sky italia – investor field trip

Sky Italia – Investor Field Trip Milan, 3rd December 2014

Gomorrah

2

This document contains certain forward looking statements with respect to Sky Italia’s financial condition, results of operations and business, and our strategy,

plans and objectives for Sky Italia. These statements include, without limitation, those that express forecasts, expectations and projections, such as forecasts,

expectations and projections in relation to new products and services, the potential for growth of free-to-air and pay television, fixed line telephony, broadband

and bandwidth requirements, advertising growth, DTH, OTT and IPTV customer growth, Multivision, Sky Online, My Sky, Sky HD, On Demand, Sky Go and other

services penetration, revenue, administration costs and other costs, advertising growth, churn, profit, cash flow, content, marketing and capital expenditure.

Although the Company believes that the expectations reflected in such forward looking statements are reasonable, these statements are not guarantees of

future performance and are subject to risks, uncertainties and other factors, some of which are beyond our control, are difficult to predict and could cause actual

results to differ materially from those expressed or implied or forecast in the forward looking statements.

All forward looking statements in this document are based on information known to the Group on the date hereof. The Group undertakes no obligation publicly

to update or revise any forward looking statements, whether as a result of new information, future events or otherwise.

3

5

Countries

20 million

Customers

£11 billion

Revenue £4.6 billion

Content investment 31,000

Employees

30

Main sites

• Serving 20 million Sky customers in five countries

• Shared ethos of increased choice, better content

and superior TV experience

• Leveraging best-in-class capabilities

• Substantial opportunity

• Good for customers and shareholders

4

• Expanded growth opportunity

• Platforms of choice

• Better for customers

• Enhanced value creation

– Greater long term revenue growth

– Earnings enhancing

– Progressive dividend

5

• Transaction completed 12 November 2014

• Name changed to Sky Plc

• Acquired 90% of Sky Deutschland; Jeremy Darroch and Andrew Griffith appointed to Supervisory Board

(inc. Jeremy Darroch as Chairman)

• 9.9% equity placed at 870p

• All debt financing for the transaction completed with blended pre-tax cost of debt <3% pa

• Group leverage of c3.5x net debt/EBITDA

6

Andrea Zappia,

Chief Executive Officer

• 2011: Sky Italia - CEO

• 2010: BSkyB - Managing Director

of Customer Group

• 2003: Sky Italia - VP Marketing,

Promotion and Business

Development

Domenico Labianca

Chief Financial Officer

• 2003: Sky Italia - CFO

• 2002: Stream - Financial Director

• 2002: Matrix (Telecom Italia

subsidiary) – Head of Credit

Control

Andrea Scrosati

Executive VP Programming

• 2013: Cinema, Entertainment

and Third Party Channels

• 2010: VP Programming and

Promotions

• 2007: Joined Sky Italia as VP

Corporate Communications

7

1) Strong business executing clear strategy

2) Capturing growth opportunity with leading customer proposition

3) Enhanced potential as part of a bigger Sky group

8

9

Source: Agcom, Bloomberg

1990 1993 1997 2000 2003 2004 2006 2012

Tele+

Pay TV enters

Italy with Tele+

A 2nd player,

Stream, enters

Pay TV

Tele+ owned

by Vivendi

(100%)

NewsCorp

joins Stream

in a 50% JV

Stream acquires 100% of Tele+

Sky Italia starts operations with 1.8m subscribers

NewsCorp

buys remaining

20% stake

from Telecom

Italia reaching

100%

Sky Italia reaches

EBIT break-even

with 3.8m

subscribers

Sky Italia

becomes the No

1 TV player in

terms of

turnover

Stream Canal+ NewsCorp Sky Italia NewsCorp

Sky EBIT break- even

Sky #1

–

10

Source: Company data for FY14. Financial data as reported in Sky plc full year results announcement

Subscribers Monthly ARPU Revenues EBITDA Employees

11

Broadcaster

Content creator

Aggregator

Multi-platform

(Pay & Free)

