EM.TVAnnual Report 2003 - Constantin Medien AG

EM.TVAnnual Report 2003

DSF – Sport1 – PLAZAMEDIA
Forward looking statements.
This annual report contains statements relating to future events
that are based on management’s assessments of future developments.
A series of factors beyond the control of the company, such
as changes in the general economic and business environment
and the incidence of individual risks or occurrence of uncertain
events, can result in the actual results differing substantially from
those forecast. EM.TV does not intend to continually update the
forward looking statements contained in the annual report.

Contents.
Key Figures. 2
Foreword by the Chairman of the Management Board. 5
Management Board and Supervisory Board. 10
Report of the Supervisory Board. 11
The Year 2003. 16
EM.TV Share and Bond. 22
Corporate Strategy. 28
Business Unit Report. 32
Entertainment. 32
Sports. 42
Consolidated Financial Statements.
Consolidated Balance Sheet. 2
Consolidated Profit and Loss Account. 4
Consolidated Cash Flow Statement. 5
Analysis of Consolidated Fixed Asset Movements. 6
Changes in Consolidated Equity. 8
Comparative Consolidated Profit and Loss Account. 9
Notes on the Consolidated Financial Statements. 10
Management Report on the Situation of the Group. 43
Auditors’ Report. 54
Annual Financial Statements.
Balance Sheet of the AG. 56
Profit and Loss Account of the AG. 58
Notes on the Financial Statements of the AG. 59
Management Report on the Situation of the AG. 77
Auditors’ Report. 85
Production Credits.

Key Figures.
EM.TV GROUP (based on IFRS)
SALES in EUR ‘000
2 Key Figures.
270,029
249,923
EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (EBITDA) in EUR ‘000
-11,667
8,438
EARNINGS BEFORE INTEREST AND TAXES (EBIT) in EUR ‘000
-133,334
-97,148
-88,508
CONSOLIDATED NET RESULT in EUR ‘000
-374,173
-310,248
-129,947
721,569
285,801
2003
2002
2001
2003
2002
2001
2003
2002
2001
2003
2002
2001

in EUR ‘000 2003 2002 2001
Sales 270,029 249,923 721,569
Earnings before interest, taxes, depreciation and amortization (EBITDA) -11,667 8,438 285,801
Depreciation and amortization -85,481 -96,946 -419,135
Earnings before interest and taxes (EBIT) -97,148 -88,508 -133,334
Earnings before taxes (EBT) -135,166 -340,163 -330,593
Consolidated net loss for the year -129,947 -310,248 -374,173
Earnings per share (in EUR) -0.89 -2.13 -2.60
Film and merchandising rights, EDP programs 271,063 473,797 572,870
Fixed assets 390,351 601,826 928,135
Shareholders’ equity 0 129,914 465,670
Deficit no covered by equity 24,766 – –
Equity ratio (in percent) – 14.65 % 35.89 %
Long-term liabilities 435,783 422,411 398,199
Short-term liabilities to banks 80,769 137,544 165,692
Balance sheet total 700,646 886,795 1,297,535
Share price (at 31/12/2003 in EUR) 0.85 0.93 1.45
Market capitalization (at 31/12/2003 in EUR million) 124.1 135.6 208.9
Employees (annual average) 570 377 624
3

4
Werner E. Klatten. Chairman of the Management Board

Dear Shareholders,
2001 marked the start of the restructuring and reorientation of EM.TV &
Merchandising AG under my aegis. At that time, it was already clear that it was
going to be a very tough task, in view of the extent of the restructuring requirements
and the worsening conditions in the sector and capital markets. Just
the period of time for the process, and how complicated the company restructuring
would actually be was something that no-one could foresee.
One can hardly say that the capital market and the media would have seen
much chance for us to implement these plans. This applies even more to the
already demanding tasks of restructuring and rebuilding coincided with stock
exchange collapse, the crash of the advertising market and far-reaching rationalization
within the German media. First of all, the collapse of the Kirch Group
in spring 2002 dealt the first severe blow to EM.TV, as our company was connected
with KirchGroup Companies on an operating and corporate level in
many different ways. Therefore during the last two years, we often needed to
revise plans and develop new strategies at short notice, as well as absorb set
backs. Nevertheless, we have at no point allowed ourselves to be discouraged.
By the beginning of 2004 we were able to establish that our persistence had
paid off. The restructuring of EM.TV has been accomplished! The nearly complete
waiver of the convertible bond issued in 2000 achieved at the end of
March 2004 closes the chapter on a wide range of restructuring measures.
EM.TV has managed to strip away successively the burdens arising from the
company’s expansion phase, while at the same time strengthening the operating
business in order to facilitate a return to profitability and profitable growth
within the next few years. This has secured the company’s independence
within the drastically changed media sector.
This positive résumé is only possible because EM.TV worked so hard in 2003
and at such a fast pace to complete a large number of restructuring initiatives:
Through the sale of the remaining shareholding in the Formula 1 motorsport
series, which was subject to a pledge agreement to the Bayerische Landesbank
in return for payment of 8.5 million Euro and a debtor warrant, it was
possible to end the legal dispute over the validity of the pledge between
EM.TV and the Formula 1 banks.
Foreword by the Chairman of the Management Board. 5

Through a settlement reached with the investment bank Morgan Grenfell
Development Capital and the Deutsche European Partners IV Fund in the
dispute over warranty claims arising from the sale of Formula 1 shares to
EM.TV, we have freed the company from a significant financial risk.
Through the sale of the 16.4 percent shareholding in Constantin Film AG to
Swiss company Highlight Communications AG, we disposed of a non-strategic
shareholding in order to be able to invest the resulting funds in strategic
holdings in the sports sector.
With the sale of US subsidiary The Jim Henson Company to the family of
company founder Jim Henson, we achieved a further milestone in the
restructuring program. The transaction secures the liquidity of the EM.TV
group well into 2004.
By the middle of 2003, we had repaid the last installments of the so-called
Junior loan in several steps, meaning that EM.TV AG no longer has any
short-term financial debts. This was achieved by the early receipt of an out -
standing debt by New York Foundation, Sesame Workshop and the sale of
the Jim Henson Company.
The most important step in EM.TV’s recovery was the successful agreement
reached in November 2003 with a significant proportion of the institutional
bond holders for the restructuring of the convertible bond from 2000.
Without this agreement, the insolvency of our company would have been
unavoidable on account of the bond repayment totaling 469 million Euro.
Parallel to these restructuring steps, we expanded EM.TV business to incorporate
the sports sector, thus establishing a two-pronged operating strategy. With
TV station DSF, online platform Sport1 and Germany’s leading sports produc-
6 Foreword by the Chairman of the Management Board.

tion company PLAZAMEDIA, now we have three established brands in our company
portfolio that offer a balanced growth potential for the years to come. In
making these acquisitions, we have proven our statement that we would play
an active role in the consolidation of the media sector, and emerge from the
crisis with a strengthened operating base.
The workload that EM.TV had to deal with over the last year was enormous.
I would like to offer my heartfelt appreciation for their commitment to all
employees of the parent company and subsidiaries, to the members of the
Supervisory Board and to my colleagues on the Management Board. Now we
can safely say that all the effort was not in vain.
2004 marks the beginning of a new era for EM.TV. This is primarily true from a
corporate perspective, in that the complex concept for restructuring the convertible
bond will see EM.TV & Merchandising AG merged into the new EM.TV
Vermögensverwaltungs AG, which will, in turn, be renamed EM.TV AG.
With this move, the “old EM.TV” will cease to exist. However, a “new EM.TV”
will exist, financially restructured and with a healthy equity basis.
There will also be significant changes in terms of shareholder structure, in that,
within the scope of the restructuring concept, the existing bondholders will
become majority shareholders in the “new EM.TV”. And, finally, a new era will
begin in the operating business. Freed from inherited burdens, EM.TV will be
able to concentrate fully on the development of its core business for the first
time in years.
The top priority of the Management Board remains to bring EM.TV back to profitability
as soon as possible. This won’t happen purely through the removal of
past burdens, but first and foremost because we see strong development
opportunities for our operating business.
7

Within the Entertainment segment, i.e. the production and marketing of high
quality programs and characters for children and youth markets, it would appear
that, following years of slipping demand and budget cutbacks on the part
of TV stations, a gradual change of fortune is taking place in the market. In the
event that demand does indeed start building up speed, EM.TV is well prepared
with its portfolio of high quality programs, including numerous popular classics.
Market consolidation within the children and youth market segment is not yet
over. EM.TV intends to continue to play an important role in this process, be it
through strategic partnerships, the acquisition of rights portfolios or the acquisition
of companies. Furthermore, the strengthening of our presence abroad
deserves our special attention. We can envisage strategic co-operation in this
respect, too, bringing together EM.TV’s program portfolio and sales capabilities
with sound understanding of local markets on the part of our partners.
The new sports marketing segment has demonstrated very positive development
during its first few months within the EM.TV group. Our approach of offering
packaged, networked marketing concepts via our subsidiaries, and thus
establishing ourselves in the sports segment as a provider of integrated fullservice
solutions is already showing promise. In addition, our sports segment
will also receive a boost from the increasing activities connected with the
2006 FIFA World CupTM in Germany. The intelligent combination of marketing
rights for this top event along with our sports activities at DSF, Sport1 and
PLAZAMEDIA should open up new business potential for us in the years
to come.
8 Foreword by the Chairman of the Management Board.

Dear shareholders,
Through your approval of the restructuring concept for the convertible bond at
the extraordinary general meeting on February 5, 2004, you and the bond
holders have freed the way to the completion of a long and complex restructuring.
For this, I would like to offer once more my sincere thanks. EM.TV has
been given another chance and I am convinced that we will use this chance to
turn the “new EM.TV” into a growing, profitable media company that will also
have an attractive value on the stock market. In order to achieve these targets,
we will work with the same level of commitment as we did to restructure the
company.
Unterföhring, April 16, 2004
With best wishes
Werner E. Klatten. Chairman of the Management Board
9

Management Board.
Rainer Hüther Werner E. Klatten Dr. Andreas Pres
Werner E. Klatten. Chairman of the Management Board
Werner E. Klatten has been Chairman of the Management Board of EM.TV & Merchandising AG
since September 15, 2001. He is responsible for the following central functions: Legal Matters,
Investor Relations, Communications, Human Resources and Administration, as well as for shareholdings.
Rainer Hüther. Member of the Management Board
Since March 6, 2001, Rainer Hüther has been responsible for Content, Marketing, Merchandising
and TV Sales. In addition to his Board Member activities at EM.TV, he took over management of
sports broadcaster DSF June 2, 2003 – a position he already occupied from 1996 to 2000.
Dr. Andreas Pres. Member of the Management Board
Dr. Andreas Pres has been Board Member since January 1, 2003 and is responsible for Finance,
Accounting, Controlling, IT and Process Management.
Supervisory Board.
Dr. Bernd Thiemann. Chairman (since April 17, 2001)
Prof. Dr. h.c. Roland Berger. Deputy Chairman (since August 1, 2001)
Dr. Ralph Wollburg. (until March 15, 2003)
Dr. Andreas Meissner. (since May 20, 2003)
10 Management Board and Supervisory Board.

Dr. Bernd Thiemann
Report of the Supervisory Board.
During 2003, EM.TV & Merchandising AG continued with the implementation of its strategic
reorientation according to plan and completed, to a large extent, the restructuring tasks. In this
respect, the company can look back on a successful year. In contrast, however, the development
of EM.TV’s operating business remained, as in previous years, bogged down in a difficult market.
It was not until the end of the financial year that general economic conditions in Germany showed
signs of recovery. Development of the advertising market, which is so important to TV stations –
EM.TV’s key customer group – continued at a slow pace.
In 2003, the Supervisory Board carried out its duties at a total of eight meetings, one of which
being a telephone conference. As in the previous year, no committees were formed – in accordance
with legal requirements – as the Board is made up of only three members.
The higher than normal number of meetings was due to the large number of decisions necessary
during the financial year in respect of restructuring measures. The Supervisory Board regularly
monitored the work of the Management Board, and assisted with advice. Through detailed oral
and written reports from the Management Board, it kept up to date with the progress of company
and group business, business planning and significant business events. Members of the
Management Board took part in all meetings in order to report to the controlling body and to answer
questions. Furthermore, the Supervisory Board called on expert external advice as it saw fit,
in particular that of lawyers and accountants.
Continuous oral and written contact was also maintained between members of the Management
Board and the Supervisory Board between meetings, especially between the chairmen of the two
boards.
During the financial year, the advice of the Supervisory Board centered on the following issues:
Liquidity development: The Supervisory Board took particular interest in the status and development
of the liquidity of both the parent company and group, especially in light of the repayment
due on the Junior loan. In this regard, checks were maintained principally on the progress of the
sale of The Jim Henson Company, which was completed in May 2003.
Report of the Supervisory Board. 11

Disposal/Restructuring: In the course of 2003, EM.TV disposed of numerous company shareholdings,
the most notable being The Jim Henson Company, Speed Investments (Formula 1 group)
and Constantin Film. In all cases, the Supervisory Board conducted intensive checks on the appropriateness
of the respective sales agreements, as well as on possible alternatives and, in all
instances, approved the decision of the Management Board. In the case of the Formula 1 group
in particular, there was careful assessment made of the sales solution finally reached with the
Bayerische Landesbank against the possible opportunities and risks associated with a prolonged
legal dispute with the so-called Formula 1 banks to decide the validity of the share pledge
Broadening of the business base: The Supervisory Board considered in detail the outlook for the
original core business – marketing rights to programs for children and young people. In light of
decreasing profitability in the pay-TV, free-TV and merchandising sectors, not only in Germany, but
also on a European level, it agreed with the assessment of the Management Board that EM.TV
must broaden its core business if it is to return to profitability and growth on a sustained basis. In
this regard, the Supervisory Board concerned itself in detail with the development of the sport
business, and endorsed and supported the acquisition of TV station DSF, online platform Sport1
and production company PLAZAMEDIA.
Convertible bond: During the entire financial year, the Supervisory Board was kept closely informed
by the Management Board on the status of the restructuring of the convertible bond, due for
repayment in 2005. The restructuring concept agreed on November 26, 2003 with the bond committee
was approved unanimously.
Legal issues: In terms of advice given to the Supervisory Board, the examination of damages
claims against former board members played an important role. To review the issues relevant to
this matter, the Supervisory Board engaged a team of legal advisors, which reported back on a
regular basis. As at the end of the financial year, the review had not yet been completed.
Munich accountancy firm, PricewaterhouseCoopers GmbH, which was engaged by the AGM on
July 23, 2003, reviewed the annual accounts of EM.TV & Merchandising AG, the group accounts,
the status report and group status report to December 31, 2003, and accorded them with an
unconditional audit certificate. The annual accounts, the group annual accounts and the parent
company and group status reports were passed to all members of the Supervisory Board in good
12 Report of the Supervisory Board.

time, along with the audit reports. The auditors reported to the Supervisory Board on their key
findings at the Supervisory Board meetings held on March 5, 2004 and April 7, 2004. The
Supervisory Board reviewed the annual accounts of both parent company and group, as well as
the status reports in detail, and approved the findings of the auditors. On completing its examination,
the Supervisory Board raised no objections against the annual accounts and group
accounts. It approved the company annual accounts and group accounts as presented by the
Management Board, thus finalizing the annual accounts.
One change took place within the Management Board during the financial year. Dr. Andreas Pres,
previously Company General Secretary, was appointed to the Management Board by the Supervisory
Board, with responsibility for Finance, Accounting, Controlling, IT and Process Management, effective
as of January 1, 2003.
Within the Supervisory Board, Dr. Ralph Wollburg left his post on May 15, 2003. The Munich
Regional Court appointed Dr. Andreas Meissner as new Supervisory Board Member, with effect
from May 20, 2003.
In the interests of good practice, the members of the Supervisory Board tendered their resignations
with effect from August 31, 2003, and offered themselves for re-election at the AGM on July
23, 2003. They were duly reappointed by shareholders as Supervisory Board Members, with
effect from September 1, 2003. At its constituent meeting of September 8, 2003, the Supervisory
Board unanimously voted Dr. Bernd Thiemann as its chairman.
2003 placed a great deal of demands on EM.TV group management and employees. Due to the
complexity of the restructuring and to time pressure, it was necessary to deal with a large number
of issues in parallel. In spite of this pressure, almost all restructuring tasks were resolved. Simultaneously,
sports was successfully established as the company’s second core business element.
Most importantly, however, the restructuring of the 2000/2005 convertible bond agreed with the
ad-hoc bond holder committee, achieved the necessary means to release the company from a
substantial financial burden that, otherwise, EM.TV would probably not have been in the position
to overcome.
13

With completion of the contract to waive the convertible bond on March 30, 2004, and payment
of the various considerations to the convertible bond holders, it was possible to finalize the bond
restructuring successfully. The resulting merger of EM.TV & Merchandising AG into EM.TV
Vermögensverwaltungs AG, which in the course of the merger changes its name to EM.TV AG, is
likely to be completed within the next few weeks. As a fully restructured company, the new EM.TV
AG that will emerge from this process can look forward to a positive future.
The Supervisory Board would like to thank the Management Board and all employees for their outstanding
work during the financial year.
April 2004
The Supervisory Board of EM.TV & Merchandising AG
Dr. Bernd Thiemann
14 Report of the Supervisory Board.

Sports.
Since 2003, EM.TV AG has been pursuing a two-pronged strategy in its core operating business. The Sports Division forms the
second element of company activities alongside the Entertainment Division. As well as shareholdings in TV station DSF, online
platform Sport1 and the 100 percent stake in sports production company PLAZAMEDIA, this includes the European merchandising
marketing rights to the 2006 FIFA World Cup TM .
15

The Year 2003.
January 2003. EM.TV closes its first contract with Fox Kids UK. This agreement marks the expansion
of EM.TV’s relationship with Fox Kids into the United Kingdom, following deals in several other
countries.
Having already repaid part of the sum due to the financing banks on the so-called Junior loan at
the turn of the year - in the amount of 15 million Euro - EM.TV repays a further installment of
around 24 million Euro in January 2003. The remaining sum repayable now stands at 25 million
Euro.
February 2003. EM.TV and the Bayerische Landesbank (Bayern LB) reach agreement in their
dispute over the lien on the EM.TV holding in the Formula 1 racing series. For its 22.3 percent in
Speed Investment Ltd., EM.TV receives payment of 8.5 million Euro from Bayern LB, plus the right
to a proportion of any profit resulting from the onward sale of the Speed shares.
March 2003. In time for CeBit 2003, the new KAMBA play and learn domain enjoys its launch in
the internet. The supervised children’s community is a joint project between EM.TV, T-Online and
Cobra Youth Communications.
EM.TV concludes the legal dispute with Morgan Grenfell Development Capital Syndications Ltd.
and Deutsche European Partners IV via settlement. The plaintiff withdraw their action against
EM.TV lodged in December 2001.
April 2003. KarstadtQuelle New Media AG and Swiss sports investor Dr. h.c. Hans-Dieter Cleven
reach agreement with KirchMedia on the acquisition of TV station DSF and Germany’s leading
online platform Sport1. EM.TV and KarstadtQuelle New Media are to set up a joint holding that
will take over 77.78 percent of shares in DSF and Sport1.
16 The Year 2003.

Maya the Bee.
EM.TV and KarstadtQuelle New Media reach agreement with Infront BuLi GmbH for a comprehensive
free-TV rights package to the German Soccer League on DSF, including rights to the highlights
of the 2003/2004 season Sunday matches played in the German Premier Division, and
exclusive live transmission rights, as well as first rights to highlights from the Monday matches
played in the German Second Division.
EM.TV and KirchMedia subsidiary Taurus TV GmbH agree the acquisition of 100 percent of
PLAZAMEDIA, Germany’s largest production company in the sports sector.
US banks JP Morgan Chase Bank and Lehmann Brothers join the settlement reached in February
2003 between EM.TV and Bayern LB on EM.TV’s outstanding shareholding in Formula 1.
Within the context of the strategic reorientation of its subsidiary portfolio, EM.TV sells its 16.4
percent stake in Constantin Film AG to Swiss media company Highlight Communications AG.
May 2003. Following receipt of all necessary approvals, EM.TV completes the sale of its outstanding
shareholding in Formula 1 company Speed Investments Ltd., amounting to 22.3 percent. The
sale also marks the end of the associated court cases between the parties on Jersey.
EM.TV finalizes a binding agreement for the sale of all shares in 100 percent subsidiary The Jim
Henson Company Inc. to JHC Holding Company LLC., which is controlled by the children of company
founder Jim Henson. The resulting cash flow is used to complete the repayment of the sum
still outstanding on the Junior loan, amounting to 12.5 million Euro, and secures the liquidity of
the EM.TV group.
17

With effect from May 20, 2003, attorney Dr. Andreas Meissner (43) is appointed from the local
court in Munich as the new Member of the Supervisory Board of EM.TV & Merchandising AG. He
follows attorney Dr. Ralph Wollburg, who resigned from his position on the EM.TV & Merchandising
AG Supervisory Board, which he held since August 1, 2001.
June 2003. With effect from June 2, 2003, Rainer Hüther is appointed Managing Director of
TV station DSF. He takes on this role in addition to his activities as Member of the Management
Board for Marketing & Sales at EM.TV & Merchandising AG.
As planned, EM.TV joins the business consortium that took over DSF and Sport1. Via its 100 percent
subsidiary EM-Sport Sportmarketing GmbH, EM.TV now holds 50.1 percent of the joint holding
company that, in turn, holds 77.78 percent of DSF and Sport1.
July 2003. The Annual General Meeting (AGM) of EM.TV & Merchandising AG, held on July 23,
2003, gives its almost unanimous agreement to the sale of subsidiary The Jim Henson Company
to the family of company founder Jim Henson. Based on a presence of 52.7 percent of authorized
share capital, the approval rating for corresponding agenda item 10 stood at 99.97 percent. In
addition, EM.TV shareholders confirm the reappointment of current Supervisory Board Members
Dr. Bernd Thiemann (Chairman), Prof. Dr. h. c. Roland Berger and Dr. Andreas Meissner with a
substantial majority.
Following approval of the AGM, the sale of The Jim Henson Company Inc. is completed July 31,
2003. EM.TV receives a total sum of approximately 84 million US dollars. At the same time, the
sum outstanding on the Junior loan, amounting to 12.5 million Euro, is repaid in full.
18 The Year 2003.
Tabaluga.

EM.TV achieves an important milestone in the home entertainment sector by securing a threeyear
license contract with Universal Family Entertainment (UFE). The extensive agreement includes
the exploitation of cult series and classics from the EM.TV and Junior program library on DVD,
VHS, MC and CD. The contract volume can be measured in Euro towards the lower end of seven
figures.
September 2003. EM.TV secures a long-term distribution contract with Swiss cable network operator
and pay-TV provider Cablecom. The Zurich-based company begins screening the Junior channel
on its pay-TV platform in September 2003.
EM.TV and TATAMI Schuh GmbH sign a worldwide license contract for children’s shoes featuring
popular Greenland dragon Tabaluga. The first Tabaluga shoes from TATAMI are due to be available
in stores during 2004.
October 2003. The Bayerische Landesanstalt für neue Medien (BLM) approves the increase of
the current shareholding in DSF from 77.78 percent to 81.13 percent. EM.TV’s shareholding in
DSF now equates to 40.65 percent, while that of KarstadtQuelle New Media stands at 40.48
percent, with Dr. Cleven holding 18.87 percent.
EM.TV positions a Junior program block in Hong Kong. Via a wide-ranging volume contract with
pay-TV provider Television Broadcasts Ltd. (TVB), EM.TV further expands its position within the
increasingly important Asian market. The agreement, which spans two years, encompasses exclusive
screening rights to series from the Junior program library.
19

November 2003. Following intensive negotiations over a period of several months, EM.TV reaches
agreement with a significant proportion of the institutional bondholders (bondholder committee)
on a concept for restructuring the 400 million Euro convertible bond issued by EM.TV in February
2000. According to the concept, the bondholders will waive in full their rights within the terms of
the convertible bond. In return, they receive several assets from EM.TV (see Group Status Report
on page 45).
December 2003. SANETTA Textilwerk Gebrüder Ammann GmbH & Co. KG acquires a worldwide
license from EM.TV for children’s wear featuring the little dragon Tabaluga. The new Tabaluga
collection will first be available in stores in time for the fall/winter season 2004.
20 The Year 2003.
Maya the Bee.

Maya the Bee.
Maya the Bee is now not only a permanent feature of our TV screens, but also a great success on the stage. After over 250 shows,
Maya the Bee – The Musical has been once again on tour throughout Germany since September 2003. The music for the popular
stage show originates from German rock and pop greats such as Ulla Meinecke, Inga Rumpf, Purple Schulz and Haindling. The cheeky
bee can be seen regularly on German television on ZDF and Premiere’s Junior Channel.
21

Despite the continued downswing of international capital markets at the beginning
of the year, key indicators for 2003 demonstrated a marked improvement. Both the
DAX and SDAX showed significant gains during the reporting period and were able to
halt the downwards trend of the previous year, despite difficult general economic
conditions. EM.TV shares experienced an extremely volatile year on the stock exchange
and ended 2003 just into negative territory.
EM.TV Share and Bond.
At the beginning of 2003, international capital markets were under heavy pressure, in particular
due to the escalating circumstances in Iraq, and continued the downwards trend of the previous
year. The start of the war and, above all, the rapid end to official fighting instigated the beginning
of recovery in the market. A weak dollar put the brakes on high hopes, but nevertheless the first
signs of economic recovery boosted stock exchanges.
The DAX began the 2003 financial year with heavy losses and followed in the footsteps of the
previous year. It wasn’t until the start of the second quarter that the index halted its downswing,
before then demonstrating continuous growth for the rest of the year. The DAX closed up 37.1 percent
for the full year at 3,965 points. The SDAX was actually able to exceed the performance of
the DAX, and demonstrated growth of 51.3 percent for the same period.
In accordance with the new segmentation of the stock market by the German stock exchange,
EM.TV qualified for registration in the new Prime Standard Segment. The first listing in this segment
of the regulated market, which is marked by strict, internationally recognized standards for
reporting and transparency, occurred on January 15, 2003. At the same time, the share listing on
the German Neuer Markt was discontinued. The EM.TV share has been weighted on the SDAX
since March 24, 2003 as a result of the new stock exchange segmentation and the accompanying
new indexing system.
In the first half of the year, EM.TV share movement followed the trend of the capital markets. After
reaching its lowest point for the year in March at 0.61 Euro, the stock was likewise not able to
demonstrate strong growth until the second quarter. The stock was, however, considerably more
volatile than that of the comparative DAX and SDAX indices. This trend peaked in a price increase,
accompanied by a high trading volume and resulting in the year’s high point of 2.29 Euro in
June 2003. This rapid price development coincided with a WpHG statutory statement, reporting
stock ownership on the part of Effecten-Spiegel AG at 5.04 percent of total voting rights. In the
third and fourth quarters, the share price moved back and forth within a range of 1.30 Euro and
22 EM.TV Share and Bond.

DEVELOPMENT OF THE EM.TV SHARE PRICE VERSUS DAX AND SDAX
Share price EM.TV: December 31, 2002 to Dezember 31, 2003
Indexed on the EM.TV share price as per December 31, 2002
■ EM.TV
■ DAX
■ SDAX
2.3
2.1
1.9
1.7
1.5
1.3
1.1
0.9
0.7
0.5
Dec. Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec.
02 03 03 03 03 03 03 03 03 03 03 03 03
1.60 Euro. On November 27, following the publication of the quarterly report and the announcement
of the restructuring process, the share price fell sharply and relinquished around 40 percent
of its value. In the weeks that followed, the share continued to lose ground amid below-average
trading volume, and temporarily dropped to below 0.80 Euro. On December 30, 2002, the share
was listed at 0.93 Euro and ended 2003 at 0.85 Euro. This equates to a performance of minus
8.6 percent.
Shareholder structure.
EM.TV authorized share capital as at December 31, 2003 equated to 146,054,116 Euro, split into
146,054,116 units. WKB Beteiligungsgesellschaft mbH, solely owned by Werner E. Klatten, continued
to hold 36.2 million shares and voting rights of 24.8 percent of authorized share capital.
According to the statement made to the company on February 6, 2002, shares held by Thomas
Haffa stood at 17.5 percent. Effecten-Spiegel AG announced to the company on December 31,
2003 that it owns 10.7 million shares, equating to a shareholding of 7.3 percent. All remaining
shares, around 50.5 percent, are free floating.
On March 2, 2004, in accordance with para. 21, section 1 of the Wertpapierhandelsgesetz
(German securities trading regulations), Thomas Haffa informed the company that his voting
share in the company had dropped below the 10 percent level. Thomas Haffa advised the company
that his voting share now stands at 9.5 percent, equating to 13,941,000 votes. On March 9,
2004 Effecten-Spiegel AG announced the reduction of its shareholding to 7,185,000 shares,
equating to 4.9 percent of voting rights.
On March 16, 2004, the venture capital firm Constant Ventures II Luxembourg S.A., from Luxembourg,
converted, as agreed, a loan guaranteed by WKB Beteiligungsgesellschaft mbH into
shares in the EM.TV & Merchandising AG media company. In so doing, Constant Ventures takes
over 36,164,360 EM.TV shares from WKB, equating to a proportion of 24.8 percent of EM.TV &
Merchandising AG authorized share capital. Following these announcements, free floating shares
stood at 60.8 percent.
23

SHAREHOLDER STRUCTURE AS AT DECEMBER 31, 2003 Free Float 50.5 %, fixed ownership 49.5 %
Source: Publications of shareholders (fixed ownership)
24.8% WKB Beteiligungsgesellschaft mbH
17.5% Thomas Haffa
NUMBER OF SHARES AND SUBSCRIPTION RIGHTS OF EXECUTIVE MEMBERS
Management Board
Werner E. Klatten
Rainer Hüther
Dr. Andreas Pres
Number of shares as per
December 31, 2003
Supervisory Board
Dr. Bernd Thiemann
Prof. Dr. h.c. Roland Berger
Dr. Andreas Meissner
* held via WKB Beteiligungsgesellschaft mbH
24 EM.TV Share and Bond.
36,164,360 *
0
0
0
0
0
0
Number of option rights
Resolution Basic price
of
Euro/share
31/01/2002
31/01/2002
07/06/2002
30/06/2003
7.3 % Effecten-Spiegel AG
2.28
2.28
1.29
1.60
Number
50.5% Free Float
Unit
200,000
200,000
100,000
100,000
0
0
0
Exercise price
Tranche 1
Euro
2.51
2.51
1.42
1.76
Tranche 2
Euro
2.74
2.74
1.55
1.92
Current price
of
30/12/2003
0.85
0.85
0.85
0.85

KEY FIGURES OF THE EM.TV SHARE AT A GLANCE
Share capital on December 31 EUR
Number of shares on December 31 (undiluted) Units
Number of shares on December 31 (diluted) Units
Average number of shares in the fiscal year Units
Market capitalization on December 31 Mio. EUR
Share price on December 31 EUR
Share high EUR
Share low EUR
Annual performance %
Group earnings per share (undiluted) EUR
Group earnings per share (diluted) EUR
Weighting in CDAX-Media on December 31 %
Source: Bloomberg, Deutsche Börse AG
BASIC INFORMATION ON THE SHARE
Type of share Bearer share
Denomination No-par stock
Security code WKN 568 480
ISIN DE0005684807
Opening quotation 30/10/1997
Stock exchange All 8 exchanges in Germany
Market segment Prime Standard
2003
146,054,116
146,054,116
152,640,661
146,037,130
122.7
0.85
2.29
0.61
-8.60
-0.89
-0.89
4.74
2002
145,854,116
145,854,116
153,094,998
145,407,223
135.6
0.93
2.36
0.68
-35.86
-2.13
-2.13
8.57
2001
144,081,116
144,081,116
155,562,758
144,081,116
208.9
1.45
8.54
1.07
-75.42
-2.60
-2.60
5.50
25

EM.TV Convertible Bond.
The EM.TV convertible bond issued in February 2000 was the focus of restructuring efforts during
2003. Restructuring activities were pushed forward aggressively, and resulted in the convertible
bond restructuring concept agreed on November 27, 2003.
On December 30, 2002, the convertible bond was quoted at 34.20 percent. Following similarly
negative development in the first quarter, the value of the bond rose continuously during the rest
of the year, reaching its peak following the announcement of the bond restructuring concept at
the end of November. At as December 31, 2004, the convertible bond was quoted at 45.50 percent,
equating to an increase in value of 33 percent for 2003.
Annual General Meeting.
The EM.TV & Merchandising AG Annual General Meeting, held on July 23, 2003, was attended by
around 1,300 shareholders. A total of 76,993,122 shares and votes were represented. This equated
to a presence of 52.72 percent of all shares and authorized share capital. The agenda items
tabled for approval were accepted by the AGM with a large majority.
Restructuring.
As a result of the merger of EM.TV into EM.TV Vermögensverwaltung AG (then called “EM.TV AG”),
the existing share will be exchanged for a new share. The merger contract stipulates a ratio of 73
to 10. This means that, for 73 shares in the current EM.TV & Merchandising AG, one will receive
10 shares in EM.TV Vermögensverwaltung AG, i.e. the new EM.TV.
26 EM.TV Share and Bond.
Norman Normal.

Corporate Governance.
The Management Board and Supervisory Board of EM.TV & Merchandising AG hereby declare that
the recommendations of the German Corporate Government Code dated November 7, 2002 were
met, with the following exceptions:
> Introduction of performance-related remuneration for the Supervisory Board is deferred until
completion of company restructuring (code reference 5.4.5).
> The deadline for publication of quarterly reports (interim reports) is not, at the moment, being
shortened to 45 days after the end of the reporting period (code reference 7.1.2). However, the
Management Board is striving to introduce this recommendation as soon as possible.
> As the Supervisory Board consists of only three members, the formation of committees will not
be undertaken (code references 5.3.1 and 5.3.2).
Furthermore, the Management Board and Supervisory Board of the company declare that the
recommendations of the German Corporate Governance code dated 21.05.2003 were complied
with, with the exception of those stated above and
> observance of the recommendation in reference 4.2.4, para. 2 of the code (individual statements
of remuneration for Members of the Management Board).
> the condition that, in the case of share options, a cap be agreed only on newly issued options
(code reference 4.2.3 section 2, last para.).
Investor Relations Activities.
The primary objective of the company is, in publishing and reporting financial figures, business
events and company strategies for EM.TV, as well as opportunities and risks, to conduct communications
in a detailed, timely and transparent manner. The aim of the company is to strengthen
trust in EM.TV on the part of investors and the general public.
The investor relations activities will be performed for the new EM.TV AG after the merger.
Up-to-date share information, as well as annual and quarterly reports can be found on our internet
homepage at www.em.tv under the heading Investor Relations.
We are also happy to answer questions regarding EM.TV & Merchandising personally.
Call or write to:
EM.TV AG
Investor Relations
Beta-Straße 11
85774 Unterföhring, Germany
Tel. +49 (0) 89 - 99 500 - 436
Fax +49 (0) 89 - 99 500 - 466
E-mail info@em.tv
27

Corporate Strategy.
EM.TV pursues two-pronged strategy in operating
business.
Earlier last year, the Management Board of EM.TV & Merchandising AG took the strategic decision
to expand the operating business of classic entertainment for children and youth markets into
new genres and target groups. This strategy was adopted on recognizing that the marketing of
rights in the entertainment sector for children and young people simply wasn’t going to offer the
company sufficient long-term growth. The acquisition in April 2002 of the European merchandising
marketing rights to the 2006 FIFA World Cup TM – the world’s most important merchandising
rights – defined the direction. During 2003, the company systematically realized acquisition
opportunities in the sports sector, and used them to establish the second central element in
EM.TV’s business operations.
At the end of July 2003, EM.TV & Merchandising AG joined the consortium made up of Karstadt-
Quelle New Media AG and Swiss sports investor Dr. h.c. Hans-Dieter Cleven that, in May 2003,
won the right to acquire TV station DSF Deutsches SportFernsehen GmbH and Germany’s leading
online sport platform Sport1 GmbH from the KirchMedia GmbH & Co. KGaA insolvency grouping.
Via its subsidiary EM-Sport Sportmarketing GmbH, EM.TV holds 50.1 percent in joint holding company
Sport Media Holding GmbH, which, in turn, holds 81.13 percent of DSF and Sport1. This
means that EM.TV has a majority qualifying for consolidation of 40.65 percent in DSF and Sport1.
KarstadtQuelle New Media AG holds 40.48 percent in DSF and Sport1, while Dr. Cleven holds
18.87 percent.
Also in May 2003, EM.TV & Merchandising AG acquired, via its subsidiary EM-Sport Sportmarketing
GmbH, 100 percent of the shares in PLAZAMEDIA GmbH Film- und TV-Produktion from
KirchMedia subsidiary TaurusTV GmbH. PLAZAMEDIA is Germany’s largest production company in
the sports sector.
28 Corporate Strategy.

Vicky the Viking.
Through the acquisitions made in the second quarter of 2003, the EM.TV group is now also in the
position to cover the entire media value chain in the sports sector. Beginning with original license
rights, through in-house productions and adaptations all the way to distribution via in-house TV
and online platforms, EM.TV will offer packaged, networked marketing concepts within this segment,
and thus establish itself as a provider of total integrated solutions within the sports sector.
Business activities in the entertainment segment include the production of high quality programs
for children and youth markets, global management of TV rights and the marketing of merchandising
rights. With its extensive rights portfolio, established know-how in the fields of Production/
Content, TV Sales and Merchandising, as well as its shareholdings in the Junior.TV joint venture
and a host of co-production companies, EM.TV covers the entire value chain. With around 25,000
half-hour episodes of programming for children and young people, the company’s program library
is one of the largest in the world. This business division also incorporates the 45 percent shareholding
in the Tele München Gruppe, whose portfolio includes rights management, production,
merchandising and home entertainment, as well as broadcasting.
Earnings from the core entertainment business and the development of the sports division to
become the second strategic element of business operations are offering EM.TV new marketing
opportunities and sales potential, and thus forming the basis of a group operating business that
is robust in the long term and consistently profitable.
29

Business Unit Report.
1. Entertainment.
Classic children and youth market business.
Classic children and youth market business includes the production of children and youth
programs, the management of TV rights and the marketing of merchandising rights. These elements
form the first core business competence in the three business units Production/Content,
TV Sales and Merchandising/Marketing.
Production/Content.
Quarter one highlights for the Production/Content business unit included the acquisition of TV
rights to the live action series 24Seven. By acquiring this series, produced by British production
studio Granada Kids and aimed at teenagers between the ages of nine and 15, EM.TV has
progressed its strategy to expand its target groups to cover older children and young people. Also
in the first quarter, EM.TV was successful in completing the second season of animation series
Fairy Tale Police Department (F.T.P.D.), which consists of 13 episodes.
In April 2003, the puppet animation series Castillo was awarded the Golden Spatz 2003 in the
animation category. The series is a co-production between EM.TV and animation studio Madbox,
working together with ZDF.
In the second quarter, EM.TV also began production of the third season of animation series Blinky
Bill. The project is being realized by EM.TV subsidiaries EM.TV & Wavery B.V. and Yoram Gross-
EM.TV, together with WDR. The 26 new episodes will be completed by winter 2004 and are planned
to begin screening on WDR and KI.KA at the start of 2005.
32 Business Unit Report. Entertainment.
Flipper & Lopaka.

