Qu ar te rly re po rt 20 04

Q1 2004

Quarterly report of the EM.TV group for the first quarter of 2004. Key Figures.

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First quarter highlights.

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Business unit reports.

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Economic development.

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Outlook.

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Consolidated financial statements.

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Corporate calendar.

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Forward looking statements. This quarterly report contains statements relating to future events that are based on management’s assessments of future developments. A

Q1 2004

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 substantially from those forecast. EM.TV does not intend to continually update the forward looking statements contained in the quarterly report.

Key figures. EM.TV group (based on IFRS). 1/1 to 31/3/2004

1/1 to 31/3/2003

47.6

67.5

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

2.8

-4.4

Depreciation and amortization

-3.1

-13.6

Earnings before interest and taxes (EBIT)

-0.3

-18.0

Earnings before taxes (EBT)

94.4

-30.1

Consolidated result for the period

93.5

-29.9

in million Euro Sales

Earnings per share (in EUR)

-0.20 31/3/2004

31/12/2003

66.7

271.1

Non-current assets

257.2

414.8

Shareholders’ equity

100.2

0

Film and merchandising rights, EDP programs

Equity ratio (in percent) Long-term interest-bearing liabilities Short-term liabilities to banks Balance sheet total

22.1 % 68.7

435.8

0.1

80.8

453.2

700.6

31/3/2004

31/3/2003

Share price (in EUR)*

0.71

Market capitalization*

Q1 2004

Employees (average of the reporting period)

103.7 618

360

* On April 27, 2004 EM.TV AG’s share was officially listed on stock exchange. Closing price on the listing day was EUR 2.89 and a market cap of EUR 139,5 million (in relation to voting shares).

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First quarter 2004 highlights. Restructuring concept for 2000/2005 convertible bond successfully implemented.

High profit reported for quarter due to special effects arising from the restructuring.

Virtual break-even achieved after tax.

Earnings expectations for full year 2004 increased.

Ongoing lively development in sports segment.

International distribution co-operation with RTV Family Entertainment AG.

Q1 2004

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Business unit reports. EM.TV AG pursues two-pronged strategy in core operating business. Like its predecessor EM.TV & Merchandising AG, EM.TV AG has been pursuing a two-pronged strategy since 2003 in its core operating business within the entertainment and sports segments. The entertainment sector includes the production of programs for children and youth market, the management of TV rights and the marketing of merchandising rights. In addition, EM.TV holds 50 percent of the Junior.TV joint venture, as well as stakes in a series of co-production companies. EM.TV Beteiligungs GmbH & Co. KG, which holds the 45 percent stake in the Tele München Gruppe (TMG) that is currently up for sale, also belongs to this segment. The sports segment forms the second key element of business activities. Alongside the European merchandising marketing rights to the 2006 FIFA World Cup™, this includes shareholdings in the TV station DSF and online platform Sport1, as well as 100 percent ownership of Germany’s largest sports production company PLAZAMEDIA.

Entertainment. Programming/Production. Ongoing budget limitations on the part of TV stations meant that the first quarter 2004, too, saw highly selective new program investment. In order to maintain risk at a minimum, broadcasters and producers opted largely for proven subject matter and programs, whose high levels of recognition mean that they are already well established among viewers. As in the previous year, the costs for new productions were shared across several financing partners or covered by pre-sales agreements with TV stations. Due to the success of classic series distributed and, in some cases, co-produced by EM.TV, the company pursued the strategy of also exploiting established program brands in the cinema. One result of this is the start of production this year on a movie version of the successful animation series Flipper & Lopaka, together with EM.TV subsidiary Yoram Gross-EM.TV. Further projects for the big screen are currently in planning.

Q1 2004

The third season of Flipper & Lopaka, which is already in production, marked the continuation, in the first quarter 2004, of the existing co-production contract with ZDF and Australian animation studio Yoram Gross-EM.TV. All new 26 episodes of this series will be completed by spring/summer 2005. The first episodes are due to celebrate their German TV premiere on ZDF as early as the beginning of 2005. Broadcast on French TV has likewise been secured. Within the reporting period, TF1 signed a pre-sales agreement, under the terms of which the French broadcaster acquired the exclusive free-TV rights to Flipper & Lopaka III for a period of five years.

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Alongside completion of four episodes of co-production Blinky Bill III, EM.TV was also able to finalize production of the 26 new episodes of animation series Norman Normal during the first quarter. The third season of animation series Tabaluga, which successfully began airing on ZDF, has also been shown on KI.KA since the end of February 2004, where it is already achieving very good viewer ratings.

TV Sales. The positive trend in the TV market for children and youth programs, already evident at the end of 2003, made modest progress during the first quarter 2004. None of the new productions to appear on the market were in a position to set new program trends, which benefited EM.TV, with its extensive and highly broad-based program library. It continued to be predominantly proven classics and cult series from the 70s and 80s that enjoyed the highest demand. Furthermore, EM.TV was able to compensate partially for falling sales in key markets through reinforced sales activities abroad. In so doing, the company was well served by its international network of shareholdings and strategic partners. First quarter highlights included the completion of an international distribution co-operation with Munich-based RTV Family Entertainment AG. The agreement grants EM.TV distribution rights to all RTV children and youth programs within key foreign markets. Thus, EM.TV took an important step in strengthening its core business of classic entertainment for children and youth markets. Within the scope of the international TV trade fair MIPTV – which took place between March 29 and April 2, 2004 in Cannes, France – EM.TV was also able to extend a host of international framework contracts. A new volume contract placed the long-standing business relationship with ORF on a stable foundation. The Austrian broadcaster acquired three series for children and teens from the EM.TV rights library, as well as four series from the RTV Family Entertainment AG program portfolio, which is now being distributed by EM.TV. In addition to this, EM.TV secured a program framework contract with French pay-TV group TPS Jeunesse, encompassing the acquisition of a total of 520 half hours from the EM.TV rights library. TPS Jeunesse will air the acquired programs over a period of several years on its four pay-TV channels TELETOON, TELETOON +1, EUREKA! and PIWI. Irish free-TV station TG4 extended its existing volume contract from 2000 for a further four years. The new program volume covered by the license stretches to 588 half hours.

