SBS Broadcasting SA Reports Third Quarter 2004 Results

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Sbs Broadcasting SA (MM)	NASDAQ:SBTV	NASDAQ	Common Stock

SBS (NASDAQ:SBTV)
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SBS Broadcasting SA Reports Third Quarter 2004 Results THIRD QUARTER Net Revenue up by 21% Station Operating Cash Flow improved by 19% Adjusted EBITDA improved by 23% LUXEMBOURG, Nov. 1 /PRNewswire-FirstCall/ -- SBS Broadcasting SA (Nasdaq: SBTV; Euronext Amsterdam N.V.: SBS) today reported financial results for the three and nine months ended September 30, 2004. Results, which are attached, are in thousands of euro (except share data) converted from local currencies. The following report should be read in conjunction with the accompanying financial statements. Financial highlights are as follows: Three months ended September 30, 2003 2004 % change Net revenue 115,228 euros 139,169 euros 21% Station operating cash flow (1) 11,915 14,176 19% Adjusted EBITDA (2) 8,153 10,062 23% Operating income 2,311 1,367 (41%) Net income (loss) (3) 20,064 (2,006) Net income (loss) per common share 0.70 euros (0.06) euros Weighted average common shares(4) 28,621 31,311 Cash provided by operating activities 6,418 1,545 Station operating cash flow margin(5) 10.3% 10.2% Adjusted EBITDA margin(5) 7.0% 7.2% Nine months ended September 30, 2003 2004 % change Net revenue 385,810 euros 467,050 euros 21% Station operating cash flow (1) 47,093 67,589 44% Adjusted EBITDA (2) 36,780 56,572 54% Operating income 19,613 33,744 72% Net income (loss) (3) 27,633 12,218 Net income (loss) per common share 0.97 euros 0.39 euros Weighted average common shares(4) 28,618 31,175 Cash provided by operating activities 27,196 5,898 Station operating cash flow margin(5) 12.2% 14.5% Adjusted EBITDA margin(5) 9.5% 12.1% (1) Station operating cash flow ("STOCF") is defined as operating income plus corporate expenses, non-cash compensation, depreciation and amortization expenses (for additional information, including a reconciliation to operating income, see page 12). (2) Adjusted EBITDA is defined as operating income plus non-cash compensation, depreciation and amortization expenses (for additional information, including a reconciliation to operating income, see page 12). (3) The net income (loss) for the three and nine month periods ended September 30, 2003, includes a non-cash investment gain of 30.2 million euros realized on the Veronica transaction completed on September 1, 2003. (4) Weighted average common shares for the three and nine month periods ended September 30, 2004, includes 1,827,047 shares issued in connection with our redemption of the 7% Convertible Subordinated Notes in December 2003. (5) Station operating cash flow margin is STOCF expressed as a percentage of net revenue, and Adjusted EBITDA margin is Adjusted EBITDA expressed as a percentage of net revenue. Commenting on the results, Markus Tellenbach, Chief Executive Officer of SBS, said: "We continued to generate improved results during the third quarter despite strong competition for viewers from the Olympic Games. Our television stations are performing well and in particular our stations in Hungary, Sweden and Belgium continue to generate impressive results. We have reduced operating costs as a percentage of revenue, thereby generating significant operating leverage. "Utilizing our market knowledge and the operating infrastructure of our television group, we are launching new channels across our pan-European footprint and will operate multiple stations in almost all of our markets by year-end. By prudently building on our existing asset base we are strategically positioning the Company to garner an increased share of the overall advertising market and new revenue streams. With a solid balance sheet and commitment to profitability, we continue to explore accretive transactions in television and radio that will complement our operations as the Company continues to grow." Recent Developments Television Norway On July 8, 2004, we acquired a 49.3% minority interest in TV Norge AS for cash consideration of NOK 260 million (30.8 million euros) from TV2 AS, increasing our ownership stake in TV Norge AS to 100%. Digital Channels On August 16, 2004, the Company launched its digital music service, The Voice TV, in Denmark. With an initial reach of over 60% of Danish television households, the channel primarily targets 12-19 year olds and is co-branded with our leading Danish radio station. The Company intends to launch further co-branded digital music services in Finland, Sweden and Norway before the end of the year. All of the channels will be the first music channels in these markets to be broadcast in the respective local language. The channels will utilize the operating expertise and marketing resources provided by our established television stations, as well as benefit from our extensive music experience in operating our radio stations in these markets. We expect the digital channels to benefit from the development of new revenue streams from subscriptions and transactions resulting from viewers interactions with each channel via SMS and phone lines, including actively selecting videos and participating in chat forums, polls and games. Hungary On September 13, 2004, we launched Irisz, our second television channel in the Hungarian market. The wholly-owned channel is broadcast from 6 p.m. to 11 p.m. on the Hungarian feed of Club, a female-oriented channel that is indirectly owned by UGC Europe BV, our largest shareholder. Irisz, which reaches approximately 700,000 homes through cable carriage, is an entertainment channel focused on the 18-49 female audience. Its programming schedule complements Club's female focus and leverages our Hungarian program library. The channel is broadcast from Amsterdam under a Dutch broadcasting license. Belgium On October 1, 2004, the Company launched its second television channel in Belgium, VijfTV ("5TV"), with an approximate reach of 97% of Flemish homes through over-the-air broadcast and cable on a must-carry basis. The new channel will be targeted to females aged 20-49 and its schedule will be programmed to complement VT4, our existing television station in Belgium. The new channel will to a large extent utilize VT4's existing sales, marketing, technical and operating facilities in Flanders. Radio Norway & Denmark On September 8, 2004 we repurchased for 18.6 million euros in cash, all of the 856,494 SBS common shares used in September 2003 to acquire Radio 1 in Norway and Radio 2 in Denmark from wholly owned subsidiaries of Clear Channel Communications, Inc. and Norsk Aller