normal market conditions.

Revenues from other companies belonging to the Fininvest Group and the Mediolanum Group mainly regarded the sale of television advertising spaces; commercial debts are mainly attributable to the purchase of television rights and productions.

Relationships with other related parties refer to consulting relationships with Sin&rgetica, a company belonging to a director of Mediaset S.p.A.

It should also be noted that in the first half of 2006 the Mediaset Group acquired television rights from Fininvest Group companies for an overall amount of EUR 265.7 million. In particular, these purchases relate for EUR 47.7 million to Medusa Film S.p.A. and for EUR 187.6 million to Milan A.C., EUR 5.0 million of which regarding rights of events that can be broadcast free-to-air and EUR 182.6 million rights for the broadcasting on all distribution platforms of home matches of the Serie A 2007/2008 and 2008/2009 seasons of Milan A.C. S.p.A. besides tournaments and friendly matches. Within the framework of the latter agreement, another EUR 27.0 million was paid for the option on encrypted rights of Milan regarding the 2009/2010 season. With respect to Medusa Film S.p.A., contracts were also finalised that were previously recognised as advances for EUR 16.3 million, and new advances for EUR 16.1million were paid.

In addition to the payments of dividends to Fininvest S.p.A. for EUR 180.5 million, the main impacts on the consolidated financial cash flows in the first half of the year generated by related parties’ transactions can be attributed to EUR 68.4 million paid to company Medusa Film S.p.A. for the purchase of television rights, EUR 16.1million of which as advances, and outflows to Milan A.C. for EUR 27.0 million for the purchase of the option on Milan encrypted rights regarding the 2009/2010 season, purchases supported by the assessment of an independent expert.

21. OTHER INFORMATION

20.1 Personal Sureties given

At 30 June 2006, the Group had outstanding guarantees given to third parties and on behalf of affiliated companies totalling EUR 54.2 million (EUR 53.5 million at 31 December 2005).

20.2 Commitments

The main commitments of the Mediaset Group companies may be summarised as follows:

- commitments for artistic services, television productions and press agency agreements totalling around EUR 137.7 million (EUR 264.3 million at 31 December 2005), EUR 14.9 million of which regarding commitments for the production of long serial dramas;

- commitments to acquire rights totalling EUR 1,004.8 million (EUR 1,015.7 million at 31 December 2005). These future commitments refer to "volume deal" contracts that the Mediaset Group has entered into with several major US studios to ensure the availability of movies and television productions made by them guaranteeing the possibility to make a volume of investments in line with the Group’s strategies of extending the library. It should also be noted that this item includes EUR 155.7 million regarding commitments with associated company Medusa Film S.p.A.;

- commitments for the purchase of new equipment, maintenance of the broadcasting network, works done and supplies for company offices and the supply of EDP services for EUR 24.4 million (EUR 16.9 million at 31 December 2005);

20.3 Potential Liabilities counter-guaranteed by Fininvest S.p.A.

As was mentioned in the account report at 31 December 2005, it is worth noting that the guarantee issued on 6 June 1996 by Fininvest S.p.A. to the benefit of Mediaset S.p.A. and its subsidiary companies, in connection with the public offering for the sale and subscription of shares in Mediaset S.p.A., expired on 31 December 2002.

However, as already mentioned, on 19 December 2002 a joint recognition with the parent company was stipulated, according to which Fininvest S.p.A. undertook to hold harmless Mediaset S.p.A. and its subsidiary companies also beyond that deadline, until there are no longer income statement and balance sheet consequences of the events notified to Mediaset S.p.A. and its subsidiaries by 31 December 2002 and communicated to Fininvest S.p.A. by 31 January 2003. With respect to charges already ascertained, Mediaset S.p.A. and its subsidiary companies requested an indemnity of charges from Fininvest S.p.A. for an amount at 30 June 2006 of EUR 7.8 million .

20.4 Significant Subsequent events after the June 30^th June 2006

On 5 July 2006, MusicShop was started, the new Mediaset portal for the online purchase of digital music from a large catalogue of Italian and international songs and especially audio-visual contents connected to the soundtrack and unpublished collections of Mediaset original programmes.

On 14 July 2006 the Council of State rejected Agcom appeal against the decisions of the Regional Administrative Court regarding the cancellation of administrative sanctions decided by the Agcom with respect to dominant positions; the disputes above are therefore to be considered as definitively closed.

On 27 July 2006, Mediaset and Telecom Italia Media signed an agreement for the mutual sale of digital terrestrial broadcasting rights of football matches of the major clubs in their respective bouquets for the next three seasons. By virtue of this agreement, Mediaset can broadcast away matches of Milan, Inter, Roma Lazio and Torino in the stadiums of Telecom Italia Media clubs (Fiorentina, Palermo, Cagliari, Sampdoria and Catania).

On 28 July 2006, Mediaset reached an agreement with Torino FC for the purchase of the broadcasting rights of home matches in the next two seasons of the Serie A division for all distribution platforms with the exception of UMTS and foreign rights, reserving the right to sell to third parties the rights of use of the broadcasting platforms on which it will not develop its own commercial offer.