Q1 2004

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In the German domestic market, EM.TV was able to sell the series Casper and Alvin & Chipmunks to RTL2. Furthermore, WDR secured free-TV rights to two feature films, and KI.KA selected four series for children and teens from the EM.TV portfolio within the scope of its existing program supply contract. In the home entertainment sector, EM.TV licensed numerous series and feature films to Greek video company VMC during the reporting period. In addition, Italian video distributor Medianetwork acquired DVD rights to several classics from the EM.TV portfolio, including Heidi and Pippi Longstocking.

Merchandising & Marketing. As in the previous year, the first quarter 2004 demonstrated strengthened demand for license products in the video, DVD and audio sectors. In contrast, consumers were restrained in their purchase of classic license goods in the toys & games, textiles and household goods sectors. Alongside classic license sales in merchandising, the reporting period witnessed numerous marketing activities and cross promotions realized jointly by EM.TV and its licensees. In addition, a number of new license products were presented at the specialist trade fairs Ambiente (Frankfurt), GDS (Dusseldorf) and Practical World (Cologne). Among the most important activities was the first phase of a promotion organized at its service stations by Autobahn Tank & Rast GmbH & Co. KG to celebrate the 30th anniversary of animation series Vicky the Viking. Between the end of March and mid-April, the Bonn-based company offered special Vicky menus with giveaways for children. In addition, the restaurant outlets were decorated with wide-ranging POS material and product displays. The promotion was supported by nationwide radio commercials, online advertising and competitions. Two further initiatives will take place during the summer vacation period and around the 2004 Christmas Holidays. On top of this, EM.TV has made preparations for a wide range of initiatives to mark Vicky’s 30th birthday together with ZDF and other license partners. These are set to reach their climax in summer 2004.

Q1 2004

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One of the first quarter’s most important license deals was the agreement with POS Handels GmbH covering the licensing of games and ceramic products featuring Maya the Bee. Furthermore, BMG Ariola Miller acquired the audio book rights to TV series Our Little Sandman, and the company Rotstern (formerly Handelshaus Alsen) secured the license to candy floss featuring the popular character. The reporting period also included a new license contract with the Xenos publishing house for Sesame Street picture books and soundbooks. In addition, the company Morgenstern acquired a license for new children’s hand towels featuring Ernie, Bert and others, while Gaba GmbH extended its existing contract for Elmex-branded children’s toothpaste.

Junior.TV GmbH & Co. KG. Junior.TV GmbH & Co. KG is held 50/50 by EM.TV AG and KirchMedia subsidiary TaurusLizenz GmbH & Co. KG. On March 27, 2004, the former EM.TV & Merchandising AG reached an agreement with KirchMedia GmbH & Co. KGaA i. In. regarding the acquisition of the outstanding 50 percent of Junior.TV GmbH & Co. KG. Two further agreements, both also involving Junior.TV, have resulted in the finalization and settlement of all major rights and licensing matters outstanding between the two companies, including insolvency related issues and mutual claims. The transaction remains subject to suspensive conditions. Through Junior.TV, EM.TV has access to the extensive Junior program library, consisting of around 22,000 half hours of high quality entertainment for children and youth markets. Pay-TV. Junior.TV supplies the children and family-oriented Junior pay-TV channel on the Premiere platform from Premiere Fernsehen GmbH & Co. KG. The channel is available as part of the Premiere Plus or Premiere Komplett packages, or can be obtained for an individual subscription of two Euro per month in combination with Premiere Start or any other Premiere package. In the first quarter 2004, the Junior Channel benefited from growth in subscriptions to the Premiere Komplett package, which also includes Junior. Bookings for the Plus package also continued to show positive development during the reporting period and, as in the previous year, exceeded expectations. Since September 2003, Junior has also been aired in Switzerland and Liechtenstein on the pay-TV platform run by Swiss cable network operator and pay-TV provider Cablecom. EM.TV secured a further partner in Switzerland in the first quarter 2004, in the form of infrastructure and pay-TV provider Swisscom Broadcast AG. The Bern-based company signed a long-term distribution contract to supply the Junior Channel on its new pay-TV platform Premium Digital TV, which went on air April 16, 2004.

Q1 2004

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Home Entertainment. February 2004 saw the market launch of further DVDs featuring EM.TV series classics Vicky the Viking, The Little Rascals, Black Beauty and The Rainbow Fish, published by Universal Family Entertainment under the “TV Kult” brand. In March 2004, a further three parts of series Vicky the Viking, Sinbad, Nils Holgersson and The Rainbow Fish appeared in audio format on CD and MC. Also in the first quarter 2004, EM.TV secured a contract with Concorde Home Entertainment, a subsidiary of the Tele München Gruppe, granting the company exclusive marketing rights in the home entertainment sector to TV series Rupert the Bear, Felix the Cat, Arthur and Karlsson on the Roof.

Q1 2004

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Sports. DSF. Alongside very good viewer ratings and market share, the first quarter 2004 also enjoyed a high level of successfull sales activities. The German Soccer Premier League formats on Super Sonntag were almost fully booked. After just a few months, DSF has already established Super Sonntag as a standalone brand, coming second only to the Sportschau in surveys, with the market demonstrating a very positive reaction. DSF also achieved growth, not only in income from classic advertising but also from the special advertising sector. In this regard, important co-operations such as those with international brands Coca-Cola, McDonalds and Telekom were expanded, with interrelated offerings between the Monday and Sunday formats playing an increasingly important role. On top of this, the added value services sector demonstrated very positive development. The sports quiz in the call-in slot continued to turn in a strong performance against the national trend. 50 percent more viewers. Viewer ratings showed substantially positive development during the reporting period. Market share among all viewers increased from 0.8 percent in the same period last year to 1.2 percent, representing an outstanding 50 percent. In the target group of men aged between 14 and 49, DSF likewise demonstrated strong growth of 11 percent to 2.1 percent. Ratings growth in the soccer segment stood between 15 and 66 percent. The absolute highlight was, however, the European Handball Championship, which began in January 2004. The Championship was watched by up to 5.23 million viewers. The final and the Championship triumph enjoyed by the DHB team was followed on February 1 by an average of 4.44 million viewers, LIVE on DSF. Very good viewing figures continue with the German Soccer Premier League. Following the successful brand positioning of Super Sonntag, the formats worked straight away, even after the Premier League’s six-week winter break. Number one crowd-puller was the Sunday matches in Bundesliga – Der Sonntag. On February 29, Premier League viewing figures on DSF peaked at up to 4.51 million viewers, with an average of 3.23 million (total viewers). First quarter ratings were up by 18 percent against the first leg matches.