AS. Greece In October 2004, the Greek Council of State granted several applications for the annulment of all 15 four-year FM radio licenses awarded by the Greek Ministry of Press and Mass Media (the "Greek Ministry") in March 2002, which include the license granted to Lampsi, our FM station in Athens. The decision was based on a number of alleged deficiencies in the license tender process (and, with respect to Lampsi, on the grounds that Lampsi's ownership structure does not comply with Greek media law) and is not subject to appeal. Although the current legal situation remains unclear and it is possible that Lampsi and the other radio stations currently operating under the annulled licenses will have to cease broadcasting, we expect that the Greek Ministry will initiate a new radio license tender in late 2004 or early 2005 and that the radio stations whose licenses were annulled will be permitted to continue to broadcast until new licenses are awarded. We expect that Lampsi will participate in any new radio license tender in accordance with applicable laws and regulations. Other During July, August and September 2004, the Company acquired and redeemed an additional 16.5 million euros of its 12% Senior Notes due 2008 at a loss of 2.7 million euros. On October 20, 2004, we sold our investment in Telitas AS for a cash consideration of 2.8 million euros. We will record an investment gain of 2.6 million euros on this sale. Overview We prepare our financial statements in euro and in accordance with accounting principles generally accepted in the US ("US GAAP"). Our consolidated financial statements for the three and nine months ended September 30, 2004 were affected by the sale of our 30.4% equity interest in TVN and TVN7 in Poland in December 2003, and by the acquisition of the Print operations from Veronica Holding B.V. in September 2003, the acquisition of Radio operations in Norway and Denmark in September 2003, and the merger of our Swedish Radio operations with Bonnier Radio AB in October 2003 (the "2003 Acquired Operations"). They were also to a lesser extent affected by the launch of our first digital television station, The Voice TV, in Denmark in August 2004. Our consolidated broadcasting operations generate revenue primarily in Norwegian kroner, Swedish kronor, Danish kroner, Hungarian forint and euro, and incur substantial operating expenses in these currencies. We also incur significant operating expenses for programming in U.S. dollars, which are often hedged, and other currencies. Balance sheet accounts are translated from foreign currencies into euro at the period-end exchange rates and statement of operations accounts are translated at the average exchange rates for the period. Any resulting balance sheet translation adjustments are recorded as other comprehensive income (loss) within shareholders' equity. Currency translation adjustments relating to our transactions and those of our subsidiaries in currencies other than the functional currency of the entity involved are reflected in the results of operations. In the discussions of the results for the three and nine months ended September 30, 2004 compared to the three and nine months ended September 30, 2003, we divide our operations into three segments: * "Television operations", which include: TVNorge (in Norway), Kanal 5 (in Sweden), TvDanmark and Kanal 5 (in Denmark) and jointly referred to as "our Danish Television operations"; VT4 (in Flemish Belgium), SBS6, NET5 and Veronica (in The Netherlands) and jointly referred to as "our Dutch Television operations"; TV2 (in Hungary); The Voice TV (in Denmark); and other related operations that are not material. * "Radio operations", which include: The Voice, Pop FM and, from September 2003, Radio 2 and Nyhedsradioen 24/7 (in Denmark) and jointly referred to as "our Danish Radio operations"; The Voice in Stockholm, Radio City in Gothenburg and Malmoe, 106.7 Rockklassiker and Studio 107.5 in Stockholm, and, from October 2003, Mix Megapol, Vinyl and Lugna Melodier (in Sweden) and jointly referred to as "our Swedish Radio operations"; from September 2003, Radio 1 and The Voice (in Norway) and jointly referred to as "our Norwegian Radio operations"; KISS FM, Radio City, Radio Sata, Radio Mega, Radio 957, Radio Jyvaskyla and Iskelmaradio (in Finland) and jointly referred to as "our Finnish Radio operations"; and Lampsi (in Greece). * "Print operations", which include the Veronica Magazine and the Satellite Magazine in the Netherlands. We acquired these magazines on September 1, 2003, and accordingly, the results of operations have been reflected in our consolidated financial statements since that date. Results from TVN and TVN7 in Poland (through December 2, 2003), prima TV in Romania, and ATV in Austria (through December 4, 2003) are not included in the operations referred to above, but are included in equity in income (loss) from unconsolidated subsidiaries. These are subsidiaries in which we hold an interest of less than half of the voting rights or are otherwise unable to exercise control over the operations. When analyzing results within the different categories of operations for any particular period, the sums of the individual items reported within each category may differ from the total reported for such category. Differences are primarily attributable to corporate charges, eliminations between categories and items attributable to entities that are not separately disclosed but are included within the totals for the different categories. Operating Expenses as a Percentage of Revenue Three months ended Nine months ended September 30, September 30, 2003 2004 2003 2004 Net revenue 100.0% 100.0% 100.0% 100.0% Operating expenses: Station operating expenses 68.4% 67.1% 69.5% 65.9% Selling, general and administrative expenses 21.3% 22.7% 18.3% 19.6% Corporate expenses 3.3% 3.0% 2.7% 2.4% Non-cash compensation 0.4% 1.1% 0.1% 0.5% Depreciation and Amortization 4.6% 5.1% 4.3% 4.3% Three months ended September 30, 2004 compared to three months ended September 30, 2003 Net Revenue Net revenue increased 23.9 million euros, or 21%, from 115.2 million euros for the three months ended September 30, 2003 to 139.2 million euros for the three months ended September 30, 2004. Our Television operations net revenue increased 11.6 million euros, or 12%, due to increased net revenue of 4.7 million euros, or 33%, from TV2, primarily reflecting an increase in the television advertising market. VT4 had increased net revenue of 2.2 million euros, or 23%, and our Dutch Television operations had increased net revenue of 2.0 million euros, or 5%, mainly due to increased viewing shares. Our