PROTECCIÓN CONTRA INCENDIOS

Marketing

The Trademark and Corporate Design division was newly created in 2005. It ensures the uniform presentation of the Premiere brand in the marketplace and is responsible for the further development of the Premiere brand. To create further synergies, the new Channel Marketing department has been coordinating the various market-ing and communication measures in the specialist and sales departments since the fourth quarter of 2005, ensuring that information gets to the right place in a quicker and more efficient way.

Besides communicating Premiere’s exclusive program-ming, the main focus of the marketing activities in the first quarter was a broadly defined campaign on Premiere AG’s IPO. The TV and print campaign ranged from the varied and exclusive programming to the growth potential of the pay-TV operator. In addition to private investors, Premiere subscribers were also addressed selectively with spots, mailings and leaflets.

In May, Premiere started a new marketing campaign under the slogan “First Class Television”. Since then, Premiere has consistently positioned its exclusive and diverse programming as a first-class product, which pro-vides a sharp qualitative contrast to free-TV and other competitors. The slogan is designed to express the unique TV experience Premiere subscribers enjoy, which conventional TV cannot offer.

Premiere marketing campaign: „First-class television“

Measures in the third quarter were directed in particular to the sports segment, accompanying the start of various exclusive soccer events and the launch of the Premiere Sportportal.

Families were the focus of measures in the fourth quarter, and an inspiring marketing campaign was developed for them. This campaign was flanked by the “64:64” World Cup campaign (64 World Cup games for only EUR 64) sur-rounding the draw for the World Cup finals in Leipzig on December 9, 2005.

Following a comprehensive pitch, the decision was taken in December to award the new marketing account to the DDB agency. DDB was chosen by Premiere for its creative performance and strategic competence.

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Sales

With its broad sales network, Premiere can be subscribed to nationwide in Germany and Austria. Premiere primar-ily sells its subscriptions in the three channels of direct sales, retail sales, discounters and cash & carry mar-kets.

In order to serve customer wishes even more flexibly, Premiere introduced a differentiated and fair package structure on August 1, 2005, comprising various stan-dard and supplementary subscriptions. The stanstan-dard subscriptions, PREMIERE THEMA, PREMIERE FILM and PREMIERE SPORT, can be combined with supplementary subscriptions, such as PREMIERE FUSSBALL LIVE or PREMIERE GOLDSTAR. PREMIERE KOMPLETT now offers an even clearer price advantage in comparison to the in-dividual components.

In direct sales, voucher campaigns with major partners such as Hasseröder and Aral attracted the attention of and provided access to a new customer group. Drivers could collect bonus points (“Fussis”) when they stopped at Aral gas stations, and were able to exchange these for reduced subscriptions. In October, Premiere and Hasseröder started a long-term partnership with a

loy-alty program. Consumers can obtain reduced Premiere subscriptions until July 2006 by collecting beer bottle tops.

The Premiere retail sales force provided direct support for over 2,000 specialist retailers in 2005. In coopera-tion with the sales partner, Philips, 450 POS were newly equipped with demonstration devices and equipment. In August, Premiere installed a new version of the Connect online-subscription registration tool to simplify the regis-tration of new subscribers at retailers, and make the application process as easy as possible for the partner.

The new system impressed users with its increased flexibility, higher security and lower costs. Connect also gives retail partners an almost playful means of getting to know the ins and outs of what’s new at Premiere. The new application “Premiere Partner Coach” encourages sales partners to train themselves quickly and refresh their knowledge online.

Further sales agreements were concluded in 2005 with well-known discounters in the cash & carry sector.

Business customers

In addition to consumer business, Premiere also offers special products for business customers. New master agreements, for instance with NH-Hotels, the Helios clinics and the Klinotel association, were concluded in the hotel and clinic sector during the reporting period.

Premiere increased its investment in the service provider, Roombase Networks GmbH, in December 2005 to 95 percent in order to further expand hotel pay-TV.

Roombase Networks is the full service provider for hotel TV systems for the hotel industry, from installation through operation to maintenance. The new website, www.premiere.de/hotel went online in December. On this site customers can look for a hotel for their next trip that includes Premiere in its service.

Fans regularly meet up in Germany and Austria’s over 13,500 Premiere Sportsbars to cheer on their favorite teams. With its sights set on the forthcoming 2006 soccer World Cup, Premiere has been offering sportsbar owners the Premiere Sportsbar Plus subscription since October 2005, which clarifies the issue of the GEMA performing rights fees and the Infront license rights on broadcasting in advance. The Sportsbar Super Plus option allows bar owners to purchase a projector at a reasonable price. As a general rule, bar owners as new customers are now only taking out prepaid subscrip-tions.

In 2005, Premiere continuously expanded its business with operators of cable networks who want to offer their customers and tenants added value with digital pay-TV.

