As filed with the Securities and Exchange Commission on May 15, 200314, 2004

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F

OR

OR

Commission file number 1-21302

SBS BROADCASTING S.A.

(Exact name of registrant as specified in its charter)

LUXEMBORGLUXEMBOURG
(Jurisdiction of incorporation or organization)

8-10, rue Mathias Hardt
L-1717 Luxembourg, Luxembourg
(Address of principal executive offices)

Securities registered pursuant to Section 12(g)12(b) of the Act:

None

Securities for which there is a reporting obligation pursuant to Section 15(d)12(g) of the Act:

Common Shares, par value €2.00 per share
7% Convertible Subordinated Notes due 2004
12% Senior Notes due 2008

        Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report:

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

None

Indicate the number of outstanding shares of each of the issuer's classes of capital orof common stock as of the close of the period covered by the annual report.report:

Ordinary Shares: 28,604,886

31,873,328

        Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:

ý Yes        o No

Indicate by check mark which financial statement item the Registrant has elected to follow:

o Item 17        ý Item 18

TABLE OF CONTENTS

iii

FORWARD-LOOKING STATEMENTS

        Some of the statements in this annual report and the information incorporated by reference are forward-looking. These forward-looking statements include statements relating to competition, trends and anticipated developments in the broadcasting industry and in internet technology.related industries. These forward-looking statements also include statements relating to our performance in "Item 4—Information on the Company" and "Item 5—Operating and Financial Review and Prospects". In addition, we may make forward-looking statements in future filings with the Securities and Exchange Commission, and in written material,materials, press releases and oral statements issued by us or on our behalf. Forward-looking statements include statements regarding our intent, belief or current expectations or those of our officers (including statements preceded by, followed by or that include forward-looking terminology such as "may", "will", "should", "believes", "expects", "anticipates", "estimates", "continues" or similar expressions or comparable terminology) with respect to various matters.

        It is important to note that our actual results in the future could differ materially from those anticipated in these forward-looking statements depending on various important factors. These factors include:

•

the effects of, and changes in, regulation and government policy;



•

the effects of changes in general economic environment;



•

the effects of changes in the rates of advertising spending growth;



•

the effects of competition;



•

our ability to reduce costs;



•

the timely development and acceptance of our new channels, stations, and/or services;



•

the effects of technological changes in broadcasting;the broadcasting and related industries; and



•

our success at managing the risks that arise from these factors.

        All forward-looking statements in this annual report and the information incorporated by reference are based on information available to us on the date hereof. We do not undertake to update any forward-looking statements that may be made by us or on our behalf, in this annual report or otherwise. In addition, please note that the matters set forth under "Item 3—Key Information—Risk Factors" constitute cautionary statements identifying important factors with respect to these forward-looking statements, including certain risks and uncertainties, that could cause actual results in the future to differ materially from those anticipated in such forward-looking statements.

USE OF TERMS AND PRESENTATION OF INFORMATION

        Unless the context otherwise requires, in this annual report all references to the "Company" or "SBS" are to SBS Broadcasting S.A. and all references to "we", "us" or "us"the "SBS group", are to SBS and its consolidated subsidiaries. Unless otherwise indicated, the financial information contained in this document has been prepared in accordance with accounting principles generally accepted in the United States ("US GAAP").

        This annual report contains market data and other statistical information, which has been obtained from various industry publications and other independent sources. In some cases, where such data and/or information was not available independently, we have made estimates. We have not independently verified this market data and statistical information, and we cannot assure you of its accuracy or reliability.

iiiii

PART I

ITEM 1—IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

        This item is not applicable.

ITEM 2—OFFER STATISTICS AND EXPECTED TIMETABLE

        This item is not applicable.

1

ITEM 3—KEY INFORMATION

SELECTED CONSOLIDATED HISTORICAL FINANCIAL AND OPERATING DATA

        The consolidated historical financial data set forth below as of December 31, 1998, 1999, 2000, 2001, 2002 and 2002,2003, and for each of the five years in the period ended December 31, 2002,2003, are derived from our audited consolidated financial statements. EffectiveSince January 1, 2002, we preparehave prepared our consolidated financial statements in euro. Prior to January 1, 2002, we reported in U.S. dollars. All prior period financial statements have been restated in euro. The StatementStatements of Operations were translated using a weighted average exchange rate for the applicable period. Balance Sheets were translated using the applicable period end rate. You should read the data in conjunction with our financial statements and the financial statements of TVN Sp. z o.o. ("TVN") and the accompanying notes and "Item 5—Operating and Financial Review and Prospects" included elsewhere in this annual report. The dates of acquisitions or start-ups of our operating entities affect the comparability of the operating data in different periods is affected by the dates of acquisitions or start-ups of our television and radio stations.periods.

2

(1)

Beginning January 1, 2002, we no longer amortize goodwill.

(2)

We have not paid any dividends for any of the periods presented. Net lossincome (loss) per Common Share basic and diluted, is calculated by dividing net lossincome (loss) by the weighted average Common Shares outstanding.

(2)(3)

For the years ended December 31, 1998, 1999, 2000 and 2001, earnings were insufficient to cover fixed charges. For purposes of determining the ratio of earnings to fixed charges, earnings are defined as income before income taxes and minority interest plus equity in loss of unconsolidated subsidiaries and fixed charges. Fixed charges include interest expense and a portion of rental expense deemed to be attributable to interest expense. Earnings were insufficient to cover fixed charges by €32.0 million, €29.8 million, €73.0 million and €94.5 million in the years ended December 31, 1998, 1999, 2000 and 2001, respectively.

(3)(4)

AllThe years ended December 31, 1999, 2000, 2001 and 2002 include capitalized lease obligations; the year ended December 31, 1998, includes €133,075,000 of our convertible subordinated debentures then outstanding; the years ended December 31, 1998, 1999, 2000, 2001 and 2001,2002, include, €64,267,000, €74,657,000, €80,602,000, €84,260,000 and €84,260,000,€66,749,000, respectively of our convertible subordinated notes7% Convertible Subordinated Notes then outstanding; the year ended December 31, 2002, includes €66,749,000 of our convertible subordinated notes currently outstanding; and the periodsyears ended December 31, 2001 and 2002, include €135,000,000 of our 12% Senior Notes currently outstanding.

(4)

Asthen outstanding; the euro was not introduced until January 1, 1999, the statement of operations for year ended December 31, 1998, will not be comparable2003, includes €134,700,000 of our Senior Notes currently outstanding, and €17,813,000 deferred consideration related to the financial statementsacquisition of other companies that reportRadio 1 in eurosNorway and that restated amounts from a different currency than the Luxembourg franc.Radio 2 in Denmark.

EXCHANGE RATES

        Our consolidated broadcasting operationsoperating entities generate revenues primarily in Norwegian kroner ("NOK"), Swedish kronor ("SEK"), Danish kroner ("DKK"), Hungarian forint ("HUF") and euro ("€"), and incur substantial operating expenses in these currencies. We also incur significant operating expenses for programming in U.S. dollar ("$US$" or "$") and other currencies. Balance sheet accounts are translated from foreign currencies into euro at the period-end exchange rates and statement of operations accounts are translated at the average exchange rates for the period. Any resulting translation adjustments are recorded as other comprehensive income (loss) within shareholders' equity. Currency translation adjustments relating to our transactions and those of our subsidiaries in currencies other than the functional currency of the entity involved are reflected in the results of operations.

        The following table presents the year-end and annual average exchange rates against the euro for the currencies in Norway (Norwegian kroner), Sweden (Swedish kronor), Denmark (Danish kroner), Hungary (Hungarian forint) and Poland (Polish zloty) at the dates and for the periods indicated.

(1)

The year-end exchange rates presented below are the rates quoted by the European Central Bank ("ECB") based on the daily concertation procedure between central banks within and outside the European System of Central Banks, which takes place daily at 2:15 p.m. ECB time; and the average rates

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presented below were determined by averaging the daily rates of the respective currencies during the periods indicated.

			1998(1)		1999		2000		2001		2002
Norwegian kroner equivalent of €1.00
	—end of period		8.87		8.08		8.23		7.95		7.28
	—average during period		8.39		8.31		8.11		8.05		7.51
Swedish kronor equivalent of €1.00
	—end of period		9.40		8.56		8.83		9.30		9.15
	—average during period		8.83		8.81		8.45		9.26		9.16
Danish kroner equivalent of €1.00
	—end of period		7.45		7.44		7.46		7.44		7.43
	—average during period		7.45		7.44		7.45		7.45		7.43
Hungarian forint equivalent of €1.00
	—end of period		255.55		254.70		265.00		245.18		236.29
	—average during period		238.13		252.75		260.03		256.59		242.96
Polish zloty equivalent of €1.00
	—end of period				4.16		3.85		3.50		4.02
	—average during period				4.23		4.01		3.67		3.86

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(1)

The year-end and average exchange rates of Luxembourg francs converted into euro at the exchange rate set by the Council of the European Union for use as of January 1, 1999, of €1 = LUF40.3399.

        The table below sets forth, for the periods and dates indicated, the exchange rate for the U.S. dollar against the euro based on the noon buying rate in New York for cable transfers in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York ("the Noon Buying Rate") for such currency, and the average rates presented below were determined by averaging the daily Noon Buying Rates for this currency during the periods indicated below.

Euro/U.S. dollar Exchange Rates
(euro per U.S. dollar)

		End of Period		Average Rate(1)		High		Low
1998(2)		0.86		0.90		0.93		0.84
1999		1.00		0.94		1.00		0.84
2000		1.07		1.09		1.21		0.97
2001		1.12		1.12		1.20		1.05
2002		0.95		1.06		1.16		0.95
November 2002						1.01		0.99
December 2002						1.01		0.95
January 2003						0.97		0.92
February 2003						0.93		0.92
March 2003						0.95		0.90
April 2003						0.94		0.89
May 1st through May 12, 2003						0.89		0.87

		End of Period		Average Rate(1)		High		Low
1999		1.00		0.94		1.00		0.84
2000		1.07		1.09		1.21		0.97
2001		1.12		1.12		1.20		1.05
2002		0.95		1.06		1.16		0.95
2003		0.79		0.88		0.97		0.79
November 2003						0.88		0.83
December 2003						0.84		0.79
January 2004						0.81		0.78
February 2004						0.81		0.78
March 2004						0.83		0.80
April 2004						0.85		0.81
May 1 through May 10, 2004						0.84		0.82

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(1)

The average of the Noon Buying Rates on the last business day of each full month or portion of a month during the relevant period.

(2)

The year-end, average, high and low Noon Buying Rates of Luxembourg francs converted into euro at the exchange rate set by the Council of the European Union for use as of January 1, 1999, of €1 = LUF40.3399

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Risk FactorsRISK FACTORS

        You should consider carefully the factors described below, as well as the other information included in this annual report, before making an investment decision relating to our registered securities.

        This annual report also contains forward-looking statements that involve risks and uncertainties. See "Forward-Looking Statements". above. Our actual results in the future could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the risks that we face described below and elsewhere in this annual report.

Risks Relating to the Company

We have a history of losses.may not be profitable in the future.

        Since our inception, we have incurred operating losses every year, exceptThe Company operates in 1993a highly competitive, consumer-driven and in 2002,rapidly changing media and net losses every year.entertainment industry. Our future ability to generate operating profits and net profits will depend upon a number of factors that are difficult to predict, such as our ability to:

•

attract and maintain audiences;audiences and magazine subscribers;



•

generate advertising revenues and other revenues;



•

develop additional revenue streams;streams and to remain competitive;



•

have access to distribution channels controlled by third parties; and



•

control costs in all areas, particularly programming costs.

        There areOur future ability to generate operating profits and net profits also depends on a number of external factors over which we have no control, such as the level of economic growth, and consumer and advertising spending in our markets.markets and the possible negative effect of the fragmentation of consumer leisure and entertainment time caused by a greater number of choices resulting from technological developments. We cannot guarantee that our efforts to makekeep our existing operations profitable will be successful or that we will continue to be profitable in the future.

We are highly leveraged and our substantial indebtedness and other factors mayOur debt service obligations could adversely affect our ability to service debt.business.

        We are highly leveraged.        At December 31, 2002,2003, we had total consolidated debt of €232.0€164.8 million and total shareholders' equity of €198.7€278.1 million. Our consolidated interest expense for the year ended December 31, 2002,2003, was €26.8€26.3 million. Our ratio of earnings to fixed charges for the year ended December 31, 2002,2003, was 1.07.2.65.

        By an indenture dated as of June 14, 2001, between SBS and The indenture for ourBank of New York, as trustee, we issued €135 million aggregate principal amount of 12% Senior Notes due 2008 (which we refer to as our Senior Notes) restricts our ability. Interest is payable on the Senior Notes in arrears on each June 15 and December 15, with the outstanding principal amount due on June 15, 2008. We are restricted from incurring indebtedness outside certain ordinary course amounts and subject to among other things, incur additional debtcertain exceptions, unless we satisfy a leverage ratio test and make investments.a senior leverage ratio test. In addition, we are limited from incurring indebtedness at our subsidiaries' ability to incur debt beyond asubsidiaries and secured indebtedness at the Company with certain amount is limited by this indenture.exceptions. These restrictions may impede our ability to finance programming expenditures, acquisitions and other business opportunities. If we cannot service our debt or obtain additional financing, as needed, this would have a material adverse effect on our business and results of operations.