Among the most important events of the third quarter was the broadcast debut of EM.TV
co-production What about Mimi? on KI.KA at the end of September. In its first screening in
German television, What about Mimi? achieved, within its first four weeks on KI.KA., a market
share of up to 14.4 percent among viewers between the ages of three and 13.
Also at the end of September 2003, EM.TV acquired the TV transmission rights for Germany to
the fifth and sixth seasons of the well-known 2D animation series Franklin from Nelvana Limited.
The fourth quarter began with the launch of the new Tabaluga Christmas movie Tabaluga and
Leo –A Christmas Adventure on DVD and video, as well as in audio format on CD and MC.
Produced by BMG Ariola Miller, they have been available in stores since October 6, 2003. In
December this year, the 70-minute film will celebrate its free TV premier on ZDF. Tabaluga and
Leo – A Christmas Adventure is a co-production from EM.TV and its two subsidiaries EM.TV &
Wavery B.V. and Yoram Gross-EM.TV.
The third season of the Tabaluga animation series was completed at the turn of the year
2003/2004, and began screening on December 27, 2003 on ZDF within the club format
“Tabaluga tivi”. The 26 new episodes featuring the Greenland dragon also made their debut on
KI.KA on February 27, 2004.
By the end of 2003, 13 episodes of the second season of EM.TV co-production Norman Normal
had already been completed.
The black comedy series Creepschool was still in production at the end of the reporting period.
The joint project between EM.TV, Alphanim, Happy Life and CINAR will be completed in summer
2004.
Fourth quarter broadcast debuts included the first screening of the animation series Momo on
KI.KA. One week after its first showing on October 31, 2003, the German/Italian co-production
had already achieved a market share of up to 20.3 percent among the three to 13 year-old target
group with its 7.00 pm slot Monday to Friday.
33

TV Sales.
However, due to its international network of shareholdings and associates, EM.TV was in the position
to compensate partially for falling sales in the key German-speaking markets during the 2003
business year with strengthened sales activities abroad – particularly in Eastern Europe and Asia.
During 2003, when there were no clear program trends in either national or international markets,
EM.TV was also well served by its wide-ranging and extremely diverse program library. It enabled
the company to satisfy the widest possible range of broadcaster requirements, and to take into
consideration local viewing habits. In accordance with ongoing cost savings, TV stations continued
to demonstrate a preference for screening repeats instead of new programs. This meant that
EM.TV was able either to resell or to extend the license period on a large number of productions
that had already been successfully screened.
Towards the end of the year, however, a slightly upwards trend began to emerge. This was the
result of a slowing down in the inflow of new productions and ongoing strong demand for proven
classics.
Highlights of the 2003 business year for the TV Sales business unit included the sale of pay TV
rights to the EM.TV co-production The World of Tosh to British pay TV station Fox Kids UK.
Following agreements with Fox Kids in several countries, EM.TV has been able to expand this relationship
into the British market.
In the first quarter, Austrian broadcaster ORF acquired free TV rights to the series Animaniacs and
The Smurfs, as well as to the 13 th season of the well-known animation series The Simpsons.
EM.TV also licensed 50 episodes of the teenage live action series Sabrina the Teenage Witch to
France 2. On top of this, Chinese TV distributor Network King secured free and pay TV rights to
animation series Maya the Bee, Heidi, Marco and Vicky the Viking.
Amongst the most important new productions presented by EM.TV at the MIPTV trade fair at the
end of March 2003 was the production Tabaluga and Leo – A Christmas Adventure. The 70 minute
film rides on the back of the success of the Tabaluga animation series, and was produced jointly
by EM.TV subsidiaries EM.TV & Wavery B.V. and Yoram Gross-EM.TV. BMG Ariola Miller launched
the special on October 6, 2003 on DVD and VHS, as well as in audio format on CD and MC.
Tabaluga and Leo – A Christmas Adventure will celebrate its free TV premier on ZDF in December
2004.
34 Business Unit Report. Entertainment.

Flipper & Lopaka.
A further highlight of the trade fair was the second season of animation series Norman Normal,
which EM.TV produced jointly with Magma Films and Télé Images. The series will be screened in
Germany on Super RTL.
In the second quarter of 2003, EM.TV successfully achieved several international agreements for
the puppet animation series Bear in the Big Blue House. France 5 acquired the free TV rights to
the first three seasons, while Buena Vista International secured worldwide pay TV rights to seasons
one to four. The third season was also licensed to ZDF.
Third quarter highlights included a free TV agreement in the USA with Univision, Latin America’s
largest media group. The contract encompasses the screening of a one-hour Junior program block
by Univision broadcaster Telefutura Network. Every Saturday and Sunday, the program window
screens series from the EM.TV and Junior library in Spanish.
Also in the third quarter, Swiss national TV station SF DRS acquired the rights to 50 episodes of
the series Sabrina the Teenage Witch, while Farscape IV was licensed to Australian broadcaster
Foxtel. In Spain, EM.TV sealed contracts with two distributors – the company Daniel Sole secured
free TV rights to the first three seasons of Bear in the Big Blue House, while R.B.A. bought pay TV
rights to a range of classics from the Junior program library.
The fourth quarter began with the MIPCOM TV trade fair in mid-October, at which EM.TV was able
to announce a wide-ranging volume contract with pay TV station Television Broadcasts Ltd. (TVB)
of Hong Kong. The agreement envisages a minimum call-off volume of 182 half-hour episodes
from the Junior program library over a period of two years. The selected programs are to be screened
in the form of a Junior program block across TVB’s broadcast area, the islands of Hong Kong.
Further agreements reached in the fourth quarter of 2003 included a license contract with
Universal Studios Networks. The company acquired the screening rights to four seasons of science
fiction series Farscape, to be shown on its pay TV channel SCI FI, which was newly established
in 2003. The rights extend throughout the entire German-speaking region.
Furthermore, EM.TV secured numerous contracts in Spain during the fourth quarter. 75 episodes
of the series Arthur were sold to Television Española (TVE), and Antena 3 secured the rights to the
first two seasons of Sabrina the Teenage Witch. In France, agreements were reached with broadcasters
TF1, Canal J, TF6 and TPS Cinema.
35

Several seasons of Bear in the Big Blue House went to Japanese broadcaster TV Aichi, as well as
to RTE in Ireland. In addition, Italian media group Mediaset bought the rights to Sabrina the
Teenage Witch I and II.
Merchandising/Marketing.
As far as license products are concerned, DVDs, videos and audio products as well as interactive
games, enjoyed sales growth during 2003. In contrast, sales fell in the toys & games sector (e.g.
classic toys, soft toys) and in home & living (e.g. textiles, household goods). Business shifted from
traditional licensing towards marketing co-operations, and intensified use of well-known TV
brands in advertising and point-of-sale promotions. Many producers of branded goods, as well as
specialist retailers, have recognized the potential of classic series and cult programs, and are
making the most of the positive image and recognition of these license topics in order to add emotional
value to their own products.
As in the previous year, EM.TV secured most of its license contracts in the Merchandising
Business Unit during the 2003 financial year with classic children’s topics, such as Maya the Bee,
Vicky the Viking, Heidi and Sesame Street, as well as successful co-productions like Tabaluga and
Rainbowfish.
Among the most important deals of the first quarter 2003 was a license contract between Sony
Ericsson and The Jim Henson Company, in which EM.TV functioned as licensing agent. With this
agreement, the mobile communications provider acquired rights to logos, icons and games
featuring the Muppets for transmission by SMS or MMS.
Due to the celebration of their 30 th anniversary, the Sesame Street characters found themselves
in particularly high demand during the first half of 2003. Highlights included a co-operation with
Deutsche Bahn and TV station NDR. Between April 6 and June 22, 2003, Deutsche Bahn organized
numerous shows and promotional activities featuring Ernie, Bert & Co. at stations in ten major
German cities. A further promotional initiative was organized by Toys ‘R’ Us. The toy store chain
accompanied the 30 th birthday with the sale of numerous license products, and invited children to
celebrate alongside Sesame Street characters in selected outlets of Toys ‘R’ Us.
Also in the first quarter, Xenos-Verlagsgesellschaft secured the license to bedtime stories and
educational books featuring Sesame Street characters, for distribution in book stores.
36 Business Unit Report. Entertainment.

Heidi.
EM.TV issued a Maya the Bee license in the first quarter to Nürnberger Lebensversicherung AG.
The company used the bee for the introduction of its new children’s life insurance policy.
One significant agreement reached in the second quarter was the license contract with Edition XXL.
The publishing house secured rights to picture books featuring Maya the Bee and Vicky the Viking.
In the third quarter, J. Bauer GmbH & Co. KG acquired a license for yoghurt and milk desserts featuring
Maya the Bee in Germany, Austria and Switzerland. Licenses for Sesame Street characters
were issued to United Labels (textile products) and Helmut Lingen GmbH & Co. KG (wall calendars).
At the end of September, EM.TV secured a worldwide license contract with Tatami Schuh GmbH
for children’s shoes featuring Tabaluga. The first children’s sandals will be available in stores as
of April 2004.
In the fourth quarter of 2003, EM.TV succeeded in sealing several license contracts for Tabaluga.
Among the most important agreements was a license agreement with Sanetta Textilwerk Gebr.
Amman GmbH. The textiles producer acquired a worldwide license for children’s clothing featuring
the green dragon. The new collection will be available in stores as of fall/winter 2004.
In a further development, the Teka Europalager und Vertriebs GmbH secured rights to bedding
and towels featuring Tabaluga, for distribution in German-speaking countries. Grocery producer
Chipita extended its license for croissants bearing Tabaluga images, following huge product
success in Austria.
Alongside those for Tabaluga, agreements were also achieved on a range of other EM.TV titles.
Egmont Verlagsgesellschaft mbH secured the paperback rights to manga series Cardcaptor
Sakura, due to be marketed in Germany, Austria and Switzerland. EM.TV licensed children’s footwear
featuring Sesame Street images to Giesswein Walkwaren AG for distribution within Germanspeaking
countries.
In a move that coincided with the 30 th anniversary of the series Vicky the Viking, textile company
Santex acquired the rights to children’s day wear featuring the little Viking. The clothing will appear
on the German, Austrian and Swiss markets.
37

Junior.TV GmbH & Co. KG / Junior Channels.
In the reporting period Junior.TV GmbH & Co. KG was held 50/50 by EM.TV & Merchandising AG
and KirchMedia subsidiary TaurusLizenz GmbH & Co. KG. In March 2004, EM.TV reached agreement
with KirchMedia concerning the takeover of the remaining 50 percent in Junior.TV GmbH &
Co. KG. Via Junior.TV, EM.TV has access to a program library of around 22,000 half hours of high
quality entertainment for children and young people.
Pay TV.
Junior.TV supplies the children and family-oriented Junior pay-TV channel on the Premiere platform.
The channel is available as part of the Premiere Plus or Premiere Komplett packages, or can
be obtained for an individual subscription of two Euro per month in combination with Premiere
Start or any other Premiere package.
Among the most important events relating to the Junior Channel in the 2003 business year, was
the extension in April of Junior’s broadcast time to 24 hours a day. In addition to achieve this, the
programs from the pay TV channel K-Toon, which is also stocked by Junior.TV, were integrated into
Junior.
Since September 2003, Premiere subscribers can not only receive Junior via the Plus-Paket or
through individual subscription, but also via the newly introduced Premiere Komplett package. For
the full year 2003, Junior managed to achieve subscription growth across the various packages
that was well in excess of expectations. Individual subscriptions also developed very well, partially
due to TV commercials on Sat.1. In addition, numerous cross-marketing initiatives were carried
out during the 2003 business year, aimed at the mutual promotion of activities in the Pay-TV,
Internet and Home Entertainment business sectors.
38 Business Unit Report. Entertainment.
Junior, Jaz & Jane.

As well as on Premiere, Junior has also been screened on the platform belonging to Swiss cable
network operator and pay-TV provider Cablecom in Switzerland and Liechtenstein since
September 22, 2003. There, Junior can be received for 9.90 CHF per month via Cablecom’s
“family package”. In order to continually expand the station’s reach, and therefore its turnover
potential, EM.TV is in currently discussions with all relevant cable network operators in the
German-speaking countries.
Home Entertainment.
In view of strong growth during 2003 in the significance of the home entertainment market, and
the associated increase in demand for children’s DVDs, EM.TV and Junior.TV have continued to
expand their activities in these areas of business.
Due to their popularity and high profile, Junior-branded programs for children and young people
met with especially positive feedback during the last year. Thus, EM.TV was able to finalize a
volume contract with Universal Family Entertainment in June that included the exploitation of
popular cult series and classics, such as Vicky the Viking, Little Rascals, Pinocchio, Lassie, Sinbad
and many more in DVD, VHS, MC and CD format. The first series of DVDs, which came to market
at the end of June, encompassed a total of 18 titles, made up of three parts of six different series.
Two further DVD series, as well as a VHS range followed between September and November 2003.
Alongside the wide-ranging volume contract with Universal Family Entertainment, EM.TV also
issued single licenses from the Home Entertainment business unit to video producers and distribution
companies. These included rights to programs such as He-Man and the Masters of the
Universe, The Blue Arrow, Adventures of Tom Sawyer and Dr. Slump.
In summer 2003, video and DVD products distributed by Edel Media & Entertainment under the
Edelkids label received 11 gold, three platinum and five double platinum awards. Titles included
Maya the Bee, Heidi, Pippi Longstocking and Emil in Loenneberga.
39

Internet activities.
Among the highlights in Internet Content business was the launch of the KAMBA online play and
learn domain for children at the CeBIT computer trade fair in March 2003. The supervised children’s
community is a joint project between EM.TV, T-Online and Cobra Youth Communications. It
is split into various online domains for different age groups, and offers all that kids want from the
internet – games, learning hints, help with homework, chat rooms, current affairs, downloads,
e-cards and competitions. KAMBA can be subscribed to individually, as well as within T-Online’s
family package.
In fall 2003, KAMBA was promoted within a wide-reaching advertising campaign that included TV
commercials on Sat.1 and Junior, online advertisements on children’s internet pages, and POS
initiatives at T-Punkt outlets. The commercials were devised and produced by EM.TV subsidiary
PLAZAMEDIA.
Since its launch in March 2003, the virtual children’s world has been continually expanded to
include new content, games and functions. In addition, negotiations for further educational content
were conducted with content providers. Although the market for paid internet content continues
to be difficult, KAMBA subscription numbers have developed positively.
40 Business Unit Report. Entertainment.

Tele München Gruppe.
The Tele München Gruppe (TMG), in which EM.TV holds a 45 percent share, showed a consolidated
turnover of 214 million Euro for the 2003 financial year, equating to a growth of 19.9 percent
over that of the previous year.
In terms of turnover and profit, the Concorde Home Entertainment subsidiary, which is responsible
for video and DVD business within TMG, performed exceptionally well and substantially
exceeded the original budgets set for 2003.
The rental business, represented by Concorde Filmverleih, suffered under the general negative
trend within this market segment. In 2003, movie rentals in Germany experienced a fall in turnover
of 11.5 percent. Concorde Filmverleih performed below plan due to the hot summer, and a
production range that partially failed to meet expectations, and this year, too, made a negative
contribution to group results.
Within the Production Business Unit, contract production Anwälte der Toten on RTL achieved an
excellent market share of up to 25 percent in the 14 to 49 year-old target group. Also in 2003, the
ZDF Christmas special Wintersonne and the cinema production Abgefahren were completed, and
a number of entertainment formats for various German-language broadcasters produced. In order
to strengthen production activities, all TMG production units were merged into Clasart Film- und
Fernsehproduktionsgesellschaft and, since then, produce under the label Concorde Filmed
Entertainment.
In the Broadcasting Business Unit, TMG continued its relationship with RTL II through Tele 5,
which benefited from a very positive stimulus in the second quarter with Big Brother – The Battle.
Both market share and call-in volumes demonstrated highly satisfactory development. In addition,
TMG reached a joint venture agreement with travel company Karstadt-Reisen (45 percent TMG,
55 percent Karstadt-Reisen) to market vacation travel.
In terms of its shareholding portfolio, TMG significantly reduced its stake in Scandinavian TV
station SBS during the 2003 financial year, and disposed entirely of its holding in Canadian production
studio Lions Gate.
41

2. Sports.
DSF.
DSF Deutsches SportFernsehen GmbH has been broadcasting since January 1, 1993, and
provides the largest sports portfolio in German free-TV. Over the past eleven years, the sports TV
station has developed to become a fixed and indispensable major player in the German TV scene,
commanding recognition levels of over 90 percent, as well as full technical coverage across
Germany.
DSF achieves operating break even.
Following the takeover of DSF by the new consortium, the first step was to reposition the TV
station. The focus was on expanding programming with high quality rights and, above all, most
importantly, sports-related formats, in order to be able to re-profile DSF as a male-oriented sports
broadcaster. In so doing, it was possible to reinforce the credibility and expertise of DSF, and to
bring the station back into the relevant set of viewers and advertisers via a clear and specific
sports programming profile. This focus on the station’s core business, as well as slight improvement
in the initially still stagnant advertising market – especially in the last months of the reporting
period – and tight cost management, combined with determined marketing of advertising
time resulted in positive turnover development for the 2003 financial year.
Thus, a little less than half a year after takeover by the new consortium, bringing with it the leadership
of the new management team, DSF is able to report an operating profit (positive EBITDA) for
the full 2003 financial year.
Already in May, DSF achieved outstanding ratings and market shares with the coverage of
Germany’s second soccer league and the UEFA Champions League. The Champions League semifinal
between AC Milan and Inter Milan brought the station top ratings, with up to 2.7 million viewers
at its peak, representing the highest ratings for a football match without German participation
in the station’s history . In the core target group of 14 to 49 year-old males, market share was
at 12 percent. Furthermore, the second quarter was dominated by the live broadcast of the
Monday matches from the German second soccer league. With figures totaling up to 1.6 million
viewers, these claimed the ranking of highest-rating broadcasts. Alongside football, DSF also
achieved very good ratings with the live transmission of tennis from Wimbledon, with average figures
of up to 750,000 viewers.
42 Business Unit Report. Sports.

DSF shows German Premier Soccer League.
At the end of June 2003, DSF achieved a milestone in the broadcasting station's history with the
acquisition of the first rights to highlights from both Sunday matches played in the German
Premier Soccer League. The contract applies to the 2003/2004 season, which began in August,
and included options on both forthcoming seasons in 2004/2005 and 2005/2006 which have,
however, become invalid as a result of the said options not being exercised by the rights marketing
company Infront BuLi GmbH in dealings with DFL Deutsche Fußball-Liga GmbH. Therefore an
issue of rights by DFL to DSF on a similar scope as in the 2003/2004 season is not yet certain
at the present point of time.
DSF continues the positive trend.
The second half saw an increase in advertising income of around 36 percent against that of the
first half of 2003. It was the broadcast of highlights from the Soccer League’s Sunday matches
that had a particularly positive impact on ratings and market share. As early as August, DSF had
achieved a monthly market share of 1.2 percent, representing an increase of 33 percent against
the average monthly market share for the first half of 2003. In the core target group of 14 to 49
year-old males, the TV station turned in a figure of 2.2 percent, equating to a growth in market
share of around 29 percent against the average monthly market share for the first half of 2003.
The start of the Premier Soccer League on DSF also saw the rapid sale of the League-format sponsorships
and special promotions. Deutsche Telekom acquired an extensive key sponsor package
from DSF, encompassing exclusive presenting, advertising blocks, category sponsoring for Bilder
des Tages, as well as advertising inserts in the program Bundesliga – Der Sonntag. Furthermore,
the broadcaster expanded its client portfolio to incorporate further top brands, such as Continental
and Coca Cola.
In the third quarter, DSF acquired transmission rights to the Ice Hockey World Cup 2004/2005 in
The Czech Republic and Austria, the live matches from the German Handball League for the
2003/2004 season and the men’s and women’s European Handball Championship in 2004, as
well as the live matches from the German Basketball League (BBL) for the next two years. In addition,
in the program LaOla, DSF is also showing all the season’s matches of the English, Italian
and French soccer leagues.
43

New formats and top ratings in the fourth quarter.
In October, DSF started the new Olympic magazine Zürich Sports – der Weg nach Athen with presenter
Christian Schenk. In 12 episodes, screened monthly, the 1988 Olympic decathlon champion
is presenting German athletes, organizations and organizers in the run up to the Olympic
Games in August 2004.
Also in October, DSF acquired the rights to the matches played by the German national team in
the FIFA Junior World Cup 2003. The contract encompassed the key competitor sides, the quarter
and semi-final matches and the final of the championship, which took place in the United Arab
Emirates.
Reporting on Formula 1 is a key cornerstone of the DSF program portfolio. In November 2003,
DSF acquired an extensive rights package for the 2004 season that, alongside the one hour race
highlights program on Sundays, also includes the evaluation of both training sessions on Fridays
and qualifying on Saturdays. The total package means that DSF’s coverage of the motorsports’
premium class extends to around six hours.
DSF demonstrated ratings growth in the fourth quarter, too. Highlights of the Sunday matches
played in the German Premier Soccer League brought the station top marks in ratings and market
share. DSF achieved the season’s best figures with a peak of up to 5.08 million viewers
(average total, 4.11 million viewers) and a daily market share of 3.7 percent.
Sport1.
Sport1 GmbH emerged in 1999 from the fusion of DSF online, ran.de, Sportbild.de and the then
leading Sport1, and is now the leading online sports portal in Germany. Alongside advertising and
e-commerce, its key business activities include the sale of sports content for, among others, teletext,
other online providers and the new media sector.
44 Business Unit Report. Sports.

Realization of restructuring measures.
Following takeover by the new shareholders, it was necessary to take a fundamental decision on
the further development of the company. To this end, the consortium analyzed the Sport1 business
model during the weeks following the acquisition and signed off a restructuring plan linked
to a closer working relationship with DSF. The target was to reduce overheads and personnel
costs, while at the same time at least maintaining the breadth of capability and market position.
By the end of December, Sport1 GmbH had successfully fulfilled the implementation of this plan
and thus completed the company restructuring.
Huge growth in coverage and attractive new partnerships.
Following on from a successful co-operation, the online betting service Bet & Win extended its contract
with Sport1 in the second quarter of 2003 for a further year. In terms of visits, Sport1
achieved new top marks in May. The final of the German soccer league, the battle for promotion
in the second soccer league and the outcome of the Champions League gave rise to 7.4 million
visits and around 54 million page impressions to the online sports portal, representing a new
visitor record.
In the third quarter, too, Sport1.de continued to expand its leading market position, increasing its
hit rate by more than 61 percent against the same period in the previous year (24.4 million visits
in Q3/2003 vs. 14.1 million visits in Q3/2002, source: IVW). This growth reflects the quality and
expertise of content presentation, the wide range of issues and clear positioning of Sport1 as
DSF’s online platform. The live ticker reporting of the Tour de France brought Sport.1.de top hit
rates in July. Over 9 million visits and 60 million page impressions further boosted market
leadership.
For the third time in a row, the UEFA Champions League was presented by German brewery
Krombacher. With its European Cup pages, DSF’s online platform generated around 12 million
page impressions, making it one of the most popular sources of internet-based Champions
League reporting in the German-speaking internet.
45

On the strength of its excellent market position, Sport1 was able to secure further attractive partnerships
in the third quarter. The Deutsche Bahn AG was signed up as lead sponsor of the
German Basketball League (BBL) on Sport1.de, as well as taking on lead sponsorship of the BBL
on DSF.
For all soccer fans, Sport1.de showed the highlights of the UEFA Champions League match between
VfB Stuttgart and Glasgow Rangers as an online video. This initiative, carried out in co-operation
with VfB Stuttgart, represented a premiere. It was the first time that the highlights of a UEFA
Champions League match played by VfB Stuttgart had been shown in the internet.
PLAZAMEDIA.
PLAZAMEDIA is Germany’s largest production service provider in the sports sector. The company
offers a wide spectrum of services, ranging from on-site and studio productions, through post-production
(i.e. editing of broadcast material) and broadcast and program management, all the way
to the production of commercials, and services for internet and mobile communication. With the
multifeed broadcasting of Formula 1 and the conference channel for the German Premier Soccer
League on the digital pay-TV platform Premiere, PLAZAMEDIA is setting benchmarks in broadcasting
technology.
2003 was characterized by good capacity utilization at a low price level. In the course of the year,
it was possible to recognize the first signs of a market recovery, thus leading to an increase in
demand for high quality services in studio and on-site production during the second half of the
year.
The framework production contracts, secured in 2002 and spanning several years, with Premiere,
DSF Deutsches SportFernsehen and BuLi/Infront provided for no further price cuts during the
reporting period. In terms of quantity, production volumes met budget expectations and provided
a stable base workload. Emphasis was put, therefore, on structural and organizational measures
to improve customer satisfaction and service quality, as well as to secure a high level of technical
production quality. In spite of ongoing difficult competitive conditions, PLAZAMEDIA was able to
complete the 2003 financial year with a strongly positive result.
46 Business Unit Report. Sports.

Outside production.
Soccer is the largest sports segment in on-site production. The production of all matches in the
German Premier and Second Soccer League form the core element. For the 2003/2004 season,
too, PLAZAMEDIA was tasked once more with the conception, planning and implementation of all
612 matches under contract to BuLi Vermarktungs GmbH. PLAZAMEDIA functioned as producer
for all match footage, which was made available as a base signal to all contracted national and
international broadcasters. On top of this, PLAZAMEDIA is also active as technical service provider
for individual broadcasters. These include Premiere, with conference channel, and DSF with
reporting on the German Second Soccer League (studio broadcast and live matches on Mondays).
With the awarding of the German Soccer League Sunday matches to DSF at the beginning of the
2003/2004 season, PLAZAMEDIA also took on responsibility for the technical services for these
matches, as well as for the studio broadcast on Sundays.
With the Handball (DSF) and Ice Hockey (Premiere) Leagues, as well as Formula 1 (Premiere),
further leagues and series are being produced on a seasonal basis. A number of fight evenings
were produced live for Universum Box Promotion on EUROSPORT and ZDF.
Outside the sports segment, PLAZAMEDIA’s production list included show formats such as
Aidsgala, Deutschlands wahre Helden, Wer zuletzt lacht, LEGO Day and One Hit Wonder.
Studio production.
With its core activities of studio, post-production and program management, studio production
contributed to successful business development in recent months with a whole series of innovations
and contracts.
At the start of the 2003/2004 soccer season, a new studio format was introduced for Premiere.
PLAZAMEDIA realized this plan on a virtual set that also enabled the first use worldwide of a
steadycam in a live broadcast. The technology, developed jointly with WIGE DATA, enabled
Premiere to use new and flexible presentation formats that, for example, enable the integration of
virtual players in the middle of a live broadcast, or the analysis of tactical line-ups.
47

Production of the formats Quatsch Comedy Club and Hausmeister Krause continued for
ProSiebenSat.1. For New Year’s Eve 2003, PLAZAMEDIA also took over complete program
management for interactive channel Neun Live.
The outcome of negotiations on production of the Soccer League as of the 2004/2005 season
will be crucial for the positioning of PLAZAMEDIA. The company is in discussions with all relevant
parties, and considers itself to be well positioned as a result of its successful work in recent years.
As yet, no decision has been reached. However, in the event that it does not receive the contract,
PLAZAMEDIA would require reorientation.
New subject matter with good economic prospects is being driven forward aggressively by
PLAZAMEDIA and quickly realized. In December 2003, PLAZAMEDIA took an interest, in the form
of a strategic partnership, in Europe’s leading high-definition production company, Alfacam N.V.
based in Hove, Belgium. Currently with ten state-of-the-art transmission vehicles and many years
of experience in the broadcast of major events, Alfacam is technically one of Europe’s leading production
companies. PLAZAMEDIA has taken shares in Alfacam in return for its shareholding in
Munich-based Euro-TV Mobil.
In addition, new media and digital channels are already being implemented. New partnerships will
broaden the service portfolio and client potential. Together with a good base workload from the
core business, this forms the foundation for continued successful work, even under difficult, pricedriven
market conditions.
48 Business Unit Report. Sports.

European merchandising marketing rights for
2006 FIFA World Cup.
In April 2002, EM.TV & Merchandising AG took over the European merchandising marketing rights
to the 2006 FIFA World Cup TM . In November 2002, EM.TV brokered, as the first significant agreement
within the scope of a comprehensive contract package, license contracts between rights
owners FIFA and Europe’s largest department store and mail order group KarstadtQuelle AG.
On November 20, 2002, within the scope of its marketing strategy, Karstadt launched a limited,
high quality textile collection featuring official 2006 FIFA World Cup TM license articles in 15 selected
Karstadt stores.
In addition, the generic design of the approximately 350 planned official 2006 FIFA World Cup TM
shops/corners was unveiled on December 2, 2003 in Frankfurt as part of the preliminary draw of
the 2006 FIFA World Cup TM . Networking between all partners involved is guaranteed by the close
working relationship between EM.TV and Karstadt. On this basis, far reaching stimuli are also
being generated for further licensees, who are in the position to benefit from Karstadt’s broad
sales platform.
49

50
Rosenstrasse.
It was with great care and attention to detail that prize-winning film maker Margarethe von Trotta created the drama Rosenstrasse,
an authentic portrayal of Berlin in 1943. The film was an official German contestant at the 60 th Venice Film Festival, where Katja
Riemann was awarded the festival's Coppa Volpi for Best Actress. Since first appearing on the big screen in September 2003,
Rosenstrasse has attracted over 630,000 cinema-goers in Germany alone, and has received numerous national and international
awards. The film was produced by Tele München and Studio Hamburg Letterbox together with Get Reel Productions.

Consolidated Financial Statements and
Annual Financial Statements
from January 1 to December 31, 2003.
Consolidated Financial Statements.
Consolidated Balance Sheet. 2
Consolidated Profit and Loss Account. 4
Consolidated Cash Flow Statement. 5
Analysis of Consolidated Fixed Asset Movements. 6
Changes in Consolidated Equity. 8
Comparative Consolidated Profit and Loss Account. 9
Notes on the Consolidated Financial Statements. 10
Management Report on the Situation of the Group. 43
Auditors’ Report. 54
The release of the annual financial statements to the Supervisory Board was approved by the Management
Board on April 5, 2004. The Supervisory Board of EM.TV & Merchandising AG approved the annual financial
statements on April 7, 2004 and released them for publication.
Annual Financial Statements.
Balance Sheet of the AG. 56
Profit and Loss Account of the AG. 58
Notes on the Financial Statements of the AG. 59
Management Report on the Situation of the AG. 77
Auditors’ Report. 85
On March 5, 2004 the Management Board submitted the annual financial statements to the Supervisory
Board.
The Supervisory Board of the EM.TV & Merchandising AG approved the annual financial statements on
March 5, 2004; they are therefore adopted.
10

Consolidated Balance Sheet.
Fixed Assets
Intangible assets
ASSETS AT DECEMBER 31, 2003 in EUR ‘000
Film and merchandising rights, EDP programs
Goodwill
Advance payments
Tangible assets
Land, property rights and buildings
Technical equipment and machinery
Other property, plant and office equipment
Advance payments and assets under construction
Financial assets
Investments in associated companies
Other investments
Miscellaneous loans
Deferred taxes
Long-term receivables
Inventories
Merchandise
Raw materials and supplies
Work in progress
Advance payments
Receivables and other assets
Trade receivables
Receivables due from associated companies
Receivables due from joint ventures
Other assets
Securities
Other securities
Cash on hand and at banks
Deferred charges and prepaid expenses
Deficit not covered by equity
Note (III)
02 Consolidated Financial Statements. Consolidated Balance Sheet.
1
2
3
4
5
7
6
7
8
9
10
11
12
31/12/2003
271,063
29,546
13,044
2,639
1,715
1,991
33
1,867
65,328
3,125
0
269
302
96,536
4,134
73
29,177
31/12/2003
313,653
6,378
70,320
390,351
10,197
14,280
571
129,920
1,329
127,967
259,787
1,265
24,766
700,646
31/12/2002
473,797
23,004
8,287
505,088
7,529
143
5,852
0
13,524
1,863
81,257
94
83,214
601,826
11,599
19,241
270
374
112
756
110,114
1,468
17,565
32,599
161,746
267
90,578
253,347
782
0
886,795

Equity
EQUITY/LIABILITIES AT DECEMBER 31, 2003 in EUR ’000
Subscribed capital
Contributions made to execute the resolved capital increase
Special reserve
Capital reserve
Equalisation account for foreign currency conversions
Consolidated accumulated loss
Deficit not covered by equity
Contributions in connection with the conversion of bonds
which have not yet been registered
Minority interests
Deferred tax liabilities
Long-term provisions
Long-term interest-bearing liabilities
Short-term provisions
Tax provisions
Other provisions
Short-term liabilities
Bonds
Liabilities to banks
Payments received on account of orders
Trade accounts payable
Liabilities due to associated companies
Liabilities due to joint ventures
Other liabilities
Deferred income and accrued charges
Note (III)
13
14
15
16
15
17
18
19
20
21
22
23
31/12/2003
146,054
0
1,968,527
581
40
-2,139,968
24,766
3,703
26,961
31
80,769
3,967
72,563
6
2,737
53,973
31/12/2003
0
17
7,202
6,903
4,646
435,783
30,664
214,046
1,385
700,646
31/12/2002
145,854
200
1,968,520
598
24,763
-2,010,021
0
129,914
0
7,846
14,587
2,683
422,411
1,487
31,277
32,764
32
137,544
2,830
91,952
8,811
1,939
24,844
267,952
8,638
886,795
39

Consolidated Profit and Loss Account.
Sales
JANUARY 1 TO DECEMBER 31, 2003 in EUR ‘000
Own work capitalized
Inventory level changes - work in progress
Total output
Other operating income
Cost of materials
Expenses for licenses, commissions and materials
Expenses for outside services
Personnel expenses
Salaries
Social security and pension costs
Amortization and depreciation
Amortization of intangible assets and depreciation of
tangible fixed assets
Write-down of current assets as far as these exceed
the usual write-down in the capital company
Other operating expenses
Earnings before interest and taxes
Financial result
Earnings from investments in associated companies and other investments
Earnings from joint ventures
Interest and similar income
Write-downs of financial assets and marketable securities
Interest and similar expenses
Earnings before taxes
Taxes
Taxes on income and earnings
Deferred taxes
Earnings before minority interests
Minority interests
Consolidated net loss for the year
Consolidated net loss brought forward
Withdrawal from special reserve
Consolidated accumulated loss
Consolidated net loss for the year per share undiluted, in Euro
Consolidated net loss for the year diluted, in Euro
Note (IV)
1
2
1/1 to
31/12/2003
-47,494
-147,462
-42,530
04 Consolidated Financial Statements. Consolidated Profit and Loss Account.
3
4
5
6
7
8
9
10
11
12
13
-6,629
-85,481
0
7,031
0
4,104
-289
-48,864
-1,853
5,264
1/1 to
31/12/2003
270,029
2,388
114
272,531
46,863
-194,956
-49,159
-85,481
-86,946
-97,148
-38,018
-135,166
3,411
-131,755
1,808
-129,947
-2,010,021
0
-2,139,968
-0.89
-0.89
1/1 to
31/12/2002
249,923
5,860
-411
255,372
26,748
-68,336
-97,430
-165,766
-32,474
-3,753
-36,227
-93,795
-3,151
-96,946
-71,689
-88,508
44
6,881
7,534
-216,360
-49,754
-251,655
-340,163
22,481
4,276
26,757
-313,406
3,158
-310,248
-1,700,081
308
-2,010,021
-2.13
-2.13

Consolidated Cash Flow Statement.
JANUARY 1 TO DECEMBER 31, 2003 in EUR ‘000
Consolidated net loss for the year
Cost of materials through use of fixed asset disposals
Amortization / depreciation of fixed assets
Gains / losses on disposals of fixed assets
Deferred taxes
Other items wiht no cash effect
Decrease/increase in inventories, trade accounts receivable and other
assets which are not allocable to investment or financing activities
Increase/decrease in provisions
Increase/decrease in trade accounts payable and other
liabilities which are not allocable to investment or financing activities
Minority interests
Cash flow from operational activities
Investments in acquisitions of companies/company shares
Investments in intangible assets
Investments in tangible assets
Investments in financial assets
Proceeds from disposals of intangible assets
Proceeds from disposals of tangible fixed assets
Proceeds from disposals of financial assets
Cash flow from investment activities
Cash flow from changes in liquid funds through deconsolidation
Proceeds from capital increases and allowances by shareholders
Payment of dividends
Repayment of long-term liabilities
Repayment of bonds
Proceeds from receipt of long-term liabilities
Cash flow from financing activities
Cash flow for the year
Net funds at the beginning of the year
Net funds at the end of the year
Effects of foreign currency differences
Changes in net funds
Cash on hand and at banks at the end of the year
Short-term liabilities to financial institutions at the end of the year
Short-term net funds at the end of the year
Changes in liquidity funds (cash on hand and at banks) and short-term securities
Change in short-term bank liabilities
** thereof EUR 7,569 thousand bound for security reasons until 2006 at the latest (2002: EUR 10,544 thousand)
We refer to “Explanations on individual items in the cash flow statement” in section V of these notes.
1/1/ to
31/12/2003
96,791
81,036
-3,826
-5,101
5,312
49,313
2,725
-9,239
-1,808
-321
-59,556
-5,791
-6,516
1,861
2,556
27,708
6
-1,413
-14,937
0
1,868
-46,966
47,573
1,469
1/1/ to
31/12/2003
-129,947
85,256
-40,059
62,349
-14,476
93,070
93,070
1/1/ to
31/12/2002
-310,248
46,162
309,802
225
-3,128
24,255
28,697
-9,022
-32,474
-3,158
51,111
-1,200
-79,432
-2,259
-1,546
13,770
111
6,734
-63,822
2,051
223
-795
-1,449
-27
120
-1,928
-12,588
-37,650
-46,966
3,272
-12,588
128,342 ** 90,578 **
-80,769
47,573
37,764
-56,775
-137,544
-46,966
-37,464
-28,148
Consolidated Cash Flow Statement. Consolidated Financial Statements. 51