Q1 2004

As well as with the Premier Soccer League, DSF also continued to enjoy outstanding success with the Second League. Never before had the Second Division enjoyed such a high level of recognition as in the 2003/04 season. With almost one million viewers, the magazine program Hattrick – 2. Bundesliga am Sonntag, demonstrated a ratings growth of over 50 percent against the same period in 2003, while the Friday magazine program increased its viewer ratings by 20 percent. In the heavily foughtover early evening time slot, DSF achieved 17 percent growth with the news magazine program Bundesliga Aktuell. Handball live matches also benefited from growing viewer interest in DSF, resulting in growth of almost 20 percent.

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Sport1. Strong growth in visits. During the first quarter 2004, Sport1.de was able to continue developing its position as Germany’s most visited sports website. DSF’s online platform reached a new high in March 2004 with nine million visits and 61.6 million page impressions. Against quarter one 2003 (17.5 million visits), Sport1.de increased its hit rate by around 40 percent (24.1 million visits). New partnerships. A joint communications concept for soccer’s 2004 European Cup has been worked out and contractually agreed with mobile communications provider E-Plus. Alongside an innovative Java live ticker from Sport1, a unique European Cup mobile communications package will be launched onto the market together with E-Plus and Rudi Völler’s testimonial match at the beginning of the finals. This will be accompanied by a two-month marketing campaign encompassing TV, online outlets and the BILD newspaper. In the e-commerce sector, discussions are at an advanced stage with external shopping partners. A contract has been agreed with Intenium to operate as an external partner for the newly conceived games portal.

PLAZAMEDIA. In general, market conditions during the first quarter 2004 showed a slight improvement. The low pricing level that has now been reached afforded the basis for further expansion of the customer portfolio during the reporting period, as well as the extension of existing contracts. In addition, broadcasters are now once more developing new formats, with call-in shows enjoying healthy demand. All these factors enabled PLAZAMEDIA to report positive development during the first three months of the business year in terms of contracts and earnings.

Q1 2004

Business development. Following the successful contract extension achieved with both key customers PREMIERE and DSF, the business now has a firm base operating workload through 2006, facilitating efficient working processes and a reasonable investment budget. The working relationship with 9Live has been expanded – since the beginning of the year, PLAZAMEDIA has also been responsible for program management for the interactive station. Under contract to the Entertainment Factory, PLAZAMEDIA produced the first of a total of ten seasons of the comedy show TRAMITZ and Friends for German TV station ProSieben. An extension was achieved on the contract with Disney/Buena Vista Germany for further wide-ranging co-operation on PLAZAMEDIA’s production site. The beginning of the return leg of the 2003/2004 soccer season in the Swiss Axpo-Super League saw PLAZAMEDIA taking over the live production of all matches for the Swiss program slot on German TV station Sat.1.

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The New Media sector also enjoyed robust operating conditions at a qualitatively high level, securing demand for soccer league reporting for telecom and internet services until the end of the current season. Innovation. On March 28, 2004, PLAZAMEDIA achieved a nationwide premiere with its partner Alfacam N.V., when it transmitted a Premier Soccer League match in High Definition TV (HDTV). HDTV is the production standard for the 2006 FIFA World Cup™ in Germany, which will afford it an important launching pad into the market. Market assessment/market forecast. Following succesfull contact extensions with Premiere and DSF, the continuation of the cooperation with DFL on the production of the German Soccer League in 2004/2005 and 2005/2006 seasons would bring PLAZAMEDIA a further boost to its client portfolio. In this respect, PLAZAMEDIA is pursuing intensive negotiations with DFL.

European merchandising marketing rights to the 2006 FIFA World Cup™. Within the scope of the acquisition of the European merchandising marketing rights to the 2006 FIFA World Cup™, EM.TV is brokering sales and production licenses within Europe for a wide range of goods. One of the most important license contracts secured during the first quarter 2004 is that reached with Bertelsmann. The international media and entertainment company agreed a licensee contract with the Fédération Internationale de Football Association (FIFA) and EM.TV & Merchandising AG. As an exclusive license partner of the global soccer association FIFA, Bertelsmann will produce and sell the official print publications for the 2006 FIFA World Cup™ within the German-speaking region, representing the largest publication program ever for a FIFA World Cup™. A broad spectrum of over 35 print products is planned within the scope of the co-operation, the comprehensive license rights to which several Bertelsmann companies have acquired for the first time. The companies Medienfabrik Gütersloh, Wissen Media Verlag, C. Bertelsmann Kinder- und Jugendbuchverlag (Random House publishing group), Mohn Media Kalendar & Promotion and BMG are planning, before and during the 2006 FIFA World Cup™, event-related information books, children’s books, calendars and audio books, as well as numerous magazines and non-fiction books. The first print products are due for launch as early as fall 2004.

Q1 2004

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Economic development. Employees. The EM.TV group had an average of 618 employees from January 1 to March 31, 2004 compared with 360 in the comparable period of the previous year. The increase in the number of group employees in the reporting period is mainly attributable to the acquired acquisitions in PLAZAMEDIA and PMM, DSF and Sport1 to a very large extent. For example, the employee figures for PLAZAMEDIA and PMM were included for the first time in June and the number of employees of DSF and Sport1 were included for the first time in July 2003. It also has to be borne in mind that the number of employees of The Jim Henson Company are no longer included as a result of the sale of the company in July 2003. The number of employees for TMG have not been included since January 2004 as well. Personnel expenses for the period under review amounted to EUR 11.7 million compared with EUR 8.0 million in the comparative period in the previous year.

