ProSiebenSat.1 Group takes steps in reaction to the product placement investigation

Munich, December 21, 2005. The ProSiebenSat.1 Group has taken steps to guard against impermissible product placements in its programming. In doing so, the commercial TV broadcasting company is following the recommendations of an independent commission that in the last few months conducted an investigation of covert advertising in the Companys TV programs. Based on the conclusions of this investigative commission, the Executive Board of the ProSiebenSat.1 Group resolved yesterday to adopt mandatory Guidelines to ensure the separation of advertising and programming, binding on all employees, and to establish Guidelines for ensuring the journalistic independence of the ProSiebenSat.1 Group. Furthermore, the ProSiebenSat.1 Media AG imposed on itself an obligation to cooperate in cases of heightened incidence of suspicious cases of impermissible covert advertising. By virtue of this voluntarily assumed obligation, the competent State Media Authorities are given the right to have the Companys contractual documents inspected and audited by a competent auditor. Implementing another recommendation of the commission, the Executive Board took steps to ensure a stricter separation between the editorial interests of the TV stations and the commercial interests of the marketing company.

Guillaume de Posch, Chief Executive Officer of ProSiebenSat.1 Media AG, explained: Having conducted this extensive investigation and adopted the measures resolved yesterday, we have decisively dealt with the incidents in the Frühstücksfernsehen and Regionalfenster 17:30 programs on Sat.1. Now, we can be assured that all the TV stations of the ProSiebenSat.1 Group are free of impermissible product placements. The new rules we have adopted are supposed to ensure that there will be no covert advertising on our TV stations in the future. The CEO of the ProSiebenSat.1 Group continued by saying: We welcome the product placement rules contained in the draft version of the new EU Television Directive. That will give us the legal certainty we need. Our viewers can be assured of the requisite transparency and the German market can be brought into harmony with internationally customary rules.

An independent commission composed of lawyers from the companys legal and internal audit departments, as well as outside lawyers, launched an extensive investigation of product placements on the Companys TV stations at the beginning of September. The investigation covered all the programs of all the Groups TV stations over the last five years.

The commission came to the conclusion that there has not been systematically organized product placement at the ProSiebenSat.1 Group in the last five years, except for the cases of Worldcom und Connect TV and some smaller agencies for Frühstücksfernsehen and Regionalfenster 17:30. The commission had already documented, in its interim report that appeared in October of this year, the impermissible product placements in programming delivered and shown in the Frühstücksfernsehen and Regionalfenster 17:30 programs on Sat.1. In total, the revenues Sat.1 generated from Worldcom between 2000 and 2004 amounted to EUR 1.3 million, the revenues generated from Connect TV between 2000 and 2005 to EUR 1.5 million. Any extant business relations with Connect TV and the smaller agencies were immediately terminated. The business relationship with Worldcom had already been terminated in 2004. As a further consequence of the interim report, the Sat.1 department that had engaged in questionable self-marketing pursuant to public broadcasting laws was dissolved.

Further, the commission concluded that impermissible product placements had occurred only in isolated cases, such as the cooking show Zacherl on ProSieben. With regard to the ProSieben programs SOS Style & Home and Sarah & Marc in Love, it has not yet been definitively clarified whether the cases in question constitute the permissible use of sponsor-provided equipment or supplies or prohibited product placements. As a consequence of these findings, the ProSiebenSat.1 Group will publish a transparent price list for all permissible kinds of cooperation with advertisers, including mentions of sponsors providing equipment or supplies.

A primary focus of the investigation was on the question of topic placement. In this regard, the commission concluded that if individual cases of topic placement had occurred, no pressure was exerted on programming producers in any of these cases; instead, topics were produced only when there was an editorial reason to do so.

Guillaume de Posch: We launched this investigation to determine whether and to what extent product placements had occurred in our family of TV stations. We are satisfied with the findings of the investigation insofar as no evidence of systematically organized product placement in our broadcast group was uncovered, aside from the cases in the Frühstücksfernsehen and Regionalfenster 17:30 programs on Sat.1. We have voluntarily undergone a house-cleaning process and adopted measures to ensure that there will no longer be any form of impermissible product placement at ProSiebenSat.1 in the future.

The Guidelines of ProSiebenSat.1 Media AG to ensure the separation of advertising and programming, including the avoidance of prohibited covert advertising, take effect immediately and are binding on all employees. They serve to uphold the companys journalistic credibility and protect its independence from influence by third parties, as the highest programming principle. The Guidelines to ensure the journalistic independence of the ProSiebenSat.1 Group also take effect immediately and are binding on the entire Group. These Guidelines concretize the Companys understanding of the journalistic principles of the Press Code of the German Press Council. In particular, they state that editorial programming may not be influenced by private or business interests of third parties or employees. For instance, journalists of the ProSiebenSat.1 Group may not accept any direct or indirect, monetary or in-kind contributions in connection with their reporting duties. This applies both to monies received in compensation of reporting costs and to gifts made to journalists. Among other things, the Guidelines stipulate that every employee is bound to comply with the prohibitions against improper influence over programming and covert advertising and ensure correct content labeling.

The voluntarily assumed obligation of ProSiebenSat.1 Media AG to cooperate in cases of heightened incidence of suspicious cases of impermissible covert advertising has been made vis-à-vis the State Media Authorities in charge of the different TV networks of the broadcast company, including the Bavarian authority Bayerische Landeszentrale für neue Medien (BLM), the Rhineland-Palatinate authority Landeszentrale für Medien und Kommunikation Rheinland-Pfalz (LMK) and the Berlin-Brandenburg authority Medienanstalt Berlin-Brandenburg (MABB). The voluntarily assumed obligation takes effect on January 1, 2006. As of this date, the above-mentioned State Media Authorities will have the right, in the event of sufficient evidence of repeated violations of the prohibition against covert advertising, to have the Companys contracts inspected and audited by an expert auditor. In this case, all contracts pertaining to the contents of the TV programs being investigated must be submitted for inspection. ProSiebenSat.1 Media AG has voluntarily assumed this obligation for the purpose of ensuring transparency in its relationship with the competent State Media Authorities.