Analysis of Consolidated Fixed Assets Movements.
Intangible assets
JANUARY 1 TO DECEMBER 31, 2003 in EUR ‘000 ACQUISITION AND PRODUCTION COSTS
Film and merchandising rights, EDP programs
Goodwill
Advance payments
Total intangible assets
Tangible assets
Land, property rights and buildings
Technical equipment and machinery
Other property, plant and office equipment
Advance payments and assets under construction
Total tangible assets
Financial assets
Investments in associated companies
Other investments
Other loans
Total financial assets
Total fixed assets
1/1/2003
909,648
371,775
8,287
1,289,710
8,503
208
27,522
36,233
14,473
319,975
11,897
346,345
1,672,288
Change in
consolidated
group
-185,626
-273,639
4
-459,261
-2,712
2,771
-20,396
28
-20,309
6
-11,804
-11,798
-491,368
Foreign
currency
differences
-15,144
-25,857
-1,294
-42,295
-266
-1,697
-1,963
8
8
16
-44,242
Other
additions
45,451
14,105
59,556
2,555
897
2,333
6
5,791
2,449
971
3,096
6,516
71,863
Disposals
114,896
33
114,929
2,970
37
917
1
3,925
3,391
252,651
72
256,114
374,968
06 Consolidated Financial Statements. Analysis of Consolidated Fixed Assets Movements.
Transfers
6,705
-6,705
0
0
7,348
7,348
7,348
31/12/2003
646,138
72,246
14,397
732,781
5,110
3,839
6,845
33
15,827
13,539
68,301
10,473
92,313
840,921

Disposals
16,249
28
16,277
465
86
817
1,368
1,046
231,192
232,238
249,883
Other
additions
75,560
2,484
1,353
79,397
1,550
2,201
2,333
6,084
108
-4,553
-4,445
81,036
Foreign
currency
differences
-6,757
-25,860
-32,617
-26
-1,386
-1,412
0
-34,029
Changes in
consolidated
group
-113,330
-282,667
-395,997
438
-56
-16,946
-16,564
-11,803
-11,803
-424,364
1/1/2003
435,851
348,771
0
784,622
974
65
21,670
0
22,709
12,610
238,718
11,803
263,131
1,070,462
79
31/12/2003
375,075
42,700
1,353
419,128
2,471
2,124
4,854
0
9,449
11,672
2,973
-7,348
21,993
450,570
31/12/2002
473,797
23,004
8,287
505,088
7,529
143
5,852
0
13,524
1,863
81,257
94
83,214
601,826
31/12/2003
271,063
29,546
13,044
313,653
2,639
1,715
1,991
33
6,378
1,867
65,328
3,125
70,320
390,351
Transfers
0
0
7,348
7,348
7,348
ACCUMULATED DEPRECIATION NET BOOK VALUES

Changes in Consolidated Equity.
JANUARY 1 TO DECEMBER 31, 2003 in EUR ‘000
Balance 1/1/2002
Withdrawal from special reserve
for repayment of convertible loan
Contribution from conversion
of convertible loans
Capital increase from convertible loans
Currency conversion differences
Consolidated net loss for the year
Balance 31/12/2002
Contribution from conversion
of convertible loans
Capital increase from convertible loans
Currency conversion differences
Consolidated net loss for the year
Balance 31/12/2003
Subscribed
capital
144,081
1,773
145,854
Resolved
capital
increase
1,773
-1,773
200
08 Consolidated Financial Statements. Changes in Consolidated Equity.
200
146,054
200
-200
0
Capital
reserve
1,968,444
76
1,968,520
7
1,968,527
Special
reserve
1,096
-308
-190
598
-17
581
Equalisation
for currency
conversions
50,357
-25,594
24,763
-24,723
40
Consolidated
accumulated
profit / loss
-1,700,081
308
-310,248
-2,010,021
-129,947
-2,139,968
Total
465,670
0
0
86
-25,594
-310,248
129,914
0
-10
-24,723
-129,947
-24,766

Comparative Consolidated Profit and Loss Account.
Ongoing business sectors
Sales
Own work capitalized
Inventory level changes – work in progress
Total output
Other operating income
Cost of materials
Personnel expenses
Amortization and depreciation
Other operating expenses
Earnings before interest and taxes
Financial result
Earnings before taxes
Taxes
Earnings before minority interests
minority interests
Consolidated net loss for the year
EBITDA
EBIT
EBT
Discontinued business sector
Sales
Own work capitalized
Inventory level changes – work in progress
Total output
Other operating income
Cost of materials
Personnel expenses
Amortization and depreciation
Other operating expenses
Earnings before interest and taxes
Financial result
Earnings before taxes
Taxes
Earnings before minority interests
minority interests
Consolidated net loss for the year
income from deconsolidation measures
EBITDA
EBIT
EBT
JANUARY 1 TO DECEMBER 31, 2003 in EUR ‘000
Total company
Consolidated net loss for the year
Consolidated net loss brought forward
Withdrawal from special reserve
Consolidated accumulated loss
1/1/ to
31/12/2003
211,304
2,388
114
26,926
-144,324
-39,120
-82,007
-80,825
58,725
0
0
829
-50,632
-10,039
-3,474
-6,121
1/1/ to
31/12/2003
213,806
-105,544
-38,270
-143,814
3,909
-139,905
2,137
-137,768
-23,537
-105,544
-143,814
58,725
-10,712
252
-10,460
-498
-10,958
-329
-11,287
19,108
-7,238
-10,712
-10,460
-129,947
-2,010,021
0
-2,139,968
1/1/ to
31/12/2002
139,166
5,860
-411
144,615
25,262
-91,105
-15,540
-80,064
-55,833
-72,665
-251,832
-324,497
27,431
-297,066
3,741
-293,325
7,399
-72,665
-324,497
110,757
0
0
110,757
1,486
-74,662
-20,687
-16,882
-15,855
-15,843
178
-15,665
-675
-16,340
-583
-16,923
0
1,039
-15,843
-15,665
-310,248
-1,700,081
308
-2,010,021
Comparative Consolidated Profit and Loss Account. Consolidated Financial Statements. 9

Consolidated Financial Statements
from January 1 to December 31, 2003.
I. GENERAL EXPLANATIONS
1. General information on the group
EM.TV & Merchandising Aktiengesellschaft which is the ultimate parent company has its headquarters in
Betastrasse 11, Unterföhring near Munich in Germany.
The business activities of the group include the following business segments:
> the distribution of television and home video rights and rights in audio, television and music productions,
including merchandising and promotion as well as the production and co-production of films and television
programs. The previous “Rights” segment has been renamed as the “Entertainment” segment.
> production and trade with consumer products. This segment will be discontinued in the future.
> covering the whole media added-value chain in the sports sector, commencing with the original license right
on the production and exploitation of the relevant contents up to the distribution stage by means of the company’s
own TV and online platform. This “Sport” segment replaces the previous “Events” segment which was
discontin-ued following the sale of the investment in Speed Investments Ltd.
All amounts are basically denominated in thousand Euro (EUR ‘000) unless stated otherwise.
All group companies closed their financial year at December 31, 2003 with the exception of Yoram Gross-EM.TV
PTY Ltd., Sydney, Australia, whose financial year ends on June 30, 2004. Interim financial statements were drawn
up on the closing date of the consolidated financial statements in order to make a pro rata temporis allocation.
2. Accounting
Application of International Accounting Standards (IAS)
The consolidated financial statements of EM.TV & Merchandising Aktiengesellschaft and its subsidiaries have
been prepared in accordance with International Financial Reporting Standards (IFRS) and the interpretations of
the Standing Interpretations Committee (SIC) of the International Accounting Standards Board (IASB). As a company
quoted on the stock exchange pursuant to § 292a of the German Commercial Code (HGB), the group parent
company is exempt from preparing consolidated financial statements in accordance with the provisions of §§ 290
et seq. of the German Commercial Code. The consolidated financial statements comply in particular with the
Directive of the European Union on accounting procedures for consolidated financial statements (Directive
83/349/EEC) in accordance with Standard No. 1 of the German Accounting Standards Committee (DRSC). In order
to be comparable with consolidated financial statements prepared in accordance with commercial law regulations,
all the major representations and explanations extend beyond the rulings of the IASB. The group Management
Report has been prepared in accordance with provisions of §§ 290, para. 1 et seq. of the German Commercial
Code.
A schedule of the subsidiaries and joint venture companies included in the consolidated financial statements is
provided in these Notes. The effects of the initial inclusion and/or deconsolidation of subsidiaries and joint ventures
is shown in the Section “Details of the companies consolidated”.
The profit and loss account has been prepared using the cost summary method.
The annual and interim financial statements of the companies included in the consolidated financial statements
are based on the uniform accounting and valuation methods corresponding to the individual business activities.
The preparation of the consolidated financial statements necessitates estimates and assumptions to be made
which affect the value of assets, liabilities and financial obligations on the balance sheet date and also income
and expenses in the report year.
Changes have been made in the accounting and valuation methods based on the “Alternative permissible method”
in accordance with IAS 8.
10 Consolidated Financial Statements. Notes on the Consolidated Financial Statements.

Table 1
Explanations on the major differences between the IFRS consolidated financial statements
and German accounting regulations (§ 292a, para. 2, No. 4b of the German
Commercial Code)
Internally produced intangible assets, especially film and merchandising rights (production and development),
have been capitalized at cost in these IFRS consolidated financial statements insofar as the prerequisites of IAS
38 are met. Capitalization is not permitted under the German Commercial Code, however.
The different valuation of accounts receivables and payable on the balance sheet date as specified by IFRS has
an effect on the consolidated balance sheet. Contrary to the regulations of the German Commercial Code which
prescribes the use of a higher value when stating accounts payable and the use of a lower value when stating
accounts receivable, IAS states accounts receivable and payable designated in foreign currencies at the rate on
the closing date irrespective of the historic rate. Income and expenditure from foreign currency conversions are
correspondingly different in the profit and loss account.
Non-interest-bearing provisions and liabilities and non-interest-bearing long-term provisions and liabilities are stated
at their cash value based on IFRS whereas they are shown at their nominal values or repayment amount based
on the German Commercial Code.
Convertible bonds are shown under equity and external capital based on IAS 32. These allocations are also reduced
by the attributable issue costs. Under the German Commercial Code, it is not allowed to deduct issue costs
and, in order to account for the commitment at the relevant repayment amount, external capital is increased by
the discount which is written off in instalments over the term of the debt in question.
In accordance with IAS 37, provisions are not established if the likelihood of them being used is less than 50%. If
it is unlikely that they will be used, an explanation in the Notes is sufficient.
Deferred taxes are shown on the balance sheet-oriented liability method under IAS 12, according to which temporary
differences are determined by a comparison between the amounts shown in the consolidated financial
statements and the amounts shown in the tax balance sheet.
Under IAS 39, all financial instruments have to be stated and valued. A financial instrument is a contract which
simultaneously gives rise to a financial asset for one company and to a financial liabilities or an equity capital
instrument for the other. However, the aforesaid scope of application excludes shares in subsidiaries, associated
companies and joint ventures which are treated in financial statements in accordance with IAS 27, 28 and 31. IAS
39 prescribes that financial assets are allocated to the categories of “held for trading purposes”, “held up to the
maturity date”, “loans issued by the company” or “financial assets available for sale”. The valuation of financial
assets “held for trading purposes” or “available for sale” have to be adjusted to the relevant current values.
Contrary to the German Commercial Code, a note on the original acquisition costs also has to be made under certain
conditions therefore.
In the case of financial assets “available for sale”, EM.TV has exercised the option right under IAS 39 to record
changes in the current market value against net earnings. The company had no financial assets in the “held for
trading purposes” or “held up to the maturity date” categories on the balance sheet date.
The regulations under IAS 39 differ from the acquisition, realization and imparity principles prescribed by the
German Commercial Code.
Subsidiaries
3. Information on the companies included in the consolidated financial
statements
Subsidiaries are included in the consolidated financial statements by way of a full consolidation with the exception
of the following companies which are stated at their acquisition costs on account of their immateriality as far
as the net asset, financial and earnings position of the group are concerned.
EM.TV USA Inc., USA
The 100 percent holding in EM.TV USA Inc., New York, USA, which was formed on July 25, 2000 with a subscribed
capital of USD 10 (1,000 shares at USD 0.01) has not been included in the consolidated financial statements as
the company has not yet commenced business operations and is immaterial for the purpose of the consolidated
financial statements.
11

SUBSIDIARIES in % Table 1
ACC-Agentur für Communication und Concept Gesellschaft für Public Relation GmbH, Unterföhring
DSF Deutsches Sportfernsehen GmbH, Ismaning
EM.TV & Wavery B.V. Rijswijk, Netherlands
EM.TV France S.A.S., Paris, France (formerly EM.TV Images S.A.S.)
EM.TV Home Entertainment GmbH, Unterföhring
EM.TV Musikverlag GmbH, Unterföhring
EM.TV Publishing GmbH, Unterföhring
EM.TV USA Inc., New York, USA
EM-Sport Sportmarketing GmbH, Unterföhring
EM Supply Handelsgesellschaft mbH i.L., Unterföhring
EM.TV Vermögensverwaltungs AG, Unterföhring
EM.TV Verwaltungs GmbH, Unterföhring
EM.TV Beteiligungs GmbH & Co. KG, Unterföhring
EM-VA Film und TV-Produktions GmbH, Unterföhring
Haffa Inc., Hermosa Beach, USA
Jim Henson Productions Ltd., London, Great Britain
Junior Produktions GmbH, Unterföhring
OM Oktoberfest München, Merchandising, Film und Fernseh GmbH i.L., Unterföhring
PLAZAMEDIA GmbH Film & TV-Produktion, Ismaning
PMM Sports Production GmbH, Ismaning
Produktions-GbR Castillo II, Unterföhring
Produktions-GbR Cocco Bill, Unterföhring
Produktions-GbR Nick & Perry, Unterföhring
Produktions-GbR Tabaluga II, Unterföhring
Produktions-GbR The World of Tosh, Unterföhring
Sport Media Holding GmbH, Essen
Sport1 GmbH, Ismaning
Sport1 Multimedia GmbH, Vienna, Austria
Tabaluga Film- und Fernsehproduktion GmbH, Unterföhring
The Jim Henson Company Inc., Los Angeles, USA
The Jim Henson Company Ltd., London, Great Britain
Capital
holding
100
40.65
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
85
66,5
60
90
65
75
50.1
40.65
40.65
100
100
100
Period included in the consolidated
financial statements
1/1/ to 31/12/2003
30/6/ to 31/12/2003
1/1/ to 31/12/2003
1/1/ to 31/12/2003
1/1/ to 31/12/2003
1/1/ to 31/12/2003
1/1/ to 31/12/2003
not included
1/1/ to 31/12/2003
1/1/ to 31/12/2003
17/11/ to 31/12/2003
17/11/ to 31/12/2003
17/11/ to 31/12/2003
1/1/ to 31/12/2003
not included
1/1/ bis 30/07/2003
1/1/ bis 31/12/2003
not included
31/5/ to 31/12/2003
31/5/ to 31/12/2003
1/1/ to 31/12/2003
1/1/ to 31/12/2003
1/1/ to 31/12/2003
1/1/ to31/12/2003
1/1/ to 31/12/2003
30/6/ to 31/12/2003
30/6/ to 31/12/2003
30/6/ to 31/12/2003
1/1/ to 31/12/2003
1/1/ to 30/07/2003
1/1/ to 30/07/2003
JOINT VENTURE COMPANIES in % Table 2
Euro-TV Beteiligungs GmbH, Unterföhring
Euro-TV Mobil Production GmbH & Co. KG, Unterföhring
Hermes Filmstudio Verwaltungs GmbH, Grünwald
Junior.TV GmbH & Co. KG, Unterföhring
Junior.TV Verwaltung GmbH, Unterföhring
Planeta Junior S.L., Barcelona, Spain
Produktions-GbR Fairy Tale Police Department, Unterföhring
Produktions-GbR Flipper + Lopaka 2, Unterföhring
Tele-München Fernseh GmbH & Co. Produktionsgesellschaft, Munich
Tele-München Fernseh Verwaltungs GmbH, Munich
Tele-München Filmlizenzhandels GmbH & Co. Vertriebs KG, Munich
Tele-München Filmlizenzhandels GmbH, Munich
Yoram Gross-EM.TV PTY Ltd., Sydney, Australia
Capital
holding
50
50
42.75
50
50
50
50
50
45
45
45
45
50
Haffa Inc., USA
The 100 percent holding in Haffa Inc., Hermosa Beach, California, USA, has not been included in the consolidated
financial statements as the company discontinued business operations in 1995 and is immaterial for the purpose
of the consolidated financial statements.
OM Oktoberfest München, Merchandising, Film- und Fernseh GmbH in Liquidation, Unterföhring
The equity of this company amounted to EUR 15,574 at December 31, 2003 (2002: EUR 2 thousand). The company
has not been included in the consolidated financial statements as it is no longer operational.
12 Consolidated Financial Statements. Notes on the Consolidated Financial Statements.
Period included in the consolidated
financial statements
not included
31/05/ to 19/12/2003
1/1/ to 31/12/2003
1/1/ to 31/12/2003
1/1/ to 31/12/2003
1/1/ to 31/12/2003
1/1/ to 31/12/2003
1/1/ to 31/12/2003
1/1/ to 31/12/2003
1/1/ to 31/12/2003
1/1/ to 31/12/2003
1/1/ to 31/12/2003
1/1/ to 31/12/2003

ASSETS, JOINT VENTURES in EUR ‘000 Table 3
Fixed assets
31/12/2003
335,923
Deferred taxes
7,139
Long-term receivables
10,112
Current assets
86,735
Deferred charges and prepaid expenses
73
Total output
FJE Film & TV GmbH, Unterföhring
Lethe GmbH, Grünwald
Tabaluga Coproduktions GbR, Unterföhring
Tele-München Fernseh GmbH & Co. Medienbeteiligung KG, Munich
Table 2
Table 3
Table 4
Table 5
31/12/2002
406,758
5,533
13,345
91,164
58
Deferred taxes
Provisions
LIABILITIES, JOINT VENTURES in EUR ‘000 Table 3
Long-term liabilities
Short-term liabilities
Deferred income
1/1/ to 31/12/2003
110,714
7,052
-84,457
-6,037
-55,969
-22,364
3,277
1,719
-47,065
31/12/2003
2,735
10,505
1,236
138,540
272
31/12/2002
2,972
5,453
3,250
159,349
213
PROFIT AND LOSS ACCOUNT, JOINT VENTURES in EUR ‘000 Table 4
Other operating income
Cost of materials
Personnel expenses
Amortization and depreciation
Other operating expenses
Financial result
Income from taxes
1/1/ to 31/1272002
100,851
12,125
-60,849
-5,478
-48,772
-18,010
-5,157
8,165
-17,125
ASSOCIATED COMPANIES in % Table 5
A capital increase of EUR 15 thousand was made on February 4, 2003 in order to avoid an over-indebtedness position.
The company was dissolved with the shareholders’ resolution of December 10, 2003 and liquidation proceedings
have been commenced.
Joint venture companies
Capital
holding
25
25
66.7
22.28
The joint venture companies are included in the consolidated financial statements by way of a proportional consolidation.
A pro rata consolidation basis has not been used in the case of the following company which is included
at its acquisition cost in view of its immateriality.
Euro-TV Beteiligungs GmbH, Unterföhring
PLAZAMEDIA GmbH Film & TV-Production, a 100 percent subsidiary of EM-Sport Sportmarketing GmbH, has a
50 percent holding in Euro-TV Beteiligungs GmbH. This company is the general partner (Komplementär-GmbH) of
Euro-TV Mobil Production GmbH & Co. KG. It has not been included in the consolidated financial statements in
view of the fact that it otherwise conducts no business activities and is in total immaterial in terms of the group.
This company was transferred to Alphacam N.V., Hove, Belgium on December 19, 2003 together with Euro-TV
Mobil Production GmbH & Co. KG.
Proportional balance sheet amounts attributable to joint ventures
Proportional profit and loss amounts attributable to joint ventures
Associated companies
Associated companies are included in the consolidated financial statements “at equity”.
Period included in the consolidated
financial statements
1/1/ to 7/10/2003
not included
1/1/ to 31/12/2003
1/1/ to 31/12/2003
Tabaluga Coproduktions GbR, Unterföhring
The Articles of Association of Tabaluga Coproduktions GbR provide that all important business decisions are to be
made with a qualified majority (75 percent). EM.TV is not in a position to exercise control therefore. A proportionate
or full consolidation is not possible, therefore. The participation is included at equity even though nominally
EM.TV holds a majority share.
13

Lethe GmbH, Grünwald
This company has not been included in the consolidated financial statements in view of the fact that it is immaterial
in terms of the consolidated financial statements and conducts no business of its own to a very large extent.
The following subsidiaries have been included in the consolidated financial statements
for the first time in 2003:
PLAZAMEDIA GmbH Film & TV-Produktion, Ismaning
100 percent of the share capital of the company was acquired by EM-Sport Sport Marketing GmbH, a 100 percent
subsidiary of EM.TV & Merchandising AG, on May 30, 2003. The company has a share capital of EUR
150.000.
PMM Sports Production GmbH, Ismaning
This company is a subsidiary PLAZAMEDIA GmbH Film & TV-Produktion which holds 85 percent of the capital. The
company has a share capital of EUR 25,000.
Sport Media Holding GmbH, Essen
EM-Sport Sportmarketing GmbH acquired a 50.1 percent holding in Sport Media Holding GmbH with effect from
June 30, 2003. The company has a share capital of EUR 500,000.
DSF Deutsches Sportfernsehen GmbH, Ismaning
This company is a subsidiary of Sport Media Holding GmbH which holds 81.13 percent of the capital. EM.TV &
Merchandising AG has an ultimate holding of 40.65% in this company. It has a share capital of EUR 500,000.
Sport1 GmbH, Ismaning
This company is also a subsidiary of Sport Media Holding GmbH which holds 81.13 percent of the capital. EM.TV
& Merchandising AG has an ultimate holding of 40.65 percent in this company. It has a share capital of EUR
500,000.
Sport1 Multimedia GmbH, Vienna
This company is a 100 percent subsidiary of Sport1 GmbH. It has a share capital of EUR 35,000.
EM.TV Vermögensverwaltungs AG, Unterföhring
EM.TV AG acquired 100 percent of the shares in this company with effect from November 17, 2003 as part of the
restructuring process. It has commenced no business operations of its own since then and has a share capital of
EUR 50,000.
EM.TV Verwaltungs GmbH, Unterföhring
EM.TV AG acquired 100 percent of the shares in this company with effect from November 17, 2003 as part of the
restruc-turing process. It has commenced no business operations of its own since then and has a share capital of
EUR 25,000.
EM.TV Beteiligungs GmbH & Co. KG, Unterföhring
EM.TV AG acquired 100 percent of the shares in this company with effect from November 17, 2003 as part of the
restructuring process. It has commenced no business operations of its own since then and has a share capital of
EUR 100.
The following joint venture was included in the consolidated financial statements for
the first time in 2003:
Euro-TV Mobil Production GmbH & Co. KG, Unterföhring
This is a 50 percent joint venture of PLAZAMEDIA GmbH Film & TV-Produktion with Euro-TV Production GmbH . The
company has been included in the consolidated financial statements on a proportional basis. The share capital
amounts to EUR 701,969.
The following disinvestments were made in fiscal year 2003:
The Jim Henson Comany Inc., Los Angeles, USA
The sale of the company to JHC Holding Company LLC agreed in May 2003 was concluded in the third quarter as
part of the restructuring process. The transaction was executed on July 30, after the ordinary general meeting of
EM.TV & Merchandising AG had approved the sale with a majority of 97.97 percent.
14 Consolidated Financial Statements. Notes on the Consolidated Financial Statements.

DISCLOSURES ON THE EFFECTS OF FIRST-TIME CONSOLIDATIONS in EUR ‘000 Table 6
Fully consolidated companies
PLAZAMEDIA GmbH Film & TV-Produktion
PMM Sports Production GmbH
Sport Media Holding GmbH
DSF Deutsches Sportfernsehen GmbH
Sport1 GmbH
Sport1 Multimedia Holding GmbH
EM.TV France S.A.S. (transitional consolidation)
EM.TV Vermögensverwaltungs AG
EM.TV Verwaltungs GmbH
EM.TV Beteiligungs GmbH & Co. KG
Joint Ventures (proportional)
2003
Euro-TV Mobil Production GmbH & Co. KG
Deconsolidations:
Total
2002
Table 6
Table 7
Net profit/net loss
for the year (before
minority interests)
2,148
211
-13
-654
-295
23
-243
-8
-3
-1
190
Fixed assets and
long-term items
3,268
10
64
8,207
971
187
3
0
0
0
Current assets,
deferred taxes,
deferred charges
Euro-TV Mobil Production GmbH & Co. KG, Unterföhring
The company and the general partner GmbH (Komplementär-GmbH) Euro-TV Beteiligungs GmbH were combined
with Alphacam N.V., Hove, Belgium, with effect from December 19, 2003 by way of a capital increase in kind.
PLAZAMEDIA GmbH Film & TV-Produktion received 5 percent of the shares in the aforesaid company in return.
FJE Film & TV GmbH, Unterföhring
The 25 percent holding in this company was sold to an existing shareholder under the terms of a sale and purchase
contract dated October 7, 2003.
Disclosures on the effects of first-time consolidations
Disclosures on the effects of deconsolidations
18,838
105
354
25,230
2,198
752
1,534
50
25
0
Total assets
22,106
115
418
33,437
3,169
939
1,537
50
25
0
The effects arising from the sale of subsidiaries and joint venture companies on the net asset and financial position
of the group on the balance sheet date, on the profit for the report year and on the corresponding amounts
for the previous year are shown in Table 7.
0
Total liabilities
13,755
380
164
19,974
3,521
790
1,116
3
0
0
EFFECTS OF THE DECONSOLIDATION OF INVESTMENT HOLDINGS in EUR ‘000 Table 7
The Jim Henson Company Inc.
Euro-TV Mobil Production GmbH & Co. KG
FJE Film & TV GmbH
Comparative figures for deconsolidated entities:
Total
The Jim Henson Company Inc.
Euro-TV Mobil Production GmbH & Co. KG
FJE Film & TV GmbH
Comparative figures for deconsolidated entities previous year:
Total
TFC Holding GmbH
Dolce Media GmbH
Sales
58,725
88
0
58,813
110,757
0
0
110,757
0
0
0
Net profit/
loss for the year
7,821
190
250
8,261
-16,923
0
-73
-16,996
-1,847
0
-1,847
Fixed assets
and longterm
items
78,592
113
0
78,705
129,241
0
0
129,241
9,332
0
9,332
Current assets
without deferred
taxes and
deferred charges
31,670
119
0
31,789
37,051
0
0
37,051
10,675
0
10,675
Liabilities
40,546
194
0
40,740
49,448
0
0
49,448
20,396
0
20,396
15

EXCHANGE RATE TO EURO: EUR 1 Table 8
USA USD
Australia AUD
Consolidation methods
All major subsidiaries controlled by the group parent company are included in the consolidated financial statements
in full. Joint venture companies are consolidated in proportion to the relevant shareholding. Holdings in
associated companies are valued on the equity method.
The capital consolidation - consolidation of intercompany shareholdings - is carried out in accordance with IAS 22
by setting off the book values against the proportionate newly valued equity of the subsidiaries at the time of their
acquisition. For this purpose, assets and liabilities are stated at their current value insofar as they can be appropriately
allocated. The remaining differences are capitalised as goodwill and are written off on a straight-line basis
over their estimated useful lives of up to 20 years.
Companies which are no longer classifiable as subsidiaries are not consolidated in full in accordance with IAS 27.
The date of the subsidiary’s departure from the group is regarded as the deconsolidated date. The deconsolidation
is treated in this connection as a disposal of all assets and liabilities attributable to the subsidiary, including
goodwill and debts and the corresponding minority interest. The income and expenses accruing up to the aforesaid
date are included in the consolidated financial statements.
The effects of intercompany transactions have been eliminated. Receivables and liabilities due to or from fully consolidated
companies are set off against each other and existing differences are eliminated by a transfer to operations.
Inter-company profits are eliminated if they are material. Intercompany income is set off against the corresponding
expense.
4. Foreign currency conversions
The balance sheets of foreign group companies are converted in accordance with the functional currency at the
mid-rates on the balance sheet date, with the profit and loss account being converted at the annual average rates
and equity at historic rates. The resulting foreign currency conversion differences and differences arising from the
conversion of the previous year’s figures are included under equity capital with no affect on earnings.
Foreign currency items which are valued during the year on the date of the relevant transaction are basically converted
at the year-end rate in the financial statements of the individual group companies, with the resulting foreign
currency differences being shown directly in earnings.
All cumulative differences arising from the conversion of the equity capital of subsidiary companies resulting from
changes in the conversion rates are set off against each other and are shown separately under equity capital with
no effect on earnings.
The exchange rates of the consolidation currencies in terms of the EUR have changed as follows:
Exchanges rates on the balance sheet date are based on the official mid-rate on the last day of trading in 2003.
In view of the fact that the only company reporting in US Dollars no longer formed part of the consolidated group
on July 30, 2003 (The Jim Henson Company), the above US Dollar rates are based on the rate on the deconsolidation
date.
II. ACCOUNTING AND VALUATION PRINCIPLES
1. Film and merchandising rights, EDP programs
Closing rate Average rate
2003
2002
2003
2002
1.14400
1.04829
1.10499
0.94590
1.67655
1.85663
1.74022
1.73889
These are mainly film rights, merchandising rights and computer software, which are valued at acquisition cost
less standard straight-line and impairment depreciation/amortization and utilization-related disposals. We refer in
16 Consolidated Financial Statements. Notes on the Consolidated Financial Statements.
Table 8

this respect to our comments in the section on “Profit Realization Principles”. Amortization is based on the contractually
agreed term (film and merchandising rights) or the normal useful service life of three years (EDP programs).
A useful life of 20 years is assumed if film and merchandising rights have an unlimited term. These amortization
methods have been applied because film and merchandising rights relating the children’s entertainment have a
particularly long life. Past experience has shown that film rights can be successfully marketed even after many
years. Film rights have been subject to impairment amortization in certain cases.
Production costs for licenses are capitalized and written off in accordance with the same standards such as film
and merchandising rights. The capitalization includes allocable direct costs and overheads.
2. Goodwill
Acquired goodwill and intangible assets are stated at their acquisition cost less accumulated amortization.
Goodwill is the difference between the acquisition cost and the fair value of the identifiable assets and liabilities
acquired on the purchase date. Amortization is charged on the straight-line method over the anticipated useful life
of up to 20 years. An “impairment test” is carried out on goodwill amounts in accordance with IAS 36 if the appropriate
indications are relevant.
3. Tangible fixed assets
Land, leasehold rights and buildings are valued at their acquisition cost less standard depreciation based on an
estimated useful life of 25 years on buildings. Technical plant and equipment, including factory and office equipment,
are valued at their acquisition cost less standard and impairment depreciation. Standard depreciation is
charged on a straight-line basis over a normal useful life of three to ten years. Repair and maintenance work is
normally charged as an expense when it is incurred. Low-value assets up to EUR 410 are written off in full in the
year of acquisition and are treated as disposals in the year of acquisition (this applies to group companies based
in Germany).
In the case of lease contracts in which the group acts as lessee, the leased asset is capitalized and the leasing
liability for the same amount is capitalized if the economic ownership of the leased asset is attributable to the lessee
(financing lessee). This is the case in accordance with IAS 17 if the lessee mainly bears the risks and rewards
in connection with the leased assets associated with the ownership. The capitalization is effected in these cases
at the attributable fair value of the leased asset at the commencement of the lease contract or at the cash value
of the minimum lease payments if the latter is lower. The corresponding lease liabilities are shown in the balance
sheet under long-term interest-bearing liabilities. The interest element of the lease liability is included under financial
expenses with a charge to income over the term of the lease contract.
If the economic ownership of the leased asset is attributable to the lessor (operating lease), the leased asset is
included in the balance sheet of the lessor. Lease payments in connection with operating leases are recorded in
the profit and loss account as other operating expenses on a straight-line basis over the term of the lease contract.
4. Financial assets and marketable securities
Financial assets include participations in associated companies, loans to joint ventures, other investments and
other participations and loans. Participations and marketable securities are allocated to the category of “Financial
assets available for sale” as defined in IAS 39 with the exception of shares in associated companies valued on the
equity method. Loans are classified as “Loans and other receivables granted by the company”.
Management classifies financial assets at the time of acquisition and reviews this classification at regular intervals
with regard to whether the criteria for the classification can be maintained. All purchases and sales of financial
assets are recorded on the relevant trading date. Acquisition costs include the related transaction costs.
Financial assets which are available for sale are subsequently shown at their current market value equivalent to
the stock exchange value on the balance sheet date. Realized and unrealized gains and losses arising from changes
in the current market value of the aforesaid financial assets are shown in the profit and loss account under
“Financial result”.
17

5. Inventories
Raw materials, supplies and merchandise are valued at their acquisition cost, or their estimated lower selling
price, less any costs yet to be incurred (sales-oriented, loss-free valuation). Acquisition and production costs are
valued on the average price method. Slow-moving or obsolete stocks are written off in full.
6. Receivables and other assets
Short-term receivables are stated at cost. Non-interest-bearing monetary receivables with a term of more than one
year are discounted to their current cash value at an annual rate of 5.124 percent p.a. In accordance with IAS 18,
the net value of the transaction and the related financing aspects are taken into account in sales in the consolidated
financial statements.
If there are doubts concerning the collectibility of outstanding receivables, the receivables in question are stated
at their lower realisable value. In addition to the necessary specific bad debt provisions, a general bad debt provision
of 1 percent is applied for general default risks.
The book values correspond approximate their fair values.
7. Cash on hand and at banks
This item includes cash, call deposits at banks and short-term financial investments which are only subject to
immaterial value fluctuations and which have a term to maturity of less than three months. This item also includes
partially available sight deposits which are deposited as security within the scope of guarantees.
Liquid assets are stated at their updated acquisition costs; deposits in foreign currencies are valued at the closing
rate on the balance sheet date and approximate their fair values.
8. Share options
In view of the fact that IAS 19 includes no details rules and regulations in respect of accounting and valuation procedures
for share option plans, the group has based its rules and regulations on US GAAP (APB 25). Since EM.TV’s
share price in the past has never exceeded the strike price, there are no effects on the periodical results of the
group in connection with the grant of share option rights.
9. Provisions
In accordance with IAS 37, provisions include all identifiable obligations to third parties which have arisen in the
past and the settlement of which will probably result in an outflow of funds and if it is possible to make a reasonable
estimate of the amount of the obligation involved.
Provisions are stated at the anticipated payment amount or, in the case of any long-term provisions, at the cash
value of the anticipated payment amount calculated by applying the applicable current market rate of interest if
the interest effect is material.
10. Liabilities
Liabilities are capitalized at their updated acquisition costs. If the interest effect is material, long-term liabilities
bearing lower or no rates of interest are stated at their respective present value when incurred and interest is
accrued on a period basis up to maturity. The carrying values of the monetary liabilities included under this item
are equivalent to their market values.
11. Deferred taxes
The group determines deferred taxes for temporary differences between the book values and tax values of assets
and liabilities and tax loss carry-forwards. Deferred tax assets on temporary deductible differences and tax loss
carry-forwards are only shown to the extent that it can be assumed with reasonable probability that the company
in question is able to generate sufficient taxable income to utilise the deferred tax assets.
18 Consolidated Financial Statements. Notes on the Consolidated Financial Statements.