12

• 163 pay channels, 66 HD, 28 PPV, 184 FTA

• 80% of customers watch Sky content in HD

• More than 50% of customers use Sky Go

• Almost 30% of boxes connected with c.3,000 hours

of On Demand content

Company data 2014

13

Source: Source: Ericsson ConsumerLab TV & Media 2014 Study

NPS = Promotors-Detractors 23%

Sky Italia

18%

Sky Go by Sky

16%

Free DVB-T

(Telesione

Digitele)

5%

PremiumPlay

By Mediaset

5%

Infinity

By Mediaset

2%

Telecom Italia

(Altice TV &

Cubovision)

0%

Mediaset

-34%

Rai TV by RAI

14

58% 55%

50%

38% 38% 35%

33% 33% 33% 30% 30%

B1 On a scale from 1 to 10 (1 = poor 10 = excellent), how would you judge the overall image/reputation of the following companies?

Source: Tracker Report 1H FY14

Base: Total population - Prospects and Sky Customers who gave an answer

% ratings 8-10

15

16

25 million homes

4.7m 1.7m

0.3m

18.6m

DTH

pay

DTT

pay

OTT FTA

only Platforms

PAY

~6m

(27%)

Main Player /

Propositions

17

Source: IHS SD

Note: data are related to comparable pay TV offerings excluding pay light propositions

18% 19%

27%

33%

51%

65%

DE ES IT FR UK Netherlands

18

Total TV revenues by nature

2.9 2.9

3.5 2.6

2.8

2.5

CY10 CY14E

Discovery

LA7

Rai

Mediaset

Sky

3.1 3.1

4.8 3.6

1.7

1.8

9.6

8.4

CY10 CY14E

Licence fee

Advertising

Pay TV

9.6

8.4

Source: IHS SD

TV revenue by type (€bn) TV revenue by player (€bn)

19

43.4 42.1

41.2 42.5 42.8

FY10 FY11 FY12 FY13 FY14

4,742

4,972 4,901

4,756 4,725

FY10 FY11 FY12 FY13 FY14

ARPU (€) Subscribers (‘000)

20

Household consumption (yoy % variation) GDP (yoy % variation)

Source: Internal estimates, ISTAT, Consensus forecast

(0.3%)

0.4%

0.7% 0.9%

0.9%

(1.2%)

(5.5%)

1.8%

0.4%

(2.4%) (1.9%)

08 09 10 11 12 13 14 15 16 17 18CY

(0.6%)

(0.3%)

0.7% 0.7%

0.8%

(0.5%)

(1.0%)

1.0%

(0.2%)

(3.9%)

(2.5%)

08 09 10 11 12 13 14 15 16 17 18CY

Latest Forecast Actual

21

A neutral regulatory and political scenario is in place now

* Declared “discriminatory state aids” by EC and European Court of Justice

2003 2004 2005 2007 2008 2009 2010

EU undertakings

9-year commitments

- cannot enter pay

DTT

No exclusive deals

with Major Studios &

Sport rights

–

Digital Switch Off

DTT spectrum

assigned for free to

incumbents (MS, Rai)

DTT STB subsidized

with €200m state

contribution*

Pay TV DTT

MS acquires

exclusive pay TV

rights for 5 best

Serie A teams

Sky obliged to buy

Pay DTH rights

from MS for 90% of

total cost

Auditel

Audience

measurement

company

controlled by MS

& Rai

Sky audience

ratings not

measured till

2007

VAT

VAT on pay TV

doubled overnight

by government

decree

LCN

Sky launches Cielo on

Channel 10 but

Government forces

the channel to move

to Channel 26

Advertising on

Pay TV

Government lowers

adv thresholds only

for pay TV to 12%

keeping MS limits at

18%

Agcom approves

TivùSat

22

Others*

Total

37.5%

31.8%

14.1%

20%

56%

12%

14 SD

+1 HD

12 SD

+ 3 HD

46 SD

76

* Including: Sky, Cairo Communication, L'Espresso, De Agostini, Scripps, la Feltrinelli. Sky Pubblicità and Digitalia not included in Gross Adv Rev.

