Key Figures 2004* % %

The Year 2005

February 2005 EM.TV Beteiligungs GmbH & Co. KG completely repays the zero-coupon note to its holders, through the transfer of net proceeds from the sale of its 45 percent stake in Tele München Gruppe (TMG).

EM.TV AG reaches an agreement with KarstadtQuelle New Media AG and Swiss sports investor Dr. h. c. Hans-Dieter Cleven regarding the acquisition of their stakes in sports TV station DSF and online sports platform Sport1. The EM.TV Group is now sole stake-holder of both sports companies.

With C&A and the Deichmann Group, EM.TV wins two respected retail companies as new licensees for the 2006 FIFA World Cup™. Their extensive national and international retail networks are a decisive contributi-on to the expansicontributi-on of distributicontributi-on channels.

March 2005 EM.TV subsidiary EM.Entertainment GmbH reaches an agreement with ZDF on the exten-sion to their existing framework contract until 2012. The agreement relates to the period starting 2006 and encompasses a total of around 625 half-hour programs. Furthermore, the two companies agree to continue their joint co-production activities within the children’s and youth sector.

May 2005 DSF acquires an extensive rights package to the UEFA Cup matches for the next three seasons from sports rights marketing agency SPORTFIVE, beginning with the 2005/2006 season.

June 2005 EM.TV AG partially repays the 8% bond with warrants attached of 2004/2009 with a nominal payment of 10 million Euro on June 30, 2005.

September 2005 Following countless anniversary initiatives in celebration of the 30th TV birthday of cartoon series Vicky the Viking, the three-part Vicky promotion run in 2004 by EM.Entertainment GmbH in co-operation with Autobahn Tank & Rast GmbH is voted Promotion of the Year by licensing body LIMA.

December 2005 EM.Entertainment GmbH takes an important step in the expansion of its home entertain-ment activities when it secures long-term program con-tracts with Munich-based Universum Film GmbH and Hamburg-based Warner Bros. Entertainment GmbH.

In the course of the TV rights issue by DFL Deutsche Fußball Liga GmbH in Frankfurt, DSF secures an exten-sive rights package to the Premier and Second German Soccer League for the next three seasons, starting with the 2006/2007 season. The rights package encom-passes the exclusive first free-TV highlights to both the Sunday matches played in the Premier Soccer League, as well as the exclusive free-TV highlights to the Second Soccer League, including the live match on Mondays.

PLAZAMEDIA reaches an agreement with PREMIERE on the continuation of their long-term strategic partner-ship, as of January 1, 2007. Within the scope of the partnership, PLAZAMEDIA will provide a wide range of services in studio production (contract term until June 30, 2011) and outside production (contract term until December 31, 2009).

In addition, PLAZAMEDIA takes over 100 percent of the stakes in PREMIERE subsidiary Creation Club (CC) GmbH. Creation Club and PREMIERE also agree on an extensive production framework contract with a term of three years and an option to extend by a fur-ther two years.

Key Figures

Equity ratio (in percent) Long-term financial liabilities Short-term financial liabilities

Sales > Sports > Entertainment > Others

Earnings before interest, taxes, depreciation and amortization (EBITDA) Depreciation and amortization

Earnings before interest and taxes (EBIT) Earnings before taxes (EBT)

Shareholders’ interests

Cash flow from operational activities Cash flow from investment activities Cash flow from financing activities

Outstanding shares in million Share price December 31, in Euro

Market capitalization (based on outstanding shares) Average number of outstanding shares (undiluted) in million Earnings per share (undiluted) in Euro

Employees (annual average)

*In acordance with IFRS 2 the previous year numbers (2004) were adjusted.

2005 178.9 89.8 316.2 66.6 153.6 48.6% 64.5 5.6 209.5 177.8 30.6 1.1 21.2 -15.5 5.7 0.8 0.2 -4.0 53.5 -115.8 53.1 4.33 229.9 51.5 0.00 640 2004* 131.1 94.1 426.6 65.6 153.1 35.9% 181.9 0.0 206.6 177.6 29.0 0.0 73.1 -22.5 50.6 142.5 134.3 26.2 -19.4 -13.1 49.3 2.87 141.4 41.7 3.22 609

Corporate Structure I Simplified Structure

18.9% 100%

Junior.TV GmbH & Co. KG EM.Entertainment GmbH EM.Sport GmbH

Sport Media Holding GmbH DSF Deutsches SportFernsehen GmbH Sport1 GmbH PLAZAMEDIA GmbH TV- und Film-Produktion Creation Club (CC) GmbH 50.1% 100% 100% 1 00% 81 .1 % 81 .1 % 49.9% 18.9% 100% Yoram Gross- EM.TV Pty. Ltd. Australia Planeta Junior S.L. Spain Junior Produktions GmbH

EM.TV & Wavery B.V.

Netherlands 1 00% 33.3% 1 00% 1 00%

EM.TV – Our Profile

We are a medium-sized media company which operates in the core sectors of Sports and Children and Youth Entertainment. In sports business we are the leading German TV production company and run the leading plat-forms DSF and Sport1. In the entertainment business we are internationally oriented, have one of the largest pro-gram libraries in the children and youth sector and distin-guish ourselves by many years of experience with the deve-lopment and marketing of license themes and characters, all of which are duly esteemed and appreciated in the mar-ket. After a successful restructuring and reorientation from 2001 to 2004, we now have an attractive investment port-folio, together with a sound financial basis for further growth in the future.

EM.TV – Our Strengths

We are an independent group and on account of this inde-pendent position an established partner for a large number of companies. We encounter the challenges of our markets with classical medium-sized virtues such as speed, flexibili-ty, reliability and creativity.

EM.TV – Our Objectives

With our products and services, our aim is to satisfy the emotional requirements of our ultimate customers. We will only succeed in this respect if our products are marked by a high level of creativity and quality.

As far as our shareholders are concerned, our aim is to seize market opportunities with a due sense of proportion by means of a growth strategy, to create added-value and to ensure an attractive return on their investment.

EM.TV intends to comply with its social responsibilities with its products

and entrepreneurial actions.

Forward-looking statements

This annual report contains statements relating to future events that are based on management’s assessments of future developments. A series of factors beyond the control of the company, such as changes in the general economic and business environment and the incidence of individual risks or occurrence of uncertain events, can result in the actual results differing sub-stantially from those forecast. EM.TV does not intend to continually update the forward-looking statements contained in the annual report.