In accordance with IAS 12.47, deferred tax liabilities are calculated on the basis of the tax rates which are applicable
in the individual countries at the realization date or tax rates to be applied in the future. Deferred taxes
within the group are based on a uniform rate of 37.5 percent.
12. Borrowing costs
Borrowing costs are stated as expenses in the period in which they are incurred.
13. Principles of profit realization
Realization of sales
The group also operates under its own name in trade with TV rights if third party rights are involved. It acquires the
necessary rights from licensors for certain countries and for certain periods unless film exploitation rights are
involved over which the group is already authorized to make dispositions on the strength of co-production agreements
for certain countries. The relevant exploitation rights which may be unlimited in certain cases are normally
acquired for a period of five to 20 years.
On the basis of the transmission and exploitation rights acquired, the group then grants sub-licenses for a limited
period and geographic area to domestic and international customers in Germany and other countries. The main
customers are TV stations. Sales are realised as a sale transaction upon the transfer of exclusive transmission
rights provided the group has performed its major obligations, i.e. provided the serials or TV programs are ready
for transmission and only have to be requested by the TV station. Master tapes for reproduction purposes are provided
at no charge by the group at the request of the licensee; any risks in connection with the master tapes provided
are borne by the respective producer and do not concern the group.
In the light of the above-mentioned conditions, sales are only realised if the following conditions are met:
> if a contract has been signed prior to the balance sheet date;
> if the serials or programs are complete and have been delivered or are ready for delivery;
> if it can be assumed that there are no doubts concerning settlement of the claims;
> if the total amount of the royalty charges is fixed, if it has been agreed with the licensee and if the royalty
is payable by the licensee even if the serials or programs are not broadcasted;
> if the license period has commenced or, if agreed, if formal acceptance has been effected in the case of
cinema films.
If the criteria for a sales transaction are not met, sales are treated as income on an instalment basis.
Distribution and selling commissions for film rights are recorded at the signing of the relevant contracts as our
work has then been performed.
The group operates on the basis of agency agreements in the merchandising sector. Rights owners commission
our group companies as agents to acquire licenses for the license topics in question. The group company is normally
commissioned for approximately three years. The corresponding commission income is recorded when the
relevant agreements have been signed with the licensees.
In the case of sporting events, sales are realised when the event takes place.
Amortization and recording of sales-related expenditure
Trade with TV rights
Film rights included under fixed assets are amortized on a straight-line basis over their estimated useful lives, normally
between 5 and 20 years.
Cinema films
The amortization period may also be much shorter (between one and five years) if film rights are of a short-term
nature and if their exploitation rights are limited, e.g. to the cinema.
19

EM.TV & Wavery B.V.
EM.TV Home Entertainment GmbH
Post-acquisition holding: EM.TV Home Entertainment
Post-acquisition holding: EM.TV Home Entertainment
Junior.TV Verwaltung GmbH
Yoram Gross-EM.TV PTY Ltd.
Tabaluga Film- und Fernsehproduktion GmbH
Tele München Gruppe (TMG)
Post-acquisition EM.TV Publishing GmbH
Planeta Junior S.L.
Sport Media Holding GmbH
Sport1 GmbH
Sport1 Multimedia GmbH
DSF Deutsches Sportfernsehen GmbH
EM.TV Vermögensverwaltungs AG
EM.TV Verwaltungs GmbH
EM.TV Beteiligungs GmbH & Co. KG
Total
GOODWILL Table 9
Acquisition
date
22/12/98
28/09/98
17/08/00
06/10/00
11/12/01/99
03/03/99
26/11/99
01/09/99
25/07/00
20/10/00
30/06/03
30/06/03
30/06/03
30/06/03
17/11/03
17/11/03
17/11/03
Usage-related asset disposals
For establishing the usage and performance-related income and expense items, performance-related disposals
are congruently set off against each other for realizing the relevant sale beyond the depreciation period. Disposals
which also have to be recorded are shown under cost of materials. The method for determining the usage-related
disposal was changed in the report year on the strength of an improved data basis. As far as the exploitation of
cinema films are concerned, a license usage specified in percentage terms and linked with the individual usage
stages has been allocated to the individual exploitation cycles based on historic factors.
“Impairment test” in accordance with IAS 36
In the event of appropriate indications, an impairment test is carried out in accordance with IAS 36, i.e. an examination
on the reductions in value which have occurred to date or, if value reductions have already been taken
into account, an examination is carried out on any possible increases in value. For example, reductions in current
values are based on a substantial reduction in the market value of assets, significant changes in the economic
environment and substantiated indications of obsolescence or any changed earnings expectations. The calculation
of an impairment write-down is based on the calculation of the achievable amount equivalent to the net selling
price or the usable value of an asset whichever is the higher. If the calculation of the achievable amount is
made in the form of the utilizable value of the asset, corresponding cash-flow projections are applied.
III. EXPLANATIONS ON INDIVIDUAL ITEMS IN THE BALANCE SHEET
The development and composition of consolidated fixed assets is shown in the Analysis of Fixed Asset Movements,
attached in the Appendix.
1. Licenses, film rights and EDP programs
Share purchase
price in EUR
‘000, incl.
post acquisition
costs
3,566
56
25
26
13
5,347
7,316
409,261
592
300
11,001
391
1
10,396
54
28
1
448,374
% share
holding
100.00
51.00
24.00
25.00
50.00
50.00
100.00
45.00
36.00
50.00
50.10
40.65
40.65
40.65
100.00
100.00
100.00
Share of
equity
in EUR ‘000
486
52
25
26
11
1,065
177
361,030
286
256
10,934
-377
-40
2,222
50
25
0
376,228
In addition to typical film library business, the group is also involved in the co-production and co-financing of animated
programs. The group currently has 10 programs in various co-production stages. They are normally financed
from the Group’s internal cash-flow or by means of special project loans. We refer to our comments under “Profit
realization principles” with regard to utilization-related disposals of fixed assets.
The impairment test gave rise to accelerated amortization charges of EUR 32,052 thousand (2002: EUR 23,586
thousand) which are included in amortization and depreciation. Value adjustments of EUR 6,238 thousand (2002:
EUR 0) were also made in connection with impairment amortization carried out in previous years.
20 Consolidated Financial Statements. Notes on the Consolidated Financial Statements.
Goodwill prior to
write-downs after
foreign currency
adjustments in
EUR ‘000
3,080
4
0
0
2
4,322
7,139
48,230
305
44
67
768
41
8,174
4
3
1
72,184
Remaining
goodwill after
write-downs in
EUR ‘000
0
0
0
0
0
162
0
20,616
0
24
64
743
39
7,898
0
0
0
29,546

Table 9
Table 10
Table 11
The amortization charges for the year in accordance with IAS 36 are shown separately under “Amortization and
depreciation of intangible assets and tangible fixed assets”.
2. Goodwill
The goodwill amounts attributable to the Group in connection with shares in subsidiaries and joint ventures acquired
in prior years and in the report year are shown in Table 9.
Cumulative amortization on goodwill amounts to EUR 42,700 thousand (2002: EUR 348,771 thousand). The
reduction in goodwill is connected with the deconsolidation of The Jim Henson Company Inc. This included a complete
write-down of the relevant goodwill in the amount of EUR 308,649 thousand.
3. Investments in associated companies
Tabaluga Coproduktions GbR, Unterföhring
With sales of EUR 57 thousand in the fiscal year 2003 (2002: EUR 276 thousand), the company incurred a net
loss for the year of EUR 416 thousand (2002: a net profit off EUR 546). The equity of the company amounted to
EUR 2,040 thousand at December 31, 2003 (2002: EUR 3,105 thousand).
Lethe GmbH, Grünwald
The company only conducts management services and has no operating activities of its own. Its equity amounted
to EUR 40 thousand (2002: EUR 99 thousand) and incurred a net loss for the year of EUR 59 thousand (2002:
a net profit of EUR 4 thousand).
Tele München Fernseh GmbH & Co. Medienbeteiligung KG, Munich
With sales of EUR 0 in the fiscal year 2003 (2002: EUR 0), the company made a net profit of EUR 18,707 thousand
(2002: EUR 15,650 thousand). The equity of the company amounted to EUR 23,954 thousand at December 31,
2003 (2002: EUR 18,707 thousand).
4. Other investments
Other investments mainly include shares in the following companies
> Alphacam N.V., Hove, Belgium
> ATV Privat-TV Services AG, Vienna, Austria
> British Sky Broadcasting Group Plc.; Isleworth England
> FilmFernsehFonds Bayern GmbH, Munich
> GWFF Gesellschaft zur Wahrnehmung von Film- und Fernsehrechten mbH, Munich
> RTL II Fernsehen GmbH & Co. KG, Grünwald
> SBS Broadcasting S.A., Luxemburg
In accordance with IAS 39, these investments have been allocated to the “Available for sale” category and are stated
at their fair value. There were unrealized gains of EUR 2,981 thousand in the report year (2002; EUR 0) on
account of the positive development of share prices.
Shares in SBS Broadcasting S.A. and all the shares in Lions Gate Entertainment Corp. were sold in fiscal year
2003. A total loss of EUR 261 thousand was incurred on a book value disposal of EUR 10,094 thousand. The
investment in Formula1 Holding Company Speed Investment Ltd. was also sold at the book value of EUR 8,500
thousand, together with the investment in Constantin Film AG with a profit of EUR 3,625 thousand. The book value
of Constantin Film AG was EUR 5,750 thousand at the time of sale.
5. Deferred tax assets
Deferred tax assets of EUR 10,197 (2002: EUR 11,599) developed as shown in Table 10.
The development of deferred tax assets based on accumulated losses was as shown in Table 11.
Deferred tax assets are valued using a tax rate of 37.5 percent. They are to be regarded as long-term.
21

DEVELOPMENT OF RECEIVABLES Table 14
in EUR ‘000
Gross receivables
Discount of long-term receivables
Specific provisions for doubtful debts
General provisions for doubtful debts
Net receivables
WORK IN PROCESS Table 12
in EUR ‘000
Contract production
Other services
Total
DEFERRED TAX ASSETS Table 10
in EUR ‘000
Temporary differences in the individual
financial statements
Accumulated losses
Consolidation differences
Allowance
Total
6. Inventories
Total inventories of EUR 571 thousand (2002: EUR 756 thousand) include work in process of EUR 302 thousand
(2002: EUR 112 thousand) and raw materials of EUR 269 thousand (2002: EUR 374 thousand). There were no
merchandise inventories (2002: EUR 270 thousand ).
The book value of raw materials and supplies included at their net selling price amounted to EUR 340 thousand
before provisions which amounted to EUR 71 thousand.
7. Trade receivables
31/12/2003
62
29,626
38
-19,529
10,197
31/12/2003
38
264
302
31/12/2003
168,336
-695
-56,048
-777
110,816
Trade receivables consist as shown in Table 13.
Long-term receivables are defined as receivables with a due date in excess of one year. New receivables arising
during the report year and due after December 31, 2004 have been discounted at a rate of 5.124 percent (2002:
5.865 percent). The basis of this rate is the 3M EURIBOR increased by 300 base points. Discounted long-term
receivables already in existence prior to the report year have been accrued by applying the original interest rate.
The current value of long-term receivables amounts to EUR 14,948 thousand (2002: EUR 19,097 thousand).
The development of receivables is shown in Table 14.
31/12/2002
289
27,345
0
-16,035
11,599
31/12/2002
0
112
31/12/2002
188,550
-1,837
-55,253
-2,105
129,355
EUR 40,663 thousand of the specific bad debt provisions is attributable to receivables from the Victory Media
Group, EUR 2,903 thousand to receivables from Sat.1 Satellitenfernsehen GmbH and EUR 932 thousand to receivables
from Buena Vista International Inc..
22 Consolidated Financial Statements. Notes on the Consolidated Financial Statements.
112
TRADE RECEIVABLES Table 13
in EUR ‘000
Long-term receivables
Short-term receivables
Total
31/12/2003
14,280
96,536
110,816
Table 12
Table 13
Table 14
31/12/2002
19,241
110,114
129,355
RECEIVABLES DUE FROM ASSOCIATED COMPANIES Table 15
in EUR ‘000
Tabaluga Coproduktions GbR
Tele-München Fernseh-GmbH & Co.
Medienbeteiligung KG
Other companies
Total
DEVELOPMENT OF DEFERRED TAX ASSETS Table 11
ON LOSSES CARRIED FORWARD in EUR ‘000
Total
Not accounted for due to
lack of utilization
Total prior to allowance
Allowance
Total
31/12/2003
cumulative
771,917
-742,291
29,626
-19,529
10,097
31/12/2003
1,332
2,029
773
4,134
31/12/2002
cumulative
714,546
-687,201
27,345
-16,035
11,310
31/12/2002
1,347
0
121
1,468

Table 15
Table 16
OTHER ASSETS in EUR ‘000 Table 16
Guarantee payments
Taxation
Advance payments
Suppliers with debit balances
Other assets
Total
8. Receivables due from associated companies
Receivables due from associated companies are made up as in Table 15.
All accounts receivable are due within one year.
9. Receivables due from joint ventures
The receivables due from joint ventures mainly consist of receivables from Planeta Junior S.L. in the amount of
EUR 46 thousand (2002: EUR 135 thousand).
Receivables of EUR 13,192 thousand were shown in the previous year from Junior.TV GmbH & Co. KG. These were
mainly attributable to prior year profit entitlements. The relevant funds have now been received and consequently
there is now a net liability at the end of the report year (cf. II. 21).
10. Other assets
Other assets are summarized as in Table 16.
The guarantee payments mainly include the minimum guarantee payments to FIFA and relate to the marketing of
the 2006 FIFA World Cup Germany. They are reduced by the notified sales. All items are due within one year.
Other assets mainly include receivables from loss participations by third parties, option premiums, receivables
from capital repayments in the case of companies which no longer form part of the consolidated group, together
with amounts recharged to other parties.
11. Securities
Marketable securities are mainly listed securities in the Tele München subgroup which are allocable to the “available
for sale” category in accordance with IAS 39. The balance sheet valuation was adjusted through net income
on account of the new market values on the balance sheet date. There were unrealized gains of EUR 672 thousand
(2002: EUR 660 thousand) attributable to write-ups to fair values. The book values amounted to EUR 935
thousand compared with EUR 267 thousand in the previous year.
Dollar options were taken out in fiscal year 2003 for a total amount of EUR 5,400 thousand. A write-down of EUR
284 has been made in view of the development of the value of the Dollar.
Fixed interest-bearing securities are also held with a term of between one and seven days which are discounted
at the EURIBOR rate. In accordance with IAS 39, they are likewise allocated to the category of ”available for sale”.
The book value at December 31, 2003 amounted to EUR 375 thousand.
12. Cash on hand and at banks
31/12/2003
8,639
5,519
1,998
1,904
11,117
29,177
31/12/2002
11,725
10,612
487
1,499
8,276
32,599
Out of the liquid funds of EUR 127,967 thousand (2002: EUR 90,578 thousand), USD 9,500 thousand equivalent
to EUR 7,569 thousand (2002: EUR 10,544 thousand) were deposited on a blocked account in order to obtain a
payment guarantee by the banks in connection with the 2006 FIFA World Cup Germany.
23

13. Equity
We refer to the analysis of equity changes during the report year.
Nominal capital
The nominal capital of the group parent company at December 31, 2003 amounted to EUR 146,054.116 divided
into 146,054,116 bearer shares.
Following the entry in the Commercial Register of the balance sheet item shown separately on December 31, 2002
with effect from January 30, 2003 - “Contributions made to execute the resolved capital increase” - the nominal
capital was increased to a total of EUR 146,054,116 as a result of the conversion rights in connection with convertible
loans and convertible bonds in the amount of EUR 200,000.
Capital reserve
The capital reserve of the group amounted to EUR 1.968.527.091.84 at December 31, 2003. The exercise of the
conversion rights in connection with convertible bonds resulted in the reserve being increased by EUR 6,884.29
in the report year.
Special reserve
The special reserve amounted to EUR 581,183.28 at December 31, 2003.
Due to the capital increase from internal funds pursuant to the strength of the resolution passed by the shareholders'
meeting on July 22, 1999, the bearers of the convertible bonds were granted new shares with a total arithmetical
value in terms of the nominal capital in excess of the nominal value of the convertible bonds. In accordance
with § 218, clause 2 of the German Companies Act (AktG), a special reserve was formed in the amount of
EUR 5,873,510.48 in order to cover the difference between the issue amount of the convertible bonds and the
higher total nominal amount of the shares covered by subscription options. The subscribed capital is replenished
from this reserve upon the exercise of conversion rights in connection with convertible loans. When convertible
loans are repaid, the corresponding amount of the special reserve is set off against the accumulated loss by
means of an allocation with no effect on net income.
The special reserve was reduced by a total of EUR 16,605.24 to EUR 581,183.38 at December 31, 2003 in connection
with the conversions and loan repayments effected in the 2003 report year.
The remaining amount is earmarked for covering future conversion claims.
Authorized capital
Authorized capital
Based on the resolution of the annual general meeting on July 26, 2000 and subject to the approval of the Supervisory
Board, the Management Board was empowered to increase the share capital by a total of EUR 57,456,257
by means of a single or multiple cash contribution or contribution in kind by July 25, 2005 and to exclude the subscription
right of the shareholders on certain conditions, especially in the event of capital increases for assets in
kind.
Authorized capital II
Based on the resolution of the annual general meeting on July 26, 2000 and subject to the approval of the
Supervisory Board, the Management Board was empowered to increase the share capital by a total of EUR
14,364,064 by means of a single or multiple cash contribution or contribution in kind by July 25, 2005 and to
exclude the subscription right of the shareholders on certain conditions.
Conditional capital
Conditional capital I
After the exercise of conversions rights in connection with convertible loans, the share capital was increased by
EUR 1,304,500 by the issue of new bearer shares. The conditional capital increase is designed to discharge conversion
rights in connection with convertible loans of employees, the issue of which was resolved by the annual
general meeting on September 17, 1997, last amended by the resolution of the annual general meeting on July
22, 1999. The subscription right of shareholders is excluded.
Conditional capital II
The share capital is conditionally increased by a nominal amount of up to EUR 10,862,484 by the issue of new
24 Consolidated Financial Statements. Notes on the Consolidated Financial Statements.

earer shares. The conditional capital increase is designed to discharge option rights, the issue of which was
resolved by the annual general meeting on July 22, 1999. The conditional capital increase will only be effected if
the holders of such option rights exercise their option right. The subscription right of shareholders is excluded.
Conditional capital III
The share capital is conditionally increased by a nominal amount of up to EUR 3,759,642 by the issue of new
bearer shares. The conditional capital increase is designed to discharge conversion rights in connection with the
convertible loan issued in February 2000, the issue of which was resolved by the annual general meeting on
July 22, 1999, last amended by the resolution of the annual general meeting on July 26, 2000. The conditional
capital increase will only be effected if the holders of such convertible bonds exercise their conversion rights.
Conditional capital IV
By the resolution passed in the annual general meeting of July 26, 2002, the share capital is conditionally increased
by a further amount of EUR 53,474,061 for issuing convertible and/or option bonds. The conditional increase
will only be effected if the holders of the option warrants or conversion rights linked with the option or convertible
bonds to be issued by EM.TV & Merchandising AG or a 100% subsidiary company by July 25, 2005 exercise
their option or conversion rights.
Contribution from the conversion of bonds for which the registration is still outstanding
In 2003, conversion rights in respect of convertible bonds were exercised in the amount of EUR 17,500 in connection
with Conditional Capital I. The registration thereof and the resulting increase in the shareholders’ equity
was made in 2004. The stock is fully paid and is made out to bearer.
Stock options
At the annual general meeting of July 22, 1999, the Management Board of the Group parent company was authorised
to establish a share option program for employees and members of the management boards of Group companies.
The total volume covers 10,862,484 option rights. 30% of this total volume is attributable to members of
the management boards/directors and 70% to employees of Group companies. The option conditions (1999 Stock
Option Program) en-visage that a maximum of 50% of the option rights may be exercised at the earliest 2 years
after their issue date and the remaining 50% at the earliest 4 years after their issue date if the pre-tax DVFA earnings
of the Group parent company have risen by an average of at least 15% p.a. in the financial years since the
date of their issue.
By exercising the option right, shares may be bought in a ratio of 1:1 for payment of the base price. The base price
is the average of the closing rates in Xetra trading for the last 10 stock market trading days prior to the issue of
the option right, plus an increase factor of 5% p.a. for the period up to the exercise of the option right. As an alternative,
option beneficiaries may be granted compensation in cash. The option rights must be exercised within 10
years of their date of issue. There is a special termination right if an employee leaves the company and if his option
is not exercised on the dates specified in the option conditions.
As a result of the increasing alignment of International Financial Reporting Standards (IFRS) to the US-GAAP and
on account of a possible disclosure of personnel expenses with no effect on liquidity, the annual general meeting
on July 26, 2000 resolved the following amendment to the stock option plan (Stock Option Program 2000):
As an alternative, the average value of the opening and closing rates of the shares of EM.TV & Merchandising AG
on the Frankfurt am Main stock exchange on the resolution date of the Management Board or the Supervisory
Board on the issue of option rights (reference price) may also be selected as the base price (reference price
method) but at least the pro rata amount of the share capital for one share plus an uplift of 10% on the reference
price as an earnings objective if it is possible to exercise the option rights within 2 years of their date of issue,
or a 20% uplift for option rights which may only be exercised 4 years after their issue date (reference price
method). The rulings for establishing the base price, the price increase factor, the possibility of a cash compensation
and the alignment with the DVFA earnings lapse if the reference price method is applied.
With the reference price method, the rules on the specification of the base price, on the incremental factor, on the
possibility of a cash compensation and the alignment with the DVFA results no longer apply. Based on the annual
general meeting of July 26, 2000, the Management Board is only authorised to issue option rights on the basis of
the reference price method.
Upon exercising the option right, the beneficiary receives ordinary shares in the company, with the shares originating
from the exercise of the aforesaid rights being entitled to share in profits from the commencement of the
financial year in which they originate by exercising the relevant option right.
A total of 399,000 option rights had been issued on December 31, 2003 based on the 1999 stock option program
(2002: 406,500) and a total of 1,757,500 option rights based on the 2000 stock option program (2002:
1,782,500).
25

Tax provisions
Other provisions
600,000 option rights (2002: 400,000) had been issued to members of the Management Board on the balance
sheet date based on the 2000 stock option program at reference prices of EUR 2.28 (a total of 400,000 shares),
EUR 1.29 (a total of 100,000 shares) and EUR 1.60 (a total of 100,000 shares).
Distributions
MATURITY DATES OF PROVISIONS AND LIABILITIES in EUR ‘000 Table 19
Deferred tax liabilities
Total
Previous year
Bonds
Liabilities to banks
Payments received on account of orders
Trade accounts payable
Liabilities due to associated companies
Liabilities due to joint venture companies
Other liabilities
Total
Previous year
DEFERRED TAX LIABILITIES Table 17
in EUR ‘000
Temporary differences on
individual statements
Consolidation differences
Total
As in the previous year, EM.TV & Merchandising AG distributed no dividend in the 2003 fiscal year.
Adjustment item for currency conversions
The adjustment item for currency conversions includes conversion differences arising in respect of the consolidation
of Yoram Gross-EM.TV PTY Ltd., Sydney.
Capital deficit
31/12/2003
The Group shows a capital deficit of EUR 24,766 thousand on the balance sheet date. The equity of the Group
parent company amounts to EUR 65,801 thousand. In view of the fact that half of the nominal capital has been
eroded, the Company held an extraordinary general meeting on February 5, 2004 at which the reconstruction measures
of the Company were notified and resolved.
14. Deferred tax liabilities
6,609
294
6,903
31/12/2002
14,419
168
14,587
Less than
1 year
3,703
26,961
30,664
32,764
31
80,769
3,967
72,563
6
2,737
53,973
214,046
267,952
1 to 5 years
4,646
6,903
11,549
17,270
433,419
1,132
Deferred tax liabilities of EUR 6,903 thousand (2002: EUR 14,587 thousand) have been accrued, with details of
the relevant development being shown in Table 17.
Reference is also made to our comments and explanations on the tax charge. The differences arising from the
consolidation relate to consolidation adjustments with a net income effect.
Deferred tax liability items are summarized as shown in Table 18.
The difference between the change of the temporary differences in the balance sheet and deferred tax income in
the profit and loss account is attributable to foreign currency conversions and relates to temporary differences in
the individual financial statements. The foreign currency difference amounted to EUR 163 thousand.
COMPOSITION OF DEFERRED TAX LIABILITIES Table 18
in EUR ‘000
Convertible bond
Own film productions
Other temporary differences
26 Consolidated Financial Statements. Notes on the Consolidated Financial Statements.
Total
1,127
435,678
419,247
31/12/2003
2,420
1,738
2,745
6,903
More than
5 years
105
105
3,164
Table 17
Table 18
31/12/2002
5,143
6,248
3,196
14,587
Total
3,703
31,607
6,903
42,213
50,034
433,450
81,901
3,967
72,563
6
2,737
55,205
649,829
690,363

Licenses
Losses from onerous contracts
Provision for litigation costs
Provision for personnel expenses
Other accruals and provisions
Total
OTHER PROVISIONS in EUR ‘000 Table 20
Table 19
Table 20
Table 21
Balance
1/1/2003
15.613
1,964
7,523
0
8,860
33,960
Equity portion
Liability portion
Total
Currency
differences
-2
0
0
0
-7
-9
Consolidation
change
-9,389
159
319
979
4,080
-3,852
Utilization
-2,865
-46
-4,559
-304
-1,762
-9,536
Reversal
-1,369
-924
-155
-324
-1,072
-3,844
Allocation
2,359
5,139
2,209
1,372
6,189
17,268
Balance
31/12/2003
3.883
6.292
5.337
1.723
14.372
31.607
CONVERTIBLE LOANS in EUR ‘000 Table 21
15. Provisions and liabilities
31/12/2003
48,238
433,419
481,657
The maturity dates of provisions and liabilities are shown as shown in Table 19.
31/12/2002
48,238
418,979
467,217
Total interest-bearing liabilities due after one year and more than 5 years are to be found in the balance sheet item
“Long-term interest-bearing liabilities” amounting to EUR 435,783 thousand (2002: EUR 422,411 thousand).
Other provisions and accruals are made up of the following items shown in Table 20.
Provisions for licenses have been made for licenses which have not been charged by licensors. The provision for
litigation costs has been made in order to take account of various pending and contingent proceedings. The provision
for personnel expenses is connected the communicated restructuring costs.
Other provisions include costs of EUR 4,530 thousand for restructuring the convertible bond, including costs for
the extraordinary general meeting, and long-term liabilities of EUR 4,646 thousand in connection with vacant office
premises.
The reclassifications relate to a different form of presentation. The amounts previously shown under provisions are
now shown under “Other liabilities”.
16. Long-term interest-bearing liabilities
Convertible bond
Reclassification
-464
0
0
0
-1,916
-2,380
Based on the authorization granted by the annual general meeting on July 22, 1999, a 4 percent p.a. convertible
bond with a nominal value of EUR 400 million was placed on the capital market in February 16, 2000 with a term
of 5 years. The bond has a conversion right under which the holder receives a total of 9.3994 new bearer shares
from Approved Capital III for each EUR 1,000 loan.
February 16, 2005 is envisaged as the repayment date of non-converted bond amounts at an accumulated nominal
amount of EUR 1,172.51 for a nominal bond value of EUR 1,000.00, thereby with an effective return of 7 percent
p.a. upon the issue of the bond.
The Company has no interest rate risks on account of the relevant interest agreement.
The convertible bond has been admitted for trading on the Frankfurt Stock Exchange.
The outstanding nominal value amounted to EUR 399,987,000 at December 31, 2003 after a nominal EUR 13
thousand of the loans had been converted into 118 new bearer shares from Conditional Capital III.
The convertible bond is divided into an equity and external capital component. The external capital component
accumulates interest over the term of the bond up to the repayment amount.
The convertible bond was quoted at a rate of 45.50 percent on December 30, 2003, the last day of trading in
2003, with the fair value of the external capital therefore amounting to approximately EUR 197.2 million at
December 31, 2003 (2002: EUR 142.5 million).
27

Less than 1 year
1 to 5 years
More than 5 years
Total
COMPOSITION AND MATURITIES in EUR ‘000 Table 22
17. Loans
Convertible loan
31/12/2003
80,769
1,132
0
81,901
31/12/2002
137,544
88
408
138,040
LIABILITIES TO ASSOCIATED COMPANIES Table 23
in EUR ‘000
Jim Henson Televison LLC
Tadpole Productions Inc.
FJE Film & TV GmbH
Other companies
Based on the authority granted by the annual general meeting on September 17, 1997, last amended by the resolution
passed by the annual general meeting of July 22, 1999, the Group parent company issued a two percent
p.a. convertible loan to employees and members of the corporate bodies of the Group parent company with a total
nominal value of up to EUR 316,490 and with a term of up to ten years. The related conversion rights into new
bearer shares may be exercised by the holders for 50 percent of the shares from Conditional Capital I no earlier
than two years after the grant of the conversion right and another 50 percent no earlier than four years after the
grant of the conversion right.
The first exercise date for some of the holders was October 28, 1999. By the balance sheet date, December 31,
2003, convertible bonds with a total nominal value of EUR 249,792 had been converted into the envisaged bearer
shares after making the necessary additional payment. Thereof, convertible loans amounting to EUR 895 were
attributable to fiscal year 2003 which were converted into 17,500 bearer shares after the appropriate payment
had been made. The new shares were generated from Conditional Capital I which was reduced to EUR 1,304,500
as a result of the conversions made.
No convertible loans were repaid in fiscal year 2003 and consequently the outstanding balance of the convertible
loan still amounted to EUR 31,316 at December 31, 2003.
18. Liabilities to banks
Composition and maturities
The book values shown in the balance sheet are equivalent to their fair market values in view of the fact that all
bank liabilities bear variable interest at current market rates.
The consolidated financial statements includes loans of EUR 80,769 thousand for financing film productions and
investments. Interest is charged at the customary bank margin above the current EURIBOR rate. The actual maturity
periods of the skeleton loan agreements are between one and 25 months..
The substantial reduction in liabilities to banks is mainly attributable to the planned repayment of the syndicate
loan to EM.TV AG (originally EUR 153,388 thousand) at the end of July 2003 which was used for finance the limited
partner share in Junior.TV GmbH & Co. KG. This loan was shown in the previous year’s balance sheet at an
amount of EUR 48,912 thousand.
Securities
Bank liabilities of EUR 80,769 thousand (2002: EUR 88,625 thousand) are secured by a pledge on license rights
amounting to EUR 43,470 thousand, an assignment of accounts receivable amounting to EUR 69,030 thousand
and pledged investments and securities with a market value of EUR 8,900 thousand at December 31, 2003.
19. Trade accounts payable
The liabilities shown in the balance sheet are not collateralised further with the exception of customary reservations
of ownership. The aforesaid liabilities of EUR 72,563 thousand (2002: EUR 91,952 thousand) are due for
payment in less than one year.
20. Liabilities due to affiliated companies
28 Consolidated Financial Statements. Notes on the Consolidated Financial Statements.
Total
31/12/2003
0
0
0
6
6
Table 22
Table 23
31/12/2002
7,696
471
469
175
8,811

COMPOSITION OF OTHER LIABILITIES in EUR ‘000 Table 24
Outstanding invoices
Commissions and interest
Sales tax liabilities
Miscellaneous taxes and social security
Personnel expenses
Amounts due to outside shareholders
Audit and year-end costs
Short-term miscellaneous loans
Loans in connection with film subsidies
Leasing liabilities
Miscellaneous
Total
Table 24
Liabilities due to associated companies are summarized as in Table 23.
Jim Henson Television LLC and Tadpole Productions Inc. were subsidiaries of The Jim Henson Company and left
the groups of consolidated companies together with their parent company.
In view of the fact that FJE Film & TV GmbH was sold on October 7, 2003, accounts receivable and payable with
this company are shown under trade accounts receivable or payable.
21. Liabilities due to joint ventures
Liabilities due to joint ventures mainly include Junior.TV GmbH & Co. KG in the amount of EUR 1,522 thousand
(2002: EUR 13,192 thousand) and to Produktions-GbR Flipper + Lopaka 2 in the amount of EUR 1,071 thousand
(2002. EUR 368 thousand).
22. Other liabilities
Other liabilities include the following as in Table 24 shown.
The substantial increase in outstanding invoices is attributable to the initial consolidation of the “Sport” companies;
this item also includes costs for the restructuring of the convertible bond.
The increase in commissions, license obligations and interest is explained by the different presentation of shortterm
interest in connection with the 4 percent interest on the convertible bond. This item was previously shown
together with the bond. After the restructuring, this interest liability will have no effect on net income based on the
resolution of the creditors’ meeting held on January 9, 2004.
Personnel expenses relate to commitments and obligations in connection with bonuses, pensions and outstanding
vacation entitlements.
Miscellaneous liabilities include credit balances in accounts receivable in the amount of EUR 3,441 thousand.
23. Deferred liabilities
Deferred liabilities of EUR 1,385 thousand (EUR 8,638 thousand) mainly include film licenses which commence
after the balance sheet date or which extend beyond the financial year. The substantial reduction is attributable
to the deconsolidation of The Jim Henson Company which contributed EUR 8,425 thousand to this item in the previous
year.
IV. EXPLANATORY COMMENTS ON ITEMS IN THE PROFIT AND LOSS ACCOUNT
1. Sales
31/12/2003
18,105
16,757
4,857
3,241
2,795
1,758
525
116
35
0
5,784
53,973
31/12/2002
3,411
1,726
1,718
1,870
4,038
4,746
1,459
3,130
17
713
2,016
24,844
Reference is made to the following segment report in Section VI of these Notes with regard to the classification of
sales.
29

OTHER OPERATING INCOME in EUR ‘000 Table 25
Income from consolidation measures
Exchange gains
Income from the disposal of fixed assets
Income from the write-off of liabilities
Income from the release of miscellaneous provisions
Income from the release of bad debt provisions
Prior year income
Costs recharged
Income from subsidies
Other operating income
Total
2. Own work capitalized
1/1/ to 31/12/2003
19.570
5.036
4.097
3.907
3.844
3.534
3.324
193
63
3.295
46.863
Own work capitalized in the amount of EUR 2,388 thousand (2002: EUR 5.860 thousand) relates to intangible
assets produced internally (film productions). The substantial reduction is attributable to the lower production output.
3. Other operating income
Other operating income items are summarized as in Table 25.
Income from the write-off of liabilities mainly relates to releases of accrued debts which did not materialize in full.
Non-period income results from subsequent amendments of contracts concluded in previous periods or from the
lapse of obligations accounted for in previous years.
Other operating income includes a whole range of items which cannot be allocated to the items shown separately,
namely insurance compensation payments, indemnity payments, suppliers’ reimbursements and other refunds,
inter alia.
4. Cost of materials
Costs for licenses, commissions and materials amounting to EUR 47,494 thousand (2002: EUR 68,336 thousand)
are attributable to payments for licenses and commissions in the amount of EUR 46,945 thousand (2002: EUR
57,879 thousand) and expenses for bought-in goods and other material amounting to EUR 549 thousand (2002:
EUR 10,457 thousand).
Expenses for bought-in services in the amount of EUR 147,462 thousand (2002: EUR 97,430 thousand) are made
up of usage-related fixed asset disposals of EUR 96,790 thousand (2002: EUR 46,162 thousand), production
costs of EUR 44,247 thousand (2002: EUR 39,720 thousand) and for bought-in services amounting to EUR 6,425
thousand (2002: EUR 11,548 thousand).
The substantial increase in usage-related disposals of fixed assets is mainly attributable to the fact that The Jim
Henson Company showed a usage-related fixed asset disposal of EUR 32,714 thousand in the first quarter corresponding
to a sale to Sesame Workshop in connection with a premature execution of a license sale. Expenses also
rose by EUR 13,644 thousand as a result of the amended calculation of usage-related asset disposals in the case
of cinema films. This is, on the one hand, the result of an additional usage-related asset disposal of EUR 22,278
thousand and, on the other, a value increment allocation of EUR 8,634 thousand. The calculation of prior year figures
relating to this change would have been excessively time-consuming.
5. Amortization and depreciation of intangible assets and tangible assets
EUR 2,484 thousand (2002: EUR 2,205 thousand) of the total amortization and depreciation charge of EUR
85,481 thousand (2002: EUR 93,795 thousand) are attributable to the amortization of goodwill.
30 Consolidated Financial Statements. Notes on the Consolidated Financial Statements.
Table 25
1/1/ to 31/12/2002
0
13.353
45
196
3.641
4.936
776
125
279
3.397
26.748

COMPANIES WITH IMPAIRMENT WRITE-DOWNS in EUR ‘000 Table 26
Film portfolio Junior.TV
Film portfolio Wavery
Film portfolio World of Tosh GbR
Film portfolio Cocco Bill GbR
Film portfolio Junior Produktion
Film portfolio EM.TV AG
Film portfolio Nick & Perry GbR
Film portfolio F.T.P.D. I GbR
Film portfolio Flipper & Lopaka 2 GbR
Total
Other write downs
Write-ups
Total
Table 26
Table 27
Standard
amortization
3,464
101
217
40
88
3,211
89
59
67
7,336
52,331
59,667
EUR 32,052 thousand (2002: EUR 23,586 thousand) of the total amortization and depreciation charge relate to
exceptional write-downs made on the strength of corresponding impairment considerations. Asset revaluations of
EUR 6,238 thousand were also made in the report year in connection with write-downs made in previous years.
A discount rate of 6 percent was used for the impairment calculation.
The impairment write-downs of film assets were necessary on account of the continued deterioration of the market
situation in the German and worldwide pay- and free-TV market and the inherent lower exploitation value of the
assets concerned, together with an realignment of marketing objectives in the children and youth program sector.
The summary shown in Table 26 provides details of the companies whose intangible assets have been subject to
an extraordinary write-down based on an impairment test.
6. Other operating expenses
Impairment
write-down
13,897
6,193
3,174
2,579
2,036
1,435
1,284
850
604
32,052
-6,238
25,814
Other operating expenses are made up of the following items of Table 27.
Total
write-down
17,361
6,294
3,391
2,619
2,124
4,646
1,373
909
671
39,388
52,331
-6,238
85,481
Residual
book value
32,750
2,922
1,618
407
177
24,915
254
218
819
OTHER OPERATING EXPENSES in EUR ‘000 Table 27
Legal, consultancy and year-end costs
Advertising and travelling expenses
Losses arising from write-downs of current assets,
disposals of current assets and additions to bad debt provisions
Rental, repair and maintenance expenses
Exchange losses
Expenses in connection with incomplete contracts
Non-period expenses
Freelancer, other personnel expenses
Administration expenses
Insurance expenses and dues
IT costs
Costs of sales
Vehicle expenses
Losses on the disposal of fixed assets
Bank charges
Expenses from the deconsolidation of companies
Other expenses as part of ordinary business
Total
1/1/ to 31/12/2003
29,993
11,533
9,315
7,796
5,198
5,139
3,011
2,736
2,537
2,036
1,373
780
521
271
147
0
4,560
86,946
64,080
1/1/ to 31/12/2002
11,948
10,238
15,841
7,222
7,003
46
2,773
2,977
3,783
2,102
763
1,065
403
270
394
1,967
2,894
71,689
31

EARNINGS FROM INVESTMENTS IN ASSOCIATED COMPANIES in EUR ‘000 Table 28
Earnings from associated companies
Investment income from EM.TV AG
Investment income/expenses from Tele München Gruppe
Investment income/expenses to other companies
Earnings from other participations
Investment income from EM.TV AG
Value adjustment in connection with EM.TV AG
Value adjustment in connection with Tele München Gruppe
Total
The substantial increase in expenses for legal and consultancy costs was mainly caused by the one-off expenses
of EUR 9,854 thousand for the restructuring of the convertible bond and EUR 9,590 thousand in connection with
the sale of The Jim Henson Company.
As was also the case in 2002, the losses incurred on write-downs and bad debt provisions for current assets reflect
the ongoing difficult economic situation of the market in the media environment and the increased need to make
appropriate value adjustments.
7. Earnings from investments in associated companies and other participations
Income and expenses in connection with investments in associated companies and other participations are summarized
as in Table 28.
8. Earnings from joint ventures
In compliance with the Articles of Association of Junior.TV GmbH & Co. KG, any net profit for the year is exclusively
attributable to EM.TV AG until an amount equivalent to the investment is reached on the basis of the aforesaid
or by imputable participations in favor of EM.TV & Merchandising AG. The share of profits exceeding the pro rata
share received in the financial year 2002 in accordance with the special profit distribution agreement amounted
to EUR 6,881. Junior.TV GmbH & Co. KG incurred a loss in the current report year.
9. Interest and similar income
Interest and similar income amounting to EUR 4,104 thousand (2002: EUR 7,534 thousand) is mainly attributable
to income from interest accrued on accounts receivable in the amount of EUR 1,464 thousand (2002: EUR
2,040 thousand) and interest of EUR 2,640 thousand (2002: EUR 4,886 thousand) on bank credit balances.
10. Write-down of financial investments and marketable securities
The write-downs of financial investments and marketable securities in the amount of EUR 289 thousand (2002:
EUR 216,360 thousand) was exclusively attributable to the valuation of securities held under current assets. In
the previous year, this item mainly included the write-down of EUR 195,791 thousand on the Formula 1 investment.
11. Interest and similar expenses
Interest and similar expenses are made up of the following items of Table 29.
1/1/ to 31/12/2003
0
1,934
63
476
941
3,617
32 Consolidated Financial Statements. Notes on the Consolidated Financial Statements.
7,031
Table 28
Table 29
1/1/ to 31/12/2002
99
-145
90
0
0
0
44