Players Landscape as of today (2014) No of FTA

channels

Audience

Share

Adv Rev

Share

23

FTA

SVoD

TVoD

24

What we achieved What we did

• Protected our best subs with a strong value

injection and TV superiority (Sky On Demand,

Sky Go, Restart)

• Invested in content exclusivity (F1, Moto GP,

Italia’s Got Talent, X Factor, Masterchef,

Gomorrah)

• Evolved commercial strategy from volume to

value, attracting only new prospects in line with

Sky profile

• Cut our cost base through a multi-year

efficiency program

• Churn from 13.4% in FY12 to 10.7% in FY14

• ARPU from €41 in FY12 to €43 in FY14

• Acclaimed original production and new

audience records

• Quality of sales improved dramatically

• €33m of savings secured in FY14, €120m run

rate by FY17

• Launched first ‘triple play’ offer: bundled BB

with Fastweb

• Bundled offer now 20% of sales and driving

positive churn characteristics

25

26

1. Strengthen DTH

proposition through

increased product

penetration

Leverage market

leading proposition in

content & innovation

Drive operating

efficiency

Expand growth

opportunities with

diversified business

strategy

1 2

3 4

27

Italian households (m)

Source: Sky estimates

All HHS Have Sky Prospects Low income

Age <30; >65

Core

Prospects

55-70 High

Income

25 4.7

21 12

9.0 2.2

1.9

1.1

2.1

1.7

Families

with kids

Singles Other

families

No TV, DTH

obstructed

Of which 1.7m Mediaset Premium subs

28

(Broadband

with Fastweb)

29

11m Active Services

FY08 FY09 FY10 FY11 FY12 FY13 FY14

Multivision

HD

On Demand

SkyGo

0.9

4.1

2.2

1.1

MySky 2.8

30

49

57 64

FY13 FY14 FY15

22

40

50

FY13 FY14 FY15

5

16

27

FY13 FY14 FY15

28

38

61

FY13 FY14 FY15

18 19 19

FY13 FY14 FY15

Q1 penetration %

PVR HD Multiscreen VoD SkyGo

Note: HD penetration related to paying subs

31

Note: Products are MySkyHD, HD, Multivision (paying), SkyGo, On Demand (free)

% Customer Base 26% 27% 20% 23% 4%

Churn benefit by number of products (% disconnection rate over 6 month period, indexed to 100)

100

130

90

70

40 30

Average TV only 1 product 2 products 3 products 4 products

32

ARPU by number of products (€/ month)

26% 27% 20% 27%

42.8

34.9

42.4 46.0

48.5

Total CB TV only 1 Product 2 Products >3 Products

% customer base

Note: Products are MySkyHD, HD, Multivision (paying), SkyGo, On Demand (free)

33

Interest in product/services influencing decision to subscribe to Sky

Source: Company data.

Influence on decision to subscribe to Sky

30% 30% 29%

26% 24%

21%

Movies/Tv

Series On

Demand

Restart My Sky Wide Offer HD Sky Go

20%

Football

34

Expand growth

opportunities with

diversified business

strategy – Fibre, OTT, IPTV

Strengthen DTH

proposition through

increased product

penetration

Leverage market

leading proposition in

content & innovation

Drive operating

efficiency

1 2

3 4

35

39%

19%

7%

19%

1%

UK Italy

DTH DTT Cable / IPTV

% Pay TV penetration

58%

27%

Note: all types of pay TV offerings including pay light propositions

Source: IHS SD

• Cable has never been developed

• IPTV at early stage

36

Source: Between (Ernst & Young)

BB subs

Q1 2014

Mkt

share % Fibre /4G roll out targets Partnership with Sky

5,390 49%

- 50% population coverage

by 2016

- LTE coverage 80% by 2016

- New IPTV

- Exclusive Sky channels (mobile only)

1,565 14% - 27% population coverage

by 2016

- Home pack (DTH+BB)