Important notice

Content

2 Foreword by the Chairman of the Management

Board

5 Boards

6 Report of the Supervisory Board

10 Corporate Governance Report

14 The EM.TV AG Share

18 Company Strategy

22 Business Units Reports I Sports

22 TV I DSF Deutsches SportFernsehen

24 Online I Sport1

25 Production Services I PLAZAMEDIA

27 Licensing I European Licensing Representative

2006 FIFA World Cup™

30 Business Units Reports I Entertainment

30 Production

31 TV-Sales

33 Licensing I Merchandising

34 Licensing I Home Entertainment

35 TV I Junior Channel

38 Management Report on the Situation of the Group

and the AG

38 Economic Conditions

42 Sales and Earnings

45 Net Worth Position

46 Financial Position

48 Investments

49 Personnel Report

50 Innovation

51 Risk and Opportunities Report

57 Occurrences after the End of the Fiscal Year

57 Forecast Report

63 Consolidated Financial Statements

64 Consolidated Balance Sheet

66 Consolidated Profit an Loss Account

67 Consolidated Cash Flow Statement

68 Changes in Consolidated Equity

69 Notes on the Consolidated Financial Statements

69 General Explanation

76 Accounting and Valuation Principles

81 Explanations on Invidual Items in the Balance Sheet

96 Explanations on Items in the Profit and Loss Account

102 Explanations on Items in the Cash Flow Statement

103 Segment Reporting

106 Contingent Liabilities and Other Financial

Commitments

107 Occurrences after the End of the Fiscal Year

108 Other Mandatory Disclosures

108 Other Explanations and Disclosures

111 Auditors’ Report

113 Annual Financial Statements of the AG

114 Balance Sheet

116 Profit an Loss Account

117 Finance Calendar

2005 saw EM.TV AG continue on a path of positive deve-lopment. For the first time since 1999, we have been able to report a Group profit before tax and special or one-off effects, as well as achieve a single figure percentage growth in Group sales. This falls exactly within the forecast that we issued at the beginning of the business year. EM.TV has thus been true to its word. This is of great importance to me, as the new EM.TV, which came into being as a result of the restructuring of the former EM.TV & Merchandising AG, must take its place on the capital mar-ket as a reliable and predictable player.

The result that has been achieved pleases me all the more, as we found ourselves facing numerous obstacles during 2005 that were either not apparent at the start of the year or, at least, not as substantial:

> The development of the German economy in 2005 was disappointing, and was unable to inject new life into the advertising market. This had a subduing effect on sales development at our free-TV station DSF. > Due to the failure to pay on the part of two of its

busi-ness partners, DSF found itself obliged to make a sub-stantial bad debt provisions.

> During the previous year, EM.TV made significant investments in attractive programming and new busi -ness activities. These included the acquisition of exten-sive rights packages in sports, as well as expenditure on the preparation for market entry into the “sports betting” sector. While these investments had a nega-tive short-term impact on performance, in the medium-term they will significantly strengthen the operating business and deliver a positive contribution to profitabi-lity. In this respect, this money has been well invested.

The 2005 business year demonstrated that the EM.TV Group is strategically well positioned with its two operating busi-ness divisions Sports and Entertainment, and able to ope-rate profitable. We have made progress in both segments as well as securing and extending our market position. Within the Sports segment, we took over the stakes of the former co-owners of DSF and online portal Sport1 on attrac-tive terms. This means that EM.TV now holds also, either directly or indirectly, 100 percent of the stakes in these companies.

> In the free-TV sector, the reporting year saw DSF stabi-lize its market share within its core target group of males aged 14 to 49 at 1.9 percent. With the acquisi-tion of extensive rights packages to the UEFA Cup for the 2005/2006 to 2007/2008 seasons, and to the Premier and Second German Soccer League for the 2006/2007 to 2008/2009 seasons, DSF has secured its ability to offer top soccer to its viewers. Therefore DSF offers an attractive advertising environment for its advertising customers. This is an important condition for the station’s ongoing commercial success. These rights acquisitions also demonstrate that, through the establishment of a clear program profile, DSF has achieved a position over the last three years as one of the top players on the German TV market. The editorial quality and the independence of the station is valued and respected by not only the viewers, but also by the sporting community.

> In terms of production services, our subsidiary PLAZA-MEDIA enjoyed continued success with good levels of capacity utilization across all its business units. The company completed close to 90,000 program hours

and handled around 1,500 national and international productions. PLAZAMEDIA concentrates its service offe-ring on state-of-the-art production technology, and thus is increasingly able to offer its customers genuine added value. One good example of this innovative spirit is the company’s introduction of new television standard HDTV (High Definition Television) throughout its entire production chain, thus giving PLAZAMEDIA a unique position within the market. At the end of 2005, we were able to significantly strengthen the position as a provider of creative production services through the acquisition of Creation Club GmbH from PREMIERE. The Creation Club is successfully positioned in promotion, on and off-air design, advertising and TV formats, and thus complements perfectly PLAZAMEDIA’s service portfolio. > Within the online sector, sports portal Sport1 was yet

again successful in strengthening its position signifi-cantly as the most popular German-language sports website, with a 40 percent growth in ratings. Sport1 is also demonstrating increasing success in its media sales activities, i.e. the sale of sports content for tele-text and mobile platforms (SMS, MMS, and WAP) to third parties.

> We have been delighted with the development during the last year of our merchandising marketing activities for the 2006 FIFA World Cup™. By the end of 2005 we had secured contracts with a total of 53 license partners – clear proof that the timely introduction of our marke-ting strategy for this mega-event has been highly successful. It is already evident that the commercial success of the FIFA project will be significantly greater than originally forecast.

Within the Entertainment segment – encompassing the pro-duction and marketing of high quality program for children and young people – 2005 saw us achieve the conditions necessary in terms of structure and human resources in order to put the business onto a path of sustainable growth.

These measures included the bundling of all production and distribution activities into EM.Entertainment GmbH, with the purpose of achieving clear and transparent divisional respon-sibilities. This also included the strengthening of production competence by means of a partial renewal of EM.Entertain-ment’s management team. It remains our objective to en-sure the continued attractiveness of our library with additio-nal new, in-house program rights.

Although demand for children’s and youth program wit-nessed a slight increase both nationally and internationally during 2005, this trend has yet to impact pricing. EM.Enter-tainment has, however, demonstrated that it remains possi-ble to secure attractive business under these conditions, with extensive and long-term agreements such as those se-cured in the home entertainment sector during the fourth quarter with Universum Film GmbH and Warner Bros. Enter-tainment GmbH. Despite the difficult market conditions, the entertainment division was nevertheless able to improve its financial result – proof of the substance of our program portfolio.

The global market for children’s and youth programming con-tinues to find itself in a phase of consolidation. During the reporting year, the Management Board considered various options for the development of the Entertainment division through M&A transactions. In the end, these intensive inve-stigations did not produce any results that were commerci-ally compelling. This notwithstanding, we will continue to strive to play an active role in the consolidation of the sector.

The progress made in the operating business is also reflec-ted in the development of the EM.TV share price. During 2005 it demonstrated a growth in value of 51 percent, thus significantly exceeding the overall growth of the SDAX, which increased by 35 percent. With a daily average of 500,000 shares, EM.TV was the most traded share of the SDAX. For the sake of every one of our shareholders that stood by us

during the long process of restructuring, we are particularly pleased by this positive share price development, which is accompanied by an ever-increasing interest in our company on the part of investors and analysts.

During the current business year, we want to develop our market position within both of our key business sectors. One significant step in this process is the agreement reached in the Sports segment at the beginning of March between PLA-ZAMEDIA and Arena Sport Rechte und Marketing GmbH, making PLAZAMEDIA the exclusive production partner for Arena’s pay-TV offer for the German Soccer League. In order to improve our position in the market place, we will also seek in future to make greater use of synergies between our Sports segment stakeholdings in order to be able to offer customers turnkey solutions.

The organizational and conceptual preparations for EM.TV’s entry into the “sports betting” sector are well advanced. The German market remains restricted, preventing our entry for the time being. We continue to attribute substantial sales and profit potential to this business, but are prepared to take a decision to act only when the commercial concept is fully cohesive and its legal basis beyond all possible doubt.

Within the Entertainment segment, the focus of efforts du-ring 2006 will be on the start of in-house productions. We will also be pushing forward with the further internationali-zation of our businesses, with particular emphasis on streng-thening our presence within the Anglo-Saxon markets. In this regard, added-value M&A activities are certainly con-ceivable.