Restructuring. EM.TV AG is the legal successor of EM.TV & Merchandising AG which was merged with the company on April 19, 2004. In the first months of 2004, the former EM.TV & Merchandising AG successfully concluded the restructuring process which was started in 2001. The central feature of this process was the implementation of the complex restructuring concept of the convertible bond issued in 2000 nominally valued at EUR 400 million which would have been repayable in February 2005 with a total amount of EUR 469 million. The threatening insolvency of the former EM.TV & Merchandising AG was averted by restructuring the convertible bond. The shareholders and bondholders of EM.TV & Merchandising AG agreed a restructuring concept in the first quarter of 2004; the major company-law measures for its implementation were also undertaken in the first three months. The main results of the last few months are as follows: > A meeting of the convertible bondholders was held on January 9, 2004. With 75 percent of the total nominal value of the bond being present, the change in the bond conditions was resolved with a majority of more than 97 percent, thereby being obligatory for all bondholders. Inter alia, the bond was made interest-free from February 16, 2003 to February 15, 2006 and the redemption date was postponed from February 16, 2005 to January 9, 2007. > On February 5, 2004, the shareholders of the company resolved their acceptance of the restructuring concept with an approval rate in excess of 99 percent.

Q1 2004

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> On March 11, 2004, the drop down of EM.TV & Merchandising AG company assets and the transfer of the shareholding in EM-Sport Sportmarketing GmbH became effective with its entry into the commercial register. > The date for the acceptance of EM.TV’s offer to the bondholders for the restructuring of the convertible bond was accepted with a ratio of 94.22 percent (based on the nominal value of the convertible bond) within the acceptance period from January 12 to March 17, 2004 (including a supplementary period). The necessary acceptance ratio was achieved after EM.TV had previously made use of the right to lower the ratio from 97.5 percent to 94.0 percent with the approval of the ad-hoc committee of bondholders. > With the waiver agreement of March 30, 2004, 94.22 percent of the bondholders waived all rights and obligations arising from the 2000/2005 bond with immediate effect. The convertible bondholders received the following assets from EM.TV Merchandising AG in return: > Payment of EUR 18.8 million in cash; this is equivalent to a payment of EUR 50 for each convertible bond in the nominal value of EUR 1,000. > The transfer of the zero coupon note issued by EM.TV Beteiligungs GmbH & Co. KG to the bondholders (with a nominal value of EUR 141.3 million). The securities guarantee the bond holders the proceeds from the sale of EM.TV shareholding in Tele München Gruppe (TMG) up to an amount of EUR 150 million (any additional amounts at 50 percent). 3.75 zero coupon note with a nominal value of EUR 100 are attributable to each convertible bond with a nominal value of EUR 1,000. > The transfer of a bond issued by EM.TV Vermögensverwaltungs AG (with a nominal value of EUR 47.1 million and a term until 2009). 0.125 bonds with warrants with a nominal value of EUR 1.000 are attributable to each convertible bond with a nominal value of EUR 1.000. Option rights are associated with the bond which enable shares to be purchased in EM.TV Vermögensverwaltungs AG at a price of EUR 1 per share. > The transfer of 56.5 percent of the voting shares in EM.TV Vermögensverwaltungs AG. 75 ordinary shares with an arithmetical nominal value of EUR 1 were transferred to the holders for each convertible bond with a nominal value of EUR 1,000. The former shareholders received 40.01 percent of the voting capital of EM.TV Vermögensverwaltungs AG and also subscription rights to shares in the company which may be issued in two tranches.

Q1 2004

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> The merger of EM.TV & Merchandising AG with EM.TV Vermögensverwaltungs AG executed on the merger date of March 31, 2004 became valid on April 19, 2004 with its entry in the commercial register. Since then, EM.TV Vermögensverwaltung AG has been operating under the name of EM.TV AG. EM.TV & Merchandising AG has been dissolved as a result of the merger; trading in its share was discontinued on April 19, 2004 as a result. > On April 27, 2004, EM.TV AG shares were officially listed on the Frankfurt Stock Exchange within the regulated market (Prime Standard). The shareholders of the former EM.TV & Merchandising AG received ten shares in EM.TV AG and 10 certificates in two series with this being equivalent to the amalgamation ratio of 73 shares in the former company. Each certificate entitles the holder to subscribe for 0.39 ordinary shares in EM.TV AG at a price of EUR 2.50 per share (series 1) and 0.39 ordinary shares at a price of EUR 3.50 per share (series 2). EM.TV AG is conducting the operating business of EM.TV & Merchandising AG with the Entertainment segment (children and youth programs) and the Sport segment in exactly the same way as in the past. The 45 percent holding of EM.TV & Merchandising AG in TMG has been transferred to EM.TV Beteiligungs GmbH & Co. KG as part of the restructuring process and is available for sale. In addition to the restructuring of the convertible bond, EM.TV AG signed an agreement with KirchMedia GmbH & Co. KGaA i. In. for the transfer of the remaining 50 percent holding in Junior.TV GmbH & Co. KG. All major rights and licensing matters, as well as mutual claims were finally and conclusively regulated and settled with two additional agreements in which Junior.TV is also involved. This transaction is still subject to certain suspensive conditions.

General comments. The enclosed consolidated financial statements at March 31, 2004 show the EM.TV group after the hive down and transfer of assets to EM.TV Vermögensverwaltungs AG after executing the waiver agreement concluded with the former bondholders and after the merger of EM.TV & Merchandising AG with EM.TV Vermögensverwaltungs AG (now EM.TV AG) on March 31, 2004. The consolidation group of the new EM.TV AG is initially not different from the consolidated group of the former EM.TV & Merchandising AG but there were significant positive effects from the restructuring process in the transition of the equity in the group.

Q1 2004

In view of the fact that EM.TV AG did not exist in its present form in the reporting period, the following quarterly financial statements at March 31, 2004 drawn up in accordance with the regulations laid down in the International Financial Reporting Standards (IFRS) are to be regarded as information which shows the position of the group as at March 31, 2004. The continuation of the EM.TV group is assumed in accordance with IFRS (predecessor accounting).