- Sky Online

6,955 63%

37

Partnership Sky – Telecom IPTV 2.0

• Mirroring DTH offer and experience with IPTV offering delivered via TI broadband/ ultra-broadband network

• Retail model with revenue share – NPV neutral vs DTH

• Marketing through all TI channels but with Sky managing customer TV relationship

• Identified 1m+ prospects without access to satellite

• Targeting 3.5m TI BB customers who do not have Sky

• Live from April 2015

38

• Launched April 2014

• Pricing options in two packs: – series €9.90, cinema €19.90

• Sport TVOD

• Opening up new market segments (young, heavy

digital users) and resonating strongly with

customers

• Live events and original production driving appeal

(X Factor, Gomorrah)

• Building on NOW TV experience in the UK

39

Devices Partnership

Today Today By 2015

40

Expand growth

opportunities with

diversified business

strategy –

FTA opportunity

Strengthen DTH

proposition through

increased product

penetration

Leverage market

leading proposition in

content & innovation

Drive operating

efficiency

1 2

3 4

41

• Cielo launched in 2010

• Consistent with objective to capture all growth opportunities in

the TV landscape

• Strength in FTA supports pay TV strategy:

– Ability to cross promote pay TV offering

– Provides second monetisation window for original productions

• Optimise use of rights

42

Source: Nielsen Data (YTD Sept 2014)

Cielo performance vs peers

Audience share (%)

1.38

0.53

1.77 Real Time

1.55 DMAX

1.24 IRIS

1.01 RAI 4

1.37 CIELO

Q1 FY13 Q1 FY14

Adv Revenues

-1%

+18%

-12%

PAY

FTA DTT

Total TV 100%

12%

9%

-16% FTA Generalists 79%

CAGR

CY11-'13

CY14

Mkt Share

Q1 FY15

43

5.3% 5.8%

6.9% 6.7%

7.8%

8.9%

10.0%

FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FY 14

Market Share Sky Adv (%) Avg. Price per TV spot (30 secs)

-25%

-17%

+7%

-19%

-27%

-2%

-15%

-20%

+4% Var. CY14 vs CY13

Var. CY13 vs CY12

Var. CY12 vs CY11

Sky

Rai

Mediaset

Source: Nielsen Data (YTD Sept 2014)

44

Italian households (m)

All HHS Have Sky Prospects Low income

Age <30; >65

Core

Prospects

55-70 High

Income

25 4.7

21 12

9.0 2.2

1.9

1.1

2.1

1.7

Families

with kids

Singles Other

families

No TV, DTH

obstructed

Source: Sky estimates

IPTV

DTH

OTT

FTA

Platforms/ business models

45

Leverage market

leading proposition in

innovation & content

Strengthen DTH

proposition through

increased product

penetration

Expand growth

opportunities with

diversified business

strategy

Drive operating

efficiency

1 2

3 4

46

2003

2006

2010

2012

2013

2014

2015

–

47

•

•

•

•

•

48

•

•

•

•

Downloads

Q1 14 Q1 15

+100% 50m

24m

49

•

•

•

•

Life of Pi

50

•

•

•

•

51

Strengthen DTH

proposition through

increased product

penetration

Drive operating

efficiency

Leverage market

leading proposition in

innovation & content

Expand growth

opportunities with

diversified business

strategy

1 2

3 4

52

•

•

•

•

•

Fargo

53

Sport – season 2014/2015

54

Source: Serie A public records, domestic Pay TV live rights only

2010-12 2012-15 2015-18

• Matches: 380/380

• Exclusive matches : 56 /380

• Avg. cost p.a.: ca. €560m

• Matches: 380/380

• Exclusive matches : 132 /380

• Avg. cost p.a.: ca. €570m

• Matches: 380/380

• Exclusive matches : 56/380

• Avg. Cost p.a.: ca. €575m

Total (avg cost pa)