        Our ability to pay interest on our Senior Notes and to satisfy our other debt obligations will depend upon our future operating performance, which will be affected by prevailing economic conditions and financial, business and other factors, certain of which are beyond our control. If our cash flow and capital resources are insufficient to fundIn addition, our debt service obligations could have important consequences to our business, including the following:

•

we may be forced to reduce or delayhave difficulty borrowing money in the future for working capital, capital expenditures, acquisitions or programming expenditures, sell assets, obtain additional equity capital or restructure our debt. There can be no assurance that our cash flowgeneral and capital resources will be sufficient forother corporate purposes;

•

the payment of principal and interest on debt will reduce the amount of cash available to us to finance our operations and other business activities;



•

we may have a higher level of debt than certain of our competitors, which may put us at a competitive disadvantage; and



•

our debt level may make us more vulnerable to economic downturns and adverse developments in the future. In the absence of such operating results and resources, we could face substantial liquidity problems, and we might be required to dispose of material assets or operations to meet debt service and other obligations, and there can be no assurance as to the timing of such sales or the proceeds, which we could realize from such sales. See "Item 5—Operating and Financial Review and Prospects—Liquidity and Capital Resources".

our business.

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SBSThe Company depends on its subsidiaries and associated companies to provide it with funds to meet its obligations. If the Company'sits subsidiaries or associated companies are unable to pay dividends or otherwise distribute cash, or make cash payments to the Company, when the Company needs additional cash flow, the Company may be unable to satisfy its obligations underincluding its Senior Notes, including the payment of and interest on our Senior Notes.debt obligations.

        SBS is a holding company with no direct operations and few assets other than the stock of its subsidiaries and its equity interests in associated companies over which it has no or limited management control. The Company is dependent on the cash flows of its subsidiaries and its associated companies to meet its debt and other obligations, including the payment of principal of and interest on ourthe Senior Notes. If the Company'sOur subsidiaries or associated companies are unable or unwilling to pay dividends or otherwise distribute cash, or make cash payments to the Company when it needs additional cash flow, it may be unable to meet these obligations. We currently rely on the repayment of intercompany loans and payment of management services fees as a means of upstreaming cash to the Company, and certain of these arrangements are on an informal basis. The Company's subsidiaries and associated companies are separate and distinct legal entities thatand have no obligation, contingent or otherwise, to pay any amounts due under our Senior Notes or to make any funds available for payment of amounts due under our Senior Notes, whether by dividends, loans or other payments. None of the Company's subsidiaries or associated companies guarantees the payment of our Senior Notes. We currently rely on the repayment of intercompany loans and payment of management services fees as a means of upstreaming cash to the Company, and certain of these arrangements are on an informal basis. If the Company's subsidiaries or associated companies are unable or unwilling to pay dividends or otherwise distribute cash, or make cash payments to the Company when it needs additional cash flow, it may be unable to meet its debt and other obligations.

        In addition, the ability of the Company's subsidiaries and associated companies to make any payments or advances to the Company is limited by:

•

the laws of the relevant jurisdictions in which these entities are organized or located; or



•

our agreements with our fellow equity owners or partners.

        Currently, we believethe Company believes that most of ourits restricted subsidiaries (see definition of designation(as defined below) are able to pay dividends, subject to us pursuant to applicable law.local law capital requirements. In some cases, one or more methods of making payments or advances to the Company are limited by contract. Further, in certain circumstances, prior or subsequent approval of any such payments or advances may be required from applicable regulatory bodies, other governmental entities or our equity partners. Additionally, to the extent that dividends are paid by companies which we do not wholly own, other owners will receive their pro rata portion of any distributions and that amountthose amounts will thus become permanently unavailable for payments on our Senior Notes.to us. For more information, see "Item 5—Operating and Financial Review and Prospects—Liquidity and Capital Resources".

Our management control over certain of our jointly-owned subsidiaries is subject to the rights of our local partners.

        We own certain of our subsidiaries jointly with various strategic local partners. While we have management control over our jointly-owned consolidated subsidiaries, such as those that operate the television stations SBS6, NET5 and Veronica in The Netherlands, TV2 in Hungary and TVNorge in Norway, our local partners hold certain voting power and/or protective minority rights. Therefore, without the consent of the relevant partners, we may be unable to cause these companies to take certain actions that we may favor, such as distributing dividends, making significant acquisitions, carrying out capital increases, incurring borrowings or implementing new strategies.

Designation of subsidiaries as "restricted" or "unrestricted" under the indenture for our Senior Notes and the other terms of our indenture may impose material restrictions on our business.

        Under the indenture for our Senior Notes, our subsidiaries have been designated as either restricted subsidiaries or unrestricted subsidiaries. The companies which have been designated as restricted subsidiaries contributed €553.1 million to our consolidated net revenues in 2003, and the companies which have been designated as unrestricted subsidiaries contributed €28.6 million to our consolidated net revenues in 2003. We and our restricted subsidiaries are subject to the restrictive covenants of the indenture governing our Senior Notes, which limit or restrict our ability and the ability of our restricted subsidiaries to, among other actions:

•

incur additional debt;



•

pay dividends and make distributions;



•

repurchase securities;



•

make certain debt or equity investments;



•

create liens on assets;



•

transfer or sell assets;



•

make payments on subordinated indebtedness;



•

merge or consolidate;



•

incur subsidiary guarantees;



•

designate subsidiaries as restricted or unrestricted subsidiaries or designate included joint venture entities as excluded joint venture entities;



•

create restrictions on the ability of subsidiaries to pay dividends, make loans or transfer assets; or



•

enter into transactions with our affiliates.

        These restrictions could make it more difficult for us to expand, finance our operations or engage in business activities that may be of interest to us, which may have a material adverse effect on our operations, financial position or prospects.

Our unrestricted subsidiaries are not subject to the restrictions contained in the indenture for our Senior Notes.

        While we have an unlimited right under the indenture for our Senior Notes to invest in our restricted subsidiaries, our ability to invest in our unrestricted subsidiaries, joint ventures and other entities is limited, although we retain the ability to make significant investments in such entities, subject to complying with the indenture for our Senior Notes. This covenant may limit our ability to acquire new investments or establish joint ventures. Also, to the extent that our unrestricted subsidiaries fail to generate income or cash flow, we will be limited in our ability to provide them with additional financial support and may be required to sell them or discontinue their operations. Any such actions may require a significant amount of management time and attention. Subject to complying with the indenture for our Senior Notes, we may redesignate an unrestricted subsidiary as a restricted subsidiary and are likely to do so under circumstances in which such a redesignation provides benefits to us in the form of increased flexibility under the indenture for our Senior Notes to make restricted payments and incur debt.

We cannot assure you that our cash flow and capital resources will be sufficient for payment of our debt in the future.

        Our ability to pay interest on our Senior Notes and to satisfy our other debt obligations will depend upon our future operating performance, which will be affected by prevailing economic conditions and financial, business and other factors, certain of which are beyond our control. If our cash flow and capital resources are insufficient to fund our debt service obligations we could face substantial liquidity problems, and we might be forced to reduce or delay capital expenditures or programming expenditures, obtain additional equity capital, restructure our debt, or dispose of material assets or operations to meet debt service and other obligations, and we cannot assure you as to the timing of such sales or the proceeds, which we could realize from such sales. See "Item 5—Operating and Financial Review and Prospects—Liquidity and Capital Resources".

We may require additional external sources of capital to develop and expand our business.

        The acquisition, ownership, development and operation of broadcasting operations requires substantial capital. Based upon market conditions and other factors, we may raise additional capital to fund our capital expenditures, operations, cash debt service and other cash needs. However, our requirements with respect to these cash needs are based upon our current estimates of future capital expenditures and operating results, which rely on a variety of assumptions that may not be accurate. Our actual needs may increase significantly in the future.

        We may need to obtain additional financing ifIf our plans or assumptions change, our assumptions prove inaccurate, we make investments in or acquisitions of other companies or we experience unexpected costs or competitive pressures. Wepressures, we may also need to seek alternative financing if we are not able to repay our $65 million 7% Convertible Subordinated Notes due 2004 and our €135 million 12% Senior Notes due 2008 with cash from operations.obtain additional financing. Our actual capital needs may increase significantly in the future.

        Sources of financing may include public or private debt or equity financings, sale of assets or other financing arrangements. Any additional equity or equity-linked financing may dilute our Common Shares. In addition, we cannot offer any assurance that such additional financing will be available or

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available on acceptable terms or within the limitations contained in our other financing arrangements, including the indenture governing our €135 million 12% Senior Notes due 2008.Notes. This indenture also limits, and we expect any future credit agreement or other debt agreement to limit, our ability to incur additional debt. These limits could adversely affect our ability to finance our business plan.

        We conduct operations through our subsidiaries. Our subsidiaries are separate and distinct legal entities and have no obligation, contingent or otherwise, to pay us dividends, make loans or otherwise make funds available to us, except that some of our subsidiaries have limited obligations to us under intercompany loan agreements and management services agreements. In addition, payments of dividends and the making of loans and advances or other payments to us by our subsidiaries are subject in some cases to statutory or contractual restrictions, are dependent upon the earnings of those subsidiaries and are subject to various business considerations. Therefore, our ability to obtain additional debt financing may be limited as we may have limited sources of cash flow available for debt service.

Our management control over certain of our jointly-owned subsidiaries is subject to the rights of our local partners.

        We own certain of our subsidiaries jointly with various strategic local partners. While we have management control over our jointly-owned subsidiaries, such as SBS6, NET5 and V8 in The Netherlands and TVNorge in Norway, our local partners hold certain voting power and/or protective minority rights. Therefore, without the consent of the relevant partners, we may be unable to cause these companies to take certain actions that we may favor, such as to distribute dividends, make significant acquisitions, capital increases, borrowings or to implement new strategies.

Designation of subsidiaries as "restricted" or "unrestricted" under the indenture for our Senior Notes and the terms of our indebtedness may adversely affect the development of our business.

        Under the indenture for our Senior Notes, our subsidiaries have been designated as either restricted subsidiaries or unrestricted subsidiaries. The companies which have been designated as restricted subsidiaries contributed €397.7 million to our consolidated net revenues in 2002, and the companies which have been designated as unrestricted subsidiaries contributed €113.2 million to our consolidated net revenues in 2002. We and our restricted subsidiaries are subject to the restrictive covenants of the indenture for our Senior Notes, which may adversely affect our ability to engage in our business activities and which limit or restrict our ability and the ability of our restricted subsidiaries to, among other actions:

•

incur additional debt;



•

pay dividends and make distributions;



•

repurchase our securities;



•

make certain debt or equity investments;



•

create liens on our assets;



•

transfer or sell assets;



•

make payments on our subordinated indebtedness;



•

merge or consolidate;



•

incur subsidiary guarantees;



•

designate subsidiaries as restricted or unrestricted subsidiaries or designate included joint venture entities as excluded joint venture entities;

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•

create restrictions on the ability of subsidiaries to pay dividends, make loans or transfer assets; or



•

enter into transactions with our affiliates.

Our unrestricted subsidiaries are not subject to the restrictions contained in the indenture for our Senior Notes.

        While we have an unlimited right under the indenture for our Senior Notes to invest in our restricted subsidiaries, our ability to invest in our unrestricted subsidiaries, joint ventures and other entities is limited, although we retain the ability to make significant investments in such entities, subject to the indenture for our Senior Notes. This covenant may limit our ability to acquire new investments or establish joint ventures. Also, to the extent that our unrestricted subsidiaries fail to generate income or cash flow, we will be limited in our ability to provide them with additional financial support and may be required to sell them or discontinue their operations. Any such actions may require a significant amount of management time and attention. We may at any time redesignate an unrestricted subsidiary as a restricted subsidiary and are likely to do so under circumstances in which such a redesignation provides benefits to us in the form of increased flexibility under the indenture for our Senior Notes to make restricted payments and incur debt.

We rely on external sources for a significant proportion of our programming.

        Our revenues are substantially dependent upon having access to a sufficient supply of attractive programs on economically acceptable terms and conditions. Also, in compliance with local regulations, we are required to achieve specified percentages of domestic content in some markets, which may necessitate production of local programming for a specific domestic market. We currently purchase programming under the terms of several program license agreements. We cannot guarantee that in the future we will be successful in renewing or renegotiating these agreements or otherwise acquiring these programs on competitive terms and conditions. If we cannot maintain our quality of programming, our ratings may suffer. A decline in ratings for our broadcasting businesses would likely result in reduced advertising revenues, which could have a material adverse effect on our results of operations.