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The comparative figures in the profit and loss account for the first quarter of 2003 and the balance sheet at December 31, 2003 show details relating to EM.TV & Merchandising AG group which no longer exists on account of the merger. As a result of the radical restructuring measures which have been implemented in the meantime, the comparability with the details of EM.TV AG is strongly restricted as far as the first quarter of 2004 is concerned. The major differences in the consolidated financial statements at March 31, 2004 in comparison with the details shown as at December 31, 2003 are as follows: > The elimination of 94.22 percent of the EUR 400 million 2000/2005 convertible bond > The inclusion for the first time of the new 8 percent 2004/2009 bond with warrants issued by EM.TV AG

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> First-time balance sheet reporting of the zero coupon note, nominally valued at EUR 150 million held by EM.TV Beteiligungs GmbH & Co. KG > A change in the registered capital and major equity items in accordance with the plan for restructuring of the convertible bond

The following changes have to be taken into account in particular when comparing the profit and loss account of the EM.TV group for the first quarter of 2004 with the equivalent period in the previous year: > The former subsidiary The Jim Henson Company was fully consolidated in the financial statements for the previous year. > The profit and loss account for the first quarter of 2003 is marked in its sales and costs by a special effect arising from the premature inclusion of the outstanding debt of the US Foundation Sesame Workshop to The Jim Henson Company. > On January 1, 2004, a transitional consolidation was made of the previously consolidated 45 percent holding in TMG „at equity“. With effect from March 11, 2004, the TMG shares are now shown as financial assets on account of the transfer of shares to EM.TV Beteiligungs GmbH & Co. KG, with this resulting in a deconsolidation in the EM.TV group.

Q1 2004

> The Sports segment which was acquired during the course of 2003 (holdings in the DSF TV station and the Sport1 online portal together with a 100 percent holding in the production service company PLAZAMEDIA which were eligible for consolidation) were not included in the figures for the previous year’s quarter. > A restructuring-related profit, amounting to EUR 94,4 million, that did not result from operating business, brought share capital back into the black from negative value of December 31, 2003. 16

Accounting and valuation principles. According to the regulations of Deutsche Börse’s Prime Standard, quarterly financial statements have to be prepared in accordance with international accounting regulations - IFRS or US-GAAP. EM.TV AG draws up its consolidated financial statements in accordance with § 292a of the German Commercial Code (HGB) and in accordance with International Financial Reporting Standards (IFRS). The company is therefore exempt from drawing up consolidated financial statements in accordance with the provisions of § 290 of the German Commercial Code. The accounting and valuation procedures in the present quarterly financial statements are unchanged in comparison with the annual financial statements of the now defunct EM.TV & Merchandising AG at December 31, 2003.

Sales and earnings position. The development of the EM.TV group’s business in the first three months of 2004 was generally in line with the corresponding forecasts. The development of operational earnings shows a marked positive trend. Consolidated sales in the first three months amount to EUR 47.6 million. EUR 3.4 million thereof are attributable to the Entertainment segment and EUR 44.1 million to the Sports segment. In line with the normal seasonal trend in the rights business, the development in the TV Sales and merchandising sector was subdued in the first quarter. In the Sports sector, DSF continued its positive development of the second half of 2003. The group shows positive earnings before interest, taxes, depreciation and amortization (EBITDA) of EUR 2.8 million. The comparative figure in the previous year was a loss of EUR 4.4 million. Depreciation and amortization amounted to EUR 3.1 million. The substantial reduction of EUR 13.6 million in comparison with the previous year was mainly attributable to the deconsolidation of TMG. Earnings before interest and tax (EBIT) showed minus EUR 0.3 million (first quarter of 2003: minus EUR 18.0 million).

Q1 2004

Earnings from financing amounted to EUR 0.4 million. The restructuring of the 2000/2005 convertible bond, which has now been completed, resulted in a one-off restructuring profit of EUR 94.4 million in the first quarter. The net balance of EUR 7.4 million includes the three percent interest charge still due on the 2000/2005 convertible bond in the report quarter for the period from January 1, 2004 to March 31, 2004 and the partial impairment of EUR 94.8 million relating to the TMG holding to the lower attributable value of EUR 150 million, corresponding to the accounting presentation of the zero bond. This compares with the positive extraordinary results of EUR 194.0 million resulting from the

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extensive waiver of bond creditors in connection with their claims relating to the 2000/2005 convertible bond. Taking into account this restructuring-related balance, group earnings before tax (EBT) stand at EUR 94.5 million. After taxation and minority interests, the EM.TV group shows a quarterly surplus of EUR 93.5 million. Adjusted for the restructuring profit the consolidated loss would have been EUR 0.9 million. Whereas the Entertainment segment showed a segment loss of EUR 4.6 million. The Sports segment attained positive results of EUR 4.4 million in the first quarter.

Financial and liquidity position of the group. The consolidated balance sheet total of EM.TV AG amounts to EUR 453.2 million at March 31, 2004. The former EM.TV Merchandising AG showed a balance sheet total of EUR 700.6 million as at December 31, 2003. The decrease is largely the result of the restructuring. The non-current assets of the group are mainly attributable to film and merchandising rights at EUR 66.7 million (25.9 percent) and other investments at EUR 150.3 million (58.4 percent) which are dominated by the shares in TMG (EUR 150.0 million) which are held by the subsidiary EM.TV Beteiligungs GmbH & Co. KG. This asset position compares with a liability position in the same amount arising from the issue of the zero coupon note with the result that a sale of the TMG shares by EM.TV Beteiligungs GmbH & Co. KG will have no effect on earnings to a very large extent. Current assets amount to EUR 196.0 million on the balance sheet date. EUR 106.7 million thereof (equivalent to 54.4 percent) are attributable to liquid funds (checks, cash on hand and balances at bank), together with short-term liquid securities. A large proportion of liquid reserves are being held back for payments due in the course of the current business year. On the liabilities side of the balance sheet, there is a consolidated equity of EUR 100.2 million as at March 31, 2004, being equivalent to a capital ratio of 22.1 percent. The subscribed capital of the company amounts to EUR 65.6 million, of which EUR 48.3 million were being traded on the balance sheet date. EUR 17.3 million were held by the company as its own shares. The subscribed capital of the former EM.TV & Merchandising AG at December 31, 2003 amounted to EUR 146.1 million. The other equity items correspond to the updated values in the consolidated balance sheet at December 31, 2003.

Q1 2004

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Long-term, interest-bearing liabilities amount to EUR 68.7 million at March 31, 2004. Of this amount, EUR 42,0 million are attributable to the 2004/2009 bond with warants which was issued as part of the restructuring of the convertible bond for the transfer of assets of the former EM.TV & Merchandising AG to EM.TV Vermögensverwaltungs AG. This item also includes EUR 25,5 million of outstanding liabilities in connection with the 2000/2005 convertible bond representing the 5.78 percent of the convertible bond capital which did not accept the restructuring offer. The long-term, noninterest-bearing liabilities mainly include the zero coupon note due by EM.TV Beteiligungs GmbH & Co. KG.