Dear shareholders,

in recent years, EM.TV has developed a market position that presents many fascinating perspectives. Our ultimate objective continues to be to guide the EM.TV Group into a phase of sustainable growth, evidenced by an ongoing improvement of profitability. In this spirit, EM.TV will enrich the media market as an independent and flexible partici-pant, operating on all the best principles of a medium-sized enterprise.

Unterföhring, March, 2006 With best regards,

Werner. E. Klatten

Chairman of the Management Board

Werner E. Klatten,

Chairman of the Management Board, CEO

Werner E. Klatten is Chairman of the Management Board of the EM.TV AG. He is responsible for the the corporate strategy, the Entertainment segment, central functions: Legal Matters, Communication, Human Resources and Administration, as well as for shareholdings.

Rainer Hüther,

Member of the Management Board, COO Sports

Rainer Hüther is resposible for the Sports segment. In addi-tion to his Board Member activities at EM.TV, he is Chief Executive of sports broadcaster DSF since June 2, 2003.

Dr. Andreas Pres,

Member of the Management Board, CFO

Dr. Andreas Pres is member of the Board and responsible for Finance, Investor Relations, Accounting, Controlling, IT and Process Management.

Management Board

Boards

Dr. Bernd Thiemann, Chairman

Dr. Hans-Holger Albrecht, Deputy Chairman

Arthur Bastings, Member

The Supervisory Board of EM.TV AG met a total of six times during 2005, including one telephone conference. As in the previous year, the board, which in accordance with legal requirements consists of only three members, did not crea-te any separacrea-te commitcrea-tees.

Under the terms of the German Stock Corporation Act, the Supervisory Board is responsible for monitoring the activities of the Management Board. During the reporting year, the Supervisory Board of EM.TV regularly monitored the Manage-ment Board and provided it with advice. By means of oral and written reports from the Management Board, the Super-visory Board was kept abreast with business operations at EM.TV AG and the EM.TV Group, business planning, ongoing business development, risk factors and significant business events.

The Supervisory Board was represented in full at all mee-tings held in 2005. Furthermore, all members of the Ma-nagement Board also participated in those meetings in order to report to the Supervisory Board and to answer its questions. In keeping with previous years, the Supervisory Board also called upon the advice of external experts, in the form of lawyers and publicly certified accountants. Furthermore, between meetings, there was ongoing contact between the members of the Management and Supervisory Boards, and between the Chairmen of the Management and Supervisory Boards in particular. Where necessary in the interests of timing, documentary information was circu-lated between meetings in order to obtain decisions from the Supervisory Board.

During 2005, the Supervisory Board of EM.TV AG dealt prin-cipally with the following issues:

Business status and current business development Throughout the entire business year, the Supervisory Board dealt in detail with the current business status of EM.TV AG and the EM.TV Group. This included principally the analysis of business activities during the course of the year in both the Sports and Entertainment divisions, with particular em-phasis on positive and negative deviations from the budget. Within this process, the Management Board gave clear and detailed statements on the current status of the business and on plans for the year ahead for the individual divisions and for EM.TV AG as the holding company, as well as on the risks to group business development.

Significant investments in the operating business The Supervisory Board used the circulation procedure to ap-prove the acquisition by DSF of extensive exploitation rights to the UEFA Cup matches for the 2005/2006, 2006/2007 and 2007/2008 seasons. It likewise gave its approval to the acquisition by DSF of exploitation rights to the Premier and Second German Soccer League for the 2006/2007, 2007/2008 and 2008/2009 seasons. The Supervisory Board is of the opinion that both rights acquisitions ensure that DSF’s program portfolio is suitably stocked with attrac-tive top-end sports on a long-term basis. This is a fundamen-tal requirement for the further commercial success of the station.

Portfolio initiatives

In 2005, EM.TV AG completed the reorganization of the Entertainment division, as a result of which the company takes on the role of holding company without direct business operations. In the course of this process, the Supervisory Board used the circulation procedure to approve the mea-sures necessary in order to bundle all the production and

Report of the Supervisory Board

sales activities of the Entertainment division into EM.Enter-tainment GmbH and its subsidiaries. EM.EnterEM.Enter-tainment is a 100 percent subsidiary of EM.TV AG.

The Supervisory Board also used the circulation procedure to approve the acquisition of further shares in sports com-panies DSF and Sport1 from the possession of their previous co-owners KarstadtQuelle New Media AG and Dr. h. c. Hans-Dieter Cleven. The acquisition means that EM.TV AG now holds either directly or indirectly 100 percent of each sports company. The Supervisory Board considers the transactions as important to the strengthening of the Sports segment.

Using the circulation procedure, the Supervisory Board granted its approval to the acquisition of all stakes in the Creation Club (CC) GmbH from PREMIERE through EM.TV subsidiary PLAZAMEDIA. This included an extension of the current production services framework contract between PLAZAMEDIA and PREMIERE, ending December 31, 2006, for a period of three years (outside production) and 4.5 years (studio production). In acquiring the Creation Club, the Supervisory Board is convinced that PLAZAMEDIA is now able to broaden significantly the added value of its creative activities, while at the same time having achieved a long-term relationship with an important customer in the shape of PREMIERE.

Legal issues

2005 also saw the Supervisory Board focus a great deal of its advisory efforts on the investigation of corporate dama-ges claims against former board members. The Supervisory Board heard reports on a regular basis from the appointed legal experts, as well as from the Management Board, on the status of the investigations and the outcome of the claim entered on October 13, 2004 at the Munich I Regional Court.

This claim is against former CEO Thomas Haffa, former Deputy CEO Florian Haffa and former Supervisory Board

Chairman Dr. Nickolaus Becker, and cites negligent breach of duty in respect of the acquisition of Formula 1 shares in 2000. The damages claims asserted run to almost 148 mil-lion Euro, plus release from claims entered by the Morgan Grenfell Group.

As a result of the oral hearing of March 31, 2005, the Munich I Regional Court ruled on August 25, 2005 that the evidence of expert witnesses be submitted for consideration in respect of certain factual matters. It is estimated that the report of the expert witnesses will be submitted in the course of 2006.

The intensive examination of further factual circumstances revealed possible breach of duty in respect of loans made to TheatrO CentrO GmbH in 2000 and 2001, the acquisiti-on of stakes in Tabaluga Film- und Fernsehproduktiacquisiti-on GmbH, a major charitable donation, and in respect of the closing of several co-production and licensing contracts. Following requisite statements made by the former board members, neither the Management nor the Supervisory Board were able to reach any alternative conclusion on these matters, and thus the company entered claims with the Munich I Regional Court in August and September 2005. The claims for damages entered in respect of the combined TheatrO CentrO/Tabaluga/donation issues amount to around 17 mil-lion Euro, with those arising from the co-production and licensing contracts totaling around 18 million Euro.

With the exception of the aforementioned issues, the highly time intensive and complex investigations carried out into the major business transactions of the former EM.TV & Mer-chandising AG have not led to the establishment of any enforceable damages claims resulting from the dealings of former board members – despite repeated acts of negli-gence. This is particularly the fact in respect of the acquisi-tion of major holdings Junior.TV, Tele München Gruppe and the Jim Henson Company. In spite of the necessary in-depth

investigation, insufficient grounds were found on which the company could base a case for damages resulting from the misconduct of the former company directors. The same applies to around ten further, smaller company acquisitions; to the majority of co-production, rights purchase and license contracts agreed by the company; and to a series of other business transactions.