Danish Television operations had an increase in net revenue of 1.8 million euros, or 21%, due to an increase in viewing shares and in the television advertising market. TV Norge had increased net revenue of 1.3 million euros, or 13%, and Kanal 5 had increased net revenue of 1.0 million euros, or 6%, mainly due to increases in the television advertising markets. Our Radio operations net revenue increased 2.6 million euros, or 25%, mainly due to net revenue at the 2003 Acquired Operations. Despite additional revenue from the 2003 Acquired Operations, net revenue at our Danish Radio operations decreased 1.5 million euros, mainly due to a decrease in the Danish radio advertising market compared to the three months ended September 30, 2003 and a decrease in cable fees of approximately 0.4 million euros. Our Print operations had net revenue of 14.8 million euros for the three months ended September 30, 2004 compared to 5.0 million euros for the three months ended September 30, 2003, where the Print operations were included from September 1, 2003. Station Operating Expenses Station operating expenses increased 14.6 million euros, or 18%, from 78.8 million euros for the three months ended September 30, 2003 to 93.3 million euros for the three months ended September 30, 2004, mainly due to an early launch of the fall schedule at our television stations and expenses at the 2003 Acquired Operations. Station operating expenses expressed as a percentage of net revenue were 68.4% and 67.1% for the three months ended September 30, 2003 and 2004, respectively. The station operating expenses at our Television operations increased 7.9 million euros, or 11%, mainly due to increased programming expenses of 4.4 million euros, or 14%, at our Dutch Television operations, of 1.3 million euros, or 17%, at VT4 and of 1.2 million euros, or 21%, at TV Norge. This increase was mainly due to an early launch of the fall schedule in order to meet the competition from the Olympic Games, which were broadcast at competitor stations. Our Radio operations had increased station operating expenses of 1.4 million euros, or 34%, mainly due to expenses at the 2003 Acquired Operations. Our Print operations had print and distribution expenses of 8.1 million euros for the three months ended September 30, 2004 compared to 2.9 million euros for the three months ended September 30, 2003, where the Print operations were included from September 1, 2003. Selling, General and Administrative Expenses Selling, general and administrative expenses increased 7.2 million euros, or 29%, from 24.5 million euros for the three months ended September 30, 2003 to 31.7 million euros for the three months ended September 30, 2004, mainly due to expenses at the 2003 Acquired Operations and increased promotion expenses in connection with the early launch of the fall schedule at our television stations. Selling, general and administrative expenses expressed as a percentage of net revenue were 21.3% and 22.7% for the three months ended September 30, 2003 and 2004, respectively. As our Radio operations typically have relatively higher selling, general and administrative expenses compared to our Television and Print operations, the increase in expenses expressed as a percentage of net revenue reflects the higher proportion of expenses related to our Radio operations due to the 2003 Acquired Operations. Corporate Expenses Corporate expenses increased 0.3 million euros from 3.8 million euros for the three months ended September 30, 2003 to 4.1 million euros for the three months ended September 30, 2004. Corporate expenses expressed as a percentage of net revenue were 3.3% and 3.0% for the three months ended September 30, 2003 and 2004, respectively. Non-cash Compensation Non-cash compensation increased 1.0 million euros from 0.5 million euros for the three months ended September 30, 2003 to 1.5 million euros for the three months ended September 30, 2004. The increase was mainly due to a compensation charge of 1.3 million euros for the extension of the expiry date for 250,000 stock options issued in 1994 to the Chairman of the Company. Non- cash compensation expressed as a percentage of net revenue was 0.4% and 1.1% for the three months ended September 30, 2003 and 2004, respectively. Depreciation and Amortization Expenses Depreciation and amortization expenses increased 1.9 million euros, or 35%, from 5.3 million euros for the three months ended September 30, 2003 to 7.2 million euros for the three months ended September 30, 2004, mainly due to depreciation and amortization expenses associated with our 2003 Acquired Operations. Depreciation and amortization expenses expressed as a percentage of net revenue were 4.6% and 5.1% for the three months ended September 30, 2003 and 2004, respectively. Operating Income Operating income decreased 1.0 million euros, or 43%, from 2.3 million euros for the three months ended September 30, 2003 to 1.3 million euros for the three months ended September 30, 2004. Our Television operations had increased operating income of 1.1 million euros, or 21%, from 5.0 million euros for the three months ended September 30, 2003 to 6.1 million euros for the three months ended September 30, 2004. The improvement was mainly due to increased operating income at TV2 of 3.8 million euros and at our Danish Television operations of 2.3 million euros. Such increases were partly offset by decreased operating income at our Dutch Television of 3.0 million euros, and by operating losses at our newly launched station, The Voice TV, of 1.4 million euros. Our Radio operations had operating losses of 1.2 million euros for the three months ended September 30, 2004 compared to operating income of 0.8 million euros for the three months ended September 30, 2003, mainly due to operating losses at the 2003 Acquired Operations and the decrease in net revenue at our Danish Radio operations. Our Print operations had increased operating income of 1.4 million euros. The decrease was also due to increased corporate expenses of 0.3 million euros, increased non-cash compensation of 1.0 million euros and increased depreciation and amortization of 1.9 million euros. Equity in Loss from Unconsolidated Subsidiaries Equity in income (loss) from unconsolidated subsidiaries improved 6.2 million euros from a loss of 6.5 million euros for the three months ended September 30, 2003 to a loss of 0.3 million euros for the three months ended September 30, 2004, primarily related to our investment in prima TV. The decrease was mainly attributable to the absence in 2004 of an impairment charge of 6.1 million euros related to our investment in TVN and TVN7 