Cash-flow. The EM.TV group reports a cash flow of EUR 58.8 million for the first three months of 2004. This is impacted to a large extent by the effects of the deconsolidation of the TMG shareholding (EUR 67.2 million). Cash flow resulting from business operations stands at minus EUR 4.1 million. Investment and financing activities resulted in an outward cash flow of EUR 2.6 million and EUR 1.7 million respectively.

Financial position of EM.TV AG. EM.TV AG which has to draw up financial statements in accordance with the provisions of the German Commercial Code (HGB) shows a balance sheet total of EUR 337.7 million at March 31, 2004. The fixed assets of the AG amount to EUR 205.5 million. Liquid funds (securities, cheques, cash on hand and balances at banks) amount to EUR 80.3 million or almost 24 percent of the balance sheet total. The equity of the AG amounts to EUR 182.5 million as at March 31, 2004. It mainly consists of the subscribed capital of EUR 65.6 million and the capital reserve of EUR 135.3 million. The capital ratio is equivalent to 54,0 percent. Liabilities amount to EUR 135.0 million. Most of the liabilities (EUR 73.5 million) are attributable to bonds: EUR 47.1 million 8 percent interest-bearing bond with warrants 2004/2009; EUR 26.3 million as the residual amount of the 4 percent convertible bond 2000/2005). EM.TV AG had no bank liabilities on March 31, 2004.

Q1 2004

19

Outlook. In the 1st quarter of 2004, EM.TV has not yet achieved its objective of generating a positive EBIT but has made substantial progress in this respect. In the Entertainment segment, efforts are being concentrated on the expansion of activities abroad, together with a further strengthening of the already broad basis of EM.TV’s rights. It is planning to continue with its active participation in the consolidation of the media market which is still continuing unabatedly. As a result of the agreed, but not yet legally concluded, acquisition of the remaining 50 percent holding in Junior.TV GmbH & Co. KG, EM.TV will have full control of the largest and most valuable program libraries in the world. The accounting effects of the agreement with KirchMedia on all matters will result in special positive effects equivalent to a two-digit amount in million Euro in the second quarter. There will simultaneously be an outflow of liquidity of EUR 13.5 million, however. The new Sports segment has developed extremely positively in the first few months following its integration into the EM.TV Group. Major impulses are also expected as a result of the increasing activities concerning all aspects of the 2006 FIFA World Cup Germany™. The Management Board is still anticipating positive segment results in the Entertainment and Sport segments for the whole of 2004. On a Group level, slightly positive earnings after taxes are anticipated for the whole year - excluding the substantial reconstruction gain - and also in the light of the special positive effects in the 2nd quarter in connection with the agreement achieved with KirchMedia (acquisition of the remaining 50 percent of Junior.TV GmbH & Co. KG by EM.TV, as well as a mutual compensation of receivables and liabilities and individual license business). Unterföhring, May 2004 The Management Board

Q1 2004

20

Consolidated balance sheet. Assets. First quarter of 2004

Assets at March 31, 2004 in EUR ‘000 Non-current assets Film and merchandising rights, EDP-programs Goodwill Payments on account Land, property rights and buildings Technical equipment and machines Other equipment, factory and office equipment Payments on account and assets under construction Shares in associated companies Other investments Other loans Long-term trade accounts receivable Deferred taxes

Current assets Cash on hand, bank balances Marketable securities Short-term investments Trade receivables Receivables from associated companies Receivables from joint ventures Other assets Inventory, raw materials and supplies Finished goods and merchanside/work in process Payments on account Deferred charges and prepaid expenses

Deficit not covered by equity Total Assets

EM.TV AG

EM.TV & Merchandising AG

31/3/2004

31/12/2003

66,662 8,929 7,811 2,234 2,293 1,669 16 103 150,265 57 14,595 2,581 257,215

271,063 29,546 13,044 2,639 1,715 1,991 33 1,867 65,328 3,125 14,280 10,197 414,828

67,948 38,790 0 56,008 1,724 957 27,882 0 56 125 2,521 196,011

127,967 375 954 96,536 4,134 73 29,177 269 302 0 1,265 261,052

0

24,766

453,226

700,646

Q1 2004

21

Consolidated balance sheet. Equity and liabilities. First quarter of 2004

Equity and liabilites at March 31, 2004 in EUR ‘000 Equity Subscribed capital Capital reserves Special reserves Other reserves Consolidated accumulated loss Deficit not covered by equity Own shares Contribution in connection with the conversion of bonds which have not yet been registered. Minority interests Long-term liabilities Long-term accruals and provisions Non-interest bearing liabilities Interest bearing liabilities Deferred taxation Short-term liabilities Bonds Liabilities to financial institutions Payments received on account of order Trade accounts payable Liabilities due to associated companies Liabilities due to joint ventures Other liabilities Deferred income and accrued charges Other accruals and provisions Tax provisions

Total equity and liabilities

EM.TV AG

EM.TV & Merchandising AG

31/03/2004

31/12/2003

65,617 2,069,113 557 76 -2,017,775 0 -17,343 100,245

146,054 1,968,527 581 40 -2,139,968 24,766 0 0

0

17

6,952

7,202

2,982 141,322 68,726 4,551 217,581

4,646 0 435,783 6,903 447,332

30 115 1,254 36,879 326 4,090 60,415 1,865 21,028 2,446 128,448

31 80,769 3,967 72,563 6 2,737 53,973 1,385 26,961 3,703 246,095

453,226

700,646

Q1 2004

22

Consolidated profit and loss statement. First quarter of 2004 EM.TV AG

EM.TV & Merchandising AG

1/1 to 31/3/2004

1/1 to 31/3/2003

47,557 209 0 47,766

67,460 370 123 67,953

Other operating income Cost of materials Personnel expenses Amortization and depreciation Other operating expenses Earnings before interest and taxes

5,969 -30,587 -11,733 -3,138 -8,586 -309

5,597 -55,734 -7,961 -13,591 -14,274 -18,010

Financial result Result from restructuring activities

393 94,366

-12,100 0

Earnings before taxes Taxes

94,450 -1,104

-30,110 443

Earnings before minority interests Profit/loss of minority interests

93,346 163

-29,667 -198

Consolidated profit/loss

93,509

-29,865

-2,139,968 24 28,660 -2,017,775

-2,010,021 0 0 -2,039,886

47,766

67,953

2,829

-4,419

EBIT

-309

-18,010

EBT

94,450

-30,110

January March 1 to 31, 2004 in EUR ’000 Sales Own work capitalized Inventory level changes – work in progress Total output

Consolidated loss brought forward Withdrawal from special reserves Withdrawal from capital reserves Consolidated accumulated loss Total output EBITDA

Q1 2004

In respect of the complex capital restructuring of EM.TV AG that took place in Q1 2004, it has not been possible to determine group earnings per share on a diluted and undiluted basis, as all company shares were kept within the group.