Our programming may become more expensive.

        Our cost of programming may increase as we attempt to upgrade the quality of our programming and/or broadcast a greater number of locally-produced programs. Our cost of programming could also increase as a result of competition for available programming and initiatives taken by political and other organizations, including the European Union, to increase the amount of locally-produced programming required to be broadcast. See "Item 4—Information on the Company—Regulation" for a discussion of such requirements. Increases in our cost of programming could have a material adverse effect on our results of operations.

We are subject to risks relating to fluctuations in exchange ratesrates.

        As of January 1, 2002, theThe reporting currency of SBS is the euro, but our subsidiaries use their local currencies as their functional currencies. The results of our consolidated subsidiaries in Denmark, Hungary, Norway and Sweden are translated from the local currency into euro. An increase in the value of the euro relative to other Europeanthe functional currencies of our subsidiaries that do not use the euro would have a negative impact on our consolidated revenues, but a positive impact on our consolidated expenses.

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        We are also exposed to risks associated with foreign currency transactions denominated in U.S. dollars, specifically program right contracts and principal and interest payments on our $65 million Convertible Notes due in 2004.contracts. We enter into forward exchange contracts for a significant portion of our U.S. dollar denominateddollar-denominated program rights to reduce currency risk related to acquisitions of program rights. As we do not hedge all of our U.S. dollar denominateddollar-denominated program right contracts, and we do not currently hedge our U.S. dollar denominated debt, a decrease in the value of the euro to the U.S. dollar would have an adverse effect on our reported results of operations and financial condition.

For a detailed analysis of our exposure to exchange rate risk, see "Item 11—Quantitative and Qualitative Disclosures about Market Risk".

Our leverageInvestors may be unable to enforce civil liabilities and debt service obligations could adversely affectjudgments against us and our business.directors and officers.

        We are highly leveraged. Asincorporated under the laws of December 31, 2002, we had total consolidated debt of €232.0 millionLuxembourg, and shareholders' equity of €198.7 million. Our consolidated interest expense for the year ended December 31, 2002, was €26.8 million. Our ratio of earnings to fixed charges for the year ended December 31, 2002, was 1.07.

        Our level of debt could have important consequences to our business, including the following:

•

we may have difficulty borrowing money in the future for working capital, capital expenditures, acquisitions or general and other corporate purposes;



•

the payment of principal and interest on debt will reduce the amount of cash available to us to finance our operations and other business activities;



•

we may have a higher level of debt than certainsubstantially all of our competitors, whichassets are located outside the United States. A majority of our directors and officers are not residents of the United States, and all or a substantial portion of their respective assets are located outside the United States. As a result, investors may putnot be able to serve process within the United States or to enforce judgments against us at a competitive disadvantage;or many of our directors and officers based upon civil liability provisions of the







•

our debt level makes us more vulnerable

securities laws of the United States. In addition, foreign courts may not enforce judgments of U.S. courts predicated upon the civil liability provisions of the United States securities laws. They also may refuse to economic downturns and adverse developments in our business.

adjudicate original actions predicated upon such provisions.

Risks Relating to Our Industry

Our operating results are primarily dependent on the sale of commercial advertising time.

        Our business relies heavilydepends significantly on advertising revenues, which depend partly upon prevailinga number of factors, including general economic conditions. Our advertising revenues depend onconditions, our stations' broadcast reach, television and radio listening levels, the relative popularity of our programming and the pricing of advertising time. Furthermore, increases in advertising spending have generally corresponded to economic recoveries, while decreases have generally corresponded to general economic downturns and recessions. There can be no assuranceWe cannot assure you that advertising spending in our local markets will not decline in the future. If our television and radio audience shares decline for any reason, there can be no assurancewe cannot assure you that we will be able to maintain our current levels of advertising income or the rates we can charge advertisers. We must also compete for advertising revenues with other forms of advertising media, such as newspapers, magazines, outdoor advertising, teleshopping services, telephone directory advertising, on-line advertising and direct mail. Any resulting decline in our advertising revenues could have a material adverse effect on our financial conditionscondition and results of operations.

Regulatory restrictions and changes in regulatory environment may negatively affect us.

        Broadcast operations in our existing markets and in new markets that we may enter are subject to extensive government regulation. These regulations govern matters such as the issuance, renewal, transfer and ownership of station licenses, the timing and content of programming and the timing, content and amount of commercial advertising permitted. There are also regulations requiring that certain percentages of programming be produced or originated in local markets and/or originated in local language.

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For those of our television stations established in a member state of the European Union or the European Economic Area, European and independent production quotas also apply. Furthermore, regulations in many of our markets limit foreign ownership of television and radio broadcasters and may limit our ability to increase our interests in local subsidiaries or to acquire interests in new local broadcasting companies. See "Item 4—Information on the Company—Regulation" for a discussion of these requirements. More restrictive licensing, programming or foreign ownership requirements may be adopted in the future, which could make compliance more difficult or expensive or otherwise adversely affect our business or prospects.

We require operating licenses and authorizations, and we cannot give any assurance that new licenses will be issued to us, our current licenses will be renewed or reissued or that nonone of our licenses will be revoked.

        We require licenses or other authorizations from various national authorities to conduct our broadcasting business. Our current broadcast licences expire at various dates. We cannot guarantee that these licenses and authorizations will be issued or that our current licenses or authorizations will be renewed or reissued following their expiration or that they will not be revoked. See "Item 8—Financial Information—Legal Proceedings". For additional information on the licenses and authorizations used in our business,businesses, see "Item 4—Information on the Company—Regulation". Although we believe that we are in compliance in all material respects with applicable laws, rules, regulations and licensing requirements, we cannot give any assurance that we will continue to be in compliance, or that more restrictive laws, rules, regulations, enforcement policies or licensing requirements will not be adopted in the future, which could make compliance more difficult or expensive or otherwise adversely affect our business or prospects. In addition, changes in laws, regulations or governmental policy affecting our business activities, such as decisions by regulators as to the granting, amendment, renewal, revocation or termination of licenses or broadcast agreements could have a material adverse effect on our financial condition and results of operations.

We rely on external sources for a significant proportion of our programming.

        Our revenues are substantially dependent upon having access to a sufficient supply of attractive programs on economically acceptable terms and conditions. Also, in compliance with local regulations, we are required to achieve specified percentages of domestic content in some markets, which may necessitate production of local programming for a specific domestic market. We currently purchase programming under the terms of various program license agreements. We cannot guarantee that in the future we will be successful in renewing or renegotiating these agreements or otherwise acquiring these programs on competitive terms and conditions. If we cannot maintain our quality of programming, our ratings may suffer. A decline in ratings for our broadcasting businesses would likely result in reduced advertising revenues, which could have a material adverse effect on our results of operations.

Our programming may become more expensive.

        Our cost of programming may increase as we attempt to upgrade the quality of our programming and/or broadcast a greater number of locally-produced programs. Our cost of programming could also increase as a result of competition for available programming and initiatives taken by political and other organizations, including the European Union, to increase the amount of locally-produced programming required to be broadcast. See "Item 4—Information on the Company—Regulation" for a discussion of such requirements. Increases in our cost of programming could have a material adverse effect on our financial condition and results of operations.

We depend on various third parties to carry our television signals in our markets.

        We currently depend on numerous third-party operators, including cable systems, satellite and terrestrial transmission systems and pay television platforms, to carry our signals in our markets. We cannot assure you that these third-party operators will continue to carry our signals on favorable economic terms, or at all. Any material decrease in the distribution of our signal could have a material adverse impact on our financial condition and results of operations.

We are subject to significant competition.

        Our television and radio stations compete for audience, programming and advertising revenues with other television and radio stations in their respective markets. For advertising revenues, our stations also compete with other forms of advertising media, such as newspapers, magazines, billboards and similar forms of outdoor advertising, teleshopping services, telephone directory advertising, on-line advertising and direct mail. Some of our competitors are government-supported operations or are part of larger companies that have substantially greater financial resources than we have.

        In each of our principal television markets, we primarily compete with three basic types of television stations:

•

publicly-owned, non-commercial television stations;



•

publicly-owned, commercial television stations; and



•

privately-owned, commercial television stations, including also pay or subscription television stations.

        All of the above types are distributed via various means, including over-the-air, satellite-to-cable, and satellite-to-dish ("direct-to-home").

and digital terrestrial television. We compete with non-commercial, publicly-owned television stations for viewers and programming but not for advertising revenues. For more detailed discussions about the markets in which we operate, see "Item 4—Information on the Company".

        Our Dutch print operations compete for subscribers and advertising revenues with print and electronic media, and, in particular, with publishers of other weekly printed television and radio

program guides and electronic program guides. See "Item 4—Information on the Company—Review of Localization and Print Operations". The entrance of competitors to the market of published television and radio program information could have a material adverse effect on our results of operations.

Our business is subject to significant, rapid changes in technology.

        The implementation of systems other than analogue terrestrial broadcasting, including digital terrestrial broadcasting, digital cable and satellite distribution systems, could adversely affect our

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business. We cannot predictexpect the countries in which we operate to change from analogue to digital broadcasting independently, at different times and under different regulatory regimes. The timing of the further development and implementation of these technologies oris not fully known and we cannot predict the effect of such technological changes on us.us, or our stations' ability to have access to existing and future distribution channels controlled by third parties. Accordingly, there can be no assurancewe cannot assure you that the technologies we currently employ will not become obsolete or subject to intense competition in the future. We may be required to expend substantial financial resources on the development or implementation of new alternative technologies in the future and new distribution systems may require us to acquire additional distribution and content rights.

Risks Relating to Our Common Shares

The price of our Common Shares is likely tomay be volatile.

        The market price of our Common Shares has fluctuated in the pastcould fluctuate and is likely to continue tomay be volatile in the future.volatile. Factors that could cause such volatility may include, among other things:

•

actual or anticipated variations in quarterly operating results;



•

changes in financial estimates by securities analysts;



•

conditions or trends in the United States or Europe and our markets;



•

interest rates;



•

announcements by us or our competitors of significant acquisitions, strategic partnerships or joint ventures;



•

capital commitments;



•

additions or departures of key personnel;



•

sales of our Common Shares; and



•

general fluctuations in equity markets.

        Many of these factors are beyond our control. These factors may materially adversely affect the market price of our Common Shares, regardless of our operating performance.

The market price of our Common Shares could be adversely affected by potential future sales and issuances.

        Holders of approximately 6.47 million of our Common Shares have rights to require us to facilitate and pay certain costs relating to registered public offerings of their Common Shares and/or rights to participate in registered public offerings of Common Shares. At December 31, 2002, we hadWe have a total of 8.2 million stock options and restricted stock units outstanding $70 million 7% Convertible Subordinated Notes due 2004, which can be converted into up to 2.4and have reserved a total of 9.3 million Common Shares at an exercise price of $29.13 per share. We have reserved approximately 7.0 million Common Shares for future issuance upon the exercise of optionsshare incentives granted under our share incentive plans.plans (i.e., restricted stock, stock options, stock appreciation rights and restricted stock units). Issuances or sales of substantial amounts of our Common Shares in the public market, or the perception that such issuances or sales may occur, could adversely affect the market price of our Common Shares and could adversely affect our ability to raise capital through subsequent offerings of equity.

Investors may be unable to enforce civil liabilities and judgments against us and our directors and officers.

        We are incorporated under the laws of Luxembourg, and substantially all of our assets are located outside the United States. A majority of our directors and officers are not residents of the United States, and all or a substantial portion of their assets are located outside the United States. As a result, investors may not be able to serve process within the United States or to enforce judgments against us or many of our directors and officers based upon civil liability provisions of the securities laws of the United States. In addition, foreign courts may not enforce judgments of U.S. courts predicated upon

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the civil liability provisions of the United States securities laws. They also may refuse to adjudicate original actions predicated upon such provisions.

Risks Relating to Our €135 million 12%our Senior Notes Due 2008

As SBS is a holding company, the right of our holders of Senior Notes to receive payments on the Senior Notes is effectively subordinated to any debt of SBS's subsidiaries and could be adversely affected if any of these subsidiaries declares bankruptcy, liquidates or reorganizes.

        The Senior Notes are senior debt of SBS and rank (i) pari passu in right of payment with all existing and future unsecured debt of SBS and (ii) senior to any debt of SBS that is expressly subordinated to the Senior Notes. The Senior Notes are effectively subordinated to all liabilities of our subsidiaries and to our secured obligations to the extent of the collateral securing such obligations.

        The Company is organized as a holding company. The Company conducts essentially all of its operations through its subsidiaries and depends primarily on the earnings and cash flows of these subsidiaries to meet the Company's debt obligations, including its obligations with respect to ourthe Senior Notes. The Company's subsidiaries have other liabilities, including contingent liabilities, which could be substantial. These subsidiaries' assets constitute substantially all of the Company's operating assets. Because the Company's subsidiaries do not guarantee the payment of principal and interest on our Senior Notes, the holders of our Senior Notes will not have any direct claim on the Company's subsidiaries' assets. Therefore, all existing and future obligations of the Company's subsidiaries, including debt, taxes, trade payables and other liabilities, must be paid in full before any amounts would become available for distribution to the holders of our Senior Notes.