in Poland, which was sold in December 2003. Net Interest Expense Net interest expense decreased 3.2 million euros, or 57%, from 5.6 million euros for the three months ended September 30, 2003 to 2.4 million euros for the three months ended September 30, 2004. The decrease was mainly due to reduced interest expense of 0.8 million euros as a result of our redemption of the 7% Convertible Subordinated Notes in December 2003, a 0.9 million euros non-cash gain on an interest rate swap related to our Senior Notes, a 0.5 million euros decrease due to the redemption of 31.0 million euros of our Senior Notes and 0.5 million euros higher interest income. Foreign Exchange Gain Foreign exchange gain decreased 2.4 million euros from 3.9 million euros for the three months ended September 30, 2003 to 1.5 million euros for the three months ended September 30, 2004. The decrease in foreign exchange gain is mainly due to the absence of gains on our 7% Convertible Subordinated Notes, which we redeemed in December 2003. Investment Gain In the three months ended September 30, 2003, we recorded net investment gains of 30.1 euros related to a non-cash investment gain realized on our share of the transfer of 10% equity interest in our Dutch Television operations as consideration for the acquisition of our Print operations. In the three months ended September 30, 2004, we recorded a gain of 2.2 million euros reflecting an increase in the fair value of our 1.7 million warrants that are exercisable into common shares of Lions Gate Entertainment Corp. until December 31, 2004 at an exercise price of $5 per share. Gain (Loss) on Extinguishment of Debt In the three months ended September 30, 2004, we recorded a loss of 2.7 million euros realized on the extinguishment of 16.5 million euros principal amount of our Senior Notes. We recorded no gain (loss) on extinguishment of debt for the three months ended September 30, 2003. Other Expenses, Net Other expenses, net, decreased 0.7 million euros, from 1.1 million euros for the three months ended September 30, 2003 to 0.4 million euros for the three months ended September 30, 2004. Income Taxes Income taxes increased 1.5 million euros, from 0.9 million euros for the three months ended September 30, 2003 to 2.4 million euros for the three months ended September 30, 2004, mainly due to increased income before taxes at our Dutch Print operations and at VT4 in Belgium. Net Income As a result of the foregoing, our net income decreased 22.1 million euros from an income of 20.1 million euros for the three months ended September 30, 2003 to a loss of 2.0 million euros for the three months ended September 30, 2004. Without the non-cash investment gain in 2003 on the Veronica transaction, the net loss decreased 8.1 million euros from 10.1 million euros for the three months ended September 30, 2003 to 2.0 million euros for the three months ended September 30, 2004. Nine months ended September 30, 2004 compared to nine months ended September 30, 2003 Net Revenue Net revenue increased 81.2 million euros, or 21%, from 385.8 million euros for the nine months ended September 30, 2003 to 467.0 million euros for the nine months ended September 30, 2004. Our Television operations net revenue increased 30.0 million euros, or 9%, due to increased net revenue of 11.1 million euros, or 21%, from TV2, primarily reflecting an increase in the television advertising market. VT4 had increased net revenue of 7.8 million euros, or 22%, and our Dutch Television operations had increased net revenue of 6.1 million euros, or 5%, mainly due to increased viewing shares. Our Danish Television operations had an increase in net revenue of 2.8 million euros, or 10%, Kanal 5 had increased net revenue of 1.8 million euros, or 3%, and TV Norge had increased net revenue of 0.4 million euros, or 1%, primarily due to increases in the television advertising markets. Our Radio operations net revenue increased 10.5 million euros, or 35%, mainly due to revenue at the 2003 Acquired Operations. Despite net revenue from the 2003 Acquired Operations, net revenue at our Danish Radio operations decreased 2.4 million euros, mainly due to a decrease in cable fees of 1.2 million euros and a decrease in the Danish radio advertising market compared to the nine months ended September 30, 2003. Our Print operations had net revenue of 45.7 million euros for the nine months ended September 30, 2004 compared to 5.0 million euros for the nine months ended September 30, 2003, where the Print operations were included from September 1, 2003. Station Operating Expenses Station operating expenses increased 39.8 million euros, or 15%, from 268.1 million euros for the nine months ended September 30, 2003 to 307.9 million euros for the nine months ended September 30, 2004, mainly due to expenses at the 2003 Acquired Operations. Station operating expenses expressed as a percentage of net revenue were 69.5% and 65.9% for the nine months ended September 30, 2003 and 2004, respectively. The station operating expenses at our Television operations increased 9.6 million euros, or 4%, mainly due to increased programming expenses of 7.4 million euros, or 7%, at our Dutch Television operations and 1.8 million euros, or 7%, at VT4. This increase was mainly due to an early launch of the fall schedule in order to meet the competition from the Olympic Games, which were broadcast at competitor stations. Our Danish Television operations had increased programming expenses of 1.7 million euros, or 8%, following the re- launch of both stations in April 2004. Such increases were partly offset by reduced programming expenses of 1.5 million euros, or 4%, at TV2 and of 0.9 million euros, or 4%, at TV Norge. Our Radio operations had increased station operating expenses of 7.1 million euros, or 59%, mainly due to expenses at the 2003 Acquired Operations. Our Print operations had print and distribution expenses of 26.0 million euros for the nine months ended September 30, 2004 compared to 2.9 million euros for the nine months ended September 30, 2003, where the Print operations were included from September 1, 2003. Selling, General and Administrative Expenses Selling, general and administrative expenses increased 21.0 million euros, or 30%, from 70.6 million euros for the nine months ended September 30, 2003 to 91.6 million euros for the nine months ended September 30, 2004, mainly due to expenses at the 2003 Acquired Operations and increased promotion expenses in connection with the early launch of the fall schedule at our television stations. Selling, general and administrative expenses expressed as a percentage of net revenue were 18.3% and 