23

Consolidated cash flow statement. First quarter of 2004 EM.TV AG

EM.TV & Merchandising AG

January March 1 to 31, 2003 in EUR ’000, IAS

1/1 to 31/3/2004

1/1 to 31/3/2003

Consolidated result for the period under review

93,509

-29,865

202 3,350 -10 812 -94,366 -1,700

42,024 15,326 -1 -379 0 6,223

-6,881 -1,144

36,255 -3,031

2,265 -163

-23,246 198

-4,126

43,504

0 -1,759 -872 -39 48 0 21

-128 -8,107 -183 -221 892 2 86

Cash flow from investing activities

-2,601

-7,659

Cash flow from changes in liquid funds through deconsolidation

67,202

0

0 -1,695 0

-422 -14,495 445

-1,695

-14,472

58,780

21,373

Net funds at the beginning of the financial year Net funds at the end of the financial period Effects of foreign currency differences Changes in liquidity funds

47,573 106,623 270 58,780

-46,966 -25,360 233 21,373

Cash and cash equivalents Short-term bank liabilities Short-term net funds at the end of the financial period

106,738 * -115 106,623

80,788 * -106,148 -25,360

Changes in liquity funds (cash on hands and at banks and short-term securities) Changes in short-term bank liabilities

-21,604 -80,654

-9,790 31,396

Cost of materials due to utilisation-related disposal of assets Write-down of fixed assets Gains/losses on sales and disposals of fixed assets Deferred taxes Restructuring result Other non cash items Net change in stock, receivables and all other assets which are not investing activities or financing activities Net change in provisions and accruals Net change in liabilities and all other liabilities which are not investing activities or financing activities ** Profit/loss of minority interest Operating cash flow Investments in acquisitions of companies/companies shares Investments to intangible assets Investments to tangible assets Investments to financial assets Proceeds from disposals of intangible assets Proceeds from disposals of tangible assets Proceeds from disposal of financial assets

Dividends paid Repayment of long-term liabilities ** Proceeds from admission of long-term liabilities Cash flow from financing activities Free cash flow for the financial period

Q1 2004

* thereof EUR 7,910 thousand ( Y. 2003: ‘000 EUR 10,544) bound for security reasons until 2006 at the latest. ** Due to way it is financed, the short-term liability amounting to Euro 18,843 thousand resulting from the waiver agreement has been accounted for in cash flow from financing activities and not in cash flow from operational activities.

24

Segment reporting. First quarter of 2004

Segment information by business sectors January 1, to March 31, 2004 in EUR ’000 Consumer Products

Sports

Group

3,415 209 3,636 -11,813 -2,500 -4,553

0 0 36 -148 0 -112

44,142 0 2,297 -42,083 -638 4,356

47,557 209 5,969 -54,044 -3,138 -309

-10

0

0

-10

Entertainment * Sales Own work capitalized Other segment income Segment expenses thereof amortization and depreciation Segment results

EM.TV AG

Period result of associated companies Non-allocated operational elements: Interest expenses Interest income

-274 677

Result from restructuring activities

94,366

Results from ordinary business activities

94,450

Other segment information Segment assets Segment liabilities Segment investments

217,253 92,916 ** 1,644

899 226 0

82,068 35,698 1,025

Segment information by region January 1, to March 31, 2004 in EUR ’000

Sales Segment assets Segment investments *

300,220 128,840 2,669

EM.TV AG

Germanspeaking

Rest of Europe

USA und Canada

Rest of the World

Group

45,834

1,158

0

565

47,557

283,492 2,281

11,465 0

0 0

5,263 388

300,220 2,669

Also includes the group's administrative functions.

** This includes EUR 18,843 thousand resulting from the bond restructuring.

Q1 2004

25

Segment reporting. First quarter of 2003

Segment information by business sectors January 1, to March 31, 2003 in EUR ’000

Sales Own work capitalized Inventory level changes – work in progress Other segment income Segment expenses thereof amortization and depreciation Segment results Period result of associated companies

EM.TV & Merchandising AG

Rights

Consumer Products

Events

Total

67,090 370 123 5,502 -90,580 -13,591 -17,495

370 0 0 95 -980 0 -515

0 0 0 0 0 0 0

67,460 370 123 5,597 -91,560 -13,591 -18,010

32

0

0

32

Non-allocated operational elements: Write-down of financial assets and marketable securities Interest expense Interest income

-1,735 -12,296 1,899

Results from ordinary business activities

-30,110

Other segment information: Segment assets Segment liabilities Segment investments