        In the event of a bankruptcy, liquidation or reorganization of any of the Company's subsidiaries, holders of their debt and their trade creditors will generally be entitled to payment of their claims from the assets of those subsidiaries before any assets are made available for distribution to the Company as a shareholder. As of December 31, 2002,2003, our Senior Notes would have been effectively subordinated to €30.3€12.2 million of debt and €174.3€191.8 million of other liabilities of the Company's subsidiaries (including their trade payables and excluding intercompany liabilities). As of December 31, 2002,2003, the Company's subsidiaries had approximately €387.3€478.6 million of intercompany obligations payable to the Company. In addition, under the terms of the indenture for our Senior Notes, the Company's subsidiaries may incur a limited amount of additional debt. See "Item 5—Operating and Financial Review and Prospects—Liquidity and Capital Resources".

We may incur debt in the future that is secured by our assets and that would rank senior to our Senior Notes.

        The terms of the indenture for our Senior Notes, as well as our other debt agreements, will, subject to certain tests, permit us to incur secured debt. If we do so, the rights of holders of our Senior Notes will rank junior to the rights of the holders of all of our secured debt to the extent of the value of the assets securing our secured debt.

We may not have sufficient resources to meet our change of control purchase requirements.

        Upon the occurrence of specified change of control events, as described in our Senior Notes and the related indenture, each holder of our Senior Notes will have the right to require us to purchase such Senior Notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest and additional interest, if any, to the date of purchase. We may not have sufficient financial resources to purchase all of the Senior Notes that holders may tender to us upon a change of control. The occurrence of a change of control could also constitute an event of default under any future debt obligation of SBS or any of its subsidiaries and could create certain rights on the part of International Trading and Investments Holdings S.A. ("ITI") and its affiliates to sell us additional shares in TVN.subsidiaries.

Holders of our Senior Notes may not be able to sell ourtheir Senior Notes, market trading prices for ourthe Senior Notes may continue to be volatile and we cannot give assurance that an active trading market for our Senior Notes will develop.continue to exist.

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        We cannot give assurance as to the development or liquidity of any market for our Senior Notes. The liquidity of, and trading market for, our Senior Notes will dependdepends upon the number of holders of our Senior Notes, our own financial performance, the market for similar securities, the interest of securities dealers in making a market in our Senior Notes and other factors. The liquidity of, and trading market for, our Senior Notes may also be adversely affected by a general decline in the financial markets or by declines in the market for similar securities. Such declines may adversely affect such liquidity and trading markets independent of the financial performance of, and prospects for, the Company. Historically, the market for high-yield debt securities, such as our Senior Notes, has been subject to disruptions that have caused substantial volatility in the prices of those securities. Our Senior Notes are listed on the Luxembourg Stock Exchange.

Luxembourg or other local insolvency laws to which we or our subsidiaries may be subject may not be as favourablefavorable to the holders of our Senior Notes as U.S. insolvency laws.

        Due to the nature of Luxembourg's insolvency laws, the ability of holders of our Senior Notes to protect their interests in SBS may be more limited than would be the case under U.S. bankruptcy laws. This is because our liabilities in respect of our Senior Notes will be paid in the event of a winding up after payment of all secured debts, the cost of liquidation and those of our debts, which are entitled to priority under Luxembourg law. PreferentialOther debts that would rank senior to the Senior Notes include:

•

money owed to the Luxembourg Revenue in respect of, for example, income tax deducted at source;



•

value-added tax and other taxes and duties owed to the Luxembourg Customs and Excise;



•

social security contributions; and



•

remuneration owed to employees.

        If the liquidator or administrator can show that we have given "preference" to any person by defrauding the rights of creditors generally regardless of when this fraud occurred, a court has the power, among other things, to void the preferential transaction. This provision of Luxembourg insolvency law may affect transactions entered into or payments made by us during the period before liquidation or administration.

        Under Luxembourg law, there is generally no consolidation of the assets and liabilities of a group of companies in the event of bankruptcy. Each individual company would thus most likely be treated separately by a bankruptcy administrator appointed by the relevant court. The assets of our subsidiaries would thus first be used to satisfy the debts of each respective subsidiary and only the remaining surplus (if any) of a subsidiary would benefit our creditors. As a result, the ability of the holders of our Senior Notes to protect their interests as a creditor of a parent of a subsidiary may not be as strong under Luxembourg law as it would be under U.S. law, or the laws of other countries.

        Virtually all of our subsidiaries are incorporated in jurisdictions other than the United States and are subject to the insolvency laws of those jurisdictions. The insolvency laws of these jurisdictions may not be as favourablefavorable to interests of the holders of our Senior Notes as creditors as the laws of the United States or other jurisdictions.

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ITEM 4—INFORMATION ON THE COMPANY

History and overview of the companyITEM 4—INFORMATION ON THE COMPANY

OVERVIEW OF THE COMPANY

        We are a European television and radio broadcasting company.company with complimentary print operations. We believe our potential combined television and radio audience reach is among the largest of commercial broadcasting groups in Europe. The combined population in the markets in which we currently operate is approximately 14090 million. We acquire, package and distribute programming and other content via television channels, radio stations and the Internet in Europe. We currently own interests in 1310 television stations and 2122 radio networks operating a total of 53 radio stations overall across 119 countries in Europe, together with various related destination and promotional web sites. We operate all of these television and radio stations with the exception of the Polish television stations TVN and TVN7, prima TV in RomaniaRomania. In addition we own and ATVoperate the company that publishes the weekly television and radio guide,Veronica Magazine, the largest weekly publication in Austria.The Netherlands, with a circulation of approximately 1.1 million. We derive revenue primarily through sales of advertising to multi-national, national, regional and local advertisers.advertisers and sales of magazine subscriptions. In the year ended December 31, 2002,2003, we had consolidated net revenue of €510.9€581.7 million and consolidated operating income of €11.7€43.2 million.

HISTORY OF THE COMPANY

        SBS Broadcasting S.A. is a Luxembourg Sociésociété Anonymeanonyme that is subject to the provisions of the law on Commercial Companies of August 10, 1915, as amended. SBS Broadcasting S.A. was founded on October 24, 1989, published as memorial number 88 on March 20, 1990, and is registered with the Trade Register of Luxembourg under register number B31 996. The registered office of SBS Broadcasting S.A. is 8-10, rue Mathias Hardt, L-1717 Luxembourg, and theLuxembourg. The telephone number is +352 40 7878.261 2151 and the fax number is +352 2612 3301.

        We were originally created to acquire and operate television broadcastingtelevision-broadcasting operations in Scandinavia. In 1990, we acquired a 51% interest in TVNorge, a national satellite-to-cable television station and over-the-air network in Norway and a controlling interest in Kanal 2, a local television station in Copenhagen, Denmark. Between September 1991 and September 1995, we acquired 100% of Kanal 5, a satellite-to-cable television station based in the United Kingdom but broadcasting in Sweden.

        We commenced our radio broadcasting operations in 1994, and we own significant interests in and operate 2122 radio stationsnetworks in Denmark, Sweden, Norway, Finland and Greece.

        In 1995, we expanded our operations to include television properties outside Scandinavia by establishing VT4, a wholly-owned, UK based,UK-based, satellite-to-cable television station. Since March 1, 2002, VT4's program isVT4 has been broadcast out of Flanders, Belgium, under a license granted by the Flemish Media Commission. In 1995, we also established SBS6, a satellite-to-cable station in The Netherlands. We continued our Dutch expansion, launching NET5 in 1999 and V8Veronica in 2001, two satellite-to-cable stations reaching approximately 96% of the television households in The Netherlands.

        In Hungary, we launched TV2 in October October��1997, in which we owned a 49% voting interest and a 61.5% economic interest. In August 2000, we purchased an additional 22.5% economic interest in TV2. On February 21, 2000,In May 2002, we acquired all100% of theMTM Produkcio Kft. ("MTM Productions"), a Hungarian broadcasting assetstelevision production company that produces programming for TV2. As part of Central Europeanthis transaction, we acquired Concorde Media Enterprises, Ltd ("CME"), including programming inventories, real estate,Beteiligungs GmbH's ownership interest in MTM Productions. In addition, we acquired Ferenc Tolvaly and related tangible and intangible assets. We simultaneously agreed to sell 50% of those assets to CLT UFA S.A.Robert Prokopp's ownership interest in MTM Productions.

        In 1999, in exchange for contributing subtitling agreements for a majority of our television stations, we acquired 51% of Broadcast Text International ("BTI"), one of Europe's largest suppliers of localization services, such as subtitling for television, and in 2000, we acquired the remaining 49% of BTI from Telenor Plus A/S ("Telenor").

        In December 1999, for $10 million we acquired a minority interest in Lions Gate Entertainment Corp. ("Lions Gate"), a North American integrated entertainment company engaged in the development, production and distribution of feature films, television series, movies-of-the-week,

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mini-series and animated programming. Other investors in Lions Gate include Vulcan Ventures, Tele-München, Capital Research and Management Company and Fidelity Investments.

        On March 9, 2000, we exercised our option to acquire, for a nominal amount, 86% of the shares of Amerom Television Ltd. ("Amerom"). Amerom owns 100% of Amerom Television S.r.l., the owner and operator of prima TV, an over-the-air and satellite-to-cable television station that reaches approximately 53% of the television households in Romania. On July 18, 2001, we completed the issuance of new shares representing 53.5% of Romanian Broadcasting Corporation Limited ("RBC") to Romanian Investment and Development S.r.l. ("RID"). RBC is a newly formedthe SBS subsidiary that currently holds an 82%80% interest in Amerom. RID is controlled by the General Manager of prima TV. We continue to own 46.5% of RBC. Accordingly, we currently own 38%37% of prima TV, an over-the-air and satellite-to-cable television station that reaches approximately 53% of the television households in Romania.TV.

        On July 26, 2000, we acquired from International Trading and Investments Holdings S.A. ("ITI") a 33% interest in TVN, Poland's second largest private television station. On December 23, 2002, we sold a 2.6% equity interest in TVN to ITI for a cash consideration of $11 million (€10.5 million) and, on December 2, 2003, we granted ITI an option to acquire all ofsold our remaining 30.4% equity interest in TVN. See "Item 10—Additional Information—Material Contracts".TVN for €131.6 million.

        On November 5, 2001, we acquired a 20% equity interest in ATV Privat-TV Services AG ("ATV"), an Austrian satellite-to-cable television station, from certain of ATV's existing shareholders. See "Item 7—Major Shareholders and Related Party Transactions—Related Party Transactions".

        Over the last several years,On December 4, 2003, we sold our interests in two of our television stations. On November 26, 2001, we sold our 50% interest in TV3ATV for €1.0 million.

        On September 1, 2003, we completed our acquisitions of certain media assets from Veronica Holding B.V. in Switzerland to Tamedia, a leading Swiss publisher, for nominal consideration. In October 2000, we sold all of our interest in Kanal A in Slovenia to CME for $12.5 million.

        In May 2002, we acquired 100% of MTM Produkcio Kft. ("MTM Productions"), a Hungarian television production company that produces programming for TV2.The Netherlands. As part of thisthe transaction, weour Dutch subsidiary SBS Broadcasting B.V. obtained the exclusive right to use the "Veronica" brand for television, print and related uses. In addition, SBS Broadcasting B.V. acquired Concorde Media Beteiligungs GmbH's ownershipthe company that owns and publishes the weekly Dutch television and radio guidesVeronica Magazine andSatellite. Veronica Magazine is the largest weekly publication in The Netherlands, with an average circulation of approximately 1.1 million in 2003. As consideration for the transaction, Veronica Holding was issued a 10% equity interest in MTM Productions. See "Item 7—Major Shareholders and Related Party Transactions—Related Party Transactions". In addition, we acquired Ferenc Tolvaly and Robert Prokopp's ownership interest in MTM Productions. See "Item 10—Additional Information—Material Contracts".SBS Broadcasting B.V., subject to a final purchase price adjustment.

        Set forth below is summary information regarding our operating results for 2002:2003:

Summary of 20022003 operating results by segment (in millions of euro except for percentages)

Source	Source		Revenue		Operating Income		Source		Revenue		Operating Income
Television broadcast operations	Television broadcast operations		470.7		23.9		Television broadcast operations		514.1		58.1
	% of total		92	%	86	%	% of total		88	%	92	%
Radio broadcast operations	Radio broadcast operations		35.6		1.2		Radio broadcast operations		46.6		2.7
	% of total		7	%	4	%	% of total		8	%	4	%
New media operations			4.6		2.7
Print operations							Print operations		21.0		2.5
	% of total		1	%	10	%	% of total		4	%	4	%
Total			510.9		27.8
							Total		581.7		63.3

Television

        Our television programming strategy has been to combine original, locally produced content (often(some produced by our stations) with quality feature films and other international content from various studios. We strive to ensure that our programming reflects audience interests in each of our local markets. We also seek to benefit from the economies of group buying and local production.