Group strategic direction

During the reporting year, the Supervisory Board dealt inten-sively with issues concerning the future strategic direction of the EM.TV Group. This included, in particular, opportuni-ties for strategic development in both the Sports and Enter-tainment segments through acquisition or divestment ini-tiatives, and on the development of new business sectors. The Management Board called extensively upon advice in the matter of its plans for entry into the “betting” sector. The Supervisory Board considered detailed reports on the vario-us strategic options associated with this potential venture.

Changes to the Boards of Directors

The Management Board saw no changes in the course of the reporting year.

Supervisory Board Members Prof. Roland Berger and Dr. Andreas Meissner stepped down from their positions with effect from the Annual General Meeting (AGM) on July 5, 2005. Prof. Berger and Dr. Meissner were with the com-pany throughout its restructuring and reorientation, and brought their extensive knowledge and advice to bear during a very difficult phase for EM.TV. The Chairman of the Supervisory Board offers his sincere gratitude to both Prof. Berger and Dr. Meissner for their commitment to the good of the company.

At the AGM on July 5, 2005, Dr. Hans-Holger Albrecht and Mr. Arthur Bastings were approved as new members of the Supervisory Board. With these two individuals, EM.TV has gained the services of two highly knowledgeable and hands-on media managers, with huge internatihands-onal experience. In its meeting of July 5, 2005, the Supervisory Board unani-mously voted Dr. Albrecht to the position of Deputy Chairman of the Board.

Having been tasked with auditing the company reports, PricewaterhouseCoopers AG Wirtschaftsprüfungsgesell-schaft, München audited the annual accounts of EM.TV AG, the Group annual accounts and the combined company and Group management reports of December 31, 2005, and issued them with an unconditional audit certificate. The company annual accounts, the Group annual accounts and the combined Group and company management reports were passed in a timely manner to all members of the Super-visory Board along with the audit reports.

The auditors furnished the Supervisory Board with the significant findings of their audit at the meeting of the Supervisory Board on March 23, 2006. The Supervisory Board examined in detail the annual accounts of the AG and the Group, as well as the combined company and Group management reports, and approved the findings of the auditors. Following the completion of its examination, the Supervisory Board raised no objections to either the company annual accounts or the Group annual accounts and thus approved the company and Group annual accounts as presented by the Management Board on March 27, 2006. The annual accounts are thus final.

In the aftermath of the far-reaching restructuring that took place in 2004, the Supervisory Board is of the opinion that the 2005 business year was a successful one. Despite initi-ally unforeseen burdens such as those arising through im-portant program investments and ongoing difficult market conditions, the forecast of a positive Group financial result before tax and special and one-off effects has been achie-ved for the first time since 1999. In addition, the business year saw the foundations laid for the continuation of this positive business development through a series of success-ful business agreements. The Supervisory Board thanks the Management Board and all the employees of the EM.TV Group for their enormous commitment.

March 2006

Supervisory Board of EM.TV AG

Dr. Bernd Thiemann

In accordance with Article 3.10 of the German Corporate Governance Code, the Management Board and the Super-visory Board hereby report on the corporate governance of EM.TV AG.

The Management Board and the Supervisory Board work together on a basis of mutual trust for the benefit of the company, and are fundamentally committed to achieving sustainable growth in the company’s corporate worth. It is the objective of EM.TV AG to justify the trust put in it by its shareholders, customers and employees, as well as to live up to its corporate responsibilities. EM.TV AG thus stands for transparent and timely communication.

Shareholders and Annual General Meeting

In its annual and quarterly reports, EM.TV AG regularly pub-lishes information regarding the development of its business. In so doing, shareholders are provided with regular opportu-nities to follow analysts’ conferences on those reports live in the internet. Further detailed information on EM.TV AG is also available on our homepage www.em.tv.

EM.TV AG shareholders are able to exercise their rights, as well as their voting rights at the Annual General Meeting (AGM). Each and every shareholder is entitled to participate in the AGM, to take the floor on any agenda item, to ask questions and to submit requests. EM.TV AG simplifies the process for its shareholders to exercise their rights perso-nally, by providing proxy voting representation bound by the instruction of the shareholder. The AGM for the 2004 busi-ness year took place on July 5, 2005, at which around 1,150 shareholders were represented, with a total of some 9.8 mil-lion votes. All agenda items were agreed with majorities of over 99 percent.

Cooperation between the Management and Supervisory Boards

As the Group’s holding company and a German incorporati-on (Aktiengesellschaft), EM.TV AG has a two-tier manage-ment and control system i.e. the Managemanage-ment and Super-visory Boards operate on a strictly separate basis.

The Management Board of EM.TV AG comprises three mem-bers. The Management Board is responsible for running EM.TV AG’s operating business, and for representing the company to third parties. The main tasks of the Management Board include the establishment of strategic direction, ma-nagement of the Group and monitoring of risk mama-nagement. The Supervisory Board of EM.TV AG comprises three mem-bers. The Supervisory Board advises and monitors the Management Board in its management of the company. Its responsibilities include, but are not restricted to, the appoint-ment of Manageappoint-ment Board members and the determinati-on of Management Board remuneratideterminati-on.

The Management Board works together with the Supervisory Board. It provides the Supervisory Board in a regular and timely manner with information on all planning issues rele-vant to the company and the Group, as well as on business development, risk exposure and risk management. In doing so, the Management Board agrees the company’s strategic direction with the Supervisory Board, and discusses strate-gic implementation at regular intervals.

Documents requiring approval, in particular EM.TV AG’s an-nual accounts, its consolidated financial statement and audit report, are presented in front of a meeting of the Supervisory Board members. Laid down in the internal regu-lations governing the Management Board is the requirement for the approval of the Supervisory Board in respect of busi-ness decisions of fundamental importance to the company. A total of six Supervisory Board meetings were held during the 2005 business year.

Corporate Governance Report

Further information concerning the Management and Super-visory Boards can be found in the section on corporate bo-dies and within the Group appendix.

Management and Supervisory Board Remuneration The Management Board contract with Mr. Werner E. Klatten runs until December 31, 2007.

Following the acquisition in early 2005 of all stakes in DSF GmbH and Sport1 GmbH from KarstatdtQuelle and Dr. h.c. Hans-Dieter Cleven, both positions held by Mr. Rainer Hüther – one with EM.TV AG and one with DSF GmbH – were trans-ferred into a single contract effective as of June 1, 2005. Mr. Hüther’s contract ends on February 28, 2009. The con-tract of Chief Financial Officer Dr. Andreas Pres runs until December 31, 2008.

In accordance with the German Code of Corporate Gover-nance, the total remuneration of each Management Board member comprises both fixed and variable elements. The variable remuneration elements are made up of one-off com-ponents granted by the Supervisory Board for extraordinary performance, and from components based on the financial performance of the Group and its subsidiaries. The values of these variable components are set by the Supervisory Board and have contractual limits.

As variable remuneration components with a long-term in-centive, the members of the Management Board of the for-mer EM.TV & Merchandising AG had, at an earlier juncture, received stock option packages as part of the stock option program 2000 (“Option Program 2000”).

As the result of a decision made by the AGM of the former EM.TV & Merchandising AG on July 22, 1999 (“Option Pro-gram 1999”), which was then changed by a decision made by the AGM of the former EM.TV & Merchandising AG on July 26, 2000 (“Option Program 2000”), the Management Board of the former EM.TV & Merchandising AG was

empo-wered, with the approval of the Supervisory Board, to issue a stock option program for employees and members of the Management Board of the Group companies. These options also retain their fundamental validity following the restruc-turing that took place in 2004.