19.6% for the nine months ended September 30, 2003 and 2004, respectively. As our Radio operations typically have relatively higher selling, general and administrative expenses compared to our Television and Print operations, the increase in expenses expressed as a percentage of net revenue reflects the higher proportion of expenses related to our Radio operations due to the 2003 Acquired Operations. Corporate Expenses Corporate expenses increased 0.7 million euros, or 7%, from 10.3 million euros for the nine months ended September 30, 2003 to 11.0 million euros for the nine months ended September 30, 2004, mainly due to an increase in corporate headcount. Corporate expenses expressed as a percentage of net revenue were 2.7% and 2.4% for the nine months ended September 30, 2003 and 2004, respectively. Non-cash Compensation Non-cash compensation increased 2.0 million euros from 0.5 million euros for the nine months ended September 30, 2003 to 2.5 million euros for the nine months ended September 30, 2004. The increase was mainly due to a compensation charge of 1.3 million euros for the extension of the expiry date for 250,000 stock options issued in 1994 to the Chairman of the Company. Non-cash compensation expressed as a percentage of net revenue was 0.1% and 0.5% for the nine months ended September 30, 2003 and 2004, respectively. Depreciation and Amortization Expenses Depreciation and amortization expenses increased 3.6 million euros, or 22%, from 16.7 million euros for the nine months ended September 30, 2003 to 20.3 million euros for the nine months ended September 30, 2004, mainly due to depreciation and amortization expenses associated with our 2003 Acquired Operations. Depreciation and amortization expenses expressed as a percentage of net revenue were 4.3% and 4.3% for the nine months ended September 30, 2003 and 2004, respectively. Operating Income Operating income increased 14.1 million euros, or 72%, from 19.6 million euros for the nine months ended September 30, 2003 to 33.7 million euros for the nine months ended September 30, 2004. Our Television operations had increased operating income of 17.9 million euros, or 68%, from 26.4 million euros for the nine months ended September 30, 2003 to 44.3 million euros for the nine months ended September 30, 2004. The improvement was mainly due to increased operating income at TV2 of 9.8 million euros, at VT4 of 5.0 million euros and at our Danish Television operations of 2.5 million euros. Our Radio operations had operating losses of 5.0 million euros for the nine months ended September 30, 2004 compared to operating income of 3.3 million euros for the nine months ended September 30, 2003, mainly due to operating losses at the 2003 Acquired Operations and the decrease in net revenue at our Danish Radio operations. Our Print operations had operating income of 7.9 million euros. The increased income from operations was partly reduced by increased corporate expenses of 0.7 million euros, increased non-cash compensation of 2.0 million euros and increased depreciation and amortization of 3.6 million euros. Equity in Loss from Unconsolidated Subsidiaries Equity in loss from unconsolidated subsidiaries decreased 2.7 million euros from 4.3 million euros for the nine months ended September 30, 2003 to 1.6 million euros for the nine months ended September 30, 2004, primarily related to our investment in prima TV. The decrease was mainly attributable to the absence in 2004 of a net loss of 3.3 million euros related to our investment in TVN and TVN7 in Poland, which was sold in December 2003. Net Interest Expense Net interest expense decreased 7.8 million euros, or 45%, from 17.4 million euros for the nine months ended September 30, 2003 to 9.6 million euros for the nine months ended September 30, 2004. The decrease was mainly due to a 2.6 million euros reduction in interest expense as a result of our redemption of the 7% Convertible Subordinated Notes in December 2003, a 1.4 million euros non-cash gain on an interest rate swap related to our Senior Notes, a 0.7 million euros decrease due to the redemption of 31.0 million euros of our Senior Notes and 2.1 million euros higher interest income. Foreign Exchange Gain Foreign exchange gain decreased 6.3 million euros from 8.5 million euros for the nine months ended September 30, 2003 to 2.2 million euros for the nine months ended September 30, 2004. The decrease in foreign exchange gain is mainly due to the absence of gains on our 7% Convertible Subordinated Notes, which we redeemed in December 2003. Investment Gain In the nine months ended September 30, 2003, we recorded net investment gains of 30.1 million euros, mainly a non-cash investment gain realized on our share of the transfer of 10% equity interest in our Dutch Television operations as consideration for the acquisition of our Print operations. In the nine months ended September 30, 2004, we recorded a gain of 5.0 million euros reflecting an increase in the fair value of our 1.7 million warrants that are exercisable into common shares of Lions Gate Entertainment Corp. until December 31, 2004 at an exercise price of $5.00 per share. Gain (Loss) on Extinguishment of Debt In the nine months ended September 30, 2003, we recorded a gain of 0.1 million euros realized on the extinguishment of $5.0 million principal amount of our 7% Convertible Subordinated Notes. In the nine months ended September 30, 2004, we recorded a loss of 5.1 million euros realized on the extinguishment of 31.0 million euros principal amount of our Senior Notes. Other Expenses, Net Other expenses, net, decreased 0.1 million euros, from 1.9 million euros for the nine months ended September 30, 2003 to 1.8 million euros for the nine months ended September 30, 2004. Income Taxes Income taxes increased 5.2 million euros, from 3.3 million euros for the nine months ended September 30, 2003 to 8.5 million euros for the nine months ended September 30, 2004, mainly due to increased income before taxes at our Dutch Print operations and at VT4 in Belgium. Net Income As a result of the foregoing, our net income decreased 15.4 million euros from 27.6 million euros for the nine months ended September 30, 2003 to 12.2 million euros for the nine months ended September 30, 2004. Without the non- cash investment gain in 2003 on the Veronica transaction, the net income increased 14.8 million euros from a loss of 2.6 million euros for the nine months ended September 30, 2003 to an income of 12.2 million euros for the nine months ended September 30, 2004. Station Operating Cash Flow "Station operating cash flow" is defined as operating income plus corporate expenses, non-cash