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        Set forth below is summary information regarding our television stations and their markets:

Summary of SBS Television Investments

Station		Market		Reach(1)		SBS Ownership		Other Owners		Type of Signal		Daily Broadcast Hours(2)		Initial SBS Investment		2002 Sales(3)		Contribution to 2002 SBS Revenue			Market		Reach(1)		SBS Ownership		Other Owners		Type of Signal		Daily Broadcast Hours(2)		Initial SBS Investment		2003 Sales(3)			Contribution to 2003 SBS Revenue
TV Norge		Norway		85	%	51%		TV2		Satellite-to-cable Over-the-air		20		1990		€ 50.6		10	%		Norway		88	%	51%		TV2		Satellite-to-cable Over-the-air		24		1990		€	52.5		9	%
Kanal 5		Sweden		61	%	100%				Satellite-to-cable		21		1991		67.7		13	%		Sweden		64	%	100%				Satellite-to-cable		22		1991			83.0		14	%
TvDanmark1		Denmark		58	%	100%				Satellite-to-cable		22		2000		22.1		4	%
TvDanmark2		Denmark		76	%	100%				Satellite-to-cable Over-the-air		22		1990		18.0		4	%
TvDanmark																					Denmark		76	%	100%				Satellite-to-cable		22		1990			19.7		3	%
Kanal 5																					Denmark		58	%	100%				Satellite-to-cable Over-the-air		22		2000			20.4		4	%
VT4		Belgium(4	)	97	%	100%				Satellite-to-cable		13		1994		43.3		8	%		Belgium(4)		97	%	100%				Satellite-to-cable		15		1994			53.5		9	%
SBS6		Netherlands		96	%	70%		De Telegraaf		Satellite-to-cable		24		1995		111.0		22	%		Netherlands		96	%	63%		De Telegraaf, Veronica Holding BV		Satellite-to-cable		24		1995			112.1		19	%
Net5		Netherlands		96	%	70%		De Telegraaf		Satellite-to-cable		16		1999		61.5		12	%		Netherlands		96	%	63%		De Telegraaf, Veronica Holding BV		Satellite-to-cable		16		1999			65.7		11	%
V8		Netherlands		96	%	70%		De Telegraaf		Satellite-to-cable		24(5	)	2001		21.1		4	%
Veronica																					Netherlands		96	%	63%		De Telegraaf, Veronica Holding BV		Satellite-to-cable		24	(5)	2001			24.9		4	%
TV2		Hungary		93	%	84%/49%(6)		MTM, Tele-Munchen		Over-the-air		21		1997		69.0		14	%		Hungary		95	%	84%/49	%(6)	MTM, Tele-München		Over-the-air		21		1997			78.6		14	%
prima TV(7)		Romania		53	%	38%		RBC Ltd.		Satellite-to-cable Over-the-air		20		2000		10.4		—			Romania		53	%	37%		RBC Ltd.		Satellite-to-cable Over-the-air		20		2000			13.2		—
TVN(7)		Poland		85	%	30.4%		ITI		Satellite-to-cable Over-the-air		24		2000		136.6		—
TVN7(7)		Poland		35	%	30.4%		ITI		Satellite-to-cable		24		2002		7.5
ATV(7)		Austria		75	%	20%				Satellite-to-cable		24		2001		1.5		—

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(1)

Represents number of households (in millions) that have access to our signal.

(2)

Represents average daily broadcast in hours.

(3)

Represents net revenue by the station for the year ended December 31, 20022003 (in millions of euro).

(4)

Broadcast targets Belgian Flemish speaking community.

(5)

V8/Veronica/Fox Kids is a 24 hour24-hour station in which we control programming between 6:00pm and 1:00.00am. Fox Kids controlcontrols programming between 6:00 am00am and 6:00pm and we and Fox Kids jointly control programming between 1:00am and 6:00 am.00am.

(6)

Our economic interest is 84% and our voting interest is 49%.

(7)

These stations areThis station is not consolidated in the results of SBS andas its results are recorded under the equity method. Our ownership interest is indirectly held and represents ultimate proportionate ownership in prima TV.

Programming

        Coordinated group buying allows our individual stations to benefit from improved access to product and volume pricing. Group purchasing arrangements are generally only usedpricing in respect ofboth the acquisition of international programs which in 2002and the acquisition of formats. In 2003, the acquired programs represented the majority of our consolidated television stations' programming hours and 40% of our consolidated television stations' programming costs. We currently have multi-country programming agreements with Warner Bros. for Scandinavia and The Netherlands, and Poland, with Universal Studios for Scandinavia, The Netherlands, Belgium and Hungary, with Disney for Scandinavia, The Netherlands and Belgium and with Paramount for The Netherlands, Belgium and Hungary. From these suppliers we acquire local broadcast rights to feature films and international series. Beside the above, our suppliers also include DreamWorks, Sony Television, 20th Century Fox, MGM, the BBC, Granada, ZDF, Venevision, Protele, Alliance Atlantis and a number of others.

        Our locally produced programming (including sports), frequently, depending on the particular program and local market, frequently results in higher ratings during prime time hours. In 2002,2003, locally produced programming represented approximately 60% of our consolidated television stations' total programming costs. We believe that

locally produced programming, serves as an audience magnet for the overall station and increases ratings, brand awareness and demand for commercial airtime within a respective market's advertising community. We believeincluding our local news programming in Norway, Denmark, The Netherlands and Hungary, has particular audience appeal and reinforces our stations' local image.image, as well as serves as an audience magnet for the overall station. It also increases ratings, brand awareness and the demand for commercial airtime within a respective market's advertising community.

        We        Part of our local production budgets are allocated toward the acquisition and production of major international formats. Coordinated group buying allows our individual stations to acquire local broadcast rightsformats that would otherwise not be available to feature films and successful international series and subtitle or dub them into the local language. Our suppliers include: Paramount, DreamWorks, The Walt Disney Company ("Disney"), Sony Television, Universal Studios, Warner Bros., 20th Century Fox, MGM, the

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BBC (United Kingdom), Granada (United Kingdom), ZDF (Germany), Venevision (Venezuela), Protele (Mexico) and Alliance Atlantis.

        In November 1996, we entered into an agreement with DreamWorks. The agreement grants us the right to broadcast the first 50 films produced and distributed by DreamWorks, with a delay in broadcastthem. A few of the films for approximately three years from their respective theatrical release datesmore well-known formats that we have acquired in the United States. Films began to become availablethis manner include:Big Brother (Sweden, Norway, Denmark, Hungary and Romania),Temptation Island (Sweden, Norway, Denmark, The Netherlands and Belgium),The Bachelor (Sweden, Norway, Denmark, Hungary and Belgium),The Apprentice andExtreme Makeover(Sweden, Norway, Denmark and Belgium).

        To further leverage our group's effectiveness in our territories where language similarities exist, we have implemented a program of seeking internationally recognized formats that can be jointly produced by more than one territory. For example, we have producedSurvivor,Temptation Island andPeking Express using Dutch and Belgian (Flemish speaking) participants for broadcast in The Netherlands and Belgium. Similarly, we have producedTemptation Island,The Bachelor/Bachelorette,Joe Millionaire,Extreme Makeover and other series using participants from Sweden, Norway and Denmark. These co-productions have the autumnbenefit of 1999. We also have rightsmaking available to all first run television productions produced by DreamWorksthe stations expensive programming that they might not have been broadcast by one of the six largest networks in the United States.able to afford to produce on their own.

Radio

        We commenced our radio broadcasting operations in 1994. We own significant interests in, and operate, 2122 radio networks operating a total of 53 radio stations overall in Europe. Our European radio stations include operations in Denmark, Sweden, Norway, Finland and Greece. Our radio strategy targets young audiences between the ages of 18 and 39, focusing mainly on adult contemporary formats. Our consolidated radio operations generated net revenues of, €37.8 million, €36.0 million, and €35.6 million and €46.6 million, or 8%7%, 7% and 7%8% of our total consolidated net revenue, in 2000, 2001, 2002, and 2002,2003, respectively.

New MediaPrint

        In 1999,September 2003, we formed our SBS New Media division to expand our Internet-related activities. We have taken a conservative approach to new media and focus only on those opportunitiesacquired Veronica Uitgeverij B.V., the company that complement ourpublishes the weekly television and radio operationsguide, Veronica Magazine, which is the largest weekly publication in The Netherlands, with a circulation of approximately 1.1 million. Through this acquisition we expect to capitalize on synergies to be gained from cross promotion between our print business and do not require significant development expenditures.our Dutch television channels. Our new mediaprint operations generated net revenues of €5.6 million, €11.5 million and €4.6€21.0 million, or 1%, 3% and 1%4% of our total consolidated net revenues,revenue in 2000, 2001, and 2002, respectively.2003.

        Recently, we sold our 4.3% interest in BetandWin.com Interactive Entertainment AG for €1.7 million in cash.

Organizational Structure

        We have created a highly flexible operating structure that grants considerable authority to our national and local operations so that they can make decisions tailored to the needs and circumstances of their individual markets. At the group level, we analyze and monitor programming and financial performance centrally and coordinate program commitments, purchases and multinational productions so as to benefit from group-wide knowledge and economies of scale. Sales, marketing and most programming decisions are taken on a station-by-station basis at the local level, albeit within centrally approved budgets. At the group level, we also control operating strategies, budgets, material financial commitments, multinational sales and the selection of senior-level station management.

        For a complete list of our subsidiaries and affiliates, see Exhibit 8.1 to this annual report.

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Our StrategyOUR STRATEGY

        Our strategy is to continue to develop and expand our television and radio broadcasting and print businesses, as well as to develop new analogue and digital channels and formats using our existing platforms and programming expertise. We aim to achieve this by concentrating on the following:

•        •    ExpandExpanding audience share and advertising sales in our current markets

        We identify and target the most attractive demographic segments and target groups in each market to increase our audience share and advertising sales. We pursue both larger audiences and increased audience viewing hours through our mix of local productions and foreign programming developed for these market segments. As our audiences and audience viewing hours grow, we believe the value of our broadcasting for advertisers increases significantly. To maximize the value of our advertising reach, we seek to adopt local "best practices"best practices sales procedures across all of our stations and pursue multinational sales and cross-selling opportunities across our television, radio and radioprint businesses.

•        •    IncreaseIncreasing our control over programming content and cost

        We seek constantly to improve the quality perceptionand perceptions of our programming, which, at approximately 50% of our total revenues, is our single largest cost, and to reduce our costs by increasing our control over programming. We attempt to use our multinational purchasing power to achieve better pricing and content, license conditions / periodsterms and control of residual rights, including additional broadcast and ancillary rights. We seek to acquire lifetime rights for the majority of our local programming purchases. In addition, we continue to seek to exploit opportunities to introduce locally successful formats across all of our stations and to increase the percentage of co-productions within our territories and stations, in particular among our Scandinavian stations and between our Benelux stations.

•    Maintaining our focus on improving operating margins

        We alsointend to maintain our focus on improving our operating margins through cost controls and improved ratings performance aimed at key target demographic groups desired by advertisers. In addition, we are implementing advertising airtime yield management systems and practices across our television group in order to optimize the yield on our advertising inventory, increase our access to programming through joint ventures with or the acquisitionefficiency of direct or indirect interests in suppliers of successful programming formats.advertising campaigns and raise margins.

•        •    ExpandExpanding in existing broadcastingmedia markets

        We regularly review and consider opportunities to expand our broadcast operations in our existing media markets. We seekintend to pursue opportunities with which we can leverage our existing operations and other assets in order to achieve greater presence in our local markets and economies of scale. For example, we expanded our Scandinavian radio assets in 2003 and are seeking to develop them further by implementing the SBS group's practices, improving their ratings performance, and maximizing efficiencies within and among our Scandinavian radio stations. We also acquiredVeronica Magazine in 2003, the largest weekly television guide in The Netherlands, and are seeking to take full advantage of the cross-promotion opportunities betweenVeronica Magazine and our Dutch television channels.

•        •    ExpandExpanding into new broadcasting markets

        We intend to pursue opportunities selectively in new broadcast markets that complement our existing broadcastmedia operations. We generally seek opportunities in markets that generallyin Western and Central Europe in which television and radio have a lower television and/orshare of total advertising, share, often due to having a shorter history of commercial television and/or radio broadcasting, which resultscan result in less competition and faster growth potential than comparable, more developed markets..markets offer. As we have in the past, we intend tomay pursue these opportunities in conjunction with strong local partners.

