Channels and online is Jetix Europe’s largest division. It controls a network of 15 channels and 18 websites across Europe and the Middle East. Our localised television channels broadcast in 19² languages to 58 countries. Our core Jetix-branded network, with 13 feeds, targets six to 14 year-olds. We have an older targeted channel, GXT, which broadcasts in Italy, and a younger targeted channel, Jetix Play, which broadcasts in several territories. The division is also responsible for developing our online, mobile and other digital activities.

Strategy

Our core strategy is to deliver great content, which our audience loves, aggregated under our channel brands, whenever and wherever they want.

Our channel network remains our most important distribution channel. We develop this network in two ways: by extending our reach into new households and by attracting new audiences. We continue to develop new routes to market alongside our channels through online, mobile and other emerging technologies.

The audiences our channels aggregate are sought after by advertisers. We will continue to build audience profiles which appeal to our commercial partners. We will work across all media and all of our territories to offer a total communications solution.

Highlights in 2007

The network continued to extend its reach. Our channels now reach 50.5 million households across Europe and the Middle East, up 8% on last year.

We grew strongly in Eastern Europe this year. Our Central and Eastern European feed gained over a million subscribers. Our Polish channel grew homes reached by 25%. Our Hungary / Czech / Slovak feed saw increases in all of its markets. We also added significant numbers of households in France, Spain and Italy.

We renewed a number of distribution deals this year. In the UK, we renewed with Virgin Media, in France we have an expanded deal with Numericable following their acquisition of Noos, and in Israel we renewed with Hot. Other deals were renewed in Spain, Scandinavia and across Eastern Europe.

We have also reopened negotiations with Canalsat in France, following the suspension of talks earlier this year. A short-term extension to March 2008 has been agreed to allow time for a long-term deal to be negotiated.

Strong performances by our channels in Italy and Poland contributed to increases in advertising revenue in these markets. Elsewhere advertising came under pressure from heightened competition and regulatory changes.

We are stepping up our investment in digital activities and have reorganised our online teams accordingly. For the first time, we are planning investment in programming dedicated to the digital environment. We are also planning to expand our online games offering.

Our online presence continued to develop this year. Our broadband online video player is now available in seven markets and has generated more than a million streams per month. Our online game supporting Ōban Star-Racers proved especially popular, with over four million game plays.

We continue to develop new ways of reaching our audience. Third party video- on-demand services are generating interest and we have signed deals in several major markets. Mobile phone distribution, of both our channels and individual pieces of content, is also growing in popularity. Our channels are being made available in mobile packages in four countries. We are also selling individual pieces of content through mobile partners in Spain and Israel.

Priorities for 2008

Developing our channel network will continue to be our most important priority. We will focus on increasing the number of households we reach and on maximising our appeal within our target audience. Securing long-term distribution in France is one immediate priority.

We are investing in programming and games to develop our online presence. This initiative will create more compelling opportunities for our audience to engage with our characters, driving traffic and revenue.

We will continue to explore new ways of reaching our audience. We will build on the current interest in video-on-demand, and continue experimenting with new technologies, as they emerge.

2 Including Bulgarian, which was launched after the period end.

Live events and sponsorship

We are building audience loyalty with live events. Our sponsorship of a Monster Jam truck embodies our adventurous brand. Audience participation is key to the popularity of the Jetix Kids Awards, which now take place in six countries.

Online VOD player

We have developed an online video-on-demand player which is available through our websites. It showcases clips and trailers, and in some countries full-length episodes. It is currently operational in seven markets.

Integrated advertising

Alongside our traditional spot advertising, we work with our commercial partners to offer integrated promotional solutions. In the Netherlands, a supermarket promotion included branded product giveaways alongside in-store and on-air promotions. Over 30 million branded marbles were distributed.