For instance, long-term contracts were concluded with ewt and Kabel Baden-Württemberg on carrying the new Premiere HD program.

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Service and customer relationship management (CRM)

Premiere wants to offer its customers a high level of ser-vice. Customers can therefore call the service centers round-the-clock, where trained staff are there to answer questions on subscriptions, technology and program-ming. Regular quality checks by Premiere employees en-sure that the external service centers also provide the desired level of service. Subscribers can also find initial answers to their queries

on-line in the overhauled Premiere portal. Since October 2005, Premiere subscribers also re-ceive a new customer zine by post. The free maga-zine titled “Premiere” provides regular information on all the pay-TV operator’s new fea-tures and offers.

On January 17, 2005, Premiere started an innovative cus-tomer loyalty program for subscribers called “Premiere Stars”. With this program, subscribers can, for example, collect bonus points by introducing new subscribers and exchange these for a large number of attractive premi-ums. Since December 2005, subscribers have also been able to collect bonus points using a joint credit card issued in cooperation with Deutsche Bank. The in-tention is that customers of Premiere and Deutsche Bank will continue to receive other selected joint offers in the future.

The “Premiere Shop” opened its doors online in August 2005. Together with well-known partners, the pay-TV operator’s new purchasing world offers a wide range of products related to films, sport and entertainment. The shop forms part of the revised website that was also launched in August 2005.

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New momentum through innovative TV technologies Lean organization

Cooperation with external partners

Premiere sees itself as the engine of digital TV develop-ment in Germany and Austria. It is the only major TV oper-ator in Germany and Austria to have broadcast its pro-grams in an exclusively digital form since March 1, 2003. Although technology is not one of Premiere’s core business fields, the development of innovative TV tech-nologies is strategically important to the Company to generate momentum for further growth.

Research and development at Premiere covers viewer research and the development of TV innovations from which it expects potential future growth. Premiere is con-centrating on the development of innovations that offer viewers genuine added value, and which enables the Company to address wide sections of the public.

Viewer research

Internal company viewer research measures viewing of TV programming by Premiere households around-the-clock, and provides important information for the pur-chase of rights, program planning and advertising market-ing. With a 24.2 percent viewer share, Premiere is, by a

considerable margin, the market leader in subscriber households. Subscribers spent most of their time on the theme channels (44.1 %). The seven film channels, PRE-MIERE 1 to PREPRE-MIERE 7, together accounted for 31.1 percent, and PREMIERE SPORT for 24.8 percent.

TV viewing in Premiere households in 2005 (market share in %)*

0 10 15 20 25

5

ARD III PRO 7

6.1 6.2

4.0

3.32.8

2.3

VOX RTL 2 KABEL 1

Super RTL RTL Premiere

11.4 24.2

8.98.6

7.3

ARD SAT.1 ZDF

Premiere Free-TV channels

*Basis: Viewers aged 3+; Source: Modata GmbH/Premiere Panel

Public broadcasters

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Premiere is following a lean approach to the develop-ment of TV innovations, without operating an expensive technical division. A central expert team defines innova-tion projects, coordinates external service providers in the respective projects and focuses on quality assur-ance. In 2005, for example, Premiere cooperated with the manufacturers, Humax, Pace and Philips on the development of receivers for HDTV (High Definition Tele-vision). The Premiere model thus saves own resources,

enabling the efficient development of TV innovations. In this way, suitable partners can be sought worldwide for the respective project, allowing attractive products to be developed and brought to market as quickly as possible.

The initiative for innovations comes, on the one hand, from customer surveys and market observations, and proactively from Premiere’s core team of 15 employees on the other.

Premiere Sportportal

In June 2005, Premiere set a new trend in sports report-ing with the Premiere Sportportal. Since its introduction, viewers can see Premiere’s entire sports program on a single TV portal page. With modern picture-in-picture pre-sentation, the offering presents an overview of all the current sports broadcasts. Thanks to the multifeed tech-nology familiar from Formula 1 and soccer Bundesliga broadcasts, subscribers can select from up to 15 paral-lel sports events on one channel via an option button on their digital receiver’s remote control unit.

PREMIERE DIREKT+

Also in June, Premiere entered the market with its PREMIERE DIREKT+ video-on-demand service. Initially designed for satellite customers, the service is based on a new generation of Premiere digital recorders (PDR+) and is a world-wide first in combining a video-on-demand service with hard disk functionality. PREMIERE DIREKT+ offers customers up to 30 film highlights at all times, including full adult entertainment, as early as six months after the box office premiere. The content is uploaded onto the PDR+ hard disk overnight, and filed into clear categories. Viewers can order the film of their choice from the range on offer at all times for a fee by telephone, text message or the internet and have it re-leased for 24 hours. As in the cinema, there are new starts every week on PREMIERE DIREKT+, and customers can receive trailers and background information on re-quest. Films can be stopped at any time and continued later. Utilization of the offering requires a Premiere digi-tal recorder that is PREMIERE DIREKT+ compatible.