•        •    DevelopDeveloping additional revenue streams

        To diversify our revenues from advertising, we are developing and pursuing additional revenue streams. We have begun to secure carriage fees for some of our existing channels from cable and satellite operators and are using our existing content libraries and our expertise to develop programming designed for subscription-based channels for pay television platforms, UMTS (Universal Mobile Telecommunications System)third-generation multimedia mobile telecommunication systems and other applications. We also intend to bid forseek to obtain new digital licenses in our existing markets, as well as in new territories, as regulatory and competitive conditions permit. Furthermore, as television broadcasting becomes increasingly digital, over the next years, we intend to develop interactive services, including interactive programming and advertising.

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INDUSTRY BACKGROUND

Television

        In 1990, we began acquiring and operating television broadcasting operations in Europe. We currently own significant interests, and operate television stations in various European territories, including Scandinavia, Belgium, The Netherlands and Hungary.

        Unlike in the United States, television broadcasting in Europe began with government-owned and operated-operated television stations that did not sell advertising. In the 1960s, commercial television broadcasting began in Western Europe, initially in the United Kingdom and subsequently in other countries. Scandinavia, Belgium and The Netherlands only permitted commercial television beginning in the late 1980s. Hungary Romania and PolandRomania only awarded licenses for commercial television beginning in 1997 1993, and 1992,1993, respectively.

        As a consequence, commercial television advertising in our markets is less developed as compared to other major media markets such as the United States. Accordingly, we believe there is potential for considerable growth of television advertising in our markets. In general the growth of the television advertising is mainly affected by economic growth (growth in the Gross Domestic Product) ("GDP"), growth of the individual advertising markets, growth in television share of advertising (expenditure per capita), increase in penetration / television household coverage, increase in viewing and in viewers shares, and population growth.

        Set forth below is information on the growth in television advertising expenditures 1998 to 20022003 for the countries and regions indicated:

			Gross Domestic Product (in US$ billions)						Total Advertising Expenditure (in US$ millions)						Television Advertising (in US$ millions)						Population (in millions)				Television Advertising Per Capita								Gross Domestic Product (in US$ billions)						Total Advertising Expenditure (in US$ millions)						Television Advertising (in US$ millions)						Population (in millions)				Television Advertising Per Capita
			1998			2002			1998			2002			1998			2002			1998		2002		1998			2002					1998			2003			1998			2003			1998			2003			1998		2002		1998			2003
Norway	Norway		$	123.4		$	169.7		$	1,211		$	1,457		$	380		$	509		4.4		4.5		$	86		$	113		Norway		$	141.8		$	197.4		$	1,363		$	1,717		$	427		$	595		4.4		4.5		$	97		$	132
Sweden	Sweden			184.5			218.9			1,515			1,517			308			325		8.9		8.8			35			37		Sweden			202.7			247.6			1,616			1,630			329			354		8.9		8.8			37			40
Denmark	Denmark			138.8			166.9			1,344			1,302			241			210		5.3		5.3			45			40		Denmark			146.3			179.0			1,417			1,406			255			241		5.3		5.3			48			45
Belgium	Belgium			201.6			237.4			1,371			1,702			587			759		10.2		10.3			58			74		Belgium			211.9			251.7			1,441			2,020			617			903		10.2		10.3			60			88
The Netherlands	The Netherlands			304.8			397.3			2,050			2,876			881			1,461		15.7		16.0			56			91		The Netherlands			320.4			426.9			3,173			3,156			589			730		15.7		16.0			38			46
Hungary	Hungary			35.2			56.3			507			1,117			282			718		10.1		9.9			28			73		Hungary			39.1			70.7			564			1,488			313			997		10.1		9.9			31			101
Romania	Romania			42.1			41.3			211			174			131			142		22.5		22.4			6			6		Romania			42.1			47.5			215			153			131			100		22.5		22.4			6			4
Poland				159.3			182.1			1,243			2,509			692			1,576		38.7		38.6			18			41
Austria				169.8			192.6			1,335			1,619			318			398		8.1		8.1			39			49
Total SBS Markets	Total SBS Markets		$	1,359.5		$	1,662.5		$	10,787		$	14,273		$	3,820		$	6,098		123.9		123.9		$	31		$	49		Total SBS Markets		$	1,104.3		$	1,420.8		$	9,789		$	11,570		$	2,661		$	3,920		77.1		77.2		$	35		$	51
	— growth						22	%					32	%					60	%			0	%					60	%	—growth						29	%					18	%					47	%			0	%					52	%
Other	Other																														Other
European Union(2)			$	7,496.2		$	8,868.8		$	62,220		$	72,455		$	18,013		$	20,968		374.7		376.9		$	48		$	56
Europe																															Europe		$	7,896.2		$	9,676.3		$	66,473		$	78,553		$	20,588		$	26,043		452.8		454.7		$	45		$	57
	— growth						18	%					16	%					16	%			1	%					16	%	—growth						23	%					18	%					26	%			0	%					27	%
United States	United States		$	8,781.5		$	10,509.8		$	120,743		$	143,469		$	43,471		$	51,640		270.6		284.8		$	161		$	181		United States		$	8,781.5		$	10,878.9		$	120,743		$	148,786		$	43,471		$	52,821		270.6		284.8		$	161		$	185
	— growth						20	%					19	%					19	%			5	%					13	%	—growth						24	%					23	%					22	%			5	%					15	%

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(1)

Source: Zenith Media, Advertising Expenditure Forecasts, December 2002.2003. Zenith Media figures for advertising spending are calculated on different bases for different countries. For example, for some of the countries listed above, Zenith Media figures are based on advertising spending net of discounts and/or agency commissions, while for other countries the figures are based on advertising spending before subtracting discounts and agency commissions. As a result, Zenith Media figures are only generally indicative of relative market sizes.

(2)

European Union total includes all member states (other than Luxembourg) as of December 31, 2002.

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Transmission

        The two basic methods of television transmission in use in our markets are (1) over-the-air television ("terrestrial") broadcasting, which can be either local or national in scope, and (2) satellite-to-cable and satellite-to-dish ("direct-to-home")(or direct-to-home) broadcasting. In over-the-air broadcasting,

the station operator obtains a license from the appropriate regulatory authority to broadcast its signal at an established frequency and power over one or more land-based transmitters, each with a limited geographic range. In satellite-to-cable broadcasting, the station operator transmits its programming signal to a satellite which redirects the signal either to a ground-based antenna that is connected to a cable system or, in the case of direct-to-home broadcasting, to a home television via a satellite dish. In satellite-to-cable and direct-to-home broadcasting, the signal may originate from the territory where the viewer is situated or may be broadcast from abroad. In all of our markets, governments regulate programming, commercial advertising and other matters relating to broadcast operations. See "—Competition, Property and Regulation—also "Item 4—Information on the Company—Regulation" for additional information. In the territories in which we operate terrestial broadcasting systems, we have agreements with terrestrial transmission companies. In addition, we have agreements with one or more satellite and/or cable operators providing for the transmission of our broadcast signals.

        While over-the-air broadcasters can typically be received by virtually all of the television households in the geographic area covered by their broadcast signals, satellite-to-cable and direct-to-home broadcasters can only be received by television households connected to a cable system or by households that have satellite dishes positioned to receive the broadcasts directly. The percentages of television households connected to a cable system or capable of receiving direct-to-home broadcasting have increased over the past few years. The following table estimates the percentages of television households connected to a cable system and/or capable of receiving direct-to-home broadcasting via a satellite dish in the countries indicated at December 31, 2002.2003.

		Television households with:					Television households with:
Country		Cable		Satellite dish			Cable		Satellite dish
Norway		49	%	18	%		46	%	31	%
Sweden		45	%	22	%		64	%	30	%
Denmark		63	%	16	%		58	%	21	%
Belgium		94	%	6	%		94	%	8	%
The Netherlands		94	%	7	%		94	%	6	%
Hungary		50	%	16	%		55	%	17	%
Romania		57	%	1	%		57	%	1	%
Poland		34	%	20	%
Austria		33	%	45	%

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Source:

European Digital Pay TV Revenues Market assessment and forecasts to 2006, published in January 2004 by Screen Digest, London and, for Romania only, Western, Central and Eastern Europe MediaFact Pocket Books, published in March 2003 by Zenith Media.

Ratings

        Commercial television stations generate the majority of their revenues from the sale of advertising time. Advertising rates charged by television stations are based, in large part, on the percentage of television households in a designated market area tuned to a particular station during a particular time period and the demographic characteristics of those households. We believe that the availability of more reliable and accurate ratings information, such as the information provided by people meters installed in the territories in which we operate, accelerates the development of commercial television, because more accurate ratings information should help to convince advertisers to allocate a greater percentage of their advertising budgets to television advertising.

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Radio

        In 1994, we began acquiring and operating radio stations in Europe. We own significant interests, and operate radio stations in Denmark, Sweden, Norway, Finland and Greece. Commercial radio has operated for approximately 1314 years in Denmark, 89 years in Sweden, 1716 years in Norway, 18 years in Finland and 1415 years in Greece. Radio advertising expenditures in our existing markets increased from

an estimated $153$228 million in 1998, to an estimated $192$282 million in 2002.2003. We intend to expand radio broadcast operations into our existing and targeted television markets and into other markets as opportunities arise.

        Commercial radio advertising reflects considerably less penetration in our markets as compared to major media markets such as the United States. For example, we estimate that in 2002In 2003, radio advertising accounted only 3%for less than 4% of all advertising expenditures in theour markets, that we serve, compared to 14%13% for the United States and 5% for the European Union.Europe. Accordingly, we believe there is potential for considerable growth of radio advertising in our markets.

        Set forth below is information on the growth of radio advertising expenditures 1998 to 20022003 for the countries and regions indicated:

			Gross Domestic Product (in US$ billions)						Total Advertising Expenditure (in US$ millions)						Radio Advertising (in US$ millions)						Population (in millions)				Radio Advertising Per Capita								Gross Domestic Product (in US$ billions)						Total Advertising Expenditure (in US$ millions)						Radio Advertising (in US$ millions)						Population (in millions)				Radio Advertising Per Capita
			1998			2002			1998			2002			1998			2002			1998		2002		1998			2002					1998			2003			1998			2003			1998			2003			1998		2002		1998			2003
Denmark	Denmark		$	138.8		$	166.9		$	1,344		$	1,302		$	22		$	29		5.3		5.3		$	4		$	5		Denmark		$	146.3		$	179.0		$	1,417		$	1,406		$	23		$	32		5.3		5.3		$	4		$	6
Sweden	Sweden			184.5			218.9			1,515			1,517			50			50		8.9		8.8			6			6		Sweden			202.7			247.6			1,616			1,630			53			56		8.9		8.8			6			6
Norway																															Norway			141.8			197.4			1,363			1,717			68			59		4.4		4.5			15			13
Finland	Finland			159.3			182.1			1,243			2,509			31			40		5.2		5.2			6			8		Finland			108.7			136.2			915			1,015			32			45		5.2		5.2			6			9
Greece	Greece			169.8			192.6			1,335			1,619			50			73		10.0		10.0			5			7		Greece			99.1			142.1			1,145			2,065			52			90		10.5		10.0			5			9
Total SBS Markets	Total SBS Markets		$	652.4		$	760.5		$	5,437		$	6,947		$	153		$	192		29.4		29.3		$	5		$	7		Total SBS Markets		$	698.6		$	902.3		$	6,456		$	7,833		$	228		$	282		34.3		33.8		$	7		$	9
	— growth						17	%					28	%					25	%			0	%					26	%	—growth						29	%					21	%					24	%			-1	%					29	%
Other	Other																														Other
European Union(3)			$	7,496.2		$	8,868.8		$	62,220		$	72,455		$	2,901		$	3,466		374.7		376.9		$	8		$	9
Europe																															Europe		$	7,896.2		$	9,676.3		$	66,473		$	78,553		$	3,311		$	4,204		452.8		454.7		$	7		$	9
	— growth						18	%					16	%					19	%			1	%					19	%	—growth						23	%					18	%					27	%			1	%					29	%
United States	United States		$	8,781.5		$	10,509.8		$	120,743		$	143,469		$	43,471		$	51,640		270.6		284.8		$	161		$	181		United States		$	8,781.5		$	10,878.9		$	120,743		$	148,786		$	15,411		$	19,986		270.6		284.8		$	57		$	70
	— growth						20	%					19	%					19	%			5	%					13	%	—growth						24	%					23	%					30	%			5	%					23	%

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(1)

Source: Zenith Media, Advertising Expenditure Forecasts, December 2002.2003. Zenith Media figures for advertising spending are calculated on different bases for different countries. For example, for some of the countries listed above, Zenith Media figures are based on advertising spending net of discounts and/or agency commissions, while for other countries the figures are based on advertising spending before subtracting discounts and agency commissions. As a result, Zenith Media figures are only generally indicative of relative market sizes.

(2)

European Union total includes all member states (other than Luxembourg) as of December 31, 2002.

