Operating
& Financial Review

Channels

Programme
Distribution

Consumer
Products

Online &
Interactive

ONLINE & INTERACTIVE

Following the launch of seven new sites this year for Germany, Turkey, Israel, Hungary, Slovakia, Romania and the Czech Republic, we have established our position as the leading online community for children across Europe and the Middle East. We now operate 17 fully localised websites, offering a combination of child-friendly activities such as games, chat, news, sport, celebrity interviews, forums, competitions, downloads and other goodies.

The next-generation version of our websites, featuring new design, functionality and content, were launched successfully throughout the year for the UK, France, Spain, Italy, the Netherlands, Germany, Norway, Sweden and Denmark. These launches were very successful, achieving a significant increase in traffic with total page impressions per month rising fivefold from 5 million in May 2000 to over 26 million by June 2001, collectively reaching more than 850,000 unique users per month. Since June 30, 2001, the number of page impressions has increased yet further to over 31 million per month. Our next-generation websites achieved strong user loyalty, with users in most markets visiting almost once a week and spending on average between 25 and 30 minutes per visit.

In June 2001 we concluded an agreement with a leading Italian internet portal, Ciaoweb, to become its exclusive provider of children’s content. In July 2001, we concluded an agreement with the leading German and European internet service provider, T-Online, to become its preferred supplier of children’s content. T-Online reaches more than 9 million homes across Europe of which 7.5 million are in Germany. These agreements should significantly expand our reach in Italy and Germany.

In March 2001 we announced a joint venture with Paris based interactive TV company Visiware to launch a new subscription-based interactive games channel for children aged 4-14. The channels, which are branded “Fox Kids Play”, are the first of their kind to be launched in Europe and draw upon popular characters within the Fox Kids library. The first distribution agreements were concluded shortly after the end of the fiscal period with Energis, which is expected to launch Fox Kids Play in October 2001 on BSkyB, and with CanalSatellite which is expected to launch in November 2001 in France.

We believe that the success of our online & interactive operation demonstrates our ability to leverage our programming library, pan-European channel coverage and consumer product activities to launch and promote new businesses at low incremental cost. We reiterate our target to achieve profitability for this division by fiscal year 2003.