Within the scope of the restructuring process, the AGM of EM.TV AG decided on March 19, 2004, to grant those entit-led to stock options the right to take one 10/73 ordinary share in EM.TV AG at the strike option price, in return for the right to one ordinary share in EM.TV & Merchandising AG at the strike option price. The original issue volume of 1,488,012 shares comes from the Conditional Capital III set aside for this purpose. Of the total stock option volume, 30 percent was reserved for members of the Management Board and Group directors, with 70 percent reserved for group company employees. This notwithstanding, the opti-on terms of the 1999 and 2000 Optiopti-on Programs retain their validity. In accordance with the option terms, this in-cludes a reduction in strike price in respect of the issue of share certificates to existing shareholders within the scope of the merger (dilution protection).

The Option Program 2000 requires that 50 percent of the stock options may be exercised at the earliest after no less than 2 years (in subsequent tranche 1), with the remaining 50 percent to be exercised at the earliest after no less than 4 years (in subsequent tranche 2). The strike price is deter-mined by averaging the opening and closing price of EM.TV shares on the Frankfurt Stock Exchange on the day of the decision to issue (reference price); the price being no less than the pro-rata amount of the subscribed capital for one share, plus an additional 10 percent for tranche 1 and 20 percent for tranche 2. The stock options are valid for ten years. On exercising stock options, the holder receives ordinary shares in EM.TV AG, whereby shares arising from options are eligible for participation in profit sharing from the start of the year in which the option was exercised.

As of December 31, 2005, members of the Management Board were eligible for a total of 600,000 stock options from the Option Program 2000, entitling them to a total of 82,190 shares in EM.TV AG. The stock options are appor-tioned among the members of the Management Board as

follows:

Notes:

1_{Original strike price per share in the former EM.TV & Merchandising AG} prior to increases in accordance with option terms and dilution protection 2_{Price payable per EM.TV AG share on exercising option following increase} in accordance with option terms. Adjustment in keeping with the merger ratio of 73:10 and dilution protection in respect of issued certificates

Corporate Governance Report

Stock options Quantity 200,000 200,000 100,000 100,000 Name Werner E. Klatten Rainer Hüther Dr. Andreas Pres Issue Date 31/01/02 31/01/02 07/06/02 30/06/03 Original Strike Price1 Euro/Share 2.28 2.28 1.29 1.60 Shares Quantity 27,397 27,397 13,698 13,698 Price per Share2 Tranche 1 Euro/Share 17.48 17.48 9.53 12.02 Price per Share2 Tranche 2 Euro/Share 19.14 19.14 10.47 13.19 Share Price 31/12/05 Euro 4.33 4.33 4.33 4.33

Due to the share price performance of the former EM.TV & Merchandising shares, as well as those of EM.TV AG, it has thus far not been possible to exercise stock options held by the Management Board. Therefore we currently attribute no tangible value to the stock options.

Remuneration of Supervisory Board members is specified in paragraph 12 of EM.TV AG’s articles of association.

Alongside the reimbursement of their expenses, Supervisory Board members receive a fixed remuneration. The introduc-tion of success-based remuneraintroduc-tion for the Supervisory Board has been deferred. The fixed remuneration of Supervisory Board members in the 2005 business year was as follows:

Name Function Period Fixed Remuneration

Dr. Bernd Thiemann Chairman / Supervisory Board 01/01/2005 to 31/12/2005 90,000.00 Euro

Dr. Hans Holger-Albrecht Deputy Chairman / Supervisory Board 05/07/2005 to 31/12/2005 22,068.49 Euro

Arthur Bastings Member / Supervisory Board 05/07/2005 to 31/12/2005 14,712.33 Euro

Prof. Dr. h.c. Roland Berger Deputy Chairman / Supervisory Board 01/01/2005 to 05/07/2005 22,931.51 Euro

Neither the Management Board members nor the Supervi-sory Board members conducted any acquisitions or dispo-sals during the 2005 business year that were subject to mandatory reporting requirements. The direct or indirect ownership by any board member of any shares issued by EM.TV AG was no greater than 1%. The position with regards to shares and shares from stock options on the part of any board member as of December 31, 2005 was as follows:

Further information regarding the remuneration of the Management and Supervisory Boards can be found in the group appendix and on our homepage.

Statement of Conformity with the German Code of Corporate Governance

The Management and Supervisory Boards of EM.TV AG state that the recommendations of the German Code of Corporate Governance dated May 21, 2003 have been met, with the exceptions detailed below, as will the recommendations of the Code dated June 2, 2005 be met, with the same excep-tions:

> Section 4.2.3 para. 2, final clause of the code

With regard to stock options, a cap will be agreed on new option issues. In the case of existing share options, which currently have no tangible value, it is not necessary to amend finalized contracts in respect of a cap.

> Section 4.2.4 para. 2 of the code

The remuneration of Management Board members is not individually reported as this is the personal information of the Management Board members. The company will re-port Management Board remuneration individually as of the 2006 business year, as required by law.

> Sections 5.3.1 and 5.3.2 of the code

Separate committees were not formed, as the Supervisory Board consists of only three members.

> Section 5.4.7 of the code

The introduction of success-based remuneration for the Supervisory Board has been deferred, as there currently remains a lack of clarity in respect of the reliability of success-based remuneration.

> Section 7.1.2 of the code

The deadline for publication of quarterly reports (interim reports) has not yet been reduced to 45 days after the end of the reporting period. The Management Board is striving to meet this recommendation as quickly as possible by optimizing internal procedures.

The current version of the statement of conformity with the German Code of Corporate Governance, as well as earlier versions, can be found on our homepage.

Number of Shares from

Shares Stock Options

Werner E. Klatten 0 27,397

Rainer Hüther 0 27,397

Dr. Andreas Pres 6,000 27,396

Development of the EM.TV share

The EM.TV Share developed with substantial price fluctu-ations very positively in 2005 with a value increase of 51 percent. The percentage increase of the share price excee-ded that of the SDAX therefore which advanced by 35 per-cent and also the Prime Media which fell by 1 perper-cent. The share price rose from January to the middle of March and reached its current 52-week high of Euro 6.37 during a pe-riod of high trading volumes. A consolidation then set in un-til the end of May, with the share price falling to Euro 4.76 in April. The share price then rose again until the middle of July. Between July and the end of the year, the share price declined and reached its current 52-week low of Euro 3.68. The price of the EM.TV share closed the year at Euro 4.33. This was equivalent to a price increase of Euro 1.46 and 51 percent respectively.

In 2005, the EM.TV share was the SDAX security with the highest level of trading with a total volume of approximately 199 million shares (daily average of 0.5 million). Over the 12-month period, this was equivalent to a trading volume of approximately four times the outstanding shares and re-flected the high liquidity of the share.

Subscribed capital and shareholder structure The subscribed capital of the EM.TV share amounted to approximately Euro 69.9 million as of December 31, 2005, including new shares from exercised warrants of the bond with warrants attached, the entry of which in the Commercial Register was still outstanding at the balance date.

EM.TV AG held 23.9 percent of the subscribed capital equi-valent to 16.7 million non-voting shares. Approximately 15.0 million thereof were reserved for servicing the certifi-cate series. After deducting the Company’s own, non-voting

shares, there were approximately 53.1 million outstanding shares as of December 31, 2005.

On June 8, 2005, Centaurus Capital LP fell below the thres-hold of 5 percent of the voting rights in EM.TV AG. As of December 31, 2005, Constant Ventures B.V. held 6.9 per-cent of the share capital, equivalent to 9.1 perper-cent of the voting rights. Scattered shareholders therefore held 69.2 percent of the share capital, equivalent to 90.9 percent of the voting rights.