Advertising

        In 2002,2003, the broadcasting markets in which we operate generated an estimated $18.4$11.6 billion in total advertising expenditures. In 2002,2003, television advertising accounted for an estimated 43%34% of total advertising expenditures in our current television markets, as compared to an estimated 32%33% and 35% for the European UnionEurope and the United States, respectively. In 2002,2003, radio advertising accounted for an estimated 3.5%4% of total advertising expenditures in our current radio markets, as compared to an estimated 5.4%5% and 13.5%13% for the European UnionEurope and the United States, respectively. In 2003, magazine advertising accounted for an estimated 24% of total advertising in the market in which we operate. Our operating strategies anticipate that total advertising expenditures in our markets will continue to grow and that television's and radio's respective shares of total advertising expenditures in most of our markets will

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increase further, as advertisers increasingly use television and radio as more integral parts of their advertising strategies.

        Television and radio advertising expenditures in a given market are a function of general economic conditions, television viewing and radio listening habits, the strength and appeal of competing media (such as print and outdoor media), literacy rates and advertiser acceptance of television and radio as advertising media. No single advertiser provides us with as much asmore than 10% of our consolidated advertising revenues.

        Our broadcasting revenues are primarily generated from the sale of advertising time on our television and radio stations. In 2002,2003, advertising sales represented approximately 83% of the net revenues generated by our consolidated television operations and approximately 79% of the net revenues generated by our consolidated radio operations. The remaining revenue was derived from other sources, such as cable subscription fees, sale of airtime (including teleshopping), teletext fees, sponsoring and non-cash revenues from barter transactions, whereby advertising time is exchanged for goods or services (such as advertising in other media, travel or lodging) in respect of which we might otherwise incur cash expenditures. Our advertising sales tend to be lowest in the third quarter of each calendar year, which includes the summer holiday schedule (July and August), and highest during the fourth quarter. Advertising sales also tend to be higher in the second half of the calendar year. As is common in the broadcasting business, we pay commissions for advertising placed on our stations and we provide incentive discounts and rebates to advertisers. Advertising revenues are recorded net of all such commissions, discounts and rebates. While we seek to develop and maintain long-term relationships with our advertising clients, most advertising arrangements do not extend beyond one year, although they are generally renewed. Substantially all of our advertising sales are for cash, but we do enter into minor amounts of barter transactions as discussed above. We have also exchanged minor amounts of advertising time that would otherwise be unsold for certain of our interests in our new media businesses.investments.

        Television advertising in our markets is bought and sold in a variety of ways. Advertisers, acting directly or through intermediaries, such as advertising agencies and media buyers, purchase advertising time pursuant to annual agreements and ad hoc agreements. The price paid by the advertiser is generally based on the particular television station's rate card, less a discount based on the importance of the advertiser and the volume of advertising being committed. The intermediary receives an agency commission. The rate card value of a television station's advertising time is based upon a variety of factors, including the relative strength of the station within the marketplace, the season, the day of the week, the time of day and the number of commercial impressions (viewership) actually delivered by the station within specified demographics (gender, age and affluence). A station's viewership is a function of the station's technical reach, the number of households watching television at a particular time and the relative popularity of the station's programming (ratings). In our markets, approximately 70-75% of most television stations' advertising sales are generated in prime time viewing hours (19:00(7:00pm to 23:00)11:00pm), and advertisers typically enter into up-front annual agreements that provide for pricing terms based upon projected advertising volumes. While these agreements are generally only indicative of the advertisers' ultimate advertising purchases, they may control pricing for as much as 70-75% of a station's actual annual advertising sales because favorablefavourable pricing is dependant upon the indicative volumes being achieved.

        Radio advertising in our markets is generally sold pursuant to ad hoc agreements rather than annual agreements and advertisers are more likely to be regional or local businesses than is the case in television. Radio advertising rates are based upon the number of stations competing in a particular marketplace and each station's ability to attract and retain listening audiences in demographic groups that advertisers wish to reach. A radio station's audience is determined based on periodic ratings surveys that measure the size and demographics of the audience tuned to a particular station and the time spent listening.

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REVIEW OF TELEVISION OPERATIONS

Norway(TVNorge)

        In Norway, we own a 51% interest in, and operate, TVNorge, a national satellite-to-cable television station and over-the-air network. Our television operations in Norway generated net revenues of €55.0 million, €47.1 million, and €50.6 million and €52.5 million, or 12%10%, 10% and 10%9% of our total consolidated net revenues in 2000, 2001, 2002, and 20022003, respectively.

        In October 1988, the Norwegian government adopted legislation to deregulate cable television, which permitted private television advertising on satellite-to-cable channels. In response, in February 1990, we acquired a 51% interest in TVNorge, a national satellite-to-cable broadcaster. TV2, one of the other private commercial stations in Norway, owns the remaining 49%.

        In December 1995, the Norwegian government legalized the simultaneous transmission of a broadcast signal through multiple local television stations in Norway. TVNorge utilized this opportunity and entered into co-operation agreements with 21 local television stations. In response, we have increased the numberbeginning of local2003, TV Norge entered into a second co-operation period for a 3-year term with 16 of these stations, affiliated with TVNorge to approximately 20, which has increased the station's television household penetration from approximately 61% in 199670% to approximately 85%89% at the end of 2002. This co-operation ended at December 31, 2002 and TVNorge renewed the co-operation with 15 stations for 2003. TheTVNorge's affiliated stations have "must-carry" status and TVNorge benefits from this status in all local cable networks. During 2002, TVNorge switched from analogue to digital distribution, which did not affect TVNorge's overall distribution.also operates a local television station in Oslo, called TVNorge-Oslo.

        TVNorge broadcast an average of 20broadcasted 24 hours per day in 20022003. TVNorge's programming schedule includes locally-producedlocally produced programs (including news) and international series and films. American produced programs broadcast by TVNorge are subtitled in Norwegian and in 20022003 includedC.S.I., C.S.I. Miami, Smallville, Boston Public, Dharma & Greg,Gilmore Girls, The Bachelor, Extreme Makeover, Will & Grace, Gilmore Girls, The BoldOsbournes, Buffy the Vampire and the Beautifulmany others. andProfiler. During 2002, locally-produced2003, locally produced programming, which included the local version ofBig Brother71 Degrees North and the daily talkshow71 degrees North,Mess-tv, represented an average of approximately 310 hours per day of TVNorge's broadcast time.

        TVNorge has sold advertising time to leading advertisers that regularly advertise on TVNorge, including Orkla, Landbruket, Coop,L'oreal, Norgesgruppen, Procter & Gamble, Midelfart & Co., IcaICA Ahold Group, Elkjoep, Hjemmet Mortensen/Egmont, Coca-Cola, Krafts Foods NorwayMaster Food and Kid Interior.

        TVNorge's principal competitors are NRK1 and NRK2, non-commercial television stations financed by license fees; TV2, a privately-owned,privately owned, commercial television station; and TV3, a privately-owned,privately owned, commercial television station, serving all three Scandinavian countries. TVNorge competes with NRK1 and NRK2 for viewers and programming, but not for advertising revenue, because NRK1 and NRK2 are non-commercial television stations.

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        Set forth below is information about each of the major television broadcasters in Norway as of December 31, 2002.2003.

		Norway Television Market Television Station											Norwegian Television Market Television Stations
		NRK1		NRK2		TV2		TV3		TVNorge			NRK1		NRK2		TV2		TV3		TVNorge
Estimated coverage(1)		100	%	82	%	97	%	62	%	85	%		100%		84%		97%		64%		89%
Ownership		Government		Government		Private		Private (MTG	)	Private (SBS/TV2	)		Government		Government		Private		Private (MTG)		Private (SBS/TV2)
Type of signal		Over-the-air		Over-the-air		Satellite-to-cable/Over-the-air		Satellite-to-cable		Satellite-to-cable/Over-the-air network			Over-the-air		Over-the-air		Satellite-to-cable/Over- the-air		Satellite-to-cable		Satellite-to-cable/Over-the-air
Commercial advertising		No		No		Yes		Yes		Yes			No		No		Yes		Yes		Yes
Estimated average daily broadcast hours(1)		14		6		18		19		20			14		6		18		20		24

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(1)

Source: Company estimates.

Sweden (Kanal 5)(Kanal 5)

        We broadcast into Sweden through Kanal 5, a wholly-owned, UK-based, satellite-to-cable and direct-to-home television station. Our television operations into Sweden generated net revenues of €61.6 million, €54.4 million, and €67.7 million and €83.0 million, or 13%11%, 11%13% and 13%14% of our total consolidated net revenues in 2000, 2001, 2002, and 2002,2003, respectively.

        Commercial television advertising began in Sweden in late 1988 when TV3 began its operations. We entered the Swedish market in September 1991 when we acquired 75% of Kanal 5. In September 1995, we acquired the remaining 25%.

        Kanal 5 broadcast an average of 2122 hours per day in 2002.2003. Kanal 5's programming schedule includes locally-producedlocally produced programs and international series and feature films, many of which are well known in the United States. American-produced programs broadcast by Kanal 5 are subtitled in Swedish and in 20022003 includedC.S.I., Friends, Frasier, Spin CityGilmore Girls andThird Watch. Locally-producedLocally produced programming, which includedThe Bachelor, Big Brother Temptation Island,Motorjournalen, Roomservice andPopstarsTjockholmen, represented an average of approximately 2 hours per day of Kanal 5's broadcast time in 2002.2003.

        In 2002,2003, Kanal 5's advertising base included leading advertisers that regularly advertise on Kanal 5 including Carlsberg, Orkla,Coca-Cola, GlaxoSmithKline, ICA Ahold Group, McDonald's L'Oréal, Kraft Freia Marabou, Coca-Cola,Orkla, Procter & Gamble GlaxoSmithKline and McDonald's.Vodafone.

        Kanal 5's principal competitors are SVT1 and SVT2, both of which are government-owned, non-commercial television stations, and TV3 and TV4, privately-owned, commercial television stations. Kanal 5 competes with SVT1 and SVT2 for viewers and programming, but not for advertising revenues, because SVT1 and SVT2 are non-commercial television stations.

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        Set forth below is information about each of the major television broadcasters serving Sweden as of December 31, 2002.2003.

		Sweden Television Market Television Station											Swedish Television Market Television Stations
		SVT1		SVT2		TV3		TV4		Kanal 5			SVT1		SVT2		TV3		TV4		Kanal 5
Estimated coverage(1)		100	%	100	%	64	%	100	%	61	%		100%		100%		62%		100%		64%
Ownership		Government		Government		Private (MTG	)	Private		Private (SBS	)		Government		Government		Private (MTG)		Private		Private (SBS)
Type of signal		Over-the-air		Over-the-air		Satellite-to-cable		Over-the-air		Satellite-to-cable			Over-the-air		Over-the-air		Satellite-to-cable		Over-the-air		Satellite-to-cable
Commercial advertising		No		No		Yes		Yes		Yes			No		No		Yes		Yes		Yes
Estimated average daily broadcast hours(2)		18		16		21		19		21			18		16		22		19		22

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(1)

Source: MMS Established SurveySurvey.

(2)

Source: Company estimates.

Denmark (TvDanmark 1(TvDanmark and TvDanmark 2)Kanal 5)

        In Denmark, we operate two television stations: TvDanmark 2,(formerly TvDanmark 2), a wholly-owned entity operating under a network of 9 local participating stations transmitting over-the-air, as well as cableDanish license; and direct-to-home; andKanal 5 (formerly TvDanmark 1,1), which unlike TvDanmark 2 operates from the United Kingdom under a United KingdomU.K. satellite broadcasting license. On April 4, 2004, TvDanmark 1 and TvDanmark 2 were rebranded and relaunched as Kanal 5 and TvDanmark, respectively. Our television operations in and into Denmark generated net revenues of €37.9€46.7 million, €46.7€40.1 million and €40.1 million, or 8%10%, 10%8% and 8%7% of our total consolidated net revenues in 2000, 2001, 2002, and 2002,2003, respectively.

        TvDanmark 1 is a wholly-owned, UK-based satellite-to-cable and direct-to-home television station broadcasting from London alongside its Swedish sister channel Kanal 5. TvDanmark 1 generates additional revenues from monthly subscription fees. The distribution of TvDanmark 1 includes the single largest nationwide cable network consisting of 650,000 households. The estimated reach for TvDanmark 1 is approximately 58% of all television households as of December 31, 2002.

        TvDanmark 2 is distributed by over-the-air transmission through 97 affiliated network stations, as well as on cable and digital direct-to-home. Its network stations are "must carry" in their local areas, thus guaranteeing distribution in all local cable households. The estimated reach for TvDanmark 2 iswas approximately 76% of all television households as of December 31, 2002.2003.

        Kanal 5 is a wholly-owned, UK-based satellite-to-cable and direct-to-home television station broadcasting from London. Kanal 5 generates additional revenues from monthly subscription fees. The distribution of Kanal 5 includes the single largest nationwide cable network, which consists of approximately 650,000 households. The estimated reach for Kanal 5 was approximately 58% of all television households as of December 31, 2003.