INTEREST AND SIMILAR EXPENSES in EUR ‘000 Table 29
Interest on convertible bond
Interest on the syndicated loan
Other interest and similar expenses
Total
1/1/ to 31/12/2003
44,438
4,064
362
48,864
1/1/ to 31/12/2002
41,626
4,267
3,861
TAX RECONCILIATION STATEMENT (IAS 12.81) in EUR ‘000 Table 30
Loss before income taxes
Anticipated taxes by tax rate of 37.5 percent (2001: 37.5 percent)
Non-applied deferred taxe assets on losses carried forward
Write-down of deferred taxe assets on losses carry forwards
Non-deductible goodwill amortization in the Group
Non-deductible write-downs of shares in joint stock corporations
Effects of deviating tax rates of foreign subsidiaries
Non-period tax income / tax expenses
Tax-free income
Other effects
Actual taxes
Effective tax rate in percent
Table 30
Table 31
12. Taxation expenses
Tax reconciliation statement (IAS 12.81)
1/1/ to 31/12/2003
-135,166
50,687
-55,090
-3,494
-361
0
-497
722
8,681
2,763
3,411
-2.5
49,754
1/1/ to 31/12/2002
-340,163
127,561
-44,084
-3,347
-2,376
-81,517
750
23,930
0
5,840
26,757
-7.9
CONSOLIDATED EARNINGS PER SHARE Table 31
Consolidated loss for the year
Average number of shares issued
Average number of convertible and option rights issued
Consolidated loss per share undiluted
Consolidated loss per share diluted
The anticipated tax rate (37.5 percent) has been calculated in the amount of the corporation tax (25 percent), plus
the solidarity surcharge (5.5 percent of the corporation tax) and the corresponding trade tax on income (11.1 percent).
Current and deferred taxation
The income tax calculation is based on the tax laws in force in the financial year. An anticipated average tax rate
of 37.5 percent has been used for calculating deferred taxes. This takes account of the different national tax rates
and assumes that the calculated rate will probably apply upon the materialization date of the relevant deferred
taxes.
13. Consolidated earnings per share
1/1/ to 31/12/2003
129,947 thousand
146,037,130 shares
6,603,531 shares
EUR 0.89
EUR 0.89
1/1/ to 31/12/2002
310,248 thousand
145,407,223 shares
7,687,765 shares
EUR 2.13
EUR 2.13
Based on IAS 33.40, the calculation of the diluted consolidated annual loss per share shows the same results as
the calculation of the undiluted consolidated annual loss per share. Possible effects arising from the issue of convertible
bonds and share options have not been taken into account as they counteract any dilution.
33

Intangible assets
Tangible assets
OUTFLOW OF FUNDS ATTRIBUTABLE TO ACQUISITIONS in EUR ‘000 Table 34
Financial Investments
Total fixed assets
Inventories
Trade accounts receivable
Receivables due from joint ventures
Other assets
Cash and cash equivalents
Current assets
Deferred tax assets
Deferred charges and prepaid expenses
Assets
Minority interests
Tax provisions
Other provisions
Long-term interest-bearing liabilities
Long-term non-interest-bearing liabilities
Trade accounts payable
Liabilities due to joint ventures
Other liabilities
Deferred income and accrued charges
Liabilities
Net assets
Goodwill
Purchase price
INFLOW/OUTFLOW OF FUNDS FROM ORDINARY OPERATIONS in EUR ‘000 Table 32
Proceeds from interest and similar income
Payments for interest and similar expenses
Acquired liquid funds
Outflow of funds attributable to acquisitions
1/1/ to 31/12/2003
3,128
-23,237
690
5,865
6
6,561
96
27,422
64
1,917
16,753
46,252
43
1,385
2,657
640
8,021
12
933
15,405
303
17,189
1,065
134 Consolidated Financial Statements. Notes on the Consolidated Financial Statements.
1/1/ to 31/1272002
6,783
-24,128
INFLOW/OUTFLOW OF FUNDS ATTRIBUTABLE TO TAX PAYMENTS in EUR ‘000 Table 33
Payments for taxes on income
Proceeds from tax refunds
V. EXPLANATIONS ON INDIVIDUAL ITEMS IN THE CASH-FLOW STATEMENT
1. Inflow/outflow of funds from ordinary trading activities
1/1/ to 31/12/2003
-137
1,716
The cash flow from ordinary trading activities calculated on the indirect method includes the items of Table 32.
2. Inflow/outflow of funds attributable to tax payments
Table 32
Table 33
1/1/ to 31/12/2002
10
15,763
54,241
46,225
8,016
9,058
17,074
-16,753
321

Tangible assets
Inventories
OUTFLOW OF FUNDS ATTRIBUTABLE TO DISINVESTMENTS in EUR ‘000 Table 35
Accounts receivable
Other assets
Cash and cash equivalents
Deferred charges and prepaid expenses
Assets
Foreign currency change difference
Minority interests
Miscellaneous provisions
Deferred tax liabilities
Long-term loans
Trade accounts payable
Other liabilities
Liabilities and provisions
Fair value of net assets
Loss
Net purchase price
Remaining profit
Inflow of liquidity
Outflow of liquidity
Less short-term bank loans and overdrafts
Outflow of funds attributable to disvestments
Table 34
Table 35
3. Outflow of funds attributable to acquisitions
73,009
9,696
15,304
1,408
14,417
661
-16,226
-83
-11,873
-1,138
-2,593
-3,324
-21,812
The outflow of funds attributable to acquisitions consists of the items of Table 34.
4. Outflow of funds attributable to disinvestments
114,495
-57,049
57,446
-57,446
76,766
19,320
76,766
-14,417
0
62,349
The amounts stated include fully and proportionally consolidated companies and are equivalent to the respective
fair values as all hidden reserve have been released as part of the transition to IFRS accounting.
VI. SEGMENT REPORTING
1. New segmentation
The following segment changes were made in the EM.TV Group in the reporting period from January 1 to December
31, 2003.
The former “Rights” segment has been changed to the “Entertainment” segment. The following activities have
been combined in this segment: the production of high-class children and youth programs, worldwide trade with
TV rights and the marketing of merchandising rights. The 45 percent investment in Tele München Gruppe which
includes trade with rights, production, merchandising, home entertainment and broadcasting, together with the
co-production companies, are allocated to this segment.
351

Sales after discounting charges
Own work capitalized
Change in work in process
Other segment income
Segment expenses
> thereof amortization and depreciation
> thereof impairment write-downs
Segment results
SEGMENT INFORMATION BY BUSINESS SECTORS FROM 1/1/ TO 31/12/2003 in EUR ‘000 Table 36
Period results of associated companies
and earnings received from joint ventures
Non-allocated operational elements
Write-down of financial assets and marketable securities
Interest expenses
Interest income
Results from ordinary business activities
Other segment information:
Segment assets
Non-allocated elements
Assets of the group
Segment liabilities
Non-allocated elements
Liabilities of the group
Segment investments
Entertainment
179,621
2,388
114
40,403
-319,451
-80,784
-25,814
-96,925
136 Consolidated Financial Statements. Notes on the Consolidated Financial Statements.
7,031
517,397
130,659
70,022
Consumer
Products
770
0
0
588
-1,576
0
0
-218
With the acquisition of PLAZAMEDIA, DSF, Sport1 and their subsidiaries, the Sport segment was developed as the
second strategic pillar of the Group. With the various activities within this segment, EM.TV is now able to cover the
whole medial value-added chain. This commences with the original license right and extends to internal production
and implementation through its own TV and online platform.
This segment replaces the previous Events segment which has been discontinued with the sale of the financial
investment in Speed Investments Ltd.
The Consumer Products segment which includes the commercial sales and production merchandise goods has
been discontinued as explained in the following Section under “Discontinuation of Business Sectors”.
From a regional point of view, a sub-division has been made into German-speaking, Rest of Europe, USA/Canada
and Rest of the World segments. The USA/Canada segment was discontinued with the sale of The Jim Henson
Company.
2. Discontinuation of business sectors
At the Annual General Meeting of EM.TV AG held on July 31, 2002, the Management Board, with the approval of
the Supervisory Board, notified its intention to sell The Jim Henson Company which constituted out business sector
in the USA d Canada. The sale of The Jim Henson Company is designed to repay the Junior loan in full and to
secure the liquidity of the EM.TV Group on an ongoing basis. A binding sale agreement was signed with the heirs
of the company founder Jim Henson on May 7, 2003. The sale was approved by the Annual General Meeting held
on July 23, 2003. The sale was concluded on July 30, 2003.
The cash inflow from the operational activities of The Jim Henson Company amounted to EUR 24,697 thousand
(2002: EUR 10,748 thousand) up to the deconsolidation date, the cash outflow from investment activities to EUR
965 thousand (2002: inflow of funds of EUR 17,166 thousand) and the cash outflow from financing activities to
EUR 343 thousand (2002: EUR 3,093 thousand).
1,084
233
0
Sports
89,638
0
0
5,872
-95,515
-4,697
0
-5
76,882
35,346
1,841
Group
270,029
2,388
114
46,863
-416,542
-85,481
-25,814
-97,148
7,031
-289
-48,864
4,104
-135,166
595,363
105,283
700,646
166,238
534,408
700,646
71,863

External sales (gross)
Discounting of receivables
Sales after discounting charges
Own work capitalized
Change in work in process
Other segment income
Segment expenses
> thereof amortization and depreciation
> thereof impairment write-downs
Segment results
SEGMENT INFORMATION BY BUSINESS SECTORS FROM 1/1/ TO 31/12/2002 in EUR ‘000 Table 37
Period results of associated companies
and earnings received from joint ventures
Non-allocated operational elements
Write-down of financial assets and marketable securities
Interest expenses
Interest income
Results from ordinary business activities
Other segment information:
Segment assets
Non-allocated elements
Segment assets of the group
Segment liabilities
Non-allocable elements
Segment liabilities of the group
Segment investments
Table 36
Table 37
Rights
248,488
-46
248,442
5,860
-118
26,391
-367,006
-96,308
-23,586
-86,431
Group
249,969
-46
249,923
5,860
-411
26,748
-370,628
-96,946
-23,586
-88,508
6,925
-216,360
-49,754
7,534
-340,163
791,982
96,077
886,795
172,974
583,907
756,881
83,936
The Management Board also resolved and announced on May 6, 2003 that EM-Supply GmbH, Unterföhring, would
be liquidated and that the previous “Consumer Products” segment would be discontinued.
The carrying value of the assets pertaining to EM-Supply GmbH amounted to EUR 1,084 thousand (2002: EUR
2,031 thousand) at December 31, 2003 and the carrying value of liabilities to EUR 2,985 thousand (2002: EUR
2,249 thousand). EM Supply GmbH generated sales of EUR 770 thousand (2000: EUR 1,481 thousand) in 2003
and the related expenses to EUR 1,765 thousand (2002: EUR 3,365 thousand). On group level, EM Supply GmbH
made an operating loss of EUR 1,080 thousand (2002: EUR 1,173 thousand). The related real and deferred tax
charge amounted to EUR 683 thousand (2002: EUR 644 thousand tax income).
The cash inflow from the operating activities of EM Supply GmbH amounted to EUR 510 thousand in 2003 (2002:
cash outflow of EUR 18 thousand), the cash inflow from investment activities to EUR 2 thousand (2002: cash outflow
of EUR 3 thousand) and the cash outflow from financing activities amounted to EUR 0 (2002: EUR 0).
With the sale of the investment in Speed Investments Ltd, St. Helier, Jersey, Channel Islands on May 5, 2003, the
“Events” business sector was discontinued. In view of the fact that Speed Investments Ltd. had already been held
as a financial investment in 2001, no figures are included for this business sector in the current year, nor in the
whole of 2002.
3. Segment Information by Business Sectors
Segment information by business sectors January 1 to December 31, 2003
All associated companies consolidated in accordance with the equity method are considered in the Entertainment
segment.
Segment information by business sectors from January 1 to December 31, 2002
All associated companies consolidated in accordance with the equity method are considered in the Rights segment.
Sales and income between the business sectors are basically performed at arm’s length prices.
Administrative services are charged as a cost allocation.
6,925
790,718
172,390
83,933
Consumer
Products
1,481
0
1,481
0
-293
357
-3,622
-638
0
-2,077
0
1,264
584
3
Events
373

SEGMENT INFORMATION BY REGIONS FROM 1/1/ TO 31/12/2003 in EUR ‘000 Table 38
Sales after discounting
Period results of associated companies and other investments
Segment assets
Segment investments
Sales after discounting
Period results of associated companies and other investments
Segment assets
Segment investments
4. Segment information by Regions
The allocation of sales and assets to the individual regions is made on the basis of the geographical domicile of the
group companies.
Segment Information by Regionsfrom January 1 to December 31, 2003
Segment Information by Regions from January 1 to December 31, 2002
VII. CONTINGENT LIABILITIES AND OTHER FINANCIAL COMMITMENTS
1. Rental and leasing commitments
The company rents, hires and leases offices, storage space and equipment. The contracts have outstanding terms
of between 1 and 7 years. The total expenses based on the aforesaid contracts amounted to EUR 7,693 thousand
(2002: EUR 4,829 thousand). The increase in obligations is mainly attributable to companies involved in the Sport
segment and especially by the broadcasting costs incurred.
The main rental and leasing contracts are allocable to the “operating lease” category as defined in IAS 17.
The minimum obligations for non-terminable contracts at December 31, 2003 are shown in Table 40
The company also has financial obligations in connection with rental and leasing contracts within the scope of joint
ventures as shown in Table 41.
2. Guarantees and warranties
Germanspeaking
203,041
7,040
578,054
62,483
Rest of
Europe
5,815
0
12,392
3,387
USA and
Canada
58,725
0
0
4,758
The guarantees and warranties amounted to EUR 35,799 thousand at December 31, 2003 (2002: EUR 2,688
thousand).
138 Consolidated Financial Statements. Notes on the Consolidated Financial Statements.
Rest of
the world
2,448
-9
4,917
1,235
Total
270,029
7,031
595,363
71,863
SEGMENT INFORMATION BY REGIONS FROM 1/1/ TO 31/1/2002 in EUR ‘000 Table 39
RENTAL AND LEASING CONTRACTS Table 40
in EUR ‘000
Due within one year
Due between one and five years
Due after five years
Total
31/12/2003
16,766
54,872
4,499
76,137
31/12/2002
4,459
11,943
15,647
32,049
Germanspeaking
133,308
6,925
603,400
66,487
Rest of
Europe
4,836
0
17,030
96
USA and
Canada
110,757
0
166,293
14,835
Rest of
the world
1,022
0
5,259
2,518
31/12/2003
11,877
16,568
0
28,445
Total
249,923
6,925
791,982
83,936
RENTAL AND LEASING CONTRACTS Table 41
WITH JOINT VENTURES in EUR ‘000
Due within one year
Due between one and five years
Due after five years
Total
Table 38
Table 39
Table 40
Table 41
31/12/2002
4,692
12,524
0
17,216

EM.TV assumed the customary guarantees and assurances as part of the sale of The Jim Henson Company. The
expiry period for guarantee claims is normally 24 months with effect from the execution of the sale (July 31, 2003).
This excludes guarantees, especially for the legal circumstances of the company and for taxation and environmental
matters. The liability of EM.TV & Merchandising AG is limited to a total amount of USD 35 million.
In the event of any over indebtedness of the associated companies Junior Produktions GmbH, EM-Supply
Handelsgesellschaft mbH in liquidation and EM-Sport GmbH, all in Unterföhring, and EM.TV France S.A.S., Paris,
the group parent company has issued letters of comfort and/or financing commitments in which it undertakes to
structure the aforesaid companies financially in such a way that they are able to settle their obligations in an orderly
and proper manner. These commitments amounted to EUR 904 thousand on the balance sheet date (2002:
EUR 2,098 thousand).
3. Contingent liabilities
Contingent liabilities amounted to EUR 1,000 thousand on the balance sheet date (2002: EUR 2,300 thousand).
In the case of Tele München Gruppe, there is an obligation to make contributions amounting to a maximum of EUR
9,343 thousand based on the Articles of Association of the television station RTL2, an indirect subsidiary.
4. Purchase commitments
Contractual commitments for the purchase of license rights and orders placed for services for film productions
relating to children and youth programs and sporting rights amounted to EUR 60,073 thousand on the balance
sheet date (2002: EUR 41,357 thousand).
EUR 51,139 thousand (2002: EUR 36,672 thousand) of the commitments are attributable to the acquisition of
license rights, EUR 7,569 thousand to acquisition of Sport marketing rights and EUR 1,364 thousand (2002: EUR
4,685 thousand) to services for co-productions.
VIII. EVENTS OF PARTICULAR IMPORTANCE AFTER THE END OF THE FISCAL YEAR
At the year-end, Infront BuLi GmbH did not exercise its option to purchase the marketing rights for the Football
League and the 2nd Football League with effect from the 2003/2004 season and it expired on December 31,
2003. In view of the fact that these rights have been contractually transferred to PLAZAMEDIA GmbH Film- & TV-
Produktion, the central production of all Football League games is now only secured up to the end of the
2003/2004 football season in the summer of 2004.
A meeting of bond holders of the convertible bond issued in 2000 was held on February 9, 2004. With 75 percent
of the total value of the bond being present, the change on the bond conditions in accordance with the above-mentioned
proposal of the company was resolved with a majority of more than 97 percent with a corresponding commitment
for all creditors.
On January 12, 2003, the official period commenced for the acceptance of the offer by EM.TV with regard to the
restructuring of the convertible bond by the bond holders. The framework contract concluded with the ad-hoc committee
of the bond holders agreed that creditors amounting to 97 percent of the total value of the convertible bond
had to have accepted after the end of the offer period. In view of the fact that an acceptance ratio of only approximately
90 percent had been achieved at the end of the deadline on January 30, 2004, the deadline was extended
to February 13, 2004 and then for a last time to February 27, 2004 at midnight. 94.16 percent of the bond
holders had agreed by 6 pm on February 27, 2004 (based on the outstanding nominal amount of the convertible
bond). The necessary acceptance ratio was achieved after EM.TV had previously made use of its right to reduce
the ratio from 97.5 percent to 94.0 percent with the consent of the ad-hoc committee.
On February 5, 2004, the shareholders of the Company agreed their acceptance of the restructuring concept for
the convertible bond and the radical structural changes and legal changes in the company in this connection with
a majority of 99 percent.
With the entry in the Commercial Register in March 11, 2004, EM.TV Merchandising AG transferred major parts
of its assets to EM.TV Vermögensverwaltungs AG by way of the segregation in accordance with the restructuring plan.
395

Type of subsidy
PUBLIC GRANTS AND SUBSIDIES in EUR ‘000 Table 42
1. Film production cost subsidy
2. Film production cost subsidy
Total
EM.TV & Merchandising AG signed the contract for the acquisition of the remaining 50 percent of the shares held
by its subsidiary TaurusLizenz GmbH in Junior.TV GmbH & Co. KG with KirchMedia GmbH & Co. KG in insolvency
proceedings on March 27, 2004. With two additional agreements in which Junior.TV was also involved, all major
rights and license matters existing between the companies and all mutual claims were subsequently agreed and
settled.
With the release agreement of March 30, 2004, 94.22 percent of the holders of the convertible bond waived all
rights and obligations with immediate effects in connection with the 2000/2005 convertible bond.
At the beginning of February 2004, the company agreed a revised version of the 1999 program delivery contract
with ProSiebenSat.1 Media AG from a financial but not from a legal point of view.
IX. OTHER MANDATORY DISCLOSURES
1. Other disclosures on relationships with associated companies and persons
Associated companies
There are business relationships for mediating sales of film and merchandising rights with associated participations
in Tabaluga GbR. For the aforesaid mediation, commission payments were payable by Tabaluga GbR to group
companies in the amount of EUR 55 thousand (2002: EUR 265 thousand).
There were no direct business relationships with Tele München Fernseh-GmbH & Co. Medienbeteiligung KG.
The development of claims and liabilities are to be found under the corresponding balance sheet items.
Receivables/liabilities due to or from associated persons or companies
The executive majority shareholder of Tele München Fernseh GmbH & Co. Produktionsgesellschaft, Dr. Herbert
Kloiber, is simultaneously a shareholder of Concorde Media Beteiligungs GmbH, Vienna. This company has a holding
in ATV Privat-TV Services AG, Vienna. At December 31, 2003, Tele München Fernseh GmbH & Co.
Produktionsgesellschaft had granted interest-bearing loans of EUR 23,031 thousand (2002: Euro 16,150 thousand)
to Concorde Media Beteiligungs GmbH for acquiring the holding in the television station and also for refinancing
the necessary shareholder contributions. These loans and the accumulated interest are regarded to be of
an intrinsic and sustainable value in the amount of EUR 6,881 thousand for the years with effect from 2006 as a
result of the positive earnings prospects of ATV Privat-TV Services AG as from the aforesaid year. Tele München
Fernseh GmbH & Co. Produktionsgesellschaft also has a claim for licensing business against Concorde Media
Beteiligungs GmbH in the amount of EUR 906 thousand (2002: EUR 994 thousand).
Remuneration of the Management Board and emoluments of the Supervisory Board
Costs for the remuneration of the Management Board amounted to EUR 2,195 thousand in the financial year
2003 (2002: EUR 1,584 thousand). The total remuneration includes fixed amounts of EUR 1,792 thousand and
variable remuneration of EUR 403 thousand. Reference is made to “Stock Options” under Section 13 of the Notes
to the balance sheet regarding stock options.
The compensation paid to members of the Supervisory Board amounted to EUR 165 thousand in the financial year
from January 1 to December 31, 2003 (2002: EUR 165 thousand).
2. Public subsidies
Amount
1,132
63
The group received the following subsidies in the report year.
140 Consolidated Financial Statements. Notes on the Consolidated Financial Statements.
1,195
Shown in the consolidated financial statements
Liabilities to banks
Other operating income
Table 42

Table 43
NUMBER OF EMPLOYEES Table 43
Salaried employees
Industrial employees
2003
570
0
2002
377
0
2001
623
1
2nd half
year 1999
226
1
1st half
year 1999
218
1
Public subsidies are allowances which are only repayable under certain circumstances. Repayment cannot be
excluded if the projects being subsidised were not completed on the balance sheet date or if the subsidy prerequisites
were not satisfied in full. The repayment of the loans is dependent on the amount of income generated
by each individual film.
X. OTHER EXPLANATIONS AND DISCLOSURES
Market risk
1. Financial risks
A market risk exists if price changes on the financial markets positively or negatively affect the value of the Group’s
assets. This particularly applies in the Group to the convertible bond of EM.TV & Merchandising AG issued in 2000
and to marketable securities.
Liquidity risk
A liquidity risk exists if the payment obligations of the Group cannot be settled by existing liquidity or appropriate
credit lines. On the balance sheet date, the EM.TV Group had sufficient liquidity reserves, especially reserves from
the successful sale of The Jim Henson Company in July 2003. However, the initiated restructuring measures with
regard to the convertible bond have to be successfully implemented in order to achieve the further necessary
reduction in financial liabilities.
Default risk
There is a creditworthiness and default risk insofar as liable parties are unable to settle their debts. The theoretical
maximum default risk with the original financial instruments is equivalent to the current value of all claims less
liabilities to the same debtors insofar as offsetting is possible. Identified default risks have been taken into
account by means of appropriate provisions in the annual financial statements.
Foreign currency risk
A currency risk exists in particular wherever there are claims or liabilities in a currency other than that applied in
the annual financial statements. Exchange rate fluctuations may change the current market value of the Euro used
in the annual financial statements. The exchange rate between the US Dollar and the Euro is of particular importance
for the Group. In order to reduce the exchange rate risks associated with its business activities, the Group
decided to hedge the US Dollar rate in particular. Derivate financial instruments are only used for future cash flows
of foreign currencies for a specific project, A currency hedge was still outstanding on the balance sheet date in
connection with the marketing of merchandising rights for the 2006 FIFA World Cup GermanyTM which is allocated
to the “hold for trading” category in accordance with IAS 39. The resulting profits and losses in respect of the
aforesaid are recorded in the profit and loss account.
2. Number of employees
2000
815
4
The average number of employees in the group developed as shown in Table 43 during the report year:
79 of the aforesaid employees are attributable to companies which have been included in the consolidated financial
statements on a pro rata basis.
417

3. Executive bodies of the company
Management Board
Werner E. Klatten, Hamburg (Chairman)
Rainer Hüther, Munich
Dr. Andreas Pres, Munich
The above-mentioned members of the Management Board are members of the following control bodies:
Mr. Werner E. Klatten is a member of the following Supervisory Boards:
> Constantin Film AG, Grünwald (until June 30, 2003)
> Member of the Advisory Board of Tele München Gruppe, Munich
> Member of the Supervisory Board of EM.TV Vermögensverwaltungs AG (from November 17, 2003 to March 5,
> 2004)
Dr. Andreas Pres is a member of the following Supervisory Boards:
> Media Content Factory AG (until November 7, 2003)
> Member of the Advisory Board of Tele München Gruppe, Munich
Mr. Rainer Hüther is a member of the following Supervisory Board:
> EM.TV Vermögensverwaltungs AG (from November 17, 2003 to March 5, 2004)
Supervisory Board
Dr. Bernd Thiemann, Banking Officer, Frankfurt a.M. (Chairman)
Prof. Dr. h.c. Roland Berger, Management Consultant, Munich (Deputy Chairman)
Dr. Ralph Wollburg, Attorney-at-Law, Düsseldorf (until March 15, 2003)
Dr. Andreas Meissner, Attorney-at-Law, Hamburg (since May 20, 2003)
Dr. Bernd Thiemann is a member of the following Supervisory Boards:
> Bankhaus Hallbaum AG & Co
> Berentzen Gruppe AG (Deputy Chairman)
> ENRO AG
> M.M. Warburg Bank & Co KGaA
> NOI GmbH
> Rothschild GmbH
> ThyssenKrupp Steel AG
> Westfälische Hypothekenbank AG (until June 30, 2003)
> Member of the Advisory Board of Adolf Würth GmbH & Co. KG (Deputy Chairman)
> EM.TV Vermögensverwaltungs AG (since November 17, 2003, Chairman)
Prof. Dr. h.c. Roland Berger is a member of the following Supervisory Boards:
> Alcan Inc.
> Bmp AG (Chairman)
> Humaine Gesellschaft für Klinikmanagement GmbH (Chairman)
> Loyalty Partner GmbH
> M. DuMont Schauberg GmbH & Co. KG
> Schuler AG
> Trader classifies media N.V. (until June 24, 2003)
> WMP EUROCOM AG
> Roland Berger Strategy Consultants GmbH (Chairman, since July 1, 2003)
> EM.TV Vermögensverwaltungs AG (since March 5, 2004, Deputy Chairman)
Dr. Andreas Meissner is a member of the following Supervisory Board:
> EM.TV Vermögensverwaltungs AG (since March 5, 2004)
Unterföhring, April 5, 2004
Management Board of the group parent company.
Werner E. Klatten. Chairman of the Management Board
Rainer Hüther. Member of the Management Board
Dr. Andreas Pres. Member of the Management Board
142 Consolidated Financial Statements. Notes on the Consolidated Financial Statements.

Management Report on the Situation of the Group.
I. ECONOMIC CONDITIONS
After a very slow first half, the development of the global economy in 2003 demonstrated some improvement as
the year progressed. There were, however, regional differences. While the USA and, in particular, Japan, were eventually
able to meet expert projections, economic development in Europe was, as in the two preceding years, disappointing.
This was especially true for Germany, where GDP decreased by 0.1 percent against that of 2002.
Those markets relevant to EM.TV & Merchandising AG showed weak development. The advertising market continued
to wallow in a deep crisis in 2003. TV stations, the company’s most important customer group, cut program
and production investment due to falling advertising income. It was not until the end of the year that the first faltering
signs of a turnaround in the advertising market could be distinguished.
1. Entertainment
Production/Content
Due to limited budgets for new productions, TV stations and producers opted largely for proven subject matter and
programs that are well-established among viewers. Also in 2003, new production costs were shared across several
financing partners, or covered by pre-sales agreements with TV stations.
TV Sales
In 2003, the TV Sales business unit continued to be impacted by restrictive purchasing policies on the part of TV
stations, as well as by stagnant, or even falling, license prices. The TV market for programs for children and young
people continued to be characterized during the financial year by an over-supply of new productions.
Merchandising
The market for merchandising products, too, continued to be characterized in the 2003 financial year by an oversupply
of license subject matter for children. Despite the success of individual licenses, none were able to establish
themselves as clear hits. In addition, demand for short-lived trend material continued to be low, as these
carry a higher level of risk than popular series classics and established program brands. In view of the strong
growth in the importance of the home entertainment market during 2003, the merchandising sector witnessed
strengthened demand for DVDs, videos and audio products. In contrast, the volume of business in the toys &
games and home & living sectors fell away. In this regard, sales of license rights to product manufacturers shifted
towards the use of established TV characters and brands in advertising and promotion initiatives.
DSF
2. Sports
Just three to five years ago, double-digit growth rates in advertising income enabled TV stations to invest heavily
in programming. As a result, license prices for TV rights, especially in the sports sector, were extremely high. The
economic downturn that then set in, and still persists to this day, put considerable cost pressure on TV stations
due to falling advertising income, causing prices for sports rights to drop significantly back to a normal level, with
the exception of top rights such as football or Formula 1.
Due to ongoing low investment on the part of advertisers, especially of major brands, full program and special interest
stations were forced, alongside classic advertising, to generate additional sources of income last year. It was
special advertising formats and sponsoring that played the key roles, with t-commerce demonstrating increasing
importance as a new source of income.
Management Report on the Situation of the Group. Consolidated Financial Statements. 43

Sport1
Following a period of consolidation, especially in the case of online service providers, a slight recovery could be
identified last year within the online market, albeit at a low level, which had a positive effect on the development
of advertising income. As a result of the offensive conducted by telecommunications providers, the content
syndication business sector enjoyed an upturn, helped also by last year’s growth in demand for sports information
on mobile terminals. In contrast, however, it was consolidation that characterized the market in the e-commerce
and transaction segments.
PLAZAMEDIA
Production companies such as PLAZAMEDIA operated during the last year in a market environment that continued
to prove difficult and price-driven. Although, in the course of the year, the first signs of a slight market recovery
appeared, production volumes continued to be defined by the restrictive budgetary conditions set by TV stations.
Demand for high quality services in both studio and outside production increased once more in the second half of
2003. In addition, alongside classic broadcast business, demand also rose for audio-visual communication via
internet and mobile terminals (UMTS and MMS). Innovative production and transmission technology was also
driven forward in the production sector. Technology such as HDTV (High Definition TV) is set to grow in importance
in view of the FIFA World Cup 2006TM .
II. BUSINESS DEVELOPMENT
Restructuring and strategic reorientation
EM.TV carried out a series of restructuring measures in 2003 and was extremely successful in the strategic reorientation.
Formula 1
In February 2003, the company sold its pledged investment in Speed Investments Ltd., a company in the Formula-
1 Group, to a subsidiary of Bayerische Landesbank with the approval of Bayerische Landesbank as the security
trustee. For the sale of the Speed shares, EM.TV was particularly granted the right to have a pro rata participation
in any income from the sale of the Speed shares exceeding the lending commitment and any investments (debtor
warrant) in addition to a payment of Euro 8.5 million. The American Formula 1 banks, JP Morgan Chase Bank and
Lehman Brothers, approved the agreement in the middle of April 2003.
Legal dispute with DMG
A legal dispute with Morgan Grenfell Development Capital Syndications Ltd. and Deutsche European Partners IV
was terminated by means of a settlement in March 2003. The plaintiffs had enforced warranty claims in connection
with a contract of March 17, 2000 regarding the sale of the Formula 1 shares to EM.TV.
Constantin Film AG
The 16.4 percent investment in Constantin Film AG was sold to the Swiss company Highlight Communications AG
for Euro 9.4 million in April. The Constantin package was a pure financial participation which had ceased to have
any strategic significance.
The Jim Henson Company Inc.
In May, EM.TV agreed the sale of its US subsidiary The Jim Henson Company to the US company JHC Holding
Company, LLC, i.e. its owners, namely the children of the company founder Jim Henson, after extensive and difficult
negotiations
144 Consolidated Financial Statements. Management Report on the Situation of the Group.

The general meeting of EM.TV held on July 23, 2003 approved the sale agreement with a majority of approximately
98 percent of the available votes. EM.TV received approximately US Dollars 84 million from the sale. The transaction
which was executed at the end of July 2003 secured the liquidity of the EM.TV Group until 2005.
Junior loan
The last outstanding instalment of the so-called Junior loan amounting to Euro 49 million was repaid in full in the
report year. This was made possible in particular by the premature receipt of an outstanding debt of the Sesame
Workshop Foundation in New York to The Jim Henson Company and partial remittance of the funds received to
EM.TV, together with the proceeds arising from the sale of The Jim Henson Company.
2000/2005 convertible bond
On November 26, 2003, after months of negotiations with a substantial number of institutional bond holders (the
ad-hoc Committee of bond holders), the Management Board resolved a framework contract for restructuring the
convertible bond of Euro 400 million issued by the company (4 percent, 2000/2005). The complex restructuring
concept was approved by the EM.TV shareholders and bond creditors in the first quarter of 2004 (cf. Section 9 of
the Management Report).
The restructuring envisages the complete waiver of the convertible bond by the bond holders in exchange for a
transfer of assets by the company. An extensive reorganisation of the EM.TV Group was necessary first of all for
implementing the concept. The core concept envisages the transfer and sale of all EM.TV’s assets to two intermediate
holding companies. The first intermediate holding company, EM.TV Beteiligungs GmbH & Co. KG, will only
assume the 45 percent holding in Tele München Gruppe (TMG) and, return, will issue a nil-coupon bond to EM.TV
with a total nominal value of Euro 150 million. The two operating pillars - Entertainment and Sport - will be transferred
and sold to the second holding company, EM.TV Vermögensverwaltungs AG which will issue shares to EM.TV
together with interest-bearing option bonds (with a total nominal value of Euro 50 million).
This was followed by the execution of the so-called waiver agreement which EM.TV & Merchandising AG negotiated
with the ad-hoc Committee of bond holders. The aforesaid agreement provides that the bond creditors of the
company waive their rights in connection with the convertible bond and, in return, receive the following four assets
(for simplification purposes, all the details are provided on the assumption that the concept had been accepted
by 100 percent of the nominal value of the bond):
> Payment of Euro 20 million in cash; this corresponds to a payment of Euro 50 for each convertible bond with
a nominal value of Euro 1,000.
> Transfer of the nil-coupon bond to the bond creditors in return for EM.TV Beteiligungs GmbH & Co. KG. The
securities guarantee the bond holders 100 percent of the income from the sale of EM.TV’s holding in Tele
München Gruppe up to an amount of Euro 150 million. 50 percent of any additional amount accrued to the
bond creditors. 3.75 nil-coupon bonds with a nominal amount of Euro 100 are attributable to each convertible
bond with a nominal value of Euro 1,000.
> Transfer of the interest-bearing option bond in return for EM.TV Vermögensverwaltungs AG with a nominal
value of Euro 50 million with a term extending to 2009. 0.125 option bonds with a nominal amount of Euro
1,000 are attributable to each convertible bond with a nominal value of Euro 1,000. The bond include option
rights which entitle shares in EM.TV Vermögensverwaltungs AG to be purchased for Euro 1.
> Transfer of 60 percent of the voting shares in EM.TV Vermögensverwaltungs AG. 75 ordinary shares with an
arithmetical nominal value of Euro 1 will be transferred to the creditors for each convertible bond with a nominal
value of Euro 1,000. The shareholders receive a 40 percent share in the voting capital of EM.TV
Vermögensverwaltung AG and also subscription rights on shares in the company which may be issued in two
tranches at a price of Euro 2.50 and Euro 3.50.
In view of the fact that the final acceptance ratio for the concept was equivalent to 94.2 percent of the nominal
value of the bond, only 94.2 percent of the specified assets will be correspondingly transferred to the bond creditors.
The remaining assets will continue to be held by EM.TV & Merchandising AG.
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Following the waiver of the convertible bond and the transfer of assets to the bond creditors, the amalgamation
EM.TV & Merchandising AG with EM.TV Vermögensverwaltung AG on March 31, 2004 in accordance with the provisions
of the German Transformation Act (Umwandlungsgesetz) is envisaged as the next stage. An amalgamation
ratio of 10 new shares for 73 old shares is envisaged for the EM.TV shareholders as part of the amalgamation.
EM.TV Vermögensverwaltungs AG is to be renamed “EM.TV AG” immediately after the amalgamation. It will be the
legal successor of EM.TV & Merchandising AG and will continue the operating business of the Group with a sound
capital structure. The shares of „EM.TV AG“ are to be listed for trading on the regulated market of the Frankfurt
Stock Exchange. The ratio of the former shareholders of “EM.TV AG” may be increased up to 50 percent after the
relevant execution of the option and subscription rights assigned or granted to all the bond creditors and shareholders
as part of the restructuring process.
Acquisitions in the Sport segment
EM.TV has been executing a two-pillar strategy in its key operating business since 2003. This strategy was adopted
in the knowledge that the original core business of the company - the marketing of rights in the children and
youth entertainment sector - offers no adequate growth potential for the company in the long-term. The company
resolutely seized acquisition opportunities in 2003 therefore and has developed the Sport segment into the
second pillar of its business activity.
In April 2003, KarstadtQuelle New Media and the Swiss Investor Dr. Cleven were entitled to purchase 100 percent
of the shares in the broadcasting station DSF Deutsches Sportfernsehen GmbH and Online-Sportportal Sport1
GmbH. KarstadtQuelle New Media acquired the shares attributable to it through Sport Media Holding GmbH,
Essen, in which EM.TV assumed a consolidation majority of 50.1 percent on June 30, 2003 through its whollyowned
subsidiary EM-Sport Sportmarketing GmbH.
In May, EM.TV Sportmarketing GmbH acquired 100 % of the PLAZAMEDIA group, the largest TV production company
for the Sport segment.
III. ACCOUNTING MATTERS, CONSOLIDATED COMPANIES AND SEGMENTS
The consolidated financial statements of EM.TV & Merchandising AG have been drawn up in accordance with the
International Financial Reporting Standard (IFRS).
As a result of the company disinvestments and acquisitions during the report year, the group of consolidated companies
attributable to the EM.TV group has changed substantially with the result that the consolidated financial
statements for 2003 are only comparable with those of the previous year to a limited extent. The Jim Henson
Company group ceased to form part of the consolidated group with effect from July 31. The PLAZAMEDIA group
has not been included in the consolidated financial statements since May 30, 2003. The holdings in DSF
Deutsches Sportfernsehen GmbH and Sport1 GmbH (with the overall share of EM.TV & Merchandising AG: being
40.65 percent) held through the majority participation in Sport Media Holding GmbH have been included in the
group of consolidated companies since June 30, 2003.
A new segmentation of the business activities of the EM.TV was established in the report year. The relevant allocation
was made to the Entertainment and Sport segments in line with the two-pillar strategy. The Entertainment
segment includes the production of children and youth programs, worldwide trade with TV rights and the marketing
of merchandise rights. The 45 percent holding in Tele München Gruppe (TMG) is also allocated to this segment.
The Sport segment consists of the holdings in DSF Deutsches Sportfernsehen GmbH and Sport1 GmbH
together with the PLAZAMEDIA group. The consumer products segment was discontinued in the report year.
IV. EARNINGS POSITION
As in previous years, the consolidated financial statements of EM.TV & Merchandising AG are marked by exceptional
charges. On the one hand, these consists of the impairment depreciation and amortization which was substantially
less than in 2002, however, and, on the other hand, the results for the year were adversely effected by
146 Consolidated Financial Statements. Management Report on the Situation of the Group.