PREMIERE HD

At the end of the year, Premiere took the final steps towards the market launch of the PREMIERE HD pro-gram offering, which will be transmitted in the new high definition television format, HDTV. Thanks to fivefold higher resolution, HDTV offers much better picture qual-ity compared with conventional television standards, and is one of the most important future trends in digital television.

In December, Premiere started broadcasting its three HD channels, PREMIERE HD FILM, PREMIERE PHILIPS HD SPORT and DISCOVERY HD. The programs are broad-casted in the new MPEG4/H.264 condensed standard and the new DVB-S2 transmission standard. Compared with transmission under the MPEG2 standard, which is already used internationally, the contents are more con-densed with the new process. The reduced amount of bandwidth required makes transmission costs conside-rably less, enabling attractively priced products on a broad scale. Pay-TV operators in other countries, such as Canal+ in France and BSkyB in Great Britain, intend to follow Premiere’s example in the course of 2006 and also broadcast HD in MPEG4/H.264 and DVB-S2.

Development of TV innovations

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In December, Premiere certified the Pace DS 810 KP as the world’s first digital receiver capable of processing HD-programs in accordance with the new standards. The new receiver can receive all other Premiere programs and digital free-TV channels via satellite. Owing to world-wide delivery problems for MPEG4-chips by chip set manufacturers, only a small number of HD-receivers were available by the end of the year. Premiere therefore started its HD offering as a field test for selected Premiere subscribers. The receiver manufacturers have announced larger quantities for the first quarter of 2006.

TV cable network operators also intend to carry the HD programs in time for the 2006 FIFA World Cup^TMin Ger-many. Respective contracts with terms until 2014/15 were concluded in the third and fourth quarters of 2005 with Kabel BW, ewt, wilhelm.tel and DNMG. With 140 affiliates, DNMG is the largest marketing organization for operators of cable TV networks in German speaking countries, and represents, among others, Tele Colum-bus. Since the manufacturers have announced that cable receivers will also be available by the time the World Cup starts, satellite and cable customers should then be able to experience the matches in HD quality.

Main focus of future technical developments

Premiere continuously monitors promising technical developments in order to push ahead with more innova-tive projects. For the future, the company is keeping a particular eye on the development of hard disk receivers that combine HDTV and video-on-demand services.

PREMIERE HD: brilliant picture quality thanks to fivefold higher resolution as com-pared to conventional TV

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Employees

Number of full-time staff cut due to outsourcing A young, well-qualified team

Individual further training measures

The Premiere Group had 1,147 full-time employees on permanent contracts as of December 31, 2005. The decrease compared with the previous year (12/31/04:

1,595) is mainly due to the outsourcing of the operative IT and most of the call center operations, and the sale of Creation Club (CC) GmbH.

Employees (Full-time)

0 500 1,000 1,500 2,000 2,500

12/31/2005 12/31/2004

1,595 1,147

Corporate culture

Qualified, motivated employees who think and act like entrepreneurs are the Company’s most important asset.

Premiere has an outstandingly well-trained, young team of employees. Fifty percent of the employees have de-grees. The average Premiere employee is just under 35 and has been with the Company for 4.3 years.

Seventy percent of the Premiere employees, including the entire middle and top management, receive parts of their salaries as a variable component, based on perfor-mance.

Development initiatives

In 2005, Premiere completed the “Shape” project, which started in 2004, with the creation of a uniform organiza-tion and title structure. Since then, the transparency created has simplified internal processes and harmo-nised external communications.

In addition, various development initiatives, which com-menced in 2004, continued in 2005 in Information Management, Accounting & Taxes, Sports Editorial &

Production, Marketing & Sales, Corporate Communica-tions and Human Resources & Organization. The contents included management audits, employee surveys and

interface analyses. Comprehensive measures, such as individual coachings and team workshops, were derived from the results and personal feedback discussions.

The results of the employee surveys and interface ana-lyses show a high degree of identification with the Premiere business. The respondents also expressed great confidence in the Company’s vision and strategy.

Premiere employees are very open to change, flexible, and are highly customer-oriented.

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Training and further education

Training and further education play an important role at Premiere. Premiere supports employees wishing to qual-ify themselves further with internal and external training.

Forty-two percent of the Premiere workforce participated in further training measures in 2005. These efforts will be intensified. The personnel development department has consequently issued a new training guide, describ-ing the seminars and courses in which employees can participate in 2006.

The Company does not provide traditional vocational training but does offer internships in Corporate Communi-cations (Editorial and Picture). Over a period of 18 months, interns receive comprehensive and practical post-graduate training. The offering is rounded off with training courses at the Bavarian Press Academy and ex-ternal and inex-ternal studentships.

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Parental control beyond the legal requirements Promotion of young media talent

Soccer from fans, for fans