695,616 147,835 8,511

1,097 757 0

Segment information by region January 1, to March 31, 2003 in EUR ’000

Sales Segment assets Segment investments

0 0 0

696,713 148,592 8,511

EM.TV & Merchandising AG

Germanspeaking

Rest of Europe

USA & Canada

Rest of the World

Total

16,919

1,442

48,914

185

67,460

549,615 7,316

17,366 8

124,473 603

5,259 584

696,713 8.511

Q1 2004

26

Discontinuance of business activities. First quarter of 2004

At the Annual General Meeting of EM.TV & Merchandising AG held on July 31, 2002, the Management Board, with the approval of the Supervisory Board, notified its intention to sell The Jim Henson Company which constitutes our business sector in the USA and Canada. This announcement is equivalent to the publication of a plan to discontinue the business sector in line with IAS 35 in conjunction with IAS 37. A binding sale and purchase agreement was then signed with the heirs of the company founder Jim Henson on May 7, 2003. This sale was approved by the Annual General Meeting held on July 23, 2003. The sale was subsequently concluded on July 31, 2003. The carrying value of the assets pertaining to The Jim Henson Company at March 31, 2003 amounted to EUR 124,473 thousand and the carrying value of liabilities to EUR 54,191 thousand. The results of the company form an integral part of the rights segment. In the first quarter of 2003, The Jim Henson Company generated sales of EUR 48,914 thousand with related costs and expenses of EUR 53,026 thousand. The Jim Henson Company incurred an operating loss of EUR 4,066 thousand before tax on a group level with the related tax charge amounting to EUR 222 thousand. The cash inflow from the operating activities of The Jim Henson Company in the first quarter of 2003 amounted to EUR 26,532 thousand, the cash inflow from investment activities to EUR 897 thousand and the cash outflow from financing activities to EUR 2,758 thousand. On May 6, 2003, the Management Board also resolved and announced that EM-Supply GmbH, Unterföhring, would be liquidated and that the previous “Consumer Products” segment would be discontinued. This announcement complies with the requirements of IAS in conjunction with IAS 37. The carrying value of the assets at March 31, 2004 amounted to EUR 894 thousand (2003: EUR 1,097 thousand) and the carrying value of liabilities to EUR 258 thousand (2003: EUR 852 thousand). In the first three months of 2004, EM Supply GmbH generated sales of EUR 0 thousand (2003: EUR 370 thousand), with operating expenses amounting to EUR 155 thousand (2003: EUR 990 thousand). On a group level, EM Supply GmbH incurred an operating loss of EUR 117 thousand (2003: EUR 522 thousand). The related de facto and deferred tax expense amounted to EUR 0 thousand (2003: EUR 683 thousand). The cash outflow from the operational activities of EM Supply GmbH in the first three months of 2004 amounted to EUR 112 thousand (2003: a cash inflow of EUR 71 thousand), with the cash outflow from investment activities amounting to EUR 3 thousand (2003: EUR 0 thousand) and the cash outflow from financing activities amounting to EUR 0 thousand (2003: EUR 0 thousand).

Q1 2004

27

Changes in consolidated equity. First quarter of 2004

in EUR ‘000

As per 1/1/2003

Capital increase from convertible bonds

Subscribed capital

Resolved capital increase

Capital reserves

Special reserves

Other reserves

Consolidated accumulated loss

own shares

Total

145,854

200

1,968,520

598

24,763

-2,010,021

0

129,914

200

-200

0 -3,310

Currency conversion differences

-3,310 -29,865

Consolidated net loss for the period

-29,865

As per 31/3/2003

146,054

0

1,968,520

598

21,453

-2,039,886

0

96,739

As per 1/1/2004

146,054

0

1,968,527

581

40

-2,139,968

0

-24,766

Capital increase from convertible loan

17

17

Withdrawal from special reserve for repayment of convertible loan

-24

Withdrawal from capital reserve for end of conversion right for the convertible bond Capital reduction as a result of merger (73 : 10)

-24

-28,660 -126,062

Capital increase from issueing of shares to the former bondholders

28,265

Transfer of own shares

17,343

28,660

126,062

0

28,265 -17.343 3,184

Capital increase from bonds

36

36 93,509

Consolidated net profit for the period

65,617

0

2,069,113

0 3,184

Currency conversion differences

As per 31/3/2004

0

557

76

-2,017,775

93,509

-17.343

100,245

Q1 2004

28

I. Information on the consolidated companies First quarter of 2004

1. Transitional/deconsolidation in 2004. The 45% holding in the Tele München Gruppe joint venture was no longer included in the consolidated financial statements on a pro rata basis with effect from January 1, 2004 but only „at equity“ on account of company-law changes. The investment was deconsolidated upon the conclusion of the sale and share purchase agreement and its entry in the commercial register on March 11, 2004. The shares are included in the consolidated financial statements as financial investments with effect from the aforesaid date.

2. Effects on the transitional/deconsolidation in 2004. The impact on the first quarter results of the first-time consolidation/transitional consolidation can be summarized as follows:

Information on the effects of the transitional/initial consolidations in EUR ‘000 Net income/net loss for the year (before minority interests)

Current assets, Fixed assets deferred taxes and longand deferred term items charges

Total assets

Total liabilities

2004 – Joint Ventures (pro rata) Tele München Gruppe

-209

0

0

0

0

2003 – Joint Ventures (pro rata) Tele München Gruppe

-7,636

338,261

44,572

382,833

125,974

Q1 2004

29

The inflow of funds resulting from the deconsolidation of Tele München Gruppe in EUR ‘000 Intangible assets Land, property rights and buildings Financial assets Inventories Receivables and other assets Liquid funds and other short-term securities Deferred charges and prepaid expenses Deferred taxes Total assets Foreign currency differences Minority interests Tax provisions Other provisions Long-term liabilities Liabilities to banks Payments received on advance of orders Accounts payable and other liabilities Deferred income and accrued charges Total liabilities Current value of net assets

-229,428 -309 -69,922 -496 -48,495 -14,520 -59 -6,690 -369,919 15 2 1,481 4,570 1,132 80,768 2,942 32,414 1,583 124,907 -245,012

Reduction in liquid funds Reduction in liabilities to banks

-13,566 80,768

Inflow of funds from deconsolidation

67,202

Q1 2004

30

EM.TV Corporate Calendar. August 26, 2004. Report for the second quarter of 2004 September 23 – 24, 2004. licensing.forum 2004, Munich October 2 – 3, 2004. MIPCOM Junior, Cannes October 4 – 8, 2004. MIPCOM, Cannes October 6 – 11, 2004. Bookfair 2004, Frankfurt November 25, 2004. Report for the third quarter of 2004 December 1 – 3, 2004. Asia Television Forum, Singapore

Production Credits. Published by: EM.TV AG Beta-Straße 11 85774 Unterföhring, Germany Tel. +49 (O) 89 99 500 - 0 Fax +49 (0) 89 99 500 -111 e-mail [email protected] www.em.tv HRB 148 760 AG Munich Edited by:

Q1 2004

EM.TV Communications, Investor Relations. Frank Elsner Kommunikation für Unternehmen GmbH, Westerkappeln Designed by: EM.TV Graphics

31