(1) Consistent with prior years, EBITDA is stated before programme amortisation, impairment and depreciation. EBITDA less depreciation, amortisation and impairment is equivalent to operating income.

Latest technologies
We are running trials distributing our content through new technologies, including mobile, broadband and video-on-demand. Mobile trials this year included simulcasting our channel and selling individual pieces of content.

Online
Our 17 websites have continued to grow and now average over 100 million page views per month. In the Netherlands we have launched an advertising funded broadband video player, allowing viewers to watch episodes whenever they like.

Achievements in 2006

• Revenue‚ EBITDA and operating income growth
• Households reached increased to 46.8 million
• Sky deal renewed
• Online traffic grew strongly
• Ad-funded online video player launched in Netherlands

Priorities for 2007

• Continue to grow network reach
• Implement digital distribution strategy
• Conclude key distribution deals

Channels and online is Jetix Europe’s largest division. It controls a network of 15 channels across Europe and 17 websites. Our television channels are localised. We broadcast in 18 languages in 58 countries. Our core Jetix-branded network‚ with 13 feeds‚ targets kids aged six to 14. We have an older targeted channel‚ GXT‚ which broadcasts in Italy‚ and a younger targeted channel‚ Jetix Play. The division is also responsible for developing innovative distribution systems for our television content‚ including video-on-demand‚ mobile and broadband.

Strategy

Our overriding strategy is to deliver great content‚ which our audience loves‚ aggregated under the Jetix brand‚ whenever and wherever they want. Our channel network remains our core distribution channel. We will continue to develop this network. We are extending its reach‚ by attracting new audiences and by making it available to more households.

Advertisers are attracted by our audience demographics and our pan-European proposition. We will maintain our focus on growing advertising revenue. As technology develops we will develop new‚ profitable routes to market.

Highlights in 2006

Our channel network grew its reach by 12% this year. We are now available in 46.8 million European and Middle Eastern households.

We renewed several key channel distribution deals. In the UK we have extended our deal with Sky through to 2009‚ with an option to extend it until 2012. This has secured our position on the leading platform in Europe’s largest pay television market. As part of this deal we have agreed to a stepped reduction in our subscriber revenue per household. An initial reduction in fiscal year 2006 will be followed by a further reduction in 2008¹. We have also extended deals with Telewest and NTL in the UK‚ pending their merger‚ and with ONO in Spain.

Advertising revenue increased by 8% during the year. Italian revenues benefited from the launch of GXT. Central and Eastern Europe‚ France and Germany also returned strong performances.

We use live events to engage directly with our audiences‚ reinforcing brand loyalty. In July‚ to coincide with the FIFA World Cup‚ we held the international final of the Jetix Kids Cup in Munich. Teams from 14 countries took part‚ including‚ for the first time‚ Japan‚ following the launch of the Jetix brand in that market ². This event also allowed us to promote an active lifestyle.

Our online presence has continued to grow strongly. Traffic on our 17 websites was up by almost 50%‚ to an average of over 100 million page views per month. In the Netherlands‚ we launched a web-based broadband video service funded by advertising. Viewers can stream favourite episodes to their PCs. Early take-up has been encouraging. Over four million pieces of content have been streamed in the first few months.³

We have launched a content streaming service in the UK and Italy‚ delivering short-form clips and commercials. We are trialling distribution to mobiles in France‚ Sweden and Spain. We are also supplying content to third party video-on-demand services and piloting IPTV distribution of our channel in France.

Growth in households reached millions

Priorities for 2007

Developing our channel network‚ by increasing our reach and attracting a larger audience‚ will remain our top priority for 2007. Securing strong content is critical to this. We will complement our pan-European flagship programming with local acquisitions to maximise the local appeal of each of our channels.

We will experiment with new ways of distributing our channels. We expect that broadband distribution of both video and supporting content‚ especially games‚ will be at the heart of these developments.

¹ There will be a further reduction after 2008 if Jetix exercises its option.
² Jetix in Japan was launched by Disney.
³ Each advert or programme are counted as individual pieces of content.