special expenses in connection with the measures undertaken for the restructuring and reorientation of the group.
The one-off effects together with the restrained market environment and the recurrently high interest charges and
depreciation/amortization gave rise to a consolidated loss of Euro 129.9 million which is substantially less than the
previous year’s loss of Euro 310.2 million (minus 58.8 percent), however
The EM.TV group’s sales reached Euro 270.0 million in 2003. This represents an increase of 8.0 percent in comparison
with the previous year (Euro 249.9 million). Jim Henson Company is still included under this heading with
sales of Euro 58.7 million, whereby Euro 33.2 million of this amount is attributable to the premature termination of
a long-term licensing and co-operation agreement between Sesame Workshop and the former EM.TV subsidiary. The
Sport segment generated sales of Euro 89.6 million. What is to be stressed in this respect is a significant sales
upturn by DSF in the second half of the year. The sales contribution by the Sports segment more than compensated
the loss of sales caused by the deconsolidation of Jim Henson Company.
Other operating income increased from Euro 26.7 million to Euro 46.9 million. This increase was mainly attributable
to the profit on the deconsolidation of The Jim Henson Company (Euro 19,1 million). Cost of materials amounted
to Euro 195.0 million compared with Euro 165.8 million in the previous year (plus 17.6 percent). As a contraitem
to the corresponding sales income, this includes a usage-related fixed asset disposal of Euro 32.7 million in
connection with the premature realization of the licenses and co-operation agreement of The Jim Henson Company
and Sesame Workshop. The personnel expenses increased from EUR 36.2 Mio. to EUR 49.2 Mio. (35.9 percent).
This increase reflects the additional average number of employees in the Group as a result of the initial consolidation
of the relevant companies in the segment.
Other operating expenses in the group in the amount of Euro 86.9 million (2002: Euro 71.7 million) are very much
affected by special expenses in connection with the restructuring measures and strategic acquisitions carried out
in the report year. For example, legal, consultancy and year-end costs rose from Euro 11.9 million to Euro 30.0 million
caused by the one-off expenses for restructuring the 2000/2005 convertible bond and for the sale of The Jim
Henson Company.
The EM.TV group shows a loss of Euro 11.7 million before interest, taxation and depreciation/amortization (EBIDTA)
compared with a profit of Euro 8.4 million in the previous year (plus 39.3 percent).
Depreciation and amortization amounted to Euro 85.4 million (2002: Euro 96.9 million). This includes impairment
depreciation and amortization in the amount of Euro 25.8 million (2002: Euro 23.6 million) as a result of the examination
of the intrinsic value of intangible assets carried out at regular intervals (impairment test). They related
to the film assets of Junior.TV GmbH & Co. KG, EM.TV & Wavery B.V., EM.TV & Merchandising AG and various small
production companies. With these exceptional charges, the Management Board took account of the further deterioration
in the situation on worldwide pay- and free-TV markets and the related reduction in the usage and exploitation
values of these assets and the realignment of marketing objectives in the children and youth range. The loss
before interest and taxes (EBIT) of the EM.TV group amounted to Euro 97.1 million compared with a loss of Euro
88.5 million in the previous year. Euro 10.7 million thereof were attributable to the losses incurred by The Jim
Henson Company prior to its deconsolidation.
The financial result was marked by expenses incurred for the 2000/2005 convertible bond and amounted to Euro
-38.0 million. The previous year’s amount of Euro 251.7 million was dominated by the extensive write-down of the
financial investment in Speed Investments Ltd. (Euro 195.8 million). After including net financial expense, the
group shows a loss on ordinary trading activities (earnings before tax - EBT) of Euro -135.2 million (2002: -340.2
million). The loss for the year after taxes and minority interests amounted to Euro 129.9 million compared with
Euro 310.2 million in 2002. This gives a loss per share on a diluted and undiluted basis of Euro 0.89 (2002: diluted
and undiluted loss of Euro 2.13 per share).
The Entertainment sector incurred a segment loss of Euro 96.9 million in the report year (operating loss before
finance results). This includes depreciation and amortization of Euro 25.8 million. The Sport segment shows an
almost break-even result.
The geographical analysis of the segment reports shows that the German-speaking area accounts for 75.2 percent
of group sales compared with 53.3 percent in 2002. The higher percentage reflects the initial consolidation
of the Sport segment which operates almost exclusively in Germany and the deconsolidation of the former US subsidiary
The Jim Henson Company on July 31, 2003 of the report year. The share of sales attributable to the
USA/Canada region fell accordingly from 44.3 percent to 21.8 percent.
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V. NET WORTH AND FINANCIAL POSITION
1. Net worth
The balance sheet amount of the EM.TV group fell from Euro 886.8 million at December 31, 2002 to Euro 700.6
million at December 31, 2003 (minus 21.0 percent). This reduction in the balance sheet total was largely attributable
to the lower level of intangible assets which fell from Euro 505.1 million to Euro 313.7 million in comparison
with 2002. On the one hand, this reduction reflects the adjustments made to the value of film rights during the
year but was mainly affected by the change in the companies included in the consolidated financial statements.
For example, the deconsolidation of The Jim Henson Company gave rise to an asset reduction of Euro 73.0 million
compared with an increase in assets of only Euro 0.7 million as a result of the initial inclusion of investments in
the Sport segment. “Other investments” shown under financial assets was Euro 15.9 million lower, inter alia on
account of the sale of the remaining shares in Speed Investments Ltd. and the shares in Constantin Film AG.
In comparison with 2002, the group’s current assets rose by 2.5 percent from Euro 253.3 million to Euro 259.8
million mainly on account of the increase in liquid assets (cash on hand and at banks) by Euro 37.4 million to Euro
128.0 million which is offset by reductions in receivables and other assets in almost the same amount. The
increased liquidity on the balance sheet date results from the inflow of funds in connection with the sale of The
Jim Henson Company.
After taking account of the loss for the year and other equity changes which exceeded the positive equity of Euro
129.9 million shown in the previous year, there is a capital deficit of Euro 24.8 million shown on the assets side
of the balance sheet.
On the liabilities side, minority interests fell slightly from Euro 7.8 million in the previous year to Euro 7.2 million in
2003. Long-term liabilities of Euro 435.8 million (December 31, 2002: Euro 422.2 million) are dominated to a very
large extent by the 2000/2005 convertible bond as in the previous year. Short-term liabilities to banks were reduced
by Euro 56.8 million. Euro 48.9 million of this amount was attributable to the complete repayment of the Junior
loan. The bank liabilities still outstanding at December 31, 2003 related exclusively to TMG.
2. Cash-flow and liquidity
As is the case with the profit and loss account, the 2003 cash-flow statement for the EM.TV group is only partially
comparable with the previous year on account of the changes in the companies included in the consolidated
financial statements. The cash flow of the EM.TV Group from operational activities rose from Euro 51.1 million to
Euro 85.3 million in 2003. This increase was attributable inter alia to the premature termination of the long-term
license and co-operation contract with Sesame Workshop and the investments in the Sport segment which contributed
a positive cash flow. There was an outflow of funds from investment activities in the amount of Euro 40.1
million (2002: Euro 63.8 million). The positive cash flow as a result of the change in liquid assets attributable to
deconsolidations (Euro 62.3 million) related exclusively to the sale of the Jim Henson Company and reflects the
balance of the net selling price (Euro 76.8 million) and the cash expenses incurred in connection with the sale
(Euro 14.4 million). Financing activities showed an outflow of funds amounting to Euro 14.5 million (2002: Euro
1.9 million). The balance of the various receipts and payments gave rise to a positive cash flow for the year in the
amount of Euro 93.1 million. This represents an improvement of Euro 105.7 million in comparison with the previous
year, as a result of which the liquid assets of the group exceeded short-term liabilities to banks by Euro 47.6
million at December 31, 2003. Financial liabilities amounted to Euro 47.0 million at December 31, 2002.
VI. INVESTMENTS
The total investments of the EM.TV Group amounted to Euro 71.9 million at the end of 2003 compared with Euro 83.9
million in the previous year. Euro 70.0 million thereof were attributable to the Entertainment segment. Investments by
the Sport segment amounted to Euro 1.8 million. The pro rata investments of TMG amounted to Euro 42.8 million in
the report year compared with Euro 51.3 million in 2002.
Excluding TMG, there were 8 TV serials in production in the group, whereby production of the Tabaluga III serial is complete
and all that is outstanding is the final acceptance. The other 7 productions relate to 3 continuations of well-known
148 Consolidated Financial Statements. Management Report on the Situation of the Group.

serials (e.g. Blinky Bill III and Flipper & Lopaka III) as well as 4 new serials (e.g. Creepschool and Bambaloo). The
aim is still to produce 2 to 3 TV serials per year together with partners.
VII. EMPLOYEES
The average number of employees working in the EM.TV Group amounted to 570 in 2003, compared with 377 in
the previous year. The substantial increase in employees is attributable to the initial consolidation of investments
in the Sport sector which was significantly larger than the reduction in employees caused by the sale of The Jim
Henson Company.
VIII. RISKS OF FUTURE DEVELOPMENTS
Free-TV
2003 continued to be marked by a reserved demand for programs due to the lower advertising revenues of the TV
stations. This and cost reduction measures by the stations resulted in a continuation of the restrictive purchasing
policy worldwide which had an adverse effect on license prices in conjunction with the surplus of children and youth’s
programs.
In 2004, the Management Board anticipates a stabilization or, at best, a slight upward turn in the advertising market.
Any such recovery would only be reflected in an increasing demand for programs at a later point of time, however.
In addition, the ongoing efforts of TV stations to reduce program costs will, in certain cases, result in the existing
contractual relations with EM.TV being adjusted to the new underlying conditions.
On the basis of its numerous national as well as international framework contracts, EM.TV however is in a good
initial situation in the competition for the declining number of program windows for children and youth entertainment.
EM.TV has made repeated adjustments to the value of its rights portfolio in the past. However, it cannot be excluded
that the future examinations of their intrinsic value will give rise to further adjustments in the free-TV and also
in the pay-TV sector.
Pay-TV
The market situation in the pay-TV sector remained strained in 2003 and was marked by a restrictive purchasing
policy and declining license prices. In the pay-TV sector, the development of Junior.TV is strongly linked with the
development of the of the pay-TV platform Premiere. The activities of Junior-TV in Premiere were subject to a new
agreement in the report year and this resulted in a revenue reduction for Junior.TV GmbH & Co. KG and thereby
for EM.TV.
EM.TV continues working in the internationalization of pay-TV activities in order to reduce its dependency on the
German market. The possibility of a further weakness on the German pay-TV market could cause Junior.TV not
being able to establish itself abroad as anticipated. In particular, there is no possibility of acquiring access to program
windows of foreign pay-TV channels by means of mutual exchange.
Production
The continuing difficulties in the market environment combined with the existing surplus of programs necessitates
applying strict investment criteria in order to ensure sustained competitiveness of EM.TV. Production costs will
be distributed amongst several co-producers in order to reduce the production risk. At the same time, at least 80
percent of the investment volume is to be basically secured by firm orders of the TV stations before production
commenced.
491

Merchandising
In EM.TV’s merchandising sector, there are the customary market risks of a theme-driven business that is extremely
dependent on the general economy. EM.TV counters these risks by positioning itself as a full-service merchandise
agent which offers licensees a comprehensive service and consulting package. A reduction in risks is
also to be achieved through an expansion of the targets groups.
Risks arising from international business activities
Most sales generated by EM.TV are invoiced in Euro. However, in view of the fact that US Dollar contracts will be
entered into in future for payments - as is customary within the trading of film rights - fluctuations in the Dollar /
Euro rate of exchange may have implications as far as the company’s business operations, financial and earnings
position are concerned, especially on its operating margins, and this could result in foreign exchange losses.
Control over associated companies
EM.TV is partially conducting its business operations through joint ventures in which it only has a limited power of
authority. It cannot, therefore be excluded is unable to directly enforce its own business interests in dealings with
associated companies.
Dispute with the Sat.1 channel
At the end of December 2003, ProSiebenSat.1 Media AG terminated the 1999 without notice and enforced a
recourse claim of Euro 17 million.
Although the company regards the contract termination and also the recourse claim to be unjustified, every effort
is being made to achieve a financial settlement which basically includes the following: instead of the payments
still outstanding for 2004 amounting to Euro 24 million, Sat.1 will make an immediate payment of Euro 12 million
after the restructuring of the convertible bond and an additional Euro 2 million in 2005 and 2006. ProSieben-Sat.1
Media AG will waive the enforcement of the counter-claim for Euro 17 million. The contract which was actually supposed
to expire at the end of 2004 will be prolonged to the end of 2006 and permits the broadcasting group to
have access to the Junior catalogue to a specified extent.
This agreement had been financially negotiated in full when this Management Report was being prepared but it
had not been legally signed.
Fluctuations in an volatility of earnings
Seasonality of licensing business with a traditionally strong second half-year as well as changes in customer conduct
and habits to a certain extent may result in fluctuations in the level of earnings in each respective quarter
and in the whole fiscal year. The aim is to reduce the fixed costs of the company to the extent that fluctuations in
sales do not necessarily lead to negative operating results.
Liquidity situation
EM.TV showed no bank liabilities on the balance sheet date after the Junior loan had been repaid in full in 2003.
After the restructuring of the convertible bond by concluding the so-called waiver contract on March 30, 2004,
EM.TV is only showing the outstanding amount of the financial liabilities in connection with the 2000 convertible
bond attributable to those bond creditors who did not form part of the restructuring concept. The outstanding
amount has to be paid in 2007. After the amalgamation with EM.TV Vermögensverwaltung AG, the company will
show additional liabilities in connection with the Euro 50 million option bond issued as part of the restructuring
process. The option bond is due for repayment in 2009 and is secured by a pledge on the shares held by EM.TV
in EM-Sport Sportmarketing GmbH and Junior.TV GmbH & Co. KG.
150 Consolidated Financial Statements. Management Report on the Situation of the Group.

Although there are no intentions of raising additional funds at the present moment, it cannot be excluded that the
company could be dependent on external financing sources in future for an expansion or continuation of its business
activities or in the event of any bad debt losses. The conditions of the option bond provide the issuer with the
opportunity of security a working capital loan for Euro 15 million with the shares being subject to a prior-ranking
pledge under the terms of the option bond.
Damage compensation claims and shareholders’ claims
Approximately 87 claims and 10 summary judgements from approximately 530 shareholders have been received
from shareholders together with a whole range of claim letters addressed to EM.TV & Merchandising AG. The bakkground
to these claims is the fall in the value of the EM.TV share. The claims are founded on different legal bases
and facts or circumstances. All of the court rulings have been made in favor of EM.TV to date. Altogether, 45 first
instance court and two second instance court rulings have been given. The second instance court did not grant
leave for an appeal in the respective cases. The plaintiffs have lodged an appeal against the respective rulings.
Eleven of the first instance rulings became final and absolute. Four claims were withdrawn before a court decision
was made.
Four petitions for the execution of conciliatory proceedings have also been submitted to the ÖRA (Official Legal
Information and Conciliation Office of the Free Hanseatic City of Hamburg).
Risks in connection with the restructuring of the convertible bond
After several months of intense negotiations with a major part of the convertible bond holders, the Management
Board of the company agreed on a concept at the end of November 2003 for restructuring the convertible bond.
Details of the concept are to be found in Section 2.1.6 of this Management Report.
Without a successful restructuring of the convertible bond, insolvency proceedings would have been unavoidable
for EM.TV. In insolvency proceedings, the receiver would have been immediately obliged to sell the assets forming
part of the insolvency mass unless resolutions to the contrary had been passed by the creditors’ meeting (§ 159
of the Insolvency Act).
The Management Board and Supervisory Board are convinced that it could be assumed in this particular case that
the shareholders would have been in a substantially worse position if the assets of EM.TV had been sold in comparison
with the position offered by the implementation of the restructuring concept. After its complete execution,
the shareholders will participate in a restructured company in the opinion of the Management Board and
Supervisory Board. The agreements reached with the bond holders envisage that the restructuring and the amalgamation
of EM.TV & Merchandising AG with EM.TV Vermögensverwaltungs AG have to be competed by June 30,
2004.
The waiver by the holders of the convertible bonds with regard to their claims gives rise to a taxable gain which is
basically subject to corporation and trade tax. The current regulations on the minimum taxation rates in force since
2004 result in the aforesaid gain being subject to corporation and trade tax. If, contrary to expectations, this gain
fails to qualify as a redevelopment or reconstruction gain subject to tax at a preferential rate within the meaning
of the so-called redevelopment decree, this could give rise to tax charges of approximately Euro 13 million.
Risks arising from the competitive situation in the sport sector
In view of the fact that sport is an extremely attractive sector, considerations are always being made on new TV or
Internet sporting offers. Competition for individual high-class rights in particular is one of the focal points of current
discussions. These are only partially relevant for the DSF range, however. A similar consideration also applies
for sporting offers in the Internet. Regardless of the fact that present-day technologies do not permit direct competition
with regard to the transmission of sporting events, DSF is prepared to meet the aforesaid challenges as a
result of its close collaboration with the online portal Sport1.
Risks arising from the issue of rights in the sport sector
DSF is making itself independent of rights to a certain extent by means of its own formats. As a result of the non-execution
of the option of Infront AG in dealings with DFL Deutsche Fußball-Liga GmbH for the acquisition of broadcasting
and transmission rights for the 1st and 2nd German Football League for 2004/05 and 2005/06 seasons and
for Sunday games in the 1st Football League for the 2004/05 and 2005/06 seasons, the option for DSF with regard
to the first exploitation rights for the 2nd Football League for the 2004/05 and 2005/06 seasons is no longer valid.
An issue of rights to DSF to a similar extent as in the 2003/2004 season is not certain at the present point of time
therefore.
511

What is decisive for the future positioning of PLAZAMEDIA is the outcome of negotiations on the production of the
Football League as from the 2004/2005 season. PLAZAMEDIA is in discussions with all the relevant parties and
regards itself to be well positioned on the strength of its successful work in the past. If PLAZAMEDIA is not able to
assume the production of the Football League games for the coming seasons, however, this would necessitate
additional significant restructuring measures together with a strategic reorientation.
Tax loss carry-forwards
EM.TV AG has accumulated substantial tax loss carry-forwards as a result of the losses incurred in recent years.
Subject to the outcome of a field tax audit, the tax loss carry-forward of the AG for corporation tax purposes
amounts to approximately Euro 1.6 billion. It must be assumed that the transfer of the loss carry-forwards is not
to be regarded as assured as a result of the amalgamation of EM.TV & Merchandising AG with EM.TV
Vermögensverwaltungs AG. The transfer would materialize if the business operations which had given rise to the
losses were to be continued in the same type and scope beyond the amalgamation date. This cannot be assumed
without any doubt on account of the portfolio changes which have been carried out in the past few years with
regard to the redevelopment of the business.
Risks in connection with technical program transmissions
Advertising financed television has an interest in a transmission of programs to as many households as possible.
Transmission by satellite or cable networks are currently under discussion. The forthcoming privatisation of cable
networks in Germany could bring about a change in the present transmission system of DSF. Perturbing radiation
in cable networks is also being discussed at present and this could lead to a shortage in the already limited cable
capacities.
IX. EVENTS OF PARTICULAR IMPORTANCE AFTER THE END OF THE FISCAL YEAR
At the end of the year, Infront BuLi GmbH had not exercised its option for the purchase of the marketing rights for
the German Football League and the 2nd Football League with effect from the 2004/2005 season and it expired
on December 31, 2003. In view of the fact that these rights have been contractually placed with PLAZAMEDIA
GmbH Film- & TV-Produktion, the central production of all league games is now assured for PLAZAMEDIA GmbH
Film- & TV-Produktion up to the end of the 2003/2004 football season in the summer of 2004.
A meeting of holders of the 2000 convertible bond was held on January 9, 2004. With a presence of 75 percent
of the total nominal value of the bond, the change in the bond conditions in line with the above-mentioned proposal
of the company was resolved by a majority of more than 97 percent with a commitment for all creditors.
The official time limit for the acceptance by the creditors of the offer of EM.TV on the restructuring of the convertible
bond commenced on January 12, 2004. The framework agreement concluded with the ad-hoc committee of
the bond holders resolved that creditors amounting to 97.5 percent of the total value of the convertible bond had
to have accepted by the end of the offer period. In view of the fact that an acceptance ratio of approximately 90
percent had been achieved at the end of the time limit, the time limit was extended to February 13, 2004 and then
once again for the last time to February 27, 2004. By February 27, 2004, 94.16 percent of the bond holders (based
on the outstanding nominal value of the bond) had accepted the offer by 6 pm on February 27, 2004. The necessary
acceptance ratio has been achieved in view of the fact that EM.TV had previously made use of its right to
lower the ratio from 97.5 percent to 94.0 percent with the approval of the ad-hoc committee.
On February 5, 2004, the shareholders of the company resolved to accept the restructuring concept for the convertible
bond with a 99 percent approval and thereby the radical structural and legal changes in the company.
With the entry in the Commercial Register on March 11, 2004, EM.TV & Merchandising AG transferred most of its
assets to EM.TV Vermögensverwaltungs AG by way of a segregation in accordance with the restructuring plan.
152 Consolidated Financial Statements. Management Report on the Situation of the Group.

EM.TV & Merchandising AG signed the contract with KirchMedia GmbH & Co. KGaA in liquidation on March 27,
2004 for the acquisition of the remaining 50 percent of the shares in Junior.TV GmbH & Co. KG held by its subsidiary
TaurusLizenz GmbH. With two further agreements which also involved Junior.TV, all the main rights and
license matters and all mutual claims existing between the companies were finally and conclusively regulated or
settled.
With the waiver agreement of March 30, 2004, 94.22 percent of the convertible bond holders waived all rights
and obligations in connection with the 2000/2005 convertible bond with immediate effect.
At the beginning of February 2004, the company came to a (financial albeit not yet legally binding) agreement with
ProSiebenSat.1 Media AG on a new version of the 1999 program delivery contract.
X. OUTLOOK
After the approval by the shareholders and bond creditors of the concept for restructuring the 2000/2005 convertible
bond in the first quarter of 2004, numerous structural and legal changes were necessary in the first half
of the current fiscal year which have to be concluded by the end of the second quarter. The implementation of the
concept will result in the deletion of EM.TV & Merchandising AG by means of an amalgamation. EM.TV Vermögensverwaltungs
AG will become the legal successor of EM.TV & Merchandising AG with all rights and obligations. With
the entry of the amalgamation of EM.TV & Merchandising AG with EM.TV Vermögensverwaltungs AG, the shares
of the company will be deleted. The shares in EM.TV Vermögensverwaltungs AG which will be renamed „EM.TV AG“
will be given a new security identification number (ISIN DE0009147207). They will be admitted for trading on regulated
markets of the Frankfurt Stock Exchange on the date on which the trading of the shares in EM.TV &
Merchandising AG is discontinued.
„EM.TV AG“ is a restructured company with a healthy capital structure. Its operating business will continue to consist
of the two Entertainment and Sport segments in accordance with the two-pillar strategy of EM.TV.
The main objective for „EM.TV AG“ is to return to profitability as soon as possible. This will be contributed by the
elimination of substantial balance sheet burdens as a result of the successful restructuring of EM.TV and also the
further development of its operating business.
In the Entertainment segment, the extension of the company’s overseas’ activities are very much in the foreground,
together with then further strengthening of the already extensive rights basis of EM.TV. EM.TV is planning
to actively participate in the further consolidation of the media market, either in the form of the acquisition of participations,
rights or co-operations.
The new Sport segment has developed very positively in the first months of its establishment in the EM.TV Group.
Major impulses are also expected from the increasing activities with everything to do with the 2006 FIFA World Cup
GermanyTM . In 2002, EM.TV acquired the European merchandising marketing rights for this major sporting event.
The intelligent combination of the marketing right to 2006 FIFA World CupTM with the sporting activities of DSF,
Sport1 and PLAZAMEDIA are designed to open up new business potentials in the coming years.
The Management Board is anticipating positive results in both segments in 2004. The Holding costs, which also
include the restructuring costs, will result in an overall consolidated loss, however.
Unterföhring, April 5, 2004
The Management Board
Werner E. Klatten Dr. Andreas Pres Rainer Hüther
Chairman Members of the Management Board
530

XI. AUDITOR’S REPORT
We have audited the consolidated financial statements of EM.TV & Merchandising AG, consisting of the balance
sheet, the income statement and the statements of changes in equity and cash flows as well as the notes to the
financial statements for the business year from January 1 to December 31, 2003 . The preparation and the content
of the consolidated financial statements according to the International Financial Reporting Standards of the
IASB (IFRS) are the responsibility of the Company’s Management Board. Our responsibility is to express an opinion,
based on our audit, whether the consolidated financial statements are in accordance with IFRS.
We conducted our audit of the consolidated financial statements in accordance with German auditing regulations
and generally accepted standards for the audit of financial statements promulgated by the Institut der
Wirtschaftsprüfer in Deutschland (IDW). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are free of material misstatements.
Knowledge of the business activities and the economic and legal environment of the Group and evaluations of possible
misstatements are taken into account in the determination of audit procedures. The evidence supporting the
amounts and disclosures in the consolidated financial statements are examined on a test basis within the framework
of the audit. The audit includes assessing the accounting principles used and significant estimates made by
the Management Board, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements give a true and fair view of the net assets, financial position,
results of operations and cash flows of the Group for the business year in accordance with IFRS.
Our audit, which also extends to the group management report prepared by the Management Board for the business
year from January 1 to December 31, 2003, has not led to any reservations. In our opinion, on the whole the
group management report, together with the other information of the consolidated financial statements, provides
a suitable understanding of the Group's position and suitably presents the risks of future development. In addition,
we confirm that the consolidated financial statements and the group management report for the business year
from January 1 to December 31, 2003 satisfy the conditions required for the Company's exemption from its duty
to prepare consolidated financial statements and the group management report in accordance with German
accounting law.
In accordance with our duty, we draw attention to the fact that continued existence of the EM.TV & Merchandising
Aktiengesellschaft is threatened by risks arising from its liquidity situation as shown in section 8 of the group
management report. The maintenance of liquidity presupposes that the proposed and already initiated restructuring
of the convertible bond and the related restructuring measures of EM.TV & Merchandising AG are executed
as planned.
Munich, April 6, 2004
PricewaterhouseCoopers GmbH. Wirtschaftsprüfungsgesellschaft
Eiber. German Public Accountant
Fell. German Public Accountant
154 Consolidated Financial Statements. Auditors’ Report.

Annual Financial Statements
from January 1 to December 31, 2003.
Annual Financial Statements.
Balance Sheet of the AG. 56
Profit and Loss account of the AG. 58
Notes on the Financial Statements of the AG. 59
Management Report on the Situation of the AG. 77
Auditors’ Report. 85
On March 5, 2004 the Management Board submitted the annual financial statements to the Supervisory
Board.
The Supervisory Board of the EM.TV & Merchandising AG approved the annual financial statements on
March 5, 2004; they are therefore adopted.
551

Balance Sheet of the AG.
Fixed assets
Intangible assets
ASSETS AT DECEMBER 31, 2003 in EUR
Film and merchandising rights, EDP programs
Advance payments
Tangible assets
Buildings on third party land
Other property, plant and office equipment
Financial assets
Shares in associated companies
Investments
Loans to companies in which participations are held
Current assets
Receivables and other assets
Trade receivables
Receivables due from associated companies
Receivables due from companies in which participations are held
Other assets
Cash on hand and at banks
Deferred charges and prepaid expenses
Note (III)
156 Annual Financial Statements. Balance Sheet of the AG.
1
2
3
4
5
6
7
8
9
31/12/2003
25,525,616
6,492,407
1,451,789
892,783
17,503,941
397,247,231
593,203
12,682,168
8,011,186
2,032,326
20,966,090
31/12/2003
32,018,023
2,344,572
415,344,375
449,706,970
43,691,770
86,476,814
130.168,584
14,625,341
594,500,895
31/12/2002
26,046,459
2,645,398
28,691,857
1,743,484
1,286,559
3,030,043
119,285,579
473,709,355
765,284
593,760,218
625,482,118
14,572,162
13,252,442
19,843,723
28,330,984
75,999,311
57,449,776
133,449,087
25,519,279
784,450,484

Equity
EQUITY/LIABILITIES AT DECEMBER 31, 2003 in EUR
Subscribed capital
Contributions made to execute the resolved capital increase
Capital reserve
Special reserve in accordance with §218, clause 2 AktG
Accumulated loss
Contributions from the conversion of bonds for which
registration is still outstanding
Provisions
Miscellaneous provisions
Liabilities
Convertible bonds
Liabilities to banks
Payments received on account of orders
Trade accounts payable
Liabilities due to affiliated companies
Liabilities due to companies with which
there is a participation relationship
Other liabilities
Note (III)
10
11
11
12
13
14
15
16
17
31/12/2003
146,054,116
0
1,998,347,226
581,183
-2,079,181,708
451,458,396
0
1,013,461
15,250,397
3,444,663
20,846,167
17,212,779
31/12/2003
65,800,817
17,500
19,456,715
509,225,863
594,500,895
31/12/2002
145,854,116
200,000
1,998,340,341
597,789
-1,907,536,957
237,455,289
0
18,374,272
436,879,464
48,911,485
728,329
14,774,648
4,895,094
4,572,511
17,859,392
528,620,923
784,450,484
571

Profit and Loss Account of the AG.
Sales
JANUARY 1, TO DECEMBER 31, 2003 in EUR
Other operating income
Cost of materials
Expenses for licenses, commissions and materials
Expenses for outside services
Personnel expenses
Salaries
Social security and pension costs
> thereof for pensions EUR 40 thousand (2002: EUR 27 thousand)
Amortization and depreciation
Amortization of intangible assets and depreciation
of tangible fixed assets
Write-down of current assets
Other operating expenses
Earnings before interest and taxes
Financial result
Earnings from investments
> thereof: from associated companies EUR 1,981 thousand
(2002: EUR 327 thousand)
Interest and similar income
> thereof: from associated companies EUR 1,928 thousand
(2002: EUR 4,009 thousand)
Write-downs of financial assets
Interest and similar expenses
> thereof: associated companies EUR 27 thousand
(2002: EUR 5,390 thousand)
Earnings before taxes
Taxes
Taxes on income and earnings (refunds)
Other taxes
Loss for the year
Loss brought forward from the previous year
Withdrawal from special reserve in accordance
with § 218, clause 2 AktG
Accumulated loss
Note (III)
18
158 Annual Financial Statements. Profit and Loss Account of the AG.
24
19
20
21
22
23
25
1/1/ to
31/12/2003
-4,560,674
-423,177
-8,108,174
-917,352
-5,492,391
-20,228,635
2,980,550
4,108,183
-68,875,434
-42,906,541
122,081
-1,075
1/1/ to
31/12/2003
13,184,802
18,235,493
-4,983,851
-9,025,526
-25,721,026
-58,762,408
-67,072,516
-104,693,242
-171,765,758
121,006
-171,644,752
-1,907,536,957
0
-2,079,181,709
1/1/ to
31/12/2002
41,599,218
37,814,655
-7,715,685
-14,421,172
-22,136,857
-7,714,345
-832,682
-8,547,027
-4,396,143
0
-4,396,143
-41,131,765
3,202,081
327,942
7,802,587
-302,381,010
-49,162,039
-343,412,520
-340,210,439
15,933,592
-2,384
15,931,208
-324,279,231
-1,583,566,109
308,383
-1,907,536,957

Notes on the Balance Sheet and Profit and Loss Account
for the Fiscal Year from January 1 to December 31, 2003.
I. GENERAL EXPLANATIONS
Accounting
The annual financial statements of EM.TV & Merchandising AG (hereinafter referred to as EM.TV AG) have been
prepared in accordance with the regulations of the German Commercial Code (HGB) for large limited liability corporations,
simultaneously applying § 267, para. 3, clause 2 of the German Commercial Code and the supplementary
provisions of §§ 150 et seq. of the German Joint Stock Corporation (AktG). The parent company, EM.TV
AG, Unterföhring, draws up consolidated financial statements for the largest group of consolidated companies.
The consolidated financial statements are available for inspection at the registered office of the company.
II. ACCOUNTING AND VALUATION METHODS
1. Accounting and valuation methods
Balance sheet
The accounting and valuation methods applied by the company are unchanged in comparison with the previous
year.
In view of the repayment of a convertible bond issued in 2000 and due in February 2005 with a cumulative nominal
amount of Euro 469 million which EM.TV AG is unable to service from today’s point of view, the Management
Board drew up a concept for restructuring the convertible bond. Agreement was reached on this concept with a
large number of the convertible bond holders at the end of November 2003. The concept envisages suspense conditions
which could be contrary to a successful restructuring. In view of the fact that none of the suspensive conditions
had occurred on the balance sheet date, the balance sheet was drawn up on a going concern basis despite
threatening liquidity problems.
Fixed assets are stated at their acquisition cost less accumulated ordinary and impairment depreciation.
Intangible assets are amortized and tangible fixed assets are depreciated on a straight-line, pro rata temporis
basis over an estimated useful life of three to 20 years. If film and merchandising rights have an unlimited term,
an estimated useful life of 20 years is applied in view of the fact that film and merchandising rights are running
particularly long for children’s programs. Past experience has shown that film rights for children’s programs can
be successfully marketed even after several years. Film rights are subjected to impairment amortization in individual
cases. Film rights have been depreciated in an impairment basis in individual cases. In addition to ordinary
amortization charges, the carrying values of film rights are reduced by asset disposals if considered necessary in
view of the related volume of sales.
Low-value assets with acquisition costs of less than EUR 409 are written off in full in the year of acquisition in
accordance with § 6, para. 2 of the German Commercial Code. Financial assets are valued at their respective
acquisition costs, if necessary reduced by impairment write-offs in accordance with § 253, para. 2, clause 3 of the
German Commercial Code.
Accounts receivable and other assets are stated at their nominal amounts.
Identifiable default risks are taken into account by means of specific bad debt provisions in the case of trade
accounts receivable, amounts due from affiliated companies and amounts due from companies in which participations
are held (joint venture companies). General credit risks are taken into account by means of a lump sum
provision on trade accounts receivable. Cash on hand and at banks are stated at their nominal values.
Deferred charges and prepaid expenses include disbursements relating to a specific period after the balance
sheet date.
Miscellaneous provisions include all identifiable risks and contingent obligations in the amount of the anticipated
relevant claims. Interest and bank charges are recorded as in the previous fiscal year.
Liabilities are shown at the anticipated amount due upon settlement.
Notes on the Financial Statements of the AG. Annual Financial Statements. 591

Analysis of Fixed Asset Movements of the AG.
Intangible assets
JANUARY 1, TO DECEMBER 31, 2003 in EUR ‘000 ACQUISITION AND PRODUCTION COSTS
Film and merchandising rights, EDP programs
Advance payments
Total intangible assets
Tangible assets
Buildings on third party land
Other equipment, factory and office equipment
Total tangible assets
Financial assets
Investments in associated companies
Loans to associated companies
Investments
Loans to companies in which participations are held
Total financial assets
Total
Balance
1/1/2003
52,457,092
2,645,398
55,102,490
2,512,899
3,415,067
5,927,966
591,268,951
7,689,170
1,514,371,809
765,284
2,114,095,214
2,175,125,670
Additions
2,503,886
5,699,466
8,203,352
0
177,084
177,084
13,837,568
521,902
355,535
13,263
14,728,268
23,108,704
160 Annual Financial Statements. Analysis of Fixed Asset Movements of the AG.
Disposals
247,350
0
247,350
0
6,215
6,215
554,382,402
0
897,984,152
185,344
1,452,551,898
1,452,805,464
Transfers
599,795
-599,795
0
0
0
0
52,544
0
-52,544
0
0
0
Balance
31/12/2003
55.313.423
7.745.069
63.058.491
2.512.899
3.585.936
6.098.835
50.776.661
8.211.072
616.690.648
593.203
676.271.584
745.428.910

Additions
3,377,174
1,252,661
4,629,835
291,695
570,860
862,556
5,657,707
521,902
62,695,825
0
68,875,434
74,367,825
31/12/2002
26,046,459
2,645,398
28,691,857
1,743,484
1,286,559
3,030,043
119,285,579
0
473,709,355
765,284
593,760,218
625,482,118
Balance
1/1/2003
26,410,633
0
26,410,633
769,415
2,128,508
2,897,923
471,983,372
7,689,170
1,040,662,454
0
1,520,334,996
1,549,643,552
Disposals
0
0
0
0
6,215
6,215
444,382,402
0
883,900,819
0
1,328,283,221
1,328,289,436
Transfers
0
0
0
0
0
0
14,043
0
-14,043
0
0
0
31/12/2003
29,787,807
1,252,661
31,040,468
1,061,110
2,693,153
3,754,264
33,272,720
8,211,072
219,443,417
0
260,927,209
295,721,940
31/12/2003
25,525,616
6,492,407
32,018,023
1,451,789
892,783
2,344,572
17,503,941
0
397,247,231
593,203
415,344,375
449,706,970
611
ACCUMULATED DEPRECIATION NET BOOK VALUE

Profit and loss account
The profit and loss account has been drawn up in accordance with the cost summary method as defined in § 275,
para. 2 of the German Commercial Code.
Realization of sales
Regarding TV rights, the Group mainly acts in its own name. Unless firm exploitation rights are involved over which
the Group has powers of disposition for certain countries in any case on the strength of co-production contracts,
it acquires the necessary rights from licensors for certain countries and for certain periods. The relevant exploitation
rights which may be unlimited in certain cases are normally acquired for a period of five to 20 years. On the
basis of the broadcasting and exploitation rights acquired, EM.TV then grants sub-licenses for a limited time and
geographical area to customers in Germany and other countries. The main customers are TV stations. Sales are
realized as sales business upon the transfer of exclusive broadcasting rights provided our company has fulfilled
its major obligations, i.e. provided the serials or TV programs are ready for broadcasting and only have to be requisitioned
by the TV station. Master tapes for reproduction purposes are provided by EM.TV at no charge at the
request of the licensee; any risks in connection with the master tape provided are borne by the respective producer
and do not concern the company.
Taking account of the above-mentioned conditions, sales are only realized, as in the previous year, if the following
conditions are met:
> if a contract has been signed prior to the balance sheet date;
> if the serials or programs are complete and have been delivered or are ready for delivery;
> if it can be assumed that there are no doubts concerning settlement of the claims;
> if the total amount of the royalty payments is fixed, if it has been agreed with the licensee and is payable by
the licensee even if the serials or programs are not broadcast;
> if the license period has commenced.
If the criteria for a sales transaction are not met, sales are treated as income on an instalment basis.
Distribution and selling commissions for film rights are recorded when the relevant contracts are signed as our
work has then been performed.
EM.TV operates on the basis of agency agreements in the merchandising sector. The owners of rights commission
our group companies as agents to acquire licenses for the license topics in question. The Group company is normally
commissioned for approximately three years.
The corresponding commission income is recorded when the relevant agreements have been signed with the licensees.
Amortization and sales-related expenditure for film rights
Film rights include under fixed assets are amortized on a straight-line basis over their estimated useful lives, normally
between five and 20 years. In order to record income and expenditure on a causation and performance-related
basis, a utilization-related disposal of assets is applied proportionately to the sales achieved in addition to
straight-line amortization. The disposals to be recorded in addition are disclosed under cost of materials.
2. Foreign currency conversions
Short-term liabilities and receivables denominated in foreign currencies and originating from normal business
transactions and which have a maximum term of one year are converted at the closing rate on the balance sheet
date. Long-term liabilities and receivables denominated in foreign currencies are valued at the rate applicable on
the transaction date and are valued on the year-end closing date in compliance with the prudence principle (including
losses but excluding unrealized gains).
162 Annual Financial Statements. Notes on the Financial Statements of the AG.