compensation, depreciation and amortization expenses. We believe that station operating cash flow is a metric widely used by the broadcasting industry as a measure of operating effectiveness and is used by analysts who report publicly on the performance of broadcasting companies. Station operating cash flow is not meant to represent funds available for debt service, dividends, reinvestment or other discretionary uses. Station operating cash flow is not, and should not be used as, an indicator of or an alternative to operating income, net income, or cash flow from operations as reflected in our consolidated financial statements and is not a measure of financial performance under US GAAP. The following table reconciles operating income to Adjusted EBITDA and station operating cash flow: Three months ended Nine months ended September 30, September 30, 2003 2004 2003 2004 Operating income 2,311 euros 1,367 euros 19,613 euros 33,744 euros Add: Non-cash compensation 507 1,540 507 2,554 Depreciation 3,367 2,991 10,739 9,374 Amortization 1,968 4,164 5,921 10,900 Adjusted EBITDA 8,153 euros 10,062 euros 36,780 euros 56,572 euros Add: Corporate expenses 3,762 4,114 10,313 11,017 Station operating cash flow 11,915 euros 14,176 euros 47,093 euros 67,589 euros Station operating cash flow increased 2.3 million euros from 11.9 million euros for the three months ended September 30, 2003 to 14.2 million euros for the three months ended September 30, 2004. The increase was primarily attributable to increased station operating cash flow at our Print operations of 2.5 million euros. For the nine months ended September 30, 2004, station operating cash flow increased 20.5 million euros compared to the nine months ended September 30, 2003. The increase was primarily attributable to increased station operating cash flow at our Television operations of 15.4 million euros, and station operating cash flow at our Print operations of 11.1 million euros. The increase at our Television operations was mainly attributable to improvements at TV2 of 9.5 million euros and at VT4 of 4.8 million euros. Our Radio operations had decreased station operating cash flow of 5.3 million euros, mainly due to operating losses at the 2003 Acquired Operations and the decrease in net revenue at our Danish Radio operations. Disclosure required by the Indenture The following disclosure is required by the indenture for our 12% Senior Notes, dated as of September 14, 2001, and as amended July 13, 2001, between SBS Broadcasting S.A. and The Bank of New York, as trustee ("the Indenture"). Twelve months ended Twelve months ended September 30, 2003 September 30, 2004 Restricted Group adjusted EBITDA (1) (2) 72,622 euros 95,754 euros Unrestricted Group adjusted EBITDA (1) (2) (7,972) (2,911) Consolidated adjusted EBITDA (1) 64,650 euros 92,843 euros (1) Adjusted EBITDA represents operating income before depreciation and amortization expenses and non-cash compensation. Adjusted EBITDA is not a measurement of operating performance calculated in accordance with US GAAP and should not be considered a substitute for operating income (loss), net income (loss), cash flows from operating activities or other income statement data as determined in accordance with US GAAP, or as a measure of profitability or liquidity, and Adjusted EBITDA does not necessarily indicate whether cash flow will be sufficient or available for cash requirements. Adjusted EBITDA may not be indicative of our historical operating results nor is it meant to be predictive of potential future results. Because not all companies calculate Adjusted EBITDA identically, the presentation of Adjusted EBITDA may not be comparable to similarly titled measures of other companies. (2) Unrestricted Group Adjusted EBITDA only includes the adjusted EBITDA of our Unrestricted Subsidiaries (as defined in the Indenture). Restricted Group Adjusted EBITDA only includes the adjusted EBITDA of our Restricted Subsidiaries (as defined in the indenture) that are consolidated and thus excludes the unconsolidated subsidiary Ameron Srl. (prima TV in Romania). (3) The following table reconciles operating income to Adjusted EBITDA: Three months ended Twelve months ended September 30, September 30, 2003 2004 2003 2004 Operating income 2,311 euros 1,367 euros 39,217 euros 57,336 euros Add: Non-cash compensation 507 1,540 1,445 7,013 Depreciation 3,367 2,991 15,788 13,755 Amortization 1,968 4,164 8,200 14,739 Consolidated Adjusted EBITDA 8,153 euros 10,062 euros 64,650 euros 92,843 euros Cash Flow Cash provided by operations was 5.9 million euros for the nine months ended September 30, 2004, compared to 27.2 million euros for the nine months ended September 30, 2003. The decrease was partly due to a 13.1 million euros reduction in prepaid subscription fees within our Print operations, and partly due to a 12.6 million euros decrease related to prepayments for program rights, settlement of program right payables and an increase of our program rights inventory. Cash used in investing activities was 73.4 million euros for the nine months ended September 30, 2004, compared to cash provided by investing activities of 9.2 million euros for the nine months ended September 30, 2003. The increase was mainly due to the acquisition in 2004 of the 49.3% minority interest in TV Norge (30.8 million), and the cash settlement of the consideration for the acquisition of Radio 1 in Norway and Radio 2 in Denmark (18.6 million). Cash capital expenditure increased 11.4 million euros from 11.6 million euros for the nine months ended September 30, 2003 to 23.0 million euros for the nine months ended September 30, 2004. The cash provided by investing activities in 2003 was mainly due to the cash acquired with the Print operations in a non-cash transaction and proceeds from the sale of our investments in Lions Gate Entertainment Corp. and BetandWin. Cash used in financing activities was 35.6 million euros for the nine months ended September 30, 2004, compared to 10.4 million euros for the nine months ended September 30, 2003. The change mainly reflects the acquisition and redemption of 31.0 million euros of our Senior Notes in the nine months ended September 30, 2004 compared to the acquisition and redemption of $5.0 million of the 7% Convertible Subordinated Notes in the nine months ended September 30, 2003. As a result of the above, our cash and cash equivalents decreased 103.4 million euros from 245.8 million euros at December 31, 2003 to 142.4 million euros at September 30, 2004. Forward-Looking Statements Some of the statements in this press release are forward-looking, including, without limitation: (i) the