Shareholder structure as of December 31, 2005

The EM.TV AG Share

The EM.TV AG Share

Constant Ventures B.V. 6.9% Treasury Shares 23.9% Free Float 69.2% Constant 9.1% Ventures B.V. 90.9% Free Float

Issues of derivates by EM.TV AG

As part of the restructuring of the convertible bond of 2000/2005, three different derivatives have been issued which enable to purchase EM.TV shares.

Approximately 3.3 million shares were issued from Condi-tional Capital I in 2005 after exercising warrants for the 8% bond with warrants attached of 2004/2009. By the end of the exercise period on March 30, 2006, it will be possible to purchase approximately an additional 1.0 mil-lion shares at a subscription price of Euro 1.00 per share. As part of the merger of EM.TV & Merchandising AG into EM.TV AG, the shareholders have also received certificates

in addition to shares in EM.TV AG. The Certificates (Series 1 and 2) relate to covered warrants, i.e. if they are exerci-sed, shares will be issued from EM.TV AG’s treasury sha-res. In 2005 0.5 million shares were issued by exercising the Certificates Series 1. An additional 7.3 million shares may still be purchased at a subscription price of Euro 2.50 per share by the end of the exercise period on April 18, 2006. The exercise of Certificates Series 2 resulted in the issue of 0.1 million shares in 2005. An additional 7.7 milli-on shares may still be purchased at a subscriptimilli-on price of Euro 3.50 per share by the end of the exercise period on April 18, 2008.

0

1

2

3

4

5

6

7

EM.TV AG SDAX Prime Media

Xetra closing prices of the EM.TV share in comparison with the SDAX and Prime Media

Comparative indices indexed to the EM.TV closing price as of December 31, 2004

7 6 5 4 3 2 1 0

The EM.TV AG Share

Investor Relations activities

EM.TV AG aims at justifying the trust of investors and the public by timely and transparent publications of its finan-cial data, business transactions, corporate strategy, oppor-tunities and risks. Extensive information concerning EM.TV AG is available on our homepage www.em.tv.

Investor Relations activities were intensified in 2005. All quarterly figures were explained to analysts and investors by telephone or in person. The results for the third quarter were presented at the Deutsches Eigenkapitalforum 2005 (German Equity Capital Forum) in Frankfurt.

EM.TV AG participated in six capital market conferences and a road-show in Frankfurt and London. It was also avai-lable to institutional investors in a large number of additio-nal one-on-one meetings. Various individual enquiries by private investors were also handled by our Investor Rela-tions team.

Investor Relations activities were particularly directed to a systematic extension of analysts’ coverage. Three additio-nal institutes initiated coverage during the course of 2005. Regular contacts are currently being maintained with the following institutes:

> CA Cheuvreux > Deutsche Bank

> DZ Bank > WestLB

The aim of Investor Relations activities in 2006 will be par-ticularly directed to expanding the analyst coverage even further and increasing the number of long-term oriented in-stitutional investors.

ISIN

> Ordinary Share DE0009147207

> New Share* DE000A0AHSX7

Segment Prime Standard

Regulated Market

Indices SDAX, Prime Media Index

Bloomberg /Reuters EV4 GR/EV4G.DE

Share price Euro 4.33

52-week high/52-week low Euro 6.37/Euro 3.68

Subscribed capital (inkl. shares from exercised warrants of bond with warrants attached) Euro 69.9 million

Outstanding shares 53.1 million Shares

Potential shares from outstanding warrants

> Certificates Series 1 (Subscribed price Euro 2.50 until April 18, 2006) 7.3 million Shares > Certificates Series 2 (Subscribed price Euro 3.50 until April 18, 2008) 7.7 million Shares > Warrants of bond with warrants attached (Subscribed price Euro 1.00 until March 30, 2006) 1.0 million Shares

> Others (Employee participation programs and convertible bond) 0.4 million Shares

Market capitalization (based on outstanding shares) Euro 230.1 million

Market evaluation for own issues of outstsanding derivates Euro 29.2 million

Information on the EM.TV Share as of December 31, 2005

*Since January 1, 2006, shares are issued by EM.TV AG from the conditional capital. These are being traded under a separate ISIN as “New Shares”. The background to this is a deviating profit entitlement in comparison with ordinary shares. The “New Shares” will be transferred into ordinary shares after the resolution of the General Meeting on the appropriation of profits for the 2005 financial year.

The Company considers itself as a lean and flexible medium sized media company which is able to manoeuvre indepen-dently within the rapidly changing media industry, as it is not part of one of the large media groups in Germany. Therefore, the Company is able to cooperate with nearly all other market participants from a neutral position.

The Company pursues a two segment strategy focusing on sports and entertainment.

The Company is generally aiming to achieve organic growth as well as growth by acquisitions in each segment. The growth path will only be pursued provided that it does not jeopardize the primary goal of the Company to achieve pro-fitability for each segment and to generate a positive free cash flow before extra ordinary investments.

However, due to currently consolidating markets, the Com-pany may also decide to sell certain of its assets if the cir-cumstances are favourable to the Company.

Strategy of Sports segment

The Sports segment comprises mainly of DSF, PLAZAMEDIA and Sport1 with a range of seamlessly fitting services to offer turnkey production solutions together with access to distribution platforms in the TV and the internet and mobile devices.

It is intended that DSF will further sharpen its profile as a niche sports channel towards its target group of men aged 14 to 49 years by increasing the number of hours of natio-nal and internationatio-nal premium sports as highlights or even live formats. In addition, the channel will further seek to level out the dependency on classical advertising with other add

on services such as T-Commerce i.e. revenue streams from interactive formats. In the medium term, an expansion of the existing broadcast activities by additional DSF channels, particularly via digital distribution platforms could become an attractive option.

PLAZAMEDIA shall further exploit its current market positi-on as positi-one of the leading sports productipositi-on companies by means of expanding its customer base. It shall seek to de-velop itself further towards a general contractor for a varie-ty of sport events. As such, its involvement in production services during the upcoming 2006 FIFA World Cup™ may qualify PLAZAMEDIA for additional sports production con-tracts. Moreover, demand from foreign TV stations as well as the changing environment for new broadcast technology such as HDTV offer opportunities that PLAZAMEDIA intends to take advantage of.

Sport1 shall further exploit its market position as the leing German sports internet platform in order to grow its ad-vertising revenue and expand its strategic partnerships for cross promotions. International expansion may also be con-sidered. Given the strong development of online advertising market in other countries, the Company believes that Sport1 has potential to grow profits.

The market for sports betting has developed very positively in the last few years in the German speaking area and offers significant sales and earnings opportunities in the opinion of the Company. In the event of liberalization, EM.TV would be in a position to enter the market immediately as a result of the extensive preparations carried out in 2005 and would be able to participate with promising market perspectives. With DSF and Sport1, the Group also has two extremely

Company Strategy

appropriate advertising platforms for making appropriate offers for sports betting.

Strategy of Entertainment segment

The Entertainment segment with its large library is aiming at producing and acquiring youth and kids’ content and the comprehensive exploitation of all its properties throughout distribution channels and territories worldwide.

The Company, through its subsidiaries EM.Entertainment GmbH and Junior Produktions GmbH, intends to increase its production activities in order to heighten the value of the library and its freshness. Further, it is intended to adjust its rights library to older children and teenagers with an increa-sed focus on distribution channels besides TV. Thus, the aim is to grow the non-TV related revenue in order to lower the dependency on TV license fees currently paid for kids’ and youth program.