€795m €830m €940m

55

F1 & Moto GP: a true Italian passion with year round great events

36 weekends in 2014 season

• Formula 1

20 races; 11 exclusive

• Moto GP

19 races; 10 exclusive

Source: Monitor Calcio 2013-2014 Italian Adult Population>14yo

Interested in sports (Individuals, million)

10.7

Italian

Football

9.3

Formula 1

7.6

UEFA

Champions

League

6.2

Moto GP

3.9

Tennis

3.6

Int’l Football

1.7

Rugby

56

Qatar

Austin

Argentina

Spain

France Italy

Catalonia

Holland

Germany

Indianapolis

Czech Rep

UK S.Marino

Aragon

Malaysia

Japan

Australia

Valencia

Australia

Malaysia

Bahrain

China

Spain

Monaco

Canada

Austria

UK

Germany

Hungary

Belgium

Italia

Singapore

Japan Russia

U.S.A

Brazil

Abu Dhabi

March April May June July August September October November

15 22 29 5 12 19 26 3 10 17 24 7 14 21 27 31 5 12 19 26 2 9 16 23 30 6 13 20 27 4 11 18 25 1 8 15 22 29

In F1 since 1950

Record world titles: 16 manufacturers, 15 drivers

9 world championships

108 Grand Prix won

Only man to win all classes (125, 250, 500, Moto GP)

Valentino Rossi

57

Italy’s leading movies service

• Exclusive deals with 4 out of 6 Hollywood majors

– Disney, Fox, Paramount and Sony

• Excellent movie offer with over 2,000 titles per year

– 4x more movie premieres than competition

• Strong Italian movies offering plus Sky Cinema original

production

• 12 HD channels and successful use of pop-up/event

channels:

– Bond channels, Oscar channels, Star Wars, Monsters Attack,

Christmas channel, Disney Princess

• All movies in HD, On Demand and available on Sky Go

• Over 70% of customers take movies proposition – among

highest level in pay TV industry

Thor

58

• More exclusivity than any other platform

– 17 of the top 20 performers at the Box Office are available

on Sky Cinema of which 13 are exclusive

• Key partnerships with Italian movie distributors

– Deals granting significant exclusivity and ancillary rights on

strong titles (Dallas Buyers Club, The Wolf of Wall Street,

Rush, The Butler)

• Key franchises

– Bond, Indiana Jones, Star Wars, Transformers, Lord of The

Rings/Hobbit, Godfather

Data for period FY12 - FY14

59

• Widening offer with branded channels in key genres

• Sky Uno is only pay channel in the world to show exclusive

franchises such as:

– X-Factor, Italia’s Got Talent, Masterchef, Masterchef Junior,

Hell’s Kitchen

• Exclusive agreement with HBO – backbone of Sky Atlantic

• Creating successful track record in original commissions

• No 1 Arts channel in Italy

• Exclusive deal with Fox giving strong portfolio:

– FOX, Fox Life, Fox Crime, Fox Animation, Fox Comedy, Nat Geo,

Nat Geo People, Nat Geo Wild)

Sky Branded Channels & Original

Productions as key differentiators

60

Italia’s Got Talent

• Perfect companion

to Masterchef

franchise reinforcing

Sky Uno cooking

show line-up

Hell’s Kitchen

X Factor Italia

• Exclusive to Sky Uno

from FY15 (from

March 2015)

• Previously the top

talent show on FTA

for Mediaset for 3

years

• No 1 TV choice for

subscribers on

Thursday nights

• No 1 show for

interactive

• Highest rating show

on Sky Uno

• Consistently top

Italian cooking show

• Production cost fully

covered by product

placement and

advertising

Masterchef Italia

• Best talent show

debut on Sky Uno

• Over 80% of

production cost

covered by product

placement and

advertising

Masterchef Junior

61

• Launched April 2014 – already receiving 95% positive feedback on Sky

• Home of HBO product and Sky Italia original production

62

• Highest rating series on Sky

• Original production sold in over 100 countries to leading

broadcasters (e.g. HBO, Canal+, La Sexta)

• Season 2 re-commissioned for premiere in March 2016

• First ever sale of an Italian series into the US off the

pilot

“A Scorsese Goodfellas”

“One of the most hotly anticipated new international drama series”

“Forget The Sopranos, here are The Savastanos” “Italy’s answer to The Wire”

63

STATUS Delivered

ON AIR April 2015

EPISODES 10x50’

The year 1992: Italy is in turmoil. The old political system ruled by Cristian

Democrats and Socialists is about to collapse under the biggest criminal

investigation in Italian history: Tangentopoli.