statement that we are utilizing our market knowledge and operating infrastructure to launch new channels across our pan-European footprint and will operate multiple stations in almost all of our markets by year-end; (ii) the statement that by prudently building on our existing asset base we are strategically positioning the Company to garner an increased share of the overall advertising market and new revenue streams; (iii) the statement that with a solid balance sheet and commitment to profitability, we continue to explore accretive transactions in television and radio that will complement our operations as the Company continues to grow; (iv) the statements that we intend to launch further co-branded digital music services in Finland, Sweden and Norway before the end of the year, that such channels will be the first music channels in these markets to be broadcast in their respective local language, that the channels will utilize the operating expertise and marketing resources provided by our established television stations, as well as benefit from our extensive music experience in operating our radio stations in these markets and that we expect the digital channels to benefit from the development of new revenue streams from subscriptions and transactions resulting from viewers interactions with each channel via SMS and phone lines, including actively selecting videos and participating in chat forums, polls and games; (v) the statements that our new Belgian television channel will be targeted to females aged 20-49, that its schedule will be programmed to complement VT4 and that it will to a large extent utilize our existing sales, marketing, technical and operating facilities in Flanders; (vi) the statements that we expect the Greek Ministry will initiate a new radio license tender in late 2004 or early 2005 and that the radio stations whose licenses were annulled will be permitted to broadcast until new licenses are awarded; and (vii) the statement that we expect that Lampsi will participate in any new radio license tender in accordance with applicable laws and regulations. These forward-looking statements include statements relating to our future performance, competition, trends and anticipated developments in the television and radio broadcasting, and publishing industry. In addition, we may make forward-looking statements in future filings with the Securities and Exchange Commission and in written material, press releases and oral statements issued by us or on our behalf. Forward-looking statements include statements regarding our intent, belief or current expectations or those of our officers (including statements preceded by, followed by or that include forward-looking terminology such as "may," "will," "should," "believes," "expects," "anticipates," "estimates," "continues" or similar expressions or comparable terminology) with respect to various matters. It is important to note that our actual results in the future could differ materially from those anticipated in these forward-looking statements depending on various important factors. Some of these factors include: the effects of, and changes in, regulation and government policy; the effects of changes in general economic environment; the effects of changes in the advertising spending growth; the effects of competition; our ability to reduce costs; the timely development and acceptance of our new channels, stations and/or services; the effects of technological changes in broadcasting technology; and, our success at managing the risks that arise from these factors. All forward-looking statements in this press release are based on information available to us on the date hereof. We do not undertake to update any forward-looking statements that may be made by us or on our behalf, in this press release or otherwise. Conference Call The Company will host a teleconference to discuss its results on Monday, November 1, 2004 at 10:00 (New York Time), which is 4:00 p.m. (Luxembourg Time). To access the teleconference, please dial +1-973-321-1100 ten minutes prior to the start time. The teleconference will also be available via live web-cast on the Company's Web site, located at http://www.sbsbroadcasting.com/. If you cannot listen to the teleconference at its scheduled time, there will be a replay available through November 8, 2004 that can be accessed by dialing +1-877-519-4471 (U.S. callers) or +1-973-341-3080 (international callers), pass-code 5167866. The web-cast will be archived on the Company's Web site for two weeks. SBS is a European commercial television and radio broadcasting company with operations in Western and Central Europe. Countries where SBS currently has broadcasting assets include: Belgium (Flanders), Denmark, Finland, Greece, Hungary, The Netherlands, Norway, Romania, and Sweden. In addition, SBS has publishing operations in The Netherlands. For further information visit: http://www.sbsbroadcasting.com/. SBS BROADCASTING SA CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (in thousands of euro, except share and per share data) Three months ended Nine months ended September 30, September 30, 2003 2004 2003 2004 Net revenue 115,228 euros 139,169 euros 385,810 euros 467,050 euros Operating expenses: Station operating expenses 78,784 93,336 268,073 307,887 Selling, general and administrative expenses 24,529 31,657 70,644 91,574 Corporate expenses 3,762 4,114 10,313 11,017 Non-cash compensation 507 1,540 507 2,554 Depreciation 3,367 2,991 10,739 9,374 Amortization 1,968 4,164 5,921 10,900 Total operating expenses 112,917 137,802 366,197 433,306 Operating income 2,311 1,367 19,613 33,744 Equity in loss from unconsolidated subsidiaries (6,536) (319) (4,320) (1,616) Interest income 404 911 872 2,921 Interest expense (6,001) (3,337) (18,286) (12,502) Foreign exchange gain 3,881 1,512 8,543 2,238 Investment gain 30,115 2,222 30,061 5,011 Gain (loss) on extinguishments of debt -- (2,661) 109 (5,124) Other expense, net (1,146) (408) (1,882) (1,780) Income (loss) before income taxes and minority interest 23,028 (713) 34,710 22,892 Income taxes (931) (1,448) (3,321) (8,481) Income (loss) before minority interest 22,097 (2,161) 31,389 14,411 Minority interest in (income) loss, net (2,033) 155 (3,756) (2,193) Net income (loss) 20,064 euros (2,006) euros 27,633 euros 12,218 euros Net income (loss) per common share - basic: 0.70 euros (0.06) euros 0.97 euros 0.39 euros Net income (loss) per common share - diluted: 0.67 euros (0.06) euros 0.96 euros 0.37 euros Weighted average common shares - basic 28,621 31,311 28,618 31,175 Weighted average common shares - diluted 31,561 31,311 28,674 33,264 SBS BROADCASTING