III. INFORMATION ON THE INDIVIDUAL ITEMS IN THE BALANCE SHEET AND PROFIT AND
LOSS ACCOUNT
BALANCE SHEET
Information provided on the current year relates to the period from January 1 to December 31, 2003 unless stated
otherwise; the previous year relates to the period from January 1 to December 31, 2002.
1. Fixed assets
Fixed assets movements in the fiscal year are shown in the Analysis of Fixed Asset Movements.
2. Investments in associated companies
Our comments on the associated companies in which our company owns all the share capital or a majority of the
share capital are as follows:
Domestic associated companies
ACC-Agentur für Communication und Concept Gesellschaft für Public Relation GmbH, Unterföhring
(100 percent holding)
In its financial statements at December 31, 2003, this associated company shows a net profit for the year of EUR
20,823 (2002: a net loss of EUR 4,911) on sales of EUR 87,162 (2002: EUR 24). The equity of the company
amounts to EUR 25,001 at December 31, 2003 (2002: EUR 4,179).
EM-Sport Sportmarketing GmbH, Unterföhring (100 percent holding)
In its financial statements at December 31, 2003, this associated company shows a net loss for the year of EUR
40,118 (2002: a net profit of EUR 178) on sales of EUR 0 (2002: EUR 0). The equity of the company amounts to
EUR 12,991,755 at December 31, 2003 (2002: a capital deficit of EUR 207,494).
EM Supply Handelsgesellschaft mbH in liquidation, Unterföhring (100 percent holding)
In its financial statements at December 31, 2003, this associated company shows a loss of EUR 627,413 (2002:
a loss of EUR 1,784,179) on sales of EUR 773,180 (2002: EUR 1,664.302). A capital deficit of EUR 2,459,658
(2002: a capital deficit of EUR 1,832,245). The company was liquidated with the resolution of May 6, 2003 and
liquidation proceedings were initiated. A letter of comfort has been issued by EM.TV with regard to the continuation
of operational activities by this associate company.
EM-VA Film- und TV-Produktions GmbH, Unterföhring (100 percent holding)
In its financial statements at December 31, 2003, this associated company shows a net profit of EUR 1,120
(2002: a loss of EUR 3,631) on sales of EUR 0 (2002: EUR 0). The company shows a capital deficit of EUR 12,558
at December 31, 2003 (2002: a capital deficit of EUR 3,560).
EM.TV Musikverlag GmbH, Unterföhring (100 percent holding)
This associated company shows a net profit of EUR 13,823 (2002: a loss of EUR 25,432) on sales of EUR 100,428
(2002: EUR 61,626). The equity of the company amounts to EUR 51,806 at December 31, 2003 (2002: EUR
37,983).
EM.TV Publishing GmbH, Unterföhring (100 percent holding)
In its financial statements at December 31, 2003, this associated company shows a net profit of EUR 13,203
(2002: a loss of EUR 350,431) on sales of EUR 52,021 (2002: EUR 37,212). The equity of the company
amounts to EUR 426,876 at December 31, 2003 (2002: EUR 413,704).
EM.TV Home Entertainment GmbH, Unterföhring (100 percent holding)
In the available financial statements at December 31, 2003, this associated company shown a net loss of EUR
1,708 (2002: a net loss of EUR 2,197) on sales of EUR 0 (2002: EUR 0) and an equity of EUR 89,778 (2002:
EUR 91,487).
637

Junior Produktions GmbH, Unterföhring (100 percent holding)
In its financial statements at December 31, 2003, this associated company shows a net loss of EUR 173,537
(2002: a net profit of EUR 29,667) on sales of EUR 40,298 (2002: EUR 325,018). The capital deficit at December
31, 2003 amounts to EUR 230,334 (2002: a capital deficit of EUR 58,077). A letter of comfort regarding the financial
position of this associated company has been issued by EM.TV.
Tabaluga Film- und Fernsehproduktion GmbH, Unterföhring (100 percent holding)
In its financial statements at December 31, 2003, this associated company shows a net loss of EUR 676,149
(2002: a net loss of EUR 366,481) on sales of EUR 104,631 (2002: EUR 50,000), together with a capital deficit
of EUR 6,850,773 (2002: a capital deficit of EUR 6,562,371).
Produktions-GbR The World of Tosh, Unterföhring (75 percent holding)
In its financial statements at December 31, 2003, this associated company show a net profit of EUR 31,855
(2002: a net loss of EUR 2,375,452) on sales of EUR 236,630 (2002: EUR 882,886), together with an equity of
EUR 751,479 (2002: EUR 719,624).
Produktions-GbR Tabaluga II, Unterföhring (65 percent holding)
In its financial statements at December 31, 2003, this associated company shows a net profit of EUR 1,474,483
(2002: a net profit of EUR 1,266,423) on sales of EUR 2,517,827 (2002: EUR 1,664,395), together with an
equity of EUR 835,861 (2002: EUR 1,500,864).
Produktions-GbR Nick & Perry, Unterföhring (90 percent holding)
In its financial statements at December 31, 2003, this associated company shows a net loss of EUR 67,864
(2002: a net profit of EUR 181,449) on sales of EUR 49,364 (2002: EUR 311,763), together an equity of EUR
2,182,959 (2002: an equity of EUR 2,250,823).
Produktions-GbR Cocco Bill, Unterföhring (60 percent holding)
In its financial statements at December 31, 2003, this associated company shows a net loss of EUR 280,519
(2002; a net profit of EUR 268,267) on sales of EUR 488,479 (2002: EUR 674,718), together with an equity of
EUR 488,130 (2002: EUR 207,612).
Produktions-GbR Castillo II, Unterföhring (66,5 percent holding)
In its financial statements at December 31, 2003, this associated company shows a net loss of EUR 8,475 (2002:
a net profit of EUR 11,155) on sales of EUR 1,950 (2002: 47,360), together with an equity reduced by withdrawals
of EUR 169,337 (2002: EUR 205,665).
OM-Oktoberfest München, Merchandising, Film- und Fernseh GmbH i.L., Unterföhring
(100 percent holding)
In its financial statements at December 31, 2003, this associated company shows a net loss of EUR 1,594 (2002:
a net profit of EUR 862) on sales of EUR 0 (2002: EUR 0). The equity of the company at December 31, 2003
amounts to EUR 15,574 (2002: EUR 2,186). A capital increase of EUR 15,000 was resolved on February 4, 2003.
The company was dissolved on December 10, 2003 and liquidation proceedings were initiated.
EM.TV Vermögensverwaltungs AG, Unterföhring (100 percent holding)
As part of the restructuring of EM.TV AG, 100 percent of the shares were acquired with effect from November 17,
2003. The company has commenced no business activities to date. The equity on the balance sheet date amounts
to EUR 46,533 and the net loss for the year to EUR 3,467.
EM.TV Verwaltungs GmbH, Unterföhring (100 percent holding)
As part of the restructuring of EM.TV AG, 100 percent of the shares were acquired with effect from November 17,
2003. The company has commenced no business activities to date. The equity on the balance sheet date amounts
to EUR 24,435 and the net loss for the year to EUR 565.
EM.TV Beteiligungs GmbH & Co. KG, Unterföhring (100 percent holding)
As part of the restructuring of EM.TV AG, 100 percent of the shares were acquired with effect from November 17,
2003. The company has commenced no business activities to date. The company shows a net profit for the year
of EUR 0 and an equity of EUR 100.
164 Annual Financial Statements. Notes on the Financial Statements of the AG.

PLAZAMEDIA GmbH Film & TV-Produktion, Ismaning (100 percent holding)
The indirect 100 percent of the shares were acquired with effect from May 30, 2003. In its financial statements
at December 31, 2003, this associated company shows a net profit of EUR 2,726,976 for the period from May 30,
2003 to December 31, 2003 on sales of EUR 49,582,583. The equity of the company amounts to EUR 7,314,686
at December 31, 2003. No figures are provided in respect of the previous year as the company was only established
in 2003.
PMM Sports Production GmbH, Ismaning (85 percent holding)
EM.TV AG acquired indirect 85 percent of the shares with effect from May 30, 2003. In its financial statements at
December 31, 2003, this associated company shows a net profit of EUR 247,809 for the period from June 1, 2003
to December 31, 2003 on sales of EUR 1,562,037. The equity at December 31, 2003 amounts to EUR 855,301.
No figures are provided in respect of the previous year as the company was only established in 2003.
Sport Media Holding GmbH, Essen (50,1 percent holding)
EM.TV AG assumed an indirect 50.1 percent of the shares in the company with effect from June 30, 2003. In its
financial statements at December 31, 2003, this associate company shows sales of EUR 0 (2002: EUR 0) for the
period from June 30, 2003 to December 31, 2003, together with a net loss of EUR 27,262 (2002: EUR 0) and an
equity of EUR 15,312.372 (2002: EUR 25.000).
DSF Deutsches Sportfernsehen GmbH, Ismaning (40,65 percent holding)
EM.TV AG assumed an indirect 40.65 percent of the shares in the company with effect from June 30, 2003. In its
financial statements at December 31, 2003, this associate company shows sales of EUR 59,802,475 and a net
loss of EUR 785,633 for the period from June 30, 2003 to December 31, 2003. The equity amounts to EUR
16,714,366 at December 31, 2003. No figures are provided in respect of the previous year as the company was
only established in 2003.
Sport1 GmbH, Ismaning (40,65 percent holding)
EM.TV AG assumed an indirect 40.65 percent of the shares in the company with effect from June 30, 2003. In its
financial statements at December 31, 2003, this associate company shows sales of EUR 5,479,663 and a net
loss of EUR 2,291,812 for the period from June 30, 2003 to December 2003. The capital deficit at December 31,
2003 amounts to EUR 1,266,812. No figures are provided in respect of the previous year as the company was only
established in 2003.
Foreign associated companies (all figures converted into EUR)
EM.TV & Wavery BV, Rijswijk, The Netherlands (100 percent holding)
This associated companies shows a net loss of EUR 11,668,658 (2002: EUR a net profit of EUR 175,196) on sales
of EUR 1,332,232 (2002: EUR 3,915,028). The capital deficit at December 31, 2003 amounts to EUR 10,608,012
(2002: an equity of EUR 1,197,407).
EM.TV France S.A.S. (formerly EM.TV Images S.A.S.), Paris, France (100 percent holding)
EM.TV AG acquired the second 50 percent of the joint venture EM.TV Images S.A.S. from the previous partner with
effect from January 1, 2003. The company was renamed EM.TV France. In its financial statements at December
31, 2003, this associated company shows a net loss of EUR 219,393 (2002: a net loss of EUR 634,964) with a
capital deficit of EUR 921,933 (2002; EUR 690,379). Sales in the report year amounted to EUR 148,098 (2002:
EUR 139,606).
Haffa Inc., Hermosa Beach, California, USA (100 percent holding)
This company has been dormant since January 1, 1996.
The Jim Henson Company Inc., Los Angeles, USA (100 percent holding)
The sale of the subsidiary The Jim Henson Company to JHC Holding Company LLC was concluded in the third quarter
of 2003 as part of the restructuring process. The annual general meeting of EM.TV & Merchandising AG which
was held in Munich on July 23, 2003 approved the sale contract with a majority of 99.97 percent. The transaction
was executed on July 31, 2003 after the shareholders has given their approval. Approximately EUR 77 million was
generated for EM.TV AG by the sale of The Jim Henson Company, with a corresponding book loss of EUR 10.5 million.
651

3. Investments
Domestic investments
Junior.TV Verwaltung GmbH, Unterföhring (50 percent holding)
In its financial statements at December 31, 2003, the company shows a loss for the year of EUR 787 (2002: a net
profit of EUR 31,711) on sales of EUR 0 (2002: EUR 0). The equity at December 31, 2003 amounts to EUR 29,165
(2002: 29,952).
Junior.TV GmbH & Co. KG, Unterföhring (50 percent holding)
In its financial statements at December 31, 2003, this associated company shows a net loss of EUR 41,049,550
(2002: a net profit of EUR 13,762,362) on sales of EUR 12,960,855 (2002: EUR 30,315,568), together with an
equity of EUR 75,385,267 (2002: EUR 141,660.696).
Tabaluga Coproduktions-GbR, Unterföhring (36.02 percent holding)
In its financial statements at December 31, 2003, this associated company shows a net loss of EUR 415,703
(2002: a net profit of EUR 546,173) on sales of EUR 56,534 (2002: EUR 276,050), together with an equity of EUR
2,039,919 (2002: EUR 3,105,343).
Produktions-GbR Fairy Tale Police Department, Unterföhring (50 percent holding)
In its financial statements at December 31, 2003, this associated company shows a net loss of EUR 45,223 EUR
(2002: EUR 1,153,094) on sales of EUR 55,040 (2002: EUR 841,679), together with an equity of EUR 428,964
(2002: EUR 474,187).
Produktions-GbR Flipper & Lopaka 2, Unterföhring (50 percent holding)
In its financial statements at December 31, 2003, this associated company shows a net loss of EUR 18,857
(2002: a net profit of EUR 870,592) and on sales of EUR 277,654 (2002: EUR 836,331), together with an equity
of EUR 1.977.085 EUR (2002: EUR 1,995,943).
Constantin Film AG, Munich (16.4 percent holding)
The 16.4 percent holding in Constantin Film AG was sold to the Swiss media company Highlight Communications
AG for a sale price of EUR 4.50 for each Constantin share with effect from April 23, 2003.
Lethe GmbH, Grünwald (25 percent holding)
This company only conducts managerial activities and has no independent operating activities of its own. In its
financial statements at December 31, 2003, the company shows a net loss of EUR 58,743 (2002: a net profit of
EUR 3,811), together with an equity of EUR 40,328 (2002: EUR 99,071).
Tele München Gruppe (TMG), München (45 percent holding)
The consolidated financial statements of this associated company shows a net profit of EUR 9,812 thousand on
sales of EUR 178,227 thousand based on IAS for the period from January 1 to December 31, 2002. The equity at
December 31, 2002 amounted to EUR 57,493 thousand. No more recent figures were available for Tele München
Gruppe when the present annual financial statements were being prepared.
FJE Film & TV GmbH, Unterföhring (25 percent holding)
The 25 percent share in this company was sold to a co-shareholder with the purchase contract dated October 7,
2003.
Foreign investments (all figures converted into EUR)
Yoram Gross-EM.TV Pty Ltd., Sydney, Australia (50 percent holding)
This company shows a net profit of EUR 345,999 at December 31, 2003 (2002: a net profit of EUR 559,204) on
sales of EUR 5.524.235 (2002: EUR 4,561,231). The equity at December 31, 2003 amounts to EUR 5,093,885
(2002: EUR 4,282,798).
Planeta Junior, S.L., Barcelona, Spain (50 percent holding)
In its annual financial statements at December 31, 2003, this associated company shows a net profit of EUR
621,529 (2002: a net profit of EUR 380,862), together with an equity of EUR 1,211,737 (2002: EUR 692,910).
Sales in the report year amounted to EUR 6,427,973 (2002: EUR 4,488,120).
166 Annual Financial Statements. Notes on the Financial Statements of the AG.

RECEIVABLES DUE FROM ASSOCIATED COMPANIES Table 1
in EUR
Sport Media Holding GmbH
EM.TV & Wavery BV
EM-Sport Sportmarketing GmbH
Junior Produktions GmbH
EM Supply Handelsgesellschaft mbH
DSF Deutsches Sportfernsehen GmbH
PLAZAMEDIA GmbH Film & TV-Produktion
Sport1 GmbH
EM-VA Film- und TV-Produktions GmbH
others
Total
Table 1
Table 2
3,167,255
2,219,893
2,067,413
242,759
168,485
70,013
26,875
20,162
24,214
4,117
8,011,186
RECEIVABLES DUE FROM COMPANIES IN WHICH Table 2
PARTICIPATIONS ARE HELD in EUR
Planeta Junior, S.L.,
Yoram Gross-EM.TV Pty Ltd.
Tabaluga Coproduktions-GbR
Lethe GmbH
Total
1,093,120
513,940
407,612
17,655
2,032,326
Speed Investment Ltd., St. Helier, Jersey (22.3 percent holding)
The remaining shares in the Formula 1 company Speed Investment, which was the subject matter of a pledge
agreement, were sold to a subsidiary of Bayerische Landesbank for a price of EUR 8.5 million with effect from
May 5, 2003. In addition, EM.TV acquired the right to participate pro rata in any additional income accruing in the
event of a resale of the Speed shares by the banks. The judicial proceedings pending between the company and
the relevant bank in Jersey have been discontinued.
4. Trade receivables
EUR 4,807,719 (2002: EUR 3,253,791) of the total trade receivables of EUR 12,682,167 (2002: EUR 14,572,162)
have an outstanding term of more than one year.
Trade receivables include receivables which are not shown gross relating to licensees and other contracting parties
in connection with the exploitation of the sale and marketing contracting between Junior.TV GmbH & Co. KG
and EM.TV & Merchandising AG. EM.TV AG bills sales in its own name but owes the billed amounts to Junior.TV
GmbH & Co. KG after deducting the agreed commissions. In relations per se, there is a service agreement on a
commission basis therefore. The receivables are therefore set off against the liabilities to Junior.TV GmbH & Co.
KG arising from the transfer of sales to Junior.TV GmbH & Co. KG.
5. Receivables due from associated companies
Receivables from associated are shown in the balance sheet as shown in Table 1.
Total receivables from associated companies in the amount to EUR 8,011,186 EUR (2002: EUR 13,252,442) are
due within one year. Total receivables from associated companies include trade receivables of EUR 5,746,539
(2002: EUR 5,714,593).
6. Receivables due from companies in which participations are held
Total receivables due from companies in which participations are held amount to EUR 2,032,326 (2002: EUR
19,843,723). Thereof, receivables of EUR 3,550 (2002: EUR 8,454,151) have a term of more than one year.
7. Other assets
Other assets amount to EUR 20,966,090 (2002: EUR 28,330,984). Thereof, EUR 766,938 (2002: EUR 0) are payable
after one year. This item mainly includes guarantee payments of EUR 9,969,038 (2002: EUR 11,751,426)
for sales and marketing rights. Other assets also include debit balances in accounts payable in the amount of EUR
1,250,498 (2002: EUR 1,439,988), miscellaneous receivables of EUR 7,241,841 (2002: EUR 6,677,434) and tax
refund claims of EUR 2,504,713 (2002: EUR 7,889,403).
671

SHAREHOLDERS' EQUITY in EUR Table 3
Balance 1/1/2002
Withdrawal from special reserve
on account of repayment
Contribution from conversion of convertible loan
Capital increase from convertible loan
Net loss for the year
Balance 31/12/2002
Capital increase from convertible loan
Net loss for the year
Balance 31/12/2003
8. Cash on hand and at banks
Subscribed
capital
144,081,116
0
1,773,000
0
145,854,116
200,000
0
146,054,116
Resolved
capital increase
1,773,000
0
-1,773,000
200,000
200,000
-200,000
0
Capital
reserve
1.998.264.449
0
0
75,892
0
1,998,340,341
6,885
0
1,998,347,226
168 Annual Financial Statements. Notes on the Financial Statements of the AG.
Special
reserve
1,095,946
-308,383
0
-189,774
0
597,789
-16,606
0
581,183
EUR 10,543,941 (USD 9.5 million) of the total liquid assets of EUR 86,476,814 (2002: EUR 57,499,776) have
been deposited on a blocked account in order to obtain a payment guarantee issued by the relevant banks in connection
with the FIFA World Cup 2006TM .
9. Deferred charges and prepaid expenses
This item mainly includes a loan discount of EUR 14,422,332 (2002: EUR 25,504,809), resulting from the issue
of the convertible bond on February 16, 2000. The value of the subscription right attributable to the convertible
bond of EUR 50 million (12.5 % of the nominal value) had to be transferred to the capital reserve in accordance
with §272, para. 2, No. 2 of the German Commercial Code (HGB). Based on predominant opinion, this difference
is to be regarded as a loan discount for which there is an option to capitalize the amount in question or to write it
off immediately as an expense in accordance with §250, para. 3 of the German Commercial Code. EM.TV has
exercised the option right and has established a loan discount of EUR 50 million as an asset. The loan discount
is being written off over the relevant term with an effective rate of interest of 10.1267 percent based on the effective
interest rate method. The loan discount gave rise to an interest expense of EUR 11.1 million (2002: EUR
9.7 million) in 2003.
10. Shareholders’ equity
The development of shareholders’ equity is shown in the following Analysis of Shareholders’ Equity.
Share capital
The share capital of the Group parent company amounted to EUR 146,054,116 on December 31, 2003, divided
into 146,054,116 registered shares.
Following the registration of the item shown separately at December 31, 2002, namely “Capital contributions
made for executing a resolved capital increase” with effect from January 30, 2003, the share capital was increased
to EUR 146,054,116 by exercising convertible rights on a convertible loan and convertible bonds of EUR
200,000 issued in 2002.
Capital reserve
The capital reserve of the Group amounted to EUR 1,998,347,225.78 at December 31, 2003. The exercise of
conversion rights in connection with convertible bond loans resulted in an increase of EUR 6,884.29 in the
report year.
Special reserve
The special reserve amounted to EUR 581,183.38 at December 31, 2003.
On the strength of the capital increase from internal funds carried out in accordance with the resolution of the
annual general meeting on July 22, 1999, the holders of convertible loans receive new registered shares,
Earnings/loss
brought forward
-1,583,566,109
308,383
0
0
-324,279,231
-1,907,536,957
0
-171,644,751
-2,079,181,708
Table 3
Total
561,648,402
0
0
86,118
-324,279,231
237,455,289
-9,721
-171,644,751
65,800,817

the total arithmetical amount of which in relation to the share capital exceeds the nominal amount of the convertible
loan. According to § 218, clause 2 of the German Joint Stock Corporation Act (AktG), a special reserve of EUR
5,873,510.48 was established in order to cover the difference between the issue amount of the convertible loans
and the higher total nominal amount of the subscribed shares granted. The subscribed capital is replenished from
the aforesaid reserve when the conversion rights on connection with the convertible loans are exercised. Upon
repayment of the convertible loans, the corresponding amount of the special reserve will be set off against the
accumulated loss by means of an allocation with no net income effect.
The special reserve was reduced by a total of EUR 16,605.24 to EUR 581,183.38 on December 31, 2003 in connection
with the conversions and loan repayments carried out in the 2003 fiscal year. The balance will be used to
cover future conversion claims.
Authorized capital
Authorized capital I
Based on the resolution of the annual general meeting on July 26, 2000 and subject to the approval of the
Supervisory Board, the Management Board was empowered to increase the share capital by a total amount of EUR
57,456,257 by means of a single or multiple issue of new bearer shares for cash or a contribution in kind by July
25, 2005 and to exclude the subscription right of shares under certain conditions, especially in the event of capital
increases for contributions in kind.
Authorized capital II
Based on the resolution of the annual general meeting on July 26, 2000 and subject to the approval of the
Supervisory Board, the Management Board was empowered to increase the share capital by a total amount of EUR
14,364,064 by means of a single or multiple issue of new registered shares for cash or a contribution in kind by
July 25, 2005 and to exclude the subscription right of shares under certain conditions.
Conditional capital
Conditional capital I
After the exercise of conversion rights on connection with convertible loans, the share capital was increased by
EUR 1,304,500 by the issue of new bearer shares. The conditional capital increase is designed to discharge conversion
rights in connection with employee convertible loans, the issue of which was resolved by the annual general
meeting on September 17, 1997, last amended by the resolution of the annual general meeting on July 22,
1999. The subscription right of shareholders is excluded.
Conditional capital II
The share capital is conditionally increased by a nominal amount of up to EUR 10,862,484.24 by the issue of new
bearer shares. The conditional capital increase is designed to discharge option rights, the issue of which was resolved
by the annual general meeting on July 22, 1999. The conditional capital increase will only be effected if the
holders of such rights exercise their option rights.
Conditional capital III
The share capital is conditionally increased by a nominal amount of up to EUR 3,759,642 by the issue of new bearer
shares. The conditional capital increase is designed to discharge conversion rights in connection with the convertible
loan issued in February 2000, the issue of which was resolved by the annual general meeting on July 22,
1999, amended by the resolution of the annual general meeting on July 26, 2000. The conditional capital increase
will only be effected if the holders of such convertible bonds exercise their conversion rights.
Conditional capital IV
The capital is conditionally increased by a nominal amount of up to EUR 53,474,061 by the issue of new bearer
shares. The conditional capital increase will only be executed if the holders of option warrants or conversion rights
linked with the option or convertible bonds to be issued by EM.TV & Merchandising AG or a wholly-owned subsidiary
by July 25, 2005 exercise their option or conversion rights.
Contribution in connection with the conversion of bonds which have not yet been
registered
After the exercise of conversion rights in connection with convertible loans in 2003, the shareholders’ equity increased
by EUR 17,500 from conditional capital I. The registration was effected in 2004. The shares are fully paid
and made out to bearer.
691

Convertible bonds
Dividend distributions
EM.TV & Merchandising AG distributed no dividends in the 2003 fiscal year.
Statutory reserve
No allocation to the statutory reserve has been made in accordance with § 150 of the German Joint Stock
Corporation Act (AktG) in view of the fact that the company generated no net income in 2003 and because the
capital reserve exceeds ten percent of the share capital.
11. Provisions and liabilities
Miscellaneous provisions have developed as follows:
Provisions
MATURITY OF LIABILITIES in EUR ‘000 Table 4
Advances received on account of orders
Trade accounts payables
Liabilities due to affiliated companies
Amounts due to companies in which participations are held
Other liabilities
Total
Less than 1 year
0
1,014
15,242
3,445
20,821
17,213
57,735
1 to 5 years
451,458
0
8
0
25
0
451,491
The provision for outstanding royalty payments in the among of EUR 1,400 thousand is mainly connected with a
volume report concluded in the report period. The provisions for contingent losses relate to rent obligations for
unused office areas for the duration of the relevant rent contracts.
The provision for outstanding invoices includes, inter alia, the anticipated costs amounting to EUR 1,150 thousand
in connection with the sale of Junior Web GmbH in 2001. The allocation to the provision for personnel expenses are
mainly attributable to accumulated overtime and outstanding vacation entitlements of employees in the report year.
The provision for commissions include, inter alia, estimated statements of account for licensors in the amount of
EUR 960 thousand.
The provision for legal and consultancy expenses relate to various pending litigation cases and corresponding
costs in connection with the restructuring of the convertible bond. This allocation is mainly attributable to the costs
relating to the convertible bond.
170 Annual Financial Statements. Notes on the Financial Statements of the AG.
More than 5 years
0
0
0
0
0
0
Table 4
Table 5
0
Total
451,458
1,014
15,250
3,445
20,846
17,213
509,226
PROVISIONS in EUR ‘000 Table 5
Outstanding license payments and production costs
Onerous contracts
Preparation and audit of the financial statements
Outstanding invoices
Commission claims
Personnel expenses
Legal and consultancy costs
Miscellaneous
Total
Balance
1/1/2003
2,601
3,897
850
1,783
1,915
400
6,529
399
18,374
Utilization
1,232
448
850
628
384
400
4,529
331
8,802
Reversal
1,369
766
0
4
326
0
0
79
2,544
Appropriation
1,500
0
474
231
0
474
9,520
230
12,429
Balance
31/12/2003
1,500
2,683
474
1,382
1,205
474
11,520
219
19,457

Table 6
EMPLOYEE CONVERTIBLE BOND in EUR ‘000 Table 6
Balance at January 1, 2003 32
Reduction due to exercise of conversion right and repayment -1
Balance at December 31, 2003 31
12. Convertible loans
Employee convertible loans
Based on the authority granted by the annual general meeting on September 17, 1997, last amended by the resolution
passed by the annual general meeting of July 22, 1999, EM.TV AG issued a 2 percent p.a. convertible loan
to employees and members of the corporate bodies of the group parent companies with a total nominal value of
EUR 316,490 and with a term of up to ten years. The related conversion rights into new bearer shares may be exercised
by the holders for 50 percent of the shares no earlier than four years after the grant of the conversion right.
The first exercise date for some of the holders was October 28, 1999. By the balance sheet date, December 31,
2003, convertible bonds with a total nominal value of EUR 249,792 had been converted into the envisaged bearer
shares after making the necessary additional payment. Thereof, convertible loans of EUR 895 were attributable
to the 2003 fiscal year which were converted into 17,500 bearer shares after remitting the additional relevant
payment. The new bearer shares were generated from the above-mentioned Conditional Capital I which was reduced
by EUR 1,304,500 as a result of the conversions. No convertible loans were repaid in the 2003 fiscal year,
thereby resulting in a convertible loan balance of EUR 31,316 at December 31, 2003.
Convertible bond
Based on the authorization granted by the annual general meeting held on July 22, 1999, EM.TV AG issued convertible
bonds on the capital market with a five-year term on February 16, 2000 with a nominal amount of EUR
400,000,000 and an interest coupon of 4 percent p.a..
The bond has a conversion right under which the holder receives a total of 9.3994 bearer shares from the
Conditional Capital III for a nominal amount of EUR 1,000.
Repayment of the non-converted bond amounts is scheduled for February 16, 2005 at an accumulated nominal
amount of EUR 1,172.51 for one bond with a nominal amount of EUR 1,000 resulting in an effective interest rate
of 7 percent.
The convertible bond has been admitted for dealings on the Frankfurt Stock Exchange.
On December 31, 2003, the outstanding nominal amounted to EUR 399,987,000 after a nominal EUR 13,000 of
the bond had been converted into 118 new bearer shares in the past from Conditional Capital III. The accumulated
repayment amount at December 31, 2003 amounted to EUR 451,427,080.
Stock options
At the annual general meeting held on July 22, 1999, the Management Board of the group parent company was
authorized to establish a stock option program for employees and members of the Management Board of group
companies. The total volume consists of 10,862,484 option rights. 30 percent of this total volume is attributable
to members of the Management Board and 70 percent to employees of group companies. The option conditions
(1999 Stock Option Program) envisage that a maximum of 50 percent of the option rights may be exercised at the
earliest two years after their issue date and the remaining 50 percent at the earliest four years after the issue of
their issue date if the pre-tax DVFA earnings of the company have risen by average of at least 15 percent p.a. in
the fiscal years since the date of their issue.
By exercising the option right, shares may be bought in a ratio of 1:1 for payment of the base price. The base price
is the average of the closing rates in Xetra trading for at least ten stock market trading days prior to the issue of
the option right, plus an increase factor of 5 percent p.a. for the period up to the exercise of the option right. As
an alternative, option beneficiaries may be granted compensation in cash.
The option rights must be exercised within 10 years of their date of issue. There is a special termination right if an
employee leaves the company and if his option is not exercised on the dates specified in the option conditions. As
a result of the increasing alignment of International Financial Reporting Standards (IFRS) to the US-GAAP and
711

TRADE ACCOUNTS PAYABLE in EUR ‘000 Table 7
Liabilities to licensors
Trade accounts payable
Total
on account of a possible disclosure of personnel expenses with no effect on liquidity, the annual general meeting
held on July 26, 2000 resolved the following amendment to the stock option plan (Stock Option Program 2000):
As an alternative, the average value of the opening and closing rate of the EM.TV shares on the Frankfurt am Main
Stock Exchange on the resolution date of the Management Board or the Supervisory Board on the issue of option
rights (reference price) may also be selected as the base price (reference price method) but at least the pro rata
amount of the share capital for one share plus a premium of 10 percent on the reference price as an earnings
objective if it is possible to exercise the option rights within two years of their date of issue, or a 20 percent premium
for option rights which may only be exercised four years after their issue date (reference price method). The
rules for establishing the base price, the price increase factor, the possibility of a cash compensation and the
alignment with the DVFA earnings lapse if the reference price method is applied. After the annual general meeting
held on July 26, 2000, the Management Board is only authorized to issue option rights on the basis of the reference
price method.
Upon exercising the option right, the beneficiary receives ordinary shares in the company, with the shares originating.
Upon exercising the option right, the beneficiary receives ordinary shares in the company, with the shares originating
from the exercise of the aforesaid rights being entitled to share in profits from the start of the fiscal year in
which they originate by exercising the relevant option right.
A total of 399,000 option rights had been issued on December 31, 2003 based on the 1999 stock option plan
(2002: 406,500 shares) and a total of 1,757,500 option rights based in the 2000 stock option program (2002:
1,782,500 shares). 600,000 option rights had been issued to members of the Management Board on the balance
sheet date based on the 2000 stock option plan (2002: 400,000) with reference prices of EUR 2.28 (400,000
shares in total), EUR 1.29 (100,000 shares in total) and EUR 1.60 (100,000 shares in total).
13. Liabilities to banks
The company had no liabilities to banks on the balance sheet date. The amount of EUR 48,912 thousand shown
in the previous year related to the syndicate loan of EM.TV AG (originally EUR 153,388 thousand) which had been
raised in order to finance the limited partner share in Junior.TV GmbH & Co. KG. This was repaid at the end of July
2003 as planned.
14. Trade accounts payable
15. Liabilities due to associated companies
31/12/2003
8,662
6,588
15,250
Liabilities payable to associated companies are mainly to Produktions-GbR Cocco Bill in the amount of EUR 383
thousand, to Produktions-GbR Nick & Perry in the amount of EUR 1,964 thousand and to EM.TV Publishing GmbH
in the amount of EUR 529 thousand. The total amounted to EUR 3,445 thousand December 31, 2003 (2002: EUR
4,895 thousand).
16. Liabilities due to companies in which participations are held
Liabilities to joint venture companies mainly relate to Junior.TV GmbH & Co. KG in the amount of EUR 18,475 thousand
(2002: a receivable of EUR 11,905 thousand) and to Produktions-GbR Flipper & Lopaka 2 in the amount of
EUR 2,079 thousand. The total amounted to EUR 20,846 thousand at December 31, 2003 (2002: EUR 4,573
thousand).
172 Annual Financial Statements. Notes on the Financial Statements of the AG.
31/12/2002
8,284
6,491
14,775
Table 7

Interest liabilities
OTHER LIABILITIES in EUR ‘000 Table 8
Credit balances in receivables
Wage and church tax
Social security contributions
Withholding taxes
Loan liability
Miscellaneous
Total
Table 8
Table 9
31/12/2003
14,011
2,725
240
122
104
0
11
17,213
17. Other liabilities
Interest liabilities include the short-term interest payable on the 4 percent convertible bond which, based on a
resolution of the creditors’ meeting held on January 9, 2004 passed under conditions subsequent will not become
due for payment in the event of a successful restructuring of the convertible bond.
PROFIT AND LOSS ACCOUNT
18. Sales
31/12/2002
14,020
2.387
236
116
0
1,037
63
17,859
Sales are classified as shown in Table 9 based on the relevant sales segments:
Total sales are geographically attributable to the German speaking area in the amount of EUR 8,834 thousand
(2002: EUR 18,360 thousand), to the Rest of Europe in the amount of EUR 1,614 thousand (2002: EUR 18,278
thousand) and to the Rest of the World in the amount of EUR 2,737 thousand (2002: EUR 4,961 thousand). The
downturn in sales is attributable to the event marketing of the Tyson versus Lewis fight in 2002 in the amount of
EUR 16,965 thousand and to the consistently weak market environment for children and youth programs.
19. Other operating income
Other operating income amounting to EUR 18,235 thousand (2002: EUR 37,815 thousand) mainly includes income
arising from exchange differences of EUR 4,614 thousand (2002: EUR 18,784 thousand) and income from the
disposal of fixed assets in connection with the sale of Constantin AG shares for EUR 4,042 thousand. Also included
under this heading are costs recharged to associate companies in the amount of EUR 1,464 thousand (2002:
EUR 1,604 thousand) and income from the release of bad debt provisions on trade accounts receivable in the
amount of EUR 2,547 thousand (2002: EUR 3,770 thousand), income from the release of provisions in the amount
of EUR 2,544 thousand (2002: EUR 3,415 thousand) and non-period income arising from the write-off of liabilities
in the amount EUR 2,918 thousand (2002: EUR 112 thousand).
20. Cost of materials
TV/AV
Merchandising
Miscellaneous
Total
Cost of materials in the amount of EUR 4,984 thousand (2002: EUR 22,137 thousand) include, inter alia, royalty
costs of EUR 3,001 thousand, commission expenses of EUR 1,152 thousand and usage-related disposals of fixed
assets in the amount of EUR 247 thousand.
21. Depreciation and amortization
SALES BY BUSINESS SEGMENTS in EUR ‘000 Table 9
2003
7,103
3,994
2,088
13,185
2002
34,599
4,594
2,406
41,599
The total amount of EUR 25,721 thousand (2002: EUR 4,396 thousand) includes normal amortization and depreciation
of intangible assets and property, plant and equipment together with low-cost assets of EUR 4,057 thousand
and exceptional write-downs of EUR 1,435 thousand on advance payments for intangible assets. This item
also includes current asset write-downs of EUR 20,229 thousand which exceed the normal depreciation and amortization
rates for the company.
731

22. Other operating expenses
Other operating expenses amounting to EUR 58,762 (thousand) (2002: EUR 41,132 thousand) mainly include
the following items:
> Legal, consultancy and audit costs of EUR 26,978 thousand (2002: EUR 10,105 thousand)
> Losses on sales of fixed assets EUR 10,522 thousand (2002: EUR 270 thousand)
> Bad debt provisions of EUR 5,567 thousand (2002: EUR 5.915 thousand)
> Exchange differences of EUR 5,161 thousand (2002: EUR 5,241 thousand)
> Advertising, travelling and trade fair expenses of EUR 2,350 thousand (2002: EUR 4,696 thousand)
> Expenses for the annual general meeting of EUR 1,924 thousand (2002: EUR 736 thousand)
> Insurances, contributions and other charges of EUR 1,504 thousand (2002: EUR 1,420 thousand)
> Rental and office costs EUR 1,300 thousand (2002: EUR 1,363 thousand)
> Non-period expenses of EUR 1,044 thousand (2002: EUR 7,464 thousand)
> Bank charges of EUR 106 thousand (2002: EUR 219 thousand).
Legal and consultancy expenses mainly include one off costs of EUR 9,854 thousand for restructuring the convertible
loan and EUR 9,590 thousand which were incurred in connection with the sale of The Jim Henson
Company. The loss on the disposal of fixed assets in the amount of EUR 10,522 thousand relates to the sale of
The Jim Henson Company in the USA.
23. Write-down of financial assets
Die Abschreibungen auf Finanzanlagen von insgesamt 68.875 TEUR (Vj. 302.381 TEUR) beinhalten im Wesentlichen
die Abschreibung auf den niedrigeren beizulegenden Wert der Junior.TV GmbH & Co. KG von 60.000 TEUR
sowie 4.988 TEUR auf die Produktions-GbR’s.
24. Interest and similar expenses
The total amount of EUR 42,907 thousand as shown in the profit and loss account (2002: EUR 49,162 thousand)
mainly includes interest expenses for the convertible bond of EUR 41,662 thousand (2002: EUR 39,902 thousand)
and interest expenses of EUR 845 thousand (2002: EUR 4,267 thousand) on the syndicate loan for financing
the limited partner share in Junior.TV GmbH & Co. KG.
25. Taxation
The total tax refund of EUR 121 thousand (2002: EUR 15,931 thousand) as shown in the profit and loss account
consists of corporation and municipal tax refunds of EUR 193 thousand from 1997 to 1999 and expenses in 2003
for non-deductible withholding taxes of EUR 7 thousand and vehicle taxes of EUR 1 thousand.
IV. MISCELLANEOUS INFORMATION
1. Executive bodies
Management Board
Werner E. Klatten, Hamburg (Chairman since September 15, 2001)
Rainer Hüther, Munich (since March 6, 2001)
Dr. Andreas Pres, Munich (since January 1, 2003)
The expenses for the remuneration of the Management Board, additionally including the remuneration of
Dr. Andreas Pres, amounted to EUR 2,195 thousand in the fiscal year 2003 (2002: EUR 1,584 thousand). The total
remuneration includes fixed components of EUR 1,792 thousand (2002: EUR 1,484 thousand) and variable components
of EUR 403 thousand (2002: EUR 100 thousand). Reference is made to Section III, Item 11 with regard
to existing share options. The company had no claims against the members of the Management Board on the
balance sheet date.
174 Annual Financial Statements. Notes on the Financial Statements of the AG.