STATUS In post production

ON AIR May 2015

EPISODES 2x90’

STATUS In post production

ON AIR October 2015

EPISODES 35x30’

STATUS In development

ON AIR March 2016

EPISODES 12x50’

STATUS In development

ON AIR May 2016

EPISODES 8x50’

STATUS In development

ON AIR November 2016

EPISODES 10x50’

STATUS in development

ON AIR April 2017

EPISODES 10x50’

New mysteries to be solved by the unconventional barman detective

created by best selling author Marco Malvaldi.

Psycologist Giovanni Mari returns with new patients. Each episode focuses

on one (including Giovanni himself), each airing a different week night.

The Savastano’s saga will engage its worldwide audience for another

action-packed season, that will bring us into the darkest core of

Neapolitan mob.

Written and directed by Oscar winner Paolo Sorrentino. A new pope of

American origin is elected. He will bring unconventional and unsuspected

reforms to the Catholic Church.

The comic anti-hero that counts million of followers, will be finally brought to

the small screen in a high end international co-production.

Meet the Vatican Profilers, a mysterious organisation of the Catholic Church,

whose origins are shrouded in mystery. A modern thriller based on International

bestseller by Donato Carrisi.

64

• 8 part series written and directed by Paolo

Sorrentino (Oscar winner for “The Great

Beauty”)

• €20-25M production budget – 80%

financed by international partners, driven

by success of Gomorrah

• Due in 2016

YOUNG POPE

65

Key Partners Channels

66

Strengthen DTH

proposition through

increased product

penetration

Drive operating

efficiency

Leverage market

leading proposition in

content & innovation

Expand growth

opportunities with

diversified business

strategy

1 2

3 4

67

Cumulative €170m delivered FY10-13… …€120m more to come

Gross Annual Savings (€m )

43

43

44

42 172

FY10 FY11 FY12 FY13 FY10 -FY13

FY14 -FY16

• New efficiency program launched in FY14

• Due to be completed in the next 18 months

• Targeting c.€120m run rate saving by FY17 equivalent to c.10% of cost base (ex-rights)

• €33m of savings already delivered in FY14

68

* Self service transactions (Web / IVR) as % of total (net retention activities)

** Avg Calls per sub

Source: Customer Satisfaction survey (July 2013)

Customer care optimisation Supply Chain Excellence

18%

34% 42%

51%

4.3

3.9 3.8

3.2

Diversion rate*

Call Rate**

65% 48%

37% 21%

11.6%

8.1% 5.6% 3.9%

FY11 FY12 FY13 FY14

PVRHD Swap

No fault found

FY11 FY12 FY13 FY14

69

• Launched in Nov 2013

• Strong progress to date:

– Reached c.0.6m unique users

– 1m downloads (47% Tablet, 53% Smartphone)

– 1.3m transactions

– Mobile App achieved 22% of total upgrades

on Self Service channels (Web, Mobile App, IVR)

70

• 300bp improvement since FY11

• Achieved alongside multiple product launches

• Contributing to investment in the customer

proposition

• Continues to be an area of opportunity

for the future

Operating costs excluding programming

Other operating costs as % of sales

26%

25%

24%

23%

FY11 FY12 FY13 FY14

71

72

• Well positioned for growth in an attractive market

• Delivering the best customer experience

• Building a more valuable and stable customer base

• Continued investment in content and innovation

underpinned by efficiency programme

• Unlocking multi-platform and product growth

opportunity

• Sky Italia is an exciting part of a significant growth

opportunity at the new Sky