• A substantial increase in the earnings situation
• Strategy change: Concentration on the Sports Segment
• Structured selling process for the Entertainment Segment
• Proposals to the General Meeting: new company name, transferring the company location and increasing the Supervisory Board

The EM.TV Group has recorded a development of its business in the first quarter of 2007 which exceeded the expectations of its Management Board. Sales were stabilized as planned, whereas the earnings position was significantly improved. In addition, the media company today announced basic changes in its strategic position.

Development of earnings in the first quarter of 2007
Group sales amounted to Euro 60.3 million in the first quarter of 2007, thereby achieving the same level as in the previous year (Euro 60.1 million). It should be noted, however, that the sales in the previous year had already been significantly increased primarily on account of a substantial program delivery contract with the ZDF in the Entertainment Segment. As a result of the substantial sales growth in the Sports Segment, it was possible to compensate the lapse of the aforesaid effect in the current year to date.

The Group achieved earnings before interest, taxes, amortization and depreciation (EBITDA) of Euro 10.3 million, corresponding to a growth rate of 41.1 percent in comparison with the equivalent amount in the same period of the previous year (Euro 7.3 million). This substantial increase was attributable to expense reductions or expense postponements, especially those classified under other operating expenses. Group earnings before interest and taxes (EBIT) were almost doubled from Euro 3.0 million in the previous year to Euro 5.6 million in the current year.

The Group achieved pre-tax earnings (EBT) of Euro 5.3 million in the first quarter (compared with Euro 0.3 million in the previous year). In addition to the improvement in operating earnings, this substantial increase was also attributable to the lapse of the complete write-off of the minority holding in arena media GmbH in insolvency, recorded in the first quarter of the previous year.

After taxes and minority interests, the Group is reporting a quarterly surplus of Euro 3.1 million compared with a loss of Euro 0.5 million in the same period of the previous year.

Development of the Segments in the first quarter of 2007

The Sports Segment developed very dynamically in the first three months of the year. Against the background of the positive economic environment, sales rose by 18.7 percent from Euro 46.1 million in the same period of the preceding year to Euro 54.7 million. All three sports companies – DSF, the PLAZAMEDIA-Group and Sport1 – succeeded in achieving an increase in sales. The earnings of the Sports Segment amounted to Euro 7.3 million in the first quarter, with this being equivalent to a 13.3 percent return on sales. In the same period in the previous year, a segment loss of Euro 2.6 million was incurred.

At Euro 5.6 million, sales in the Entertainment Segment were well below the level achieved in the first quarter of 2006 (Euro 13.9 million). Sales in the previous year were exceptionally high on account of the extensive program delivery contract with ZDF which was booked in the first quarter. Production postponements also had a dampening effect on sales in the first quarter of 2007. The earnings of the Entertainment Segment revealed a loss of Euro 0.2 million (compared with earnings of Euro 8.1 million in the first quarter of 2006).

The segment results in the "Others" sector (especially costs incurred by the Holding company) were substantially improved to Euro -1.5 million (compared with Euro -2.5 million in the first quarter of 2006), particularly on account of cost savings.

Future focussing on sports activities

The Management Board and Supervisory Board of EM.TV AG have resolved that the Group will in future concentrate on the Sports Segment and, as a result, that the activities of the second operating sector, namely Children and Youth Entertainment, are to be sold. For this purpose a structured selling process of EM.Entertainment GmbH and Junior.TV GmbH & Co. KG will briefly be started.

Based on a careful analysis of the market perspectives of both operating sectors, the Management Board and Supervisory Board were convinced that focussing on the already successfully positioned and profitable Sports Segment with a strong upward growth promises a greater value-increase for the EM.TV-Group. The necessary further development of the comprehensively reorganized Entertainment segment in the last few years would commit a high level of financial and personnel resources.

Werner E. Klatten, Chairman of the Management Board of EM.TV AG: "We have always stressed that we are examining all activities and measures at EM.TV with regard to whether they are generating a value for our shareholders. In the last few years, we have succeeded in directing our sports companies into a sustained growth phase. In the Entertainment segment, this could only be achieved by means of substantial investments without an improvement of the worldwide difficult framework conditions for children and youth programs in sight. After weighing up all the relevant arguments, this constellation only permitted one decision being made. This was confirmed by the development of business in the first quarter of the current year.
With regard to the sale of the Entertainment companies, we will act speedily but with the appropriate care and caution. We are not under time pressure but wish to achieve a solution which does justice to all the relevant participants – namely shareholders, employees and customers".

Rainer Hüther, member of the Management Board of EM.TV AG, responsible for the Sports Segment: "Sport is a booming market in Germany and internationally with a broad social basis. With DSF, Sport1 and the PLAZAMEDIA Group, including Creation Club, EM.TV already has the market leaders in their particular sectors. We can now devote all our energies to extending this excellent basis. For this purpose, we will integrate the sporting activities even more to offer combined solutions from one source and to develop tailor-made offers for new types of distribution in the era of digitalization and we will drive internationalization. While sports offers great growth potential in the coming years, we will above all not only develop its own intrinsic strength but will also expand our operating sectors by means of selective acquisitions."

Prospects for 2007
In accordance with IFRS, the resolution to separate from the Entertainment Segment will necessitate a reclassification thereof into a separate item in the consolidated financial statements, namely "Earnings from discontinued operations" and thereby to a changed disclosure of the aforesaid operating activities in the balance sheet, profit and loss account and cash flow statement.

After deducting the entertainment contributions, the present financial objectives for the Group in 2007 – consisting in future of the Sports Segment and the Holding Segment - are established as follows: Group sales of approximately Euro 215 million (previous target: Euro 250 million), earnings before interest, taxes, amortization and depreciation (EBITDA) of between Euro 25 and 29 million (previously: Euro 36 to 40 million) and earnings before interest and taxes (EBIT) of between Euro 12 and 14 million (previously Euro 14 to 16 million). If business, which was above expectations in the first quarter, develops in the same way in the second quarter of 2007, an upward adjustment of the new objectives would be made.

The shareholders should also pass a resolution on the relocation of the Company’s Head Office from Unterföhring to Ismaning near Munich where DSF, PLAZAMEDIA and Sport1 are already located. The Management Board is assuming that the physical proximity to the subsidiaries will facilitate increases in efficiency and a reduction in costs.

Extension of the Supervisory Board to six members
Arthur Bastings, a member of the Supervisory Board, has notified EM.TV AG that he will relinquish his position at the end of the General Meeting in June 27, 2007. The Supervisory Board will propose to the General Meeting that Mr. Erwin Conradi, entrepreneur, should be elected to the control body up to the end of the General Meeting resolving the approval of the actions of the Supervisory Board members for the 2009 financial year.
In addition, it will be proposed to the General Meeting that the Company’s Supervisory Board presently consisting of three members should be increased to six. In doing so, it is intended to take account of the increased legal duties regarding the Supervisory Board responsibilities. The following are proposed as new members:

• Bernhard Burgener, President of the Executive Board of Highlight Communications AG, Pratteln, Switzerland;
• Martin Wagner, Vice President of the Executive Board of Highlight Communications AG, Pratteln, Switzerland;
• Dr. Alexander Ritvay, Attorney-at-Law, Berlin.