The above members of the Management Board are also members of the following control bodies:
Mr. Werner E. Klatten is a member of the following Supervisory Boards:
> a member of the Supervisory Board of Constantin Film AG, Grünwald (until June 30, 2003)
> a member of the Supervisory Board of EM.TV Vermögensverwaltungs AG (since November 17, 2003)
> a member of the Advisory Board of Tele München Gruppe, Munich
Mr. Rainer Hüther is a member of the following Supervisory Boards:
> a member of the Supervisory Board of EM.TV Vermögensverwaltungs AG (since November 17, 2003)
Dr. Andreas Pres is a member of the following Supervisory Boards:
> Media Content Factory AG, Munich (until November 7, 2003)
> a member of the Advisory Board of Tele München Gruppe, Munich
Supervisory Board
Dr. Bernd Thiemann (Chairman), Banking Officer, Frankfurt a.M.
Prof. Dr. h.c. Roland Berger (Deputy Chairman), Management Consultant, Munich
Dr. Ralph Wollburg, Attorney-at-Law, Düsseldorf (until March 15, 2003)
Dr. Andreas Meissner, Attorney-at-Law, Hamburg (since May 20, 2003),
The compensation paid to the members of the Supervisory Board amounted to EUR 165 thousand in the fiscal
year (2002: EUR 165 thousand).
The above-mentioned members of the Supervisory Board are members of the following control bodies:
Dr. Bernd Thiemann is a member of the following Supervisory Boards:
> Bankhaus Hallbaum AG & Co
> Berentzen Gruppe AG (Deputy Chairman)
> ENRO AG
> M.M. Warburg Bank & Co KGaA
> NOI GmbH
> Rothschild GmbH
> ThyssenKrupp Steel AG
> Westfälische Hypothekenbank AG (until June 30, 2003)
> Member of the Advisory Board of Adolf Würth GmbH & Co. KG (Deputy Chairman)
> EM.TV Vermögensverwaltungs AG (Chairman since November 17, 2003)
Prof. Dr. h.c. Roland Berger is a member of the following Supervisory Boards:
> Alcan Inc. (since April 25, 2002)
> Bmp AG (Chairman)
> Humaine Gesellschaft für Klinikmanagement GmbH (Chairman)
> Loyalty Partner GmbH
> M. DuMont Schauberg GmbH & Co. KG
> Schuler AG
> Trader classified media N.V. (until June 24, 2003)
> WMP EUROCOM AG
> Roland Berger Strategy Consultants GmbH (Chairman since July 1, 2003)
Dr. Andreas Meissner has no additional Supervisory Board mandates.
2. German Corporate Governance Codex
The Management Board and Supervisory Board have agreed to apply the German Corporate Government Codex
for listed companies. They only failed to comply with the catalogue of recommendations in a few cases. The relevant
confirmation is published on the homepage (under www.em-ag.de or www.em-tv.de).
3. Shareholder structure of the company on the balance sheet date
WKB Beteiligungsgesellschaft mbH whose sole shareholder and Director is Mr. Werner E. Klatten, Chairman of the
Management Board of EM.TV, holds 24.76 percent of the voting shares in the capital of the company. Mr. Thomas
Haffa and his family own a total of 17.46 percent and Effecten-Spiegel AG 7.33 percent of EM.TV’s voting rights.
The remainder of the shares are widely spread (free float).
755

OTHER FINANCIAL COMMITMENTS in EUR ‘000 Table 10
Due before 31/12/2004
Due between 1/1/2005 and 31/12/2008
Due after 31/12/2008
Total
4. Number of employees
The company had an average of 94 employees on the balance sheet (2002: 97).
5. Contingent liabilities and other financial obligations
Commitments and contingent liabilities
In view of the over-indebtedness of the associated companies Junior Produktions GmbH, Unterföhring and EM-
Supply Handelsgesellschaft mbH in liquidation, the company has issued letters of comfort in which it undertakes
to structure the above-mentioned companies in such a way financially that they are always able to comply with their
obligations and commitments in an orderly and proper manner.
EM.TV has assumed customary guarantees and commitments as part of the sale of The Jim Henson Company.
The expiry period for the guarantee claims is normally 24 months from the execution of the sale (July 31, 2003).
This excludes guarantees for the legal circumstances of the company and for taxation and environmental matters
in particular. The liability risk of EM.TV & Merchandising AG is limited to a total of USD 35 million as far as most
guarantees are concerned.
There is a liability for payment obligations of subsidiaries in the amount of EUR 3,809 thousand arising from the
acquisition of various sporting rights in connection with the purchase of sports companies.
Contingent liabilities at December 31, 2003 amounted to EUR 1,000 thousand and mainly relate to loan promises
of EUR 500 thousand and purchase price commitments of EUR 500 thousand.
Order commitments
Contractual commitments for the purchase of license rights and orders placed for services for film productions
amounted to EUR 4,780 thousand on the balance sheet date (2002: EUR 15,376 thousand). These mainly related
to the purchase of license rights (EUR 3,526 thousand) and services for co-productions (EUR 1,255 thousand).
Other financial commitments
The company has entered into the following financial commitments under long-term rental and leasing contracts at
December 31, 2003:
6. Appropriation of earnings
The Management Board recommends that the accumulated loss shown in the financial statements at December 31,
2003 should be carried forward to the following year.
Unterföhring, March 2004
EM.TV & Merchandising Aktiengesellschaft. The Management Board
Werner E. Klatten. Chairman of the Management Board
Rainer Hüther. Member of the Management Board
Dr. Andreas Pres. Member of the Management Board
31/12/2003
827
3,043
1,051
176 Annual Financial Statements. Notes on the Financial Statements of the AG.
4,921
31/12/2002
2,242
4,839
2,690
9,771
Table 10

Management Report on the Situation of the AG.
I. GENERAL ECONOMIC CONDITIONS
The general development of the economy across the globe improved in the second half of 2003 following an extremely
reserved first half of the year. There were significant regional differences in the aforesaid development, however.
Whereas the USA and, above all, Japan, were ultimately able to keep pace with expert forecasts, the economic
development in Europe was disappointing, as in the two previous years. This was particularly the case in
Germany where the gross national product fell by 0.1 percent in comparison with 2002.
The relevant markets for EM.TV & Merchandising AG developed at a sluggish pace. The advertising market was
also in a permanently deep crisis and depression. TV stations, the company’s major customer group, cut back their
program investments on account of lower advertising revenues, not least for children and youth programs.
Traditional themes and programs were still in consistent demand, however. It was only towards the end of the year
that the first signs of an upward trend in the advertising market were to be identified.
In the merchandising sector, there was an increased demand for DVD’s, videos and audio products during the
course of the year. Business volumes in the Toys & Games sector (e.g. toys) and in the Home & Living sector (e.g.
textiles) receded on the other hand. At the same time, business was therefore less concentrated on the granting
of rights to product manufacturers and more on the use of established TV characters and trademarks/logos in
advertising and promotional measures.
II. RESTRUCTURING AND STRATEGIC REORIENTATION
EM.TV carried out decisive restructuring measures in 2003 and was successful in its new strategic orientation:
> In February 2003, the company sold its pledged investment in Speed Investments Ltd., a Formula 1 group
company, to a subsidiary of Bayerische Landesbank as the security trustee. In addition to a payment of EUR
8.5 million for the sale of the Speed shares, EM.TV particularly acquired the right to participate in any additional
income arising from the re-sale of the Speed shares exceeding the loan commitment and any investments
on a predetermined percentage basis (debtor warrant). The American Formula 1 banks JP Morgan
Chase Bank and Lehman Brothers concurred with the agreement in the middle of April 2003.
> In March 2003, a legal dispute between Morgan Grenfell Development Capital Syndications Ltd. und Deutsche
European Partners IV was brought to a close by means of a settlement. The plaintiffs had enforced warranty
claims under a contract dated March 17, 2000 regarding the sale of Formula 1 shares to EM.TV.
> In April 2003, the 16.4 percent investment in Constantin Film AG was sold to the Swiss Highlight Communications
AG for a price of EUR 9.4 million. The Constantin package is a pure financial investment which ceased
to have any strategic significance.
> In May 2003, EM.TV agreed the sale of the US subsidiary The Jim Henson Company to the US company JHC
Holding Company, LLC, which belongs to the family of the company founder. The transaction which was executed
at the end of July 2003 for a selling price of approximately EUR 77 million secured the liquidity of the
EM.TV Group until 2005.
> The last outstanding instalment of the so-called Junior loan amounting to EUR 49 million was repaid in full in
the report year. The premature repayment of an outstanding debt of the New York Foundation Sesam
Workshop to The Jim Henson Company and the partial transmission of the funds received to EM.TV and the
income from the sale of the Jim Henson Company made a contribution in the aforesaid respect.
> On November 26, 2003 after months of negotiations with most institutional bond holders (an ad-hoc committee
of bond creditors), the Management Board concluded a skeleton contract for restructuring the convertible
bond issued by the company in 2000. The restructuring basically envisages a complete waiver of the
convertible bond by the bond creditors in exchange for the transfer of assets by the company. This concept
was approved by the shareholders and bond creditors at the beginning of 2004 with the result that the last
major restructuring task will be completed at the end of the second quarter of 2004.
Management Report on the Situation of the AG. Annual Financial Statements. 771

A two-tier strategy has been pursued by EM.TV in its key operating activities since 2003. This strategy was adopted
in the light of the knowledge that the traditional core business - the marketing of rights in the child and youth
entertainment sector -does not offer an adequate growth potential for the company on a permanent basis. The
company therefore systematically made use of its acquisition opportunities in 2003 and developed the sports segment
as the second pillar of its activities.
> In April 2003, KarstadtQuelle New Media AG and the Swiss Investor Dr. Cleven were able to purchase 100
percent of the shares in the broadcasting station DSF Deutsches Sportfernsehen GmbH and Online-Sportportal
Sport1 GmbH. KarstadtQuelle New Media AG acquired shares of more than 80 percent to which it was
entitled by means of its investment in Sport Media Holding GmbH, Essen, and acquired a consolidating majority
of 50.1 percent in EM.TV on June 30, 2003 through its subsidiary EM-Sport Sportmarketing GmbH.
The price for EM.TV amounted to approximately EUR 7.7 million.
> In May, EM.TV acquired a 100 percent holding in PLAZAMEDIA GmbH Film- und TV-Produktion, the largest TV
production undertaking for sport in Germany via EM-Sportmarketing GmbH for EUR 5.5 million.
III. ANNUAL FINANCIAL STATEMENTS
The present annual financial statements of EM.TV & Merchandising AG have been drawn up in accordance with
the provisions of the German Commercial Code (HGB).
IV. EARNINGS SITUATION
EM.TV AG’s sales amounted to EUR 13.2 million in 2003. The previous year’s level of EUR 41.6 million was marked
by the income received for the marketing of the heavyweight fright. In addition to the absence of such sales,
the weak economic environment particularly had a dampening effect on the development of sales in the report
year.
The downturn in other operating income from EUR 37.8 million to EUR 18.2 million was mainly attributable to lower
exchange rate gains and the waiver of a claim of The Jim Henson Company against EM.TV in the previous year.
This item also includes the book profit on the sale of the shares in Constantin Film AG.
Cost of materials receded from EUR 22.1 million to EUR 5.0 million, with this being mainly attributable to the
absence of any expenditure for the heavyweight fight. At EUR 9.0 million, personnel expenses were slightly above
those of the previous year (EUR 8.5 million). Depreciation and amortization rose from EUR 4.4 million to EUR 25.7
million. The aforesaid amount includes current asset impairments of EUR 20.2 million which exceeded the depreciation
and amortization rates normally applied by the company. This related to non-realizable profit claims of
EM.TV against TMG relating to former years and to loan impairments re EM.TV & Wavery and EM Supply.
Other operating expenses of EM.TV rose significantly in the report year from EUR 41.1 million to EUR 58.8 million.
EUR 27.0 million of this amount alone was attributable to legal, consultancy and audit costs mainly as a result of
the restructuring measures (2002: EUR 10.1 million); the aforesaid amount includes provisions of EUR 9.0 million
for expenses in connection with the restructuring of the convertible bond. In addition, other operating expenses
were particularly marked by a book loss on the sale of The Jim Henson Company in the amount of EUR 10.5 million
and receivable impairments of EUR 5.6 million (2002: EUR 5.9 million).
As a result of the lower level of sales and increased costs, the AG shows an operating loss of EUR 67.1 million
(2002: a positive operating profit of EUR 3.2 million). Net financial items remained very much as an expense but
improved considerably from minus EUR 343.4 million to minus EUR 104.7 million. The previous year’s figure was
marked by the almost complete impairment of the investment in Speed Investments Ltd. Financing expenses in
the report year mainly consisted of a further impairment of the book value of the 50 percent holding in Junior.TV
GmbH & Co. KG by EUR 60.0 million down to its lower attributable value of EUR 110.0 million, together with the
ongoing interest for the convertible bond in the amount of approximately EUR 41.7 million.
The results of the company’s ordinary business activities amounted to EUR 171.8 million compared with a loss of
EUR 340.2 million in 2002. The post-tax loss amounted to EUR 171.6 million (2002: a loss of EUR 324.3 million).
178 Annual Financial Statements. Management Report on the Situation of the AG.

V. FINANCIAL POSITION
At EUR 594.5 million, the balance sheet total in the annual financial statements of EM.TV at December 31, 2003
was 24.2 percent or EUR 190.0 million lower than the amount on the comparable year-end date in 2002 (EUR
784.5 million). Shares in associated companies receded from EUR 119.3 million to EUR 17.5 million, mainly on
account of the sale of The Jim Henson Company. The reduction of EUR 76.5 million in investments in financial
assets to EUR 397.2 mainly reflects the impairment of the investment valuation of Junior.TV GmbH & Co. KG and
the sale of shares in Speed Investments Ltd. and Constantin Film AG.
At EUR 130.2 million, current assets remained almost unchanged (December 31, 2002: EUR 133.4 million).
Accounts receivable and other assets receded by EUR 32.3 million to EUR 43.7 million whereas liquid assets rose
by EUR 29.0 million to EUR 86.5 million mainly as a result of the sale of The Jim Henson Company. Approximately
EUR 10.5 million of the liquid assets were blocked for security purposes on the balance sheet date.
After a successful restructuring of the convertible bond, the company now anticipates that the liquidity of the
undertaking is secured up to 2005 assuming that business develops as planned.
As a result of the loss for the year, the equity of the AG fell by EUR 237.5 million to EUR 65.8 million. Half of the
subscribed capital of EUR 146.1 million had been lost on the balance sheet date therefore and a formal notification
was necessary in accordance with § 92, para. 1 of the German Joint Stock Corporation Act therefore. This was
done at an extraordinary general meeting held on February 5, 2004.
Liabilities are dominated by the convertible bond which was issued in 2000 and was pending a reconstruction
(December 31, 2003: EUR 451.5 million). EM.TV was showing no bank loans or overdrafts on the balance sheet
date on account of the complete repayment of the Junior loan. The increase of EUR 16.3 million in liabilities to
companies with which there is a participation relationship relates to liabilities to Junior.TV GmbH & Co, KG and is
equivalent to a corresponding reduction in the relevant receivable.
VI. INVESTMENTS
Investments of the AG amounted to EUR 23.1 million in 2003 compared with EUR 10.9 million in the previous year.
EUR 13.8 million thereof (2002: EUR 2.5 million) was attributable to shares in associated companies as a result
of the investment acquisitions in the sport segment. Increases in intangible assets amounted to EUR 8.2 million
(2002: EUR 5.9 million) and reflect the expansion in the company’s film library.
VII. EMPLOYEES
The company had an average of 94 employees in the 2003 fiscal year (average in 2002: 97). 47 employees were
involved in central functions such as finance, controlling, accounting and legal matters (average in 2002: 54). 47
persons were engaged in operational sales positions (2002: 43). The average age of employees of EM.TV &
Merchandising AG was 35.4 (2002: 35.2).
VIII. RISKS OF FUTURE DEVELOPMENTS
Free-TV.
2003 was still marked by a modest demand for programs on account of the lower advertising revenues of the TV
stations. This and the cost measures introduced by the individual stations resulted in an unchanged restrictive
buying policy across the globe, with this exerting a negative effect on license prices as a result of the surplus of
children and youth programs.
In 2004, the Management Board is anticipating a stabilization or, at best, a slight upward trend, in advertising markets.
Such a recovery would only give rise to an increased level of demand for programs on a time-staggered basis,
however. In addition, the consistent efforts of TV stations to reduce program costs may, in individual cases, give
rise to requests for the existing contractual relationships with EM.TV to be adjusted to the changed framework conditions.
791

As a result of the large number of its national and international framework contracts, EM.TV is in a good competitive
position to adapt to the declining number of broadcasting stations for children and youth entertainment programs.
EM.TV has effected several adjustments to the value of its rights portfolio in the past. Nonetheless, it cannot be
excluded that future examinations of their intrinsic values will necessitate additional adjustments in the free-TV
and pay-TV sectors.
Pay-TV
The market situation in the pay-TV sector was consistently tense in 2003 and was characterized by more restrictive
buying policies and lower license prices. In the pay-TV sector, the development of Junior.TV is integrally linked
with the development of the pay-TV Platform Premiere. The activities of Junior.TV on Premiere were re-arranged in
the report year, with this resulting in an income reduction for Junior.TV GmbH & Co. KG and thereby for EM.TV.
EM.TV is still working on the internationalization of pay-TV activities in order to reduce its dependency on the
German market. This depends in the economic development of international markets in the pay-TV sector.
Production
The continuing difficult market environment, combined with the existing surplus of programs, requires the application
of stricter investment criteria with productions in order to ensure EM.TV’s competitiveness. Production costs
are being allocated to several co-producers in order to reduce product risks. At the same time, at least 80 percent
of the investment volume is to be basically secured by future sales to TV stations prior to the commencement of
production activities.
Merchandising
In EM.TV’s merchandising sector, there are the market risks which are customary for a strong cyclical and subjectrelated
business. EM.TV encounters these risks by positioning itself as a full service merchandising agency which
offers licensees an extensive package of services and consultancy advice. A cautious investment policy is also
being applied in the merchandising sector. It is intended to reduce the risk by extending the target groups.
Risks from international activities
Most of EM.TV’s sales are invoiced in Euro. In view of the fact that contracts are, however, entered into with future
payment dates in US Dollars - as in the film right trade - fluctuations in the Dollar-Euro rate of exchange have an
effect on business operations, the financial and earnings position of the company and especially its operating margins
and these may give rise to exchange losses. Such losses are not excluded in 2004 in the light of the current
strength of the Euro.
Control over associate companies
EM.TV conducts some of its business activities through joint ventures over which it only has a limited power of
authority. It cannot, therefore, be excluded that EM.TV is unable to enforce its own business interests directly in
dealings with the associate companies in question.
Fluctuations / volatility of earnings
The seasonality of business involved with the trading of rights with a traditionally weak second half of the year and
partial changes in customer behaviour and reactions may give rise to fluctuations in the level of earnings per quarter
and for the year.
180 Annual Financial Statements. Management Report on the Situation of the AG.

Liquidity situation
After the so-called Junior loan was repaid in full in 2003, EM.TV showed no bank overdrafts or loans on the balance
sheet date.
Following a successful restructuring of the convertible loan, the company will only have financial liabilities to bond
creditors in connection with the convertible bond issued in 2000 which was not included in the restructuring concept.
This bond would then have to be repaid in 2007. Following the amalgamation with EM.TV
Vermögensverwaltungs AG, the company will also show additional financial liabilities in connection with the 50 million
Euro option bond issued as part of the restructuring process. The option bond is due for repayment in 2009
and is secured by means of a pledge on the shares of EM-Sport Sportmarketing GmbH and Junior.TV GmbH & Co.
KG which are held by EM.TV.
Although there are no considerations with regard to raising additional loans at present, it cannot be excluded that
the company could be dependent on an external financing source in future for an extension or continuation of its
business activities or in the event of any substantial bad debts. The conditions for the option bond offer the possibility
for the issuer to secure a 15 million Euro working capital loan by way of priority with the shares pledged
under the terms of the option bond.
Damage compensation claims and shareholders’ lawsuits
A total of some 87 lawsuits and 10 default summons from approximately 530 shareholders and a whole range of
claim letters have been received by EM.TV & Merchandising AG. The background to the aforesaid is the fall in the
market value of the EM.TV share in 2000/2001. The claims are substantiated on different legal bases and facts.
Every judicial ruling has been issued in favor of EM.TV to date. These relate to 45 first instance rulings and two
second instance rulings. These proceedings were initiated by 430 plaintiffs. The second instance courts refused
to admit the appeal. The plaintiffs have appealed against the aforesaid rulings. Eleven of the first instance rulings
have become legally valid. Four lawsuits have been withdrawn prior to a judicial ruling.
Four petitions have also been submitted at present for the execution of conciliatory proceedings at the ÖRA
Establishment (Public Legal Information and Composition Office of the Free Hanseatic City of Hamburg).
The total amount of the enforced claims in the current proceedings is approximately EUR 10.5 million.
Business relationships with the former Kirch Group
The insolvency of KirchMedia, KirchPayTV and KirchBeteiligung in 2002 have given rise to risks for EM.TV on
account of the lapse of business partners and the non-performance of contracts and these risks may also continue
to apply in the future. EM.TV negotiated the acquisition of the remaining 50 percent of the joint venture
Junior.TV GmbH & Co. KG with the insolvency receiver of KirchMedia in 2003. Existing legal and licenses contracts
between the relevant parties and the settlement of mutual claims were also to be finally and conclusively agreed
and settled in this connection. Despite major progress in the negotiations, an overall solution and final settlement
has not materialized to date. If negotiations were to break down, EM.TV would not be able to exercise full control
over Junior.TV as planned.
Dispute with the SAT.1 station
At the end of December 2003, ProSiebenSat.1 Media AG terminated the program supply contract of 1999 without
notice and enforced a recourse claim of EUR 17 million.
Although the company regards the contract termination and the recourse claim to be unjustified, a financial agreement
is being sought which mainly includes the following matters: (i) instead of the outstanding payments of EUR
24 million in respect of 2004, Sat.1 will immediately pay EUR 12 million to EM.TV after the reconstruction of the
convertible bond and an additional EUR 2 million in 2005 and 2006. (ii) ProSiebenSat.1 Media AG will waive the
enforcement of the counter-claim of EUR 17 million and (iii) the contract which was actually scheduled to expire
by the end of 2004 will be prolonged until the end of 2006 and will permit the transmission group to have access
to the Junior catalogue to a precisely defined extent.
811

Announcement in accordance with § 92, para. 1 of the German Joint Stock Corporation
Act
On account of the company’s loss situation also developing in the report period, a precautionary notification was
made in December 2003 in accordance with § 92, para. 1 of the German Joint Stock Corporation Act that a loss
had been incurred equivalent to half of the share capital. The additional erosion of the equity cover has become
unavoidable just alone on account of the ongoing interest payable on the convertible bond. A restructuring concept
for the convertible bond has been drawn up as a measure to restore the capital basis. The company will have
a sound and secure capital basis after the aforesaid concept has been implemented.
Risks arising from the restructuring of the convertible bond
The convertible bond issued in February 2000 has a term of 5 years. A cumulative nominal amount of almost EUR
469 million within the meaning of § 3 of the Convertible Bond Terms and Conditions would be due for repayment
in February 2005. EM.TV will not be able to settle this obligation based on current estimates.
After months of intense negotiations with a large number of convertible bond holders, the company’s Management
Board agreed a concept for restructuring the convertible bond. The Management Board and Supervisory Board are
convinced that, in the event of the company becoming insolvent, it would have to be assumed that shareholders
would probably receive nothing if the assets of EM.TV were to be sold and, at all events, that they would be in a
much worse position than would be the case if the restructuring concept were implemented. After its implementation,
shareholders would, on the other hand, participate in a restructured undertaking in the opinion of the
Management Board and the Supervisory Board.
Insolvency proceedings would, based on the present position, be unavoidable for EM.TV without a successful
restructuring of the convertible bonds. In the event of insolvency, the receiver would be immediately obliged to sell
the assets forming part of the insolvent estate unless resolutions to the contrary are passed in a meeting of creditors
(§ 159 of the German Bankruptcy Act).
The concept consists of three stages:
(i) The transfer or sale of all the operating activities of EM.TV to two intermediate holding companies is essential
for implementing the restructuring concept first of all. The first intermediate holding company bearing the name
of EM.TV Beteiligungs GmbH & Co. KG will only receive the 45 percent holding in Tele München Gruppe and will,
in return, issue non-interest-bearing convertible bonds to EM.TV with a total nominal value of EUR 150 million. The
two operating pillars for children/youth business and sport marketing will be transferred or sold to the second
intermediate holding company bearing the name of EM.TV Vermögensverwaltungs AG which will, in return, issue
shares and interest-bearing option bonds to EM.TV with a total nominal value of EUR 50 million.
(ii) The execution of the release agreement is then envisaged which EM.TV & Merchandising AG has concluded
with holders of the convertible bond. The aforesaid agreement provides that the bond creditors release all their
rights to the convertible bond to the company. The company promises the following counter-performances in return
for the aforesaid waiver:
> EM.TV will pay EUR 20 million to the bond creditors in cash;
> The bond creditors will receive non-interest-bearing bonds from EM.TV Beteiligungs GmbH & Co. KG which provide
them with a guaranteed 100 percent of the proceeds from the sale of EM.TV’s holding in Tele München
Gruppe up to an amount of EUR 150 million and 50 percent over and above the aforesaid amount.
> The bond creditors will receive the EUR 50 million option bonds of EM.TV Vermögensverwaltungs AG with a
term up to 2009.
> The bond creditors will participate in approximately 60 percent of EM.TV Vermögensver-waltungs AG.
(iii) Following the cancellation of the convertible bond and the transfer of assets to the bond creditors, the amalgamation
of EM.TV & Merchandising AG with EM.TV Vermögensverwaltungs AG which is continuing the relevant
business operations is envisaged in accordance with § 2, No. 1 of the German Transformation Act (Umwandlungsgesetz),
whereby the amalgamation is not a mandatory prerequisite for restructuring the convertible bond.
182 Annual Financial Statements. Management Report on the Situation of the AG.

EM.TV Vermögensverwaltungs AG is then to be re-named “EM.TV AG”. The previous shareholders of the company
will participate in the aforesaid undertaking with approximately 40 percent of the capital. Their shareholdings may
be increased to 50 percent under certain conditions as a result of exercising subscription rights. EM.TV
Vermögensverwaltungs AG (in future: EM.TV AG) will be the legal successor of EM.TV & Merchandising AG with all
rights and obligations.
With the registration of the amalgamation of EM.TV & Merchandising AG with EM.TV Vermögensverwaltungs AG,
the shares of the of the company will be deleted. The shares in EM.TV Vermögensverwaltungs AG (in future: EM.TV
AG) will receive a new security identification number. They are to be admitted for trading on the regulated market
of the Frankfurt Stock Exchange on the date on which trading in shares of EM.TV & Merchandising AG is discontinued.
The terms of the offer by EM.TV to the convertible bond holders are subject to several suspensive conditions. They
envisage, in particular, that (i) the extraordinary general meeting of EM.TV agrees with the proposed resolutions
which are essential for implementing the concept, (ii) that the offer by EM.TV to the holders of the convertible
bonds is accepted for an adequate number of convertible bonds, (iii) that the segregation becomes valid upon the
relevant registration in the Commercial Register (Handelsregister) and (iv) that no complaints against resolutions
of the extraordinary general meeting oppose the conclusion of the release agreement and the resulting transfer
of assets to the bond creditors.
In addition to the aforesaid stages for restructuring the convertible bonds, a creditors’ meeting of convertible bond
holders is required for specifying the substance of the convertible bond conditions and the rights of the convertible
bond holders. The company has therefore recommended to convertible bond holders that the interest rate for
the bonds should be reduced to 0 percent for the period between February 16 2003 and February 15, 2006 (both
dates inclusive) and that convertible bond holders waive the interest accumulated since the last interest payment
date up to January 9, 2004 in accordance with the provisions of the convertible bond and that all and any termination
or any other rights accruing to them as a result of the restructuring or the preparation thereof are waived
insofar as the aforesaid rights are based on the conditions of the convertible bond.
Tax losses
EM.TV AG has accumulated substantial tax losses on the strength of the losses incurred in previous years. Subject
to the outcome of a field tax audit, the loss carry-forwards of the AG amount to approximately EUR 1.6 billion for
corporation tax purposes. It has to be assumed that the transfer of the loss carry-forwards arising from the amalgamation
of EM.TV & Merchandising AG with EM.TV Vermögensverwaltungs AG cannot be regarded as certain. The
transfer would materialize if the type and scope of the business operations which gave rise to the losses were also
continued in the new company beyond the amalgamation date. In view of the portfolio changes in recent years as
a result of the reorganization, this cannot be assumed with certainty, however.
IX. EVENTS OF PARTICULAR IMPORTANCE AFTER THE END OF THE FISCAL YEAR
A meeting of creditors of the convertible bond issued in 2000 was held on January 9, 2004. With 75 percent of
the total nominal value of the bond being present, the change in the bond conditions in accordance with the abovementioned
proposal of the company was resolved with a majority of more than 97 percent, with this constituting
a commitment and obligation for all creditors.
The official time limit for acceptance of the offer of EM.TV by the bond creditors on the restructuring of the convertible
bond commenced on January 12, 2004. The skeleton contract concluded with the ad-hoc committee of
the bond creditors provides that creditors amounting to 97.5 percent of the total value of the convertible bond have
to accept the offer by the end of the offer period. In view of the fact that an acceptance ratio of approximately
90 percent had been reached by the end of the acceptance period on January 30, 2004, the time period was
extended to February 13, 2004 and then once again for a last time to midnight on February 27, 2004. 94.16 percent
of the bond creditors (based on the outstanding nominal value of the convertible bond) had accepted the
offer by 6 p.m. on February 27, 2004. After EM.TV had previously made use of its right to reduce the ratio from
97.5 percent to 94.0 percent with the approval of the ad-hoc committee of the bond creditors, the necessary
acceptance ratio was achieved.
831

On February 5, 2004, the shareholders of the company resolved the acceptance of the restructuring concept for
the convertible bond and the radical structural and legal changes in this connection within the company with the
agreement of more than 99 percent of the shareholders.
At the beginning of February 2004, the company reached an economic albeit not legally binding agreement with
ProSiebenSat.1 Media AG on a revised version of the 1999 program delivery contract.
X. OUTLOOK
After the approval of the restructuring concept by the shareholders and bond creditors in February 2004, the reorganization
of the company was completed by the end of the second quarter of 2004. As a result of the subsequent
amalgamation of EM.TV & Merchandising AG with EM.TV Vermögensverwaltungs AG, the latter company no longer
exists.
The (new) EM.TV AG is a reorganized company with a healthy capital structure. It is concentrating on the two areas
of activity represented by children/youth programs and sport. The aim of the Management Board is to strengthen
both operating pillars and thereby to generate growth for the EM.TV Group. The acquisition of the 50 percent share
of KirchMedia in the Junior.TV GmbH & Co. KG joint venture continues to have priority in the children/youth entertainment
sector.
EM.TV intends to actively participate in the ongoing consolidation process amongst producers and legal dealers
in the children/youth entertainment sector. For example, what is conceivable, is the acquisition of rights and companies
and also strategic co-operations on a national and international level. The sports segment which is already
developing positively is to receive additional growth impulses as a result of the increasing activities with all
aspects concerning the FIFA Football World Championship 2006TM in Germany. EM.TV acquired the European
marketing rights in the merchandising sector for this major event as early as 2002. The dynamic development of
DSF Deutsches Sportfernsehen GmbH, PLAZAMEDIA GmbH Film- und TV-Produktion and Sport1 GmbH is to be
pursued further.
The Management Board is planning for both segments of the EM.TV Group to be profitable in 2004. The costs of
the holding company - which also include expenses for the restructuring of EM.TV - will result in a loss being incurred
by the EM.TV Group in the whole of 2004, however.
Unterföhring, March, 2004
The Management Board
Werner E. Klatten Dr. Andreas Pres Rainer Hüther
Managing Director Director Director
184 Annual Financial Statements. Management Report on the Situation of the AG.

XI. AUDITORS’ REPORT
We have audited the annual financial statements, together with the bookkeeping system, and the management
report of EM.TV & Merchandising AG for the business year from January 1 to December 31, 2003. The maintenance
of the books and records and the preparation of the annual financial statements and management report
in accordance with German commercial law are the responsibility of the Company’s Management Board. Our
responsibility is to express an opinion on the annual financial statements, together with the bookkeeping system,
and the management report based on our audit.
We conducted our audit of the annual financial statements in accordance with § 317 HGB and German generally
accepted standards for the audit of financial statements promulgated by the Institut der Wirtschaftsprüfer in
Deutschland (IDW). Those standards require that we plan and perform the audit such that misstatements materially
affecting the presentation of the net assets, financial position and results of operations in the annual financial
statements in accordance with German principles of proper accounting and in the management report are
detected with reasonable assurance. Knowledge of the business activities and the economic and legal environment
of the Company and evaluations of possible misstatements are taken into account in the determination of
audit procedures. The effectiveness of the accounting-related internal control system and the evidence supporting
the disclosures in the books and records, the annual financial statements and the management report are
examined primarily on a test basis within the framework of the audit. The audit includes assessing the accounting
principles used and significant estimates made by the Company’s Management Board, as well as evaluating the
overall presentation of the annual financial statements and management report. We believe that our audit provides
a reasonable basis for our opinion.
Our audit has not led to any reservations.
In our opinion, the annual financial statements give a true and fair view of the net assets, financial position and
results of operations of the Company in accordance with German principles of proper accounting. On the whole
the management report provides a suitable understanding of the Company’s position and suitably presents the
risks of future development.
In accordance with our duty, we draw attention to the fact that continued existence of the Company is threatened
by risks arising from its liquidity situation as shown in section 8 of the management report. The maintenance of
liquidity presupposes that the proposed and already initiated restructuring of the convertible bond and the related
restructuring measures of Company are executed as planned.
Munich, March 8, 2004
PricewaterhouseCoopers GmbH. Wirtschaftsprüfungsgesellschaft
Eiber. German Public Accountant
Fell. German Public Accountant
Auditors’ Report. Annual Financial Statements. 851

Children and Youth Market Business
Production Credits.
Published by:
EM.TV AG Beta-Straße 11 85774 Unterföhring, Germany
Tel. +49 (O) 89 99 500-0 Fax +49 (0) 89 99 500-111
e-mail info@em.tv www.em.tv HRB 148 760 AG Munich
Edited by:
EM.TV Communications, Investor Relations.
Frank Elsner Kommunikation für Unternehmen GmbH,
Westerkappeln
Designed by:
EM.TV Graphics

EM.TV AG
Beta-Straße 11
85774 Unterföhring, Germany
Tel. +49 (0) 89 995 00-0
Fax +49 (0) 89 995 00-111
e-mail info@em.tv
www.em.tv
HRB 148 760 AG Munich