“Our shows continue to perform well on air. Power Rangers ranked number one in its time slot in all markets in which it aired, including the UK, France, Spain and Germany.”

We have expanded our programme library, taking delivery of 205 new episodes in the period, including local European co-productions. Titles delivered include new series such as Gadget and the Gadgetinis, RoboRoach, Quintuplets and Pig City, as well as
a new season of Power Rangers (Ninja Storm). The number of episodes added to our library was significantly lower than in previous years, and as forecast at the time of our results last year, this has contributed to a fall in programme distribution revenues in the current period.

Our shows continue to perform well on air. During the year Power Rangers ranked number one in its time slot in all markets in which it aired, including the UK, France, Spain and Germany. Our Marvel catalogue has also performed strongly on the back of recent blockbuster movie releases such as Spiderman, X-Men 2 and The Incredible Hulk. Spiderman ranked number one in its time slot during the year among all kids in most major European markets while The Incredible Hulk was a top rated programme among kids in its time slot in Germany, Spain, Italy and the UK. Other movie releases based on Marvel characters scheduled for release in coming years include: Fantastic Four and the sequel to Spiderman in 2004; Silver Surfer and Iron Man in 2005.

For the second year, Buena Vista International Television has serviced our programme distribution business. During the year, a number of key programme distribution output deals were concluded or extended. In Germany, a market which has been particularly difficult for most media companies in recent years, we signed a three-year agreement with Super RTL, the leading terrestrial broadcaster amongst children. As well as acquiring programming from us each year, Super RTL will also co-produce at least two series with us, and the first of these, which is also our first co-production of a new series with Disney, W.I.T.C.H, has already been selected. In Spain, our output agreement with Antena 3, another leading terrestrial broadcaster, was extended by two years through 2006.

We maintain our focus on reducing our programming expenditure per series. Pursuant to this, our longest running show, Power Rangers, which was previously filmed entirely on location in California, is now shot on location in New Zealand, and this has reduced our cost per episode by approximately 25%.

Following the change in ownership of our majority shareholder, we anticipate that the amount of product for which we will acquire rights outside of Europe and the Middle East will continue to fall as the last of these acquisitions have now been delivered. As a result of this we anticipate that programme distribution revenues will reduce further in the next fiscal year before resuming growth in the fiscal year ending September 30, 2005 on the back of an increase in product volumes and quality.

As at September 30, 2003 there were 180 episodes in progress, an increase of 67 episodes from the previous year. Titles in progress included the following new series: Sonic X, Shaman King and Tofu Family as well as new seasons of Power Rangers, What’s With Andy and RoboRoach.