The Company is also endeavouring to obtain increased direct access to distribution platforms such as television stations, audio and video distributors. Content exploitation through mobile platforms and applications could become an additional distribution tool.

In order to get access to territories, where the Company has so far been weak distributing to such as UK, US and Canada, the Company contemplates acquisitions, partner-ships or distribution joint ventures and expand its entertain-ment activities in a fragentertain-mented, but consolidating media market.

With its products, EM.TV intends to satisfy the interests and emotional

requirements of its customers and viewers. These products have to be

creative, emotional, qualitatively equivalent to the „state of the art“ and

upright from a contents point of view.

DSF has been an integral feature of the German media landscape since the station was founded. With a clear focus on the core advertising target group of males aged 14 to 49, DSF has achieved distinctive positioning. No other German free-TV station provides such comprehensive reporting on sporting events, with independence, neutrality and critical distance being hallmarks of the station’s edito-rial policy.

Long-term coverage secured

In keeping with the station’s motto “Mehr Sport, Mehr Live” (more sport, more live), the top quality broadcast rights ac-quired during the previous year were converted into attrac-tive sports coverage. At the same time, the reporting period saw comprehensive premium soccer rights secured for the future. A further operational highlight was the successful finalization of feeder contracts with cable companies, secu-ring both analog and digital transmission on a long-term basis. With these sports rights and new levels of transmis-sion security, DSF has laid a firm foundation for the further development of the station.

Financial result impacted by program investments and special effects

Despite a difficult TV advertising market, in which DSF – in contrast to 2004 – was no longer able to buck the general trend in terms of advertising income, turnover remained on the same level as the previous year.

DSF’s operating result was down against the 2004 business year. This decrease was largely due to costs associated with the acquisition of the UEFA Cup rights, and bad debt provi-sions in respect of two service partners, which could not be compensated for by other positive effects.

Co-operations with key customers expanded

In spite of difficult overall conditions, DSF was able to ex-pand or extend co-operations with key customers, as well as form new partnerships within the sponsoring and special advertising sector. Top class customers such as Deutsche Telekom, Hasseröder, Betandwin, DA Direkt, Nike, Erdinger Weißbräu and BMW extended their partnerships, while other customers have expanded their co-operations with DSF. Thus, Krombacher (current title sponsor of DSF-Doppelpass) is now also presenter of the UEFA Cup broadcasts. Suzuki has now entered in soccer, in addition to its involvement in motorsport projects. New customers in the sponsoring sec-tor include König Pilsner, LG Electronics, Puma and DiBa.

DSF grows market share over previous year

Within the target group of viewers overall, DSF succeeded in increasing its market share for the year from 1.1 to 1.2 percent against 2004. In the core target group of males aged 14 to 49, DSF maintained its market share against the previous year at 1.9 percent. The previous year’s level was also reached in the fourth quarter 2005, with 1.1 per-cent (viewers overall) and 1.9 perper-cent (males aged 14 to 49) exactly matching the figures for the last quarter 2004. Significant growth in market share was achieved by DSF-teletext. For the full year 2005, DSF saw increases over 2004 among viewers overall (from 4.8 to 5.2 percent), as well as among the target group of males aged 14 to 49 (from 6.3 to 7.6 percent).

Long-term rights secured: German Soccer League, UEFA Cup, FA Cup and Davis Cup

DSF remains the soccer station in German free-TV. Following the TV rights granted by the Deutsche Fußball Liga (German Soccer League) (DFL), December 2005 saw DSF receive a

Business Units Reports I Sports

renewal for the next three years of the exclusive first high-lights in free-TV to the Premier Soccer League Sunday mat-ches, as well as the exclusive first free-TV highlights to the Second Soccer League, including the live match on Mon-days. With this deal, DSF has secured its core rights for the next three years. License expenditure for this is not due until the start of each respective season.

Alongside the Soccer League, the 2005 business year saw DSF invest in further long-term, top-class broadcasting rights. The top event acquired by DSF next to the Soccer League was the UEFA Cup. From the 2005/2006 season through to the 2007/2008 season, DSF will be broadcasting at least two UEFA cup matches live on every match day up to and including the semi-finals. Furthermore, DSF has also secu-red the exclusive live and highlights rights to the traditional English FA Cup for a period of two years up to and including the 2006/2007 season, as well as the live and exclusive rights to the matches of the German Davis Cup team for 2005 and 2006.

DSF increases its share of live coverage against previous year

DSF has stood by the motto it issued at the beginning of the year “Mehr Sport, mehr Live” and presented a host of pro-gram highlights during 2005. Alongside top soccer from the Premier and Second Soccer League and the UEFA Cup, DSF reported live from, among others, the Handball World Cham-pionship (January), the Ice Hockey World ChamCham-pionship (May), the Tour de Suisse (June) and the European Basket-ball Championship and the Davis Cup (both in September). Thus DSF demonstrated during 2005, an increase in live reporting of a little over seven percent. In the fourth quar-ter 2005 alone, DSF achieved an increase against the same period the previous year of around 17 percent.

In addition, DSF also presented a program innovation in 2005. For the very first time, viewers were able to select

for themselves a live match from the Handball Bundesliga over a period of six weeks. With this initiative, DSF presen-ted something completely new in German sports free-TV.

On the road to success with Bundesliga formats and the UEFA Cup

The soccer formats on DSF continue on the road to success. All formats from the Premier and Second Soccer League achieved significant increases in market share against the previous year within the core target group of males aged 14 to 49. For example, during the reporting period, Bundesliga

– Der Sonntag recorded growth in market share against

2004 from 10.1 to 10.7 percent, while DSF-Doppelpass witnessed an improvement from 7.9 to 9.3 percent.

With Bundesliga – Der Sonntag, DSF achieved a milestone in its broadcast history on March 13, 2005. The highlights of the Sunday matches Schalke 04 versus Bayern Munich, and Borussia Dortmund versus VfB Stuttgart achieved ra-tings of an average of 4.7 million, and a peak value of 5.5 million viewers. This saw DSF record its second best ratings since the station was founded, and only narrowly missed its absolute record from 1993 (an average of 4.8 million vie-wers watched the UEFA Cup semi-final Dortmund versus Auxerre). With 17.6 percent market share in the target group of males aged 14 to 49, March 13 saw DSF achieve a new best for Bundesliga – Der Sonntag since the acquisition of the Bundesliga rights in 2003. Bundesliga – Der Sonntag was also DSF’s highest-rating format for 2005 as a whole.

Alongside the Bundesliga, DSF also achieved very good ratings with the UEFA Cup. An average of 1.8 million viewers followed the broadcasts on DSF; with the station achieving a market share of 11.7 percent among males aged 14 to 49. DSF achieved its top ratings for the UEFA Cup with FSV Mainz 05 versus FC Sevilla. An average of 2.31 million vie-wers overall followed the match live on DSF (market share males 14 to 49 years – 13.3 percent). This was almost

equaled in the fourth quarter 2005, when the live transmis-sion of HSV versus Viking Stavanger on November 3 brought an average of 2.3 million viewers (market share males 14 to 49 – 11.9 percent).

Strong ratings with European Basketball Championship and Handball World Championship

Other sporting disciplines also produced outstanding ratings during 2005. With the final of the European Basket-ball Championship in September between Germany and Greece, DSF achieved strong ratings averaging 1.34 million viewers, while the Handball World Championship at the end of January was equally well received with up to 1.1 million viewers.