SA CONSOLIDATED BALANCE SHEETS (in thousands of euro) December 31, September 30, ASSETS 2003 2004 Current assets: (unaudited) Cash and cash equivalents 245,836 euros 142,427 euros Short-term investments 528 5,447 Accounts receivable trade, net of allowance for doubtful accounts of 4,799 euros (4,990 euros in 2003) 95,533 90,666 Accounts receivable, affiliates 1,404 2,488 Restricted cash and cash in escrow 1,853 2,555 Program rights inventory, current 102,880 123,907 Other current assets 18,149 25,716 Total current assets 466,183 393,206 Buildings, improvements, technical and other equipment, net of accumulated depreciation 35,581 39,083 Goodwill 149,480 161,780 Other intangible assets, net of accumulated amortization 73,517 88,359 Program rights inventory, non-current 65,079 67,339 Deferred financing cost, net of accumulated amortization 4,447 2,792 Investments in and advances to unconsolidated subsidiaries 3,791 3,104 Other assets 1,200 940 Total assets 799,278 euros 756,603 euros LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable 34,537 euros 32,221 euros Accrued expenses 65,459 68,293 Program rights payable, current 58,921 64,076 Income taxes payable 4,378 6,857 Current portion of long-term debt 3,328 3,207 Deferred income, current 41,862 31,997 Other current liabilities 20,031 11,766 Total current liabilities 228,516 218,417 Program rights payable, non-current 31,190 28,355 12% senior notes due 2008 134,700 103,655 Other long-term debt 8,909 7,842 Deferred tax, non-current 27,440 35,532 Other non-current liabilities 29,405 7,321 Minority interest 61,051 53,847 Shareholders' equity: Common Shares (authorized 75,000,000 issued 31,451,092 (31,016,834 in 2003) at par value 2.00 euros) 62,034 62,902 Additional paid-in capital 669,835 678,094 Accumulated deficit (444,749) (432,531) Unearned compensation (1,499) (1,494) Treasury shares (997 common shares) (28) (28) Accumulated other comprehensive loss) (7,526) (5,309) Total shareholders' equity 278,067 301,634 Total liabilities and shareholders' equity 799,278 euros 756,603 euros SBS BROADCASTING SA CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (in thousands of euro) Nine months ended September 30, 2003 2004 Cash flows from operating activities: Net income 27,633 euros 12,218 euros Adjustments to reconcile net income to net cash provided by operating activities: Revenue recorded in exchange for equity investments (719) (916) Non-cash compensation 507 2,554 Depreciation and amortization 16,660 20,274 Equity in (income) loss from unconsolidated subsidiaries 7,688 1,616 Non-cash interest expense 1,143 729 Foreign exchange gain on long-term debt (5,661) (110) Investment (gain) losses, net (29,772) (5,011) Loss (gain) on extinguishments of debt (109) 5,124 Minority interest in income 3,756 2,193 Changes in operating assets and liabilities, net of amounts acquired: Accounts receivable 1,136 5,821 Accounts receivable, affiliates (343) (779) Program rights inventory, net (7,271) (19,916) Other current assets (6,925) (4,831) Other non-current assets (371) 192 Accounts payable and accrued expenses 14,901 (6,640) Deferred income (1,121) (9,045) Other liabilities 6,064 2,425 Cash provided by operating activities 27,196 5,898 Cash flows from investing activities: Proceeds from sale of short-term investments 9,372 -- Cash capital expenditure (11,638) (23,037) Payment for purchase of acquired business, net of cash acquired 11,487 (50,337) Cash provided by (used in) investing activities 9,221 (73,374) Cash flows from financing activities: Net change in short-term borrowings (1,175) -- Proceeds from issuance of common shares -- 6,578 Net change in restricted cash and cash in escrow (393) (685) Payment of long-term debt (8,755) (41,496) Payment of capital lease obligation (112) -- Cash used in financing activities (10,435) (35,603) Effect of exchange rate changes on cash and cash equivalents (1,936) (330) Net change in cash and cash equivalents 24,046 (103,409) Cash and cash equivalents, beginning of period 67,026 245,836 Cash and cash equivalents, end of period 91,072 euros 142,427 euros SBS BROADCASTING SA OPERATING RESULTS BY SEGMENT (UNAUDITED) (in thousands of euro) Three months ended Nine months ended September 30, September 30, Television segment 2003 2004 2003 2004 Net revenue: TV Norge (in Norway) 9,883 euros 11,156 euros 36,142 euros 36,553 euros Kanal 5 (in Sweden) 16,358 17,392 58,953 60,776 TV Danmark and Kanal 5 (in Denmark) 8,670 10,449 28,919 31,689 VT4 (in Belgium) 9,525 11,675 35,341 43,108 SBS6, NET5 and Veronica (in the Netherlands) 38,901 40,864 134,365 140,458 TV2 (in Hungary) 14,003 18,654 52,852 63,913 Broadcast Text and other 2,502 1,271 3,644 3,713 Total net revenue 99,842 111,461 350,216 380,210 Station operating expenses 71,710 79,565 253,275 262,856 Selling, general and administrative expenses 18,566 21,785 56,084 61,069 Depreciation and amortization 4,529 4,008 14,418 11,976 Total operating expenses 94,805 105,358 323,777 335,901 Income from operations 5,037 euros 6,103 euros 26,439 euros 44,309 euros Radio segment Net revenue: Denmark 3,806 euros 2,286 euros 10,387 euros 7,990 euros Sweden 1,960 4,030 6,113 12,299 Norway 821 2,365 821 6,837 Finland 3,002 3,423 10,622 10,809 Greece 762 797 2,616 3,156 Total net revenue 10,351 12,901 30,559 41,091 Station operating expenses 4,219 5,649 11,943 19,021 Selling, general and administrative expenses 4,563 6,431 13,160 21,902 Depreciation and amortization 766 2,033 2,202 5,096 Total operating expenses 9,548 14,113 27,305 46,019 Income (loss) from operations 803 euros (1,212) euros 3,254 euros (4,928) euros Print segment Net revenue 5,035 euros 14,807 euros 5,035 euros 45,749 euros Station operating expenses 2,855 8,122 2,855 26,010 Selling, general and administrative expenses 1,400 3,441 1,400 8,603 Depreciation and amortization 40 1,114 40 3,202 Total operating expenses 4,295 12,677 4,295 37,815 Income from operations 740 euros 2,130 euros 740 euros 7,934 euros Consolidated Net revenue: 115,228 euros 139,169 euros 385,810 euros 467,050 euros Income from operating segments 6,580 7,021 30,433 47,315 Corporate expenses (3,762) (4,114) (10,313) (11,017) Non-cash compensation (507) (1,540) (507) (2,554) Operating income 2,311 euros 1,367 euros 19,613 euros 33,744 euros DATASOURCE: SBS Broadcasting SA CONTACT: Investors, Michael Smargiassi of Brainerd Communicators, Inc., +1-212-986-6667, or ; or Press, Jeff Pryor of Pryor Associates, +1-818-382-2233, or ; or Catriona Cockburn of Citigate Dewe Rogerson, +44-207-282-2924, or , all for SBS Broadcasting SA Web site: http://www.sbsbroadcasting.com/

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