A: In most of the markets in which we operate, pay television is expanding rapidly. As we are distributed primarily in the basic tier, we will continue to benefit from the market’s overall growth. We also aim to gain distribution on systems and platforms where we are not currently distributed including new markets such as Portugal. As our distribution grows, so should our advertising and subscription revenues.

In programme distribution we are continuing to expand our library, adding 205 new episodes in this fiscal year.

In consumer products, we are actively expanding our portfolio with high quality properties such as PUCCA, Shin chan and Tutenstein. We are also increasing the co-ordination of our consumer products activities with our other divisions to ensure maximum exposure for the properties we represent on our channels and free television in the critical selling periods (typically Easter and the two months pre-Christmas).

A: Our library of top quality kids programming that includes many hit shows such as Power Rangers, Spiderman, Digimon and Inspector Gadget, which together with key third-party acquisitions such as Totally Spies and Jackie Chan, drives our ratings success and differentiates us from our competitors. Many of our channels continue to show year-on-year increases in ratings and share, maintaining their leadership position among kids’ channels and confirming Fox Kids as one of the leading children’s entertainment franchises across Europe.

Another reason for our success is our localisation strategy. While deriving strength from our pan-European infrastructure and resources, we reinforce our local presence by producing events such as Fox Kids Planet Live and the Fox Kids Cup. We also create shows based around local heroes and folklore like Sinter Klaas in Holland and Kitchen Kitsch in Israel. We operate 17 localised websites and employ local management to run our operations in each major market.

And, of course, the majority of rights we own encompass most forms of media, across all countries in Europe and the Middle East and are held long term.

A: Fox Kids channels reach more than 34 million homes on cable and satellite and an additional 70 million television households on terrestrial TV blocks (e.g. REN TV in Russia). FKE is recognised by the marketing community across Europe as an efficient way to reach children.

We also leverage the core strengths of our pan-European network, offering communication strategies that benefit from the success of our channels as well as our online & interactive sites, consumer products and other media such as the Fox Kids magazines.

Our channels are localised and positioned to meet target audience needs, thereby creating the optimum communication vehicle for our commercial partners.

A: There has been a requirement for us to increase the amount of programming from third parties following a reduction in programming available from ABCW.

Historically, between 250 and 350 episodes per annum were available to FKE from ABCW under a rights acquisition agreement, but this amount has been reduced to approximately 100 episodes per annum.

FKE has since initiated activities to supplement the amount of new programming by increasing the amount of programming acquired from third parties, and by increasing international co-production activity. FKE has also expanded its pan-European programme acquisition team and is currently in discussions with Disney to co-produce more shows.

We expect programme distribution revenues to resume growth in the fiscal year ending September 30, 2005.

A: In October 2001, The Walt Disney Company acquired 100% of Fox Family Worldwide Inc. (now ABCW), thereby becoming FKE’s majority shareholder, with approximately 76% ownership.

The complementary nature of our businesses allows us to capture synergies between both companies for the benefit of all shareholders. As a first step in benefiting from this relationship, our programme distribution activities have been serviced by Buena Vista International Television since May 2002.

With regard to our channel business, Fox Kids and the Disney Channels serve different audiences in different ways. Whilst Fox Kids is a basic advertising supported channel, with action oriented programming focused towards boys, Disney Channel in Europe is offered as a premium channel, does not carry advertising and has programming focused towards children and families.

In consumer products we have appointed Disney Consumer Products (DCP) as licensing agent to represent our hit property Power Rangers. Similarly, Buena Vista Home Entertainment (BVHE) now distributes Power Rangers and certain Marvel titles within our library on DVD and video formats. BVHE and DCP are amongst the leaders in their respective markets.

In addition to these specific areas of co-operation, we continue to pursue new opportunities across all business areas both in respect of new revenue prospects as well as ways to maximise operational efficiency.