Business Units Reports I Sports

Online I Sport1

Sport1.de continues to be the most popular German-lan-guage sports website offering up-to-the-minute, well-re-searched content from the exciting world of sports. In addi-tion, as a multimedia sports platform, Sport1 provides sports content for teletext and mobile platforms such as SMS, MMS and WAP. Within this business sector, Sport1 includes private TV stations and leading telecommunica-tions companies among its customers.

Focus on core business

Following the portfolio restructuring that took place in 2004, efforts during the 2005 business year were focused entirely on the core business activities of media sales and content syndication. Due to the absence of major sporting events, Sport1 took the opportunity to use 2005 as a preparation year for the forthcoming major event – the 2006 FIFA World Cup™ in Germany.

Sport1 further developed its successful strategy of mana-ging operations outside of its core business with external partners. The Auto&Motor unit saw a partnership agreed with production service “onpact” during the first quarter, as well as a co-operation with auto portal “mobile.de”. This

concept, which minimizes risk for Sport1, has also been successfully implemented in a similar way within the Games unit with partner “Gameduell”.

Successful business year for Sport1

Due to the ongoing focus on core business, Sport1 was able to sustain the successful business development achieved in the previous year, and to confirm its position as Germany’s leading multimedia sports platform.

Massive growth in usage of more than 40 percent – mar-ket leadership position expanded

With over 180 million visits and over 1.3 billion page im-pressions during the 2005 business year, equating to an increase in usage of well over 40 percent compared with 2004, Sport1 accomplished yet another significant expan-sion in its market leadership. Sport1 achieved the highest visit ratings in its six year history in September 2005 with over 17.3 million visits.

Sport1 confirms position as teletext producer

In the second quarter 2005, the major contract with Seven One Interactiv GmbH for the production and delivery of

editorial teletext content for the sports sector was extended until December 31, 2008. Thus, Sport1 still produces and delivers the entire editorial teletext sports content for TV stations ProSieben, Sat.1, kabel eins, N24 and DSF.

Co-operations with Adidas and Suzuki

2005 saw a long-term strategic co-operation reached with sporting goods manufacturer Adidas. This encompasses exclusive advertising campaigns for the DAX group within the soccer sector. Furthermore, “Suzuki” was also secured as a strategic and long-term partner.

New marketing agency mediasquares GmbH

In recognition of the strong growth ongoing in the online ad-vertising market, 2005 saw Sport1 further expand its sales

team. In another move, a contract was signed on March 1, 2005 with Hamburg-based online marketing agency medias-quares GmbH for the marketing of classic advertising space on www.sport1.de, as well as the associated ad manage-ment. Mediasquares is one of Germany’s highest performers in online marketing and is therefore an excellent strategic partner for sport1.de, ideally complementing its in-house marketing activities associated with sponsoring, co-opera-tions and cross-media.

Sport1 with new sports database

In respect of future strategy at Sport1, the third quarter 2005 saw the implementation of an in-house sports database. This technical project was realized in co-operation with Norwe-gian sports data supplier “Betradar.com-Market Monitor AS”.

PLAZAMEDIA is a leading full-service company for TV and new media, operating in outside production, studio produc-tion, post producproduc-tion, new media, program management and creative services. Within the reporting period, the company created close to 90,000 hours of programming and mana-ged around 1,500 national and international productions.

2005 business year sees positive development and posi-tioning for further growth

The 2005 business year was marked by good capacity utili-zation across all business activities. Despite the loss of the contract to produce the base signal for the Premier and Second Soccer League as of the 2004/2005 season, PLAZAMEDIA’s business development in 2005 was in line with expectations. Major contributors to the progress made during the reporting period were increased profitability and additional contracts. The opening up of new technologies

and business sectors was pushed forward, and will also con-tinue to bring about sustainable business growth.

During the last year, PLAZAMEDIA was able to lay down the foundations for forward-looking production technology. Through the introduction of “HDTV” (High Definition Tele-vision) throughout the entire production chain, the company was able to secure its unique position in the marketplace. This production capability has already won PLAZAMEDIA significant contracts such as that for the production of the 2005 FIFA Confederation Cup from Host Broadcast Service (HBS) based in Switzerland, which is also the official produc-tion partner of the 2006 FIFA World Cup™. This tournament functioned as a dress rehearsal for the imminent 2006 FIFA World Cup™ in Germany, which, for the first time ever, will be produced entirely in the new HDTV technology.

The last business year also saw an agreement reached with HBS to provide production services on the worldwide signal for the 2006 FIFA World CupTM. HBS has contracted PLAZA-MEDIA to generate the worldwide signal using two venue production teams. The contract also covers the final of the 2006 FIFA World Cup™ in Berlin.

In addition to this, PLAZAMEDIA will also create, under con-tract to HBS, the city profiles for all the host cities of the 2006 FIFA World Cup™. These profiles are the means by which the individual host cities will be presented to the event’s worldwide audience.

Numerous other contracts were also secured during the re-porting period. These included the take over by PLAZAMEDIA of playout for the PLANET documentary channel, the realiza-tion of the PREMIERE SPORT PORTAL, as well as the first live-capable program production in HDTV for PREMIERE HD SPORT, plus production of the 2005 FIFA Confederation Cup as well as the UEFA Champions League (2005/2006 sea-son) for Premiere and the UEFA Cup for DSF. In addition, the company also handled conception and production of the Kabel Deutschland Info Channel under contract to Kabel Deutschland GmbH.

Entry into international markets and capacity expansion During 2005, Outside Production also realized numerous national and international series productions, including pro-duction of the Premier and Second Soccer League for DSF; the Red Zac First League and T-Mobile Bundesliga for PREMIERE Austria; Formula 1, the German BBL Basketball League and the DEL German Ice Hockey League for Pre-miere; plus the HBL German Handball League for DSF.

At the same time, the New Media business unit further expanded its international activities. Under contract to US internet company Bluelake Media, PLAZAMEDIA produced the Premier and Second Soccer League, the 2005 IIHF Ice Hockey World Championship, the 2005 European

Basket-ball Championship, the qualifying matches for the 2006 FIFA World Cup™ and the three-language highlights of all 16 of the 2005 FIFA Confederation Cup matches. Japanese company Softbank and Brazilian telecommunications com-pany Terra Networks received pre-prepared video clips of the German Soccer League.

During the fourth quarter, PLAZAMEDIA reached an agree-ment with PREMIERE for the continuation of their long-term strategic partnership as of January 1, 2007, as well as ex-tending the framework production contract covering exten-sive studio and outside production services. In terms of sports, the studio production services (period of agreement extends until June 30, 2011) will in future also encompass full program management of PREMIERE’s sports program and HD portfolio, post production, studio production and production of the conference channel for the Champions League matches. In outside production, PLAZAMEDIA will also continue production of the Champions League, as well as handling the multi-channel transmission of Formula 1 for a period of three years until December 31, 2009.

Expansion of management team and the Creative Services business unit

In addition, December 31, 2005 saw PLAZAMEDIA take over from PREMIERE 100 percent of shares in PREMIERE subsidiary Creation Club (CC) GmbH. With this acquisition, PLAZAMEDIA expanded its creative services portfolio within both its existing and new customer business activities. The Creation Club is successfully positioned in promotion, on and off-air design, advertising and TV formats. Creation Club’s Managing Director Zeljko Karajica has also been appointed to the PLAZAMEDIA management team.