        In 2002,2003, TvDanmark 1 and TvDanmark 2Kanal 5 broadcast an average of 22 hours per day. TheseThe stations broadcast a number of locally-producedlocally produced programs, including local news, a Danish production of48 Hours and the entertainment formatMake My Day. The successful Danish developed formatsSuper SellersTemptation Island andSense of MurderBig Brother. premiered on TvDanmark last year, both formats have been sold to several other countries. Sports broadcast on the channels includes WRC World Rally Championship, Danish Professional Boxing and major football events, for example, the English F.A. Cup,Spanish Primera División, theGerman Bundes League and theUEFA Cup.Cup. During 2002, locally-produced2003, locally produced programming represented an average of approximately three hours per day of thesethe stations' broadcast time. American-produced programs broadcast in 20022003 includedSpin City, Frasier, C.S.I., C.S.I. Miami, Gilmore Girls, Will & Grace, The Tonight Show with Jay Leno and block busters movies, likesuch asThe MatrixPerfect Storm andSixth SenseThree Kings..

        Our stations serving Denmark sold advertising to leading advertisers that regularly advertise on our Danish stations including Colgate, Unilever, Nestlé, Teledanmark, Coca-Cola, Arla Foods and Procter & Gamble.

        TvDanmark 1'sTvDanmark's and TvDanmark 2'sKanal 5's principal competitors are DR1 and DR2, government-owned, non-commercial television stations; TV2 and Zulu, government-owned, commercial television stations; and TV3 and 3+, privately-owned, commercial cable and satellite television stations. TvDanmark 1 and

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2 Kanal 5 compete with DR1 and DR2 for viewers and programming, but not for advertising revenues, because DR1 and DR2 are non-commercial television stations.

        Set forth below is information about each of the major television broadcasters in or into Denmark as of December 31, 2002.2003.

		Denmark Television Market Television Station																	Danish Television Market Television Stations
		DR1		DR2		TV2		Zulu		TV3		3+		TvDanmark 1		TvDanmark 2(2)			DR1		DR2		TV2		Zulu		TV3		3+		Kanal 5		TvDanmark(2)
Estimated coverage(1)		100	%	80	%	100	%	70	%	71	%	71	%	58	%	76	%		100%		83%		100%		54%		68%		66%		58%		76%
Ownership		Government		Government		Government		Government		Private (MTG	)	Private (MTG	)	Private (SBS	)	Private (SBS	)		Govern- ment		Govern- ment		Govern- ment		Govern- ment		Private (MTG)		Private (MTG)		Private (SBS)		Private (SBS)
Type of signal		Over-the-air		Satellite-to-cable/Over-the-air		Over-the-air		Satellite-to-cable		Satellite-to-cable		Satellite-to-cable		Satellite-to-cable		Satellite-to-cable/ Over-the-air network			Over-the-air		Satellite-to-cable/ Over-the-air		Over-the-air		Satellite-to-cable		Satellite-to-cable		Satellite-to-cable		Satellite-to-cable		Satellite-to-cable/ Over-the-air network
Commercial advertising		No		No		Yes		Yes		Yes		Yes		Yes		Yes			No		No		Yes		Yes		Yes		Yes		Yes		Yes
Estimated average daily broadcast hours(1)		20		11		20		17		22		21		22		22
Estimated average daily Broadcast hours(1)																			20		11		20		17		22		21		22		22

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(1)

Source: Company estimates.

(2)

Coverage represents households reached by TvDanmark, 2, a network of 97 local, over-the-air stations including TvDanmark Kanal 2 and TvDanmark Fyn.

Belgium (VT4)(VT4)

        We began broadcasting into Flemish Belgium in February 1995 by establishing VT4, a wholly-owned, UK-based, satellite-to-cable television station. On March 1, 2002, VT4 Ltd contributed the assets and liabilities of its Belgium operations to a Belgian company, SBS5 N.V., which has since been renamed SBS Belgium N.V. Since March 1, 2002, VT4's programVT4 is broadcast out of Flanders using a license granted by Flemish Media Commission ("(Vlaams Commissariaat voor de Media"Media). VT4 has "must-carry" status on all cable networks in Flanders. VT4 is a Flemish-language cable television station that targets the Flemish-speaking community in Belgium and is carried by all of the cable operators in that community. Our television operations in Flemish Belgium generated net revenues of €51.0 million, €45.7 million, €

43.3 million and €43.3€53.5 million, or 11%10%, 10%8% and 8%9% of our total consolidated net revenues in 2000, 2001, 2002 and 2002,2003, respectively.

        Belgium is made up of three regions: (1) Flanders, the Flemish-speaking region; (2) Wallonia, the French-speaking region; and (3) Brussels, a bilingual (French and Flemish) region. Each region has its own media regulations, state television network, commercial broadcasters, pay television services and cable networks.

        In 2002,2003, VT4 broadcast an average of 1315 hours per day. VT4 broadcasts a number of USU.S. programs that are subtitled in Flemish, includingC.S.I., Popular,C.S.I. Miami, Friends, Frasier, Dawsons Creek andScrubs, The Simpsons and Sex and the City, as well as locally produced feature presentations, includingExpeditie Robinson, Temptation Island, Zo zijn we niet getrouwdBachelor and Chris & Co. Locally-producedLocally produced programming represented an average of approximately 2.5three hours per day of VT4's broadcast time during 2002.

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2003.

        Leading advertisers that regularly advertise on VT4 include Procter & Gamble, Danone, Master Foods, Kellogg Company and Nestlé.

        VT4's Internet access service, vt4.net, was the first free access Internet service provider in Flemish Belgium. vt4.net currently has approximately 188,800 subscribers.

        There are currently five principal television stations serving Flanders. Public service broadcaster VRT operates two government non-commercial over-the-air channels, TV1 (which started in 1953) and CANVASCanvas (which started in 1977). VTM, a private commercial channel, was launched in 1989 with the approval of the Flemish government to provide a commercial alternative to the state-owned Flemish channels. In February 1995, VMM, VTM's operator, launched a second channel, Kanaal 2.Kanaaltwee. VTM and Kanaal 2Kanaaltwee have must-carry status on all cable networks in Flanders. Between 1989 and February 1995, when Kanaal 2Kanaaltwee and VT4 began broadcasting, VTM was the only commercial channel targeting the Flemish audience (although sponsorship and public interest commercials are permitted on the VRT stations).

        Set forth below is information regarding each of the major television broadcasters serving Flanders as of December 31, 2002.2003.

Flanders Television Market Television Station

													Flemish Television Market Television Stations
		VRT TV1		VRT CANVAS		VTM		Kanaal 2		VT4			VRT TV1		VRT CANVAS		VTM		Kanaaltwee		VT4
Estimated coverage(1)		100	%	100	%	97	%	97	%	97	%		100%		100%		98%		98%		98%
Ownership		Government		Government		Private		Private		Private (SBS	)		Government		Government		Private		Private		Private (SBS)
Type of signal		Over-the-air and Cable		Over-the-air and Cable		Cable		Cable		Cable			Over-the-air and Cable		Over-the-air and Cable		Cable		Cable		Cable
Commercial advertising		No		No		Yes		Yes		Yes			No		No		Yes		Yes		Yes
Estimated average daily broadcast hours(1)		21		9		20		10		13			22		13		18		14		15

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(1)

Source: Company estimates.

The Netherlands (SBS6,(SBS6, NET5 and V8)Veronica)

        In The Netherlands, we own a 70%63% interest in, and operate, SBS6 and NET5, national satellite-to-cable television stations. We andTogether with Fox Kids Europe Channels B.V. ("FoxKids"Fox Kids") each, we own a 50% interest in the TV10 license in the Netherlands. Under the licenseNetherlands, under which we operate V8,Veronica, a 70% owned63%-owned national satellite-to-cable television station. We provide programming and sell advertising for the hours from 6:00 pm00pm until 1:00 am00am and Fox Kids provides programming and sell advertising for the hours from 6:00 am00am until 6:00 pm.00pm. The hours between 1:00 am00am and 6:00 am00am are programmed and sold jointly. Our television operations in The Netherlands generated consolidated net revenues of €140.7 million, €160.4 million, and €193.6 million and €201.3 million, or 30%33%, 33%38% and 38%35% of our total consolidated net revenues in 2000, 2001, 2002 and 2002,2003, respectively. In 2001, only V8's fourth quarter revenues are included in the consolidated revenues.

        We began operations in The Netherlands in August 1995 by establishing SBS6, a satellite-to-cable station. In May 1996, De Telegraaf N.V. ("De Telegraaf"), the largest newspaper in The Netherlands, acquired 30% of SBS6. In September 2003, Veronica Holding B.V. was issued a 10% equity interest in our Dutch subsidiary, SBS Broadcasting B.V., diluting our equity ownership to 63% and the De Telegraaf equity ownership to 27%. In March 1999, we launched NET5 and in May 2001, we launched V8, both satellite-to-cable stations. On September 20, 2003, V8 was rebranded and relaunched into Veronica. Our three stations reach approximately 96% of the television households in The Netherlands. As ofOn January 7, 2002, we acquired the remaining 51% interest in Cameo Support BV,B.V., the production company ofHart van Nederland andHet Nieuws.

        In 2002,2003, SBS6, NET5 and V8Veronica broadcast an average of 24, 1624 and 7 hours per day, respectively. V8 and Fox Kids jointly broadcast 24 hours per day. The programming is provided by existing agreements

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with certain local production facilities and several of our international programming sources. Programs broadcast in 20022003 includedHart van Nederland,Weekend Miljonairs, Robinson Island, Temptation Island andAlly McBeal. Locally-producedLocally produced programming represented an average of approximately five hours per day of SBS6's, two hours per day of NET5's and 0.5 hours per day of V8'sVeronica's broadcast time in 2002.2003.

        Leading advertisers that regularly advertise on SBS6, NET5 and V8Veronica include Nestlé, Unilever, Procter & Gamble, Heineken, Mars, Rijksvoorlichtingsdienst and KPN.

        The Netherlands has three public commercial television channels, NED 1, 2NED1, NED2 and 3,NED3, which divide broadcast time primarily among eight public broadcasters. These channels are beneficiaries of an obligatory license fee payable by all television households and also sell advertising through a single government-operated sales organization. The non-government owned stations (including SBS6, NET5 and V8)Veronica) do not benefit from the obligatory license fee. Private commercial television was introduced in The Netherlands with the launch of RTL4 in 1989. RTL4 is a satellite-to-cable station broadcasting from Luxembourg. In October 1993, RTL launched a second private commercial satellite-to-cable television station, RTL5. In addition, RTL operates a satellite-to-cable station that changed itsunder the name in 2001Yorin from Veronica to Yorin.The Netherlands.

        Set forth below is information about each of the major television broadcasters in The Netherlands as of December 31,2002.31, 2003.

Netherlands Television Market Television Station

																					Dutch Television Market Television Stations
		NED1		NED2		NED3		RTL4		RTL5		Yorin		SBS6		NET5		V8(1)			NED1		NED2		NED3		RTL4		RTL5		Yorin		SBS6		NET5		Veronica/ Fox Kids(1)
Estimated coverage(2)		100	%	100	%	100	%	96	%	96	%	96	%	96	%	96	%	96	%		100%		100%		100%		96%		96%		96%		96%		96%		96%
Ownership		Government		Government		Government		Private		Private		Private		Private (SBS/De Telegraaf	)	Private (SBS/De Telegraaf	)	Private (SBS/De Telegraaf	)				Government				Private		Private		Private		Private		Private		Private
																																	SBS, De Telegraaf and Veronica Holding
Type of signal		Over-the-air		Over-the-air		Over-the-air		Satellite-to-cable		Satellite-to-cable		Satellite-to-cable		Satellite- to-cable		Satellite- to-cable		Satellite- to-cable			Over-the-air		Over-the-air		Over-the-air		Satellite-to-cable		Satellite-to-cable		Satellite-to-cable		Satellite-to-cable		Satellite-to-cable		Satellite-to-cable
Commercial advertising		Yes		Yes		Yes		Yes		Yes		Yes		Yes		Yes		Yes			Yes		Yes		Yes		Yes		Yes		Yes		Yes		Yes		Yes
Estimated average daily broadcast hours(2)		14		14		13		24		24		24		24		16		24			24		24		24		24		24		24		24		24		24

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(1)

V8/Veronica/Fox Kids is a 24-hour station in which we control programming between 6:00 pm00pm and 1:00 am,00am, Fox Kids controls programming between 6:00 am00am and 6:00 pm00pm and we and Fox Kids jointly control programming between 1:00 am00am and 6:00 am.00am.

(2)

Source: Company estimates.

Hungary (TV2)(TV2)

        In Hungary, we have a 49% voting interest and an 84% economic interest in, and, together with our local partner MTM-TV2 Kft and with Tele-München, operate TV2, a national over-the-air

television station. Our television operations in Hungary generated net revenues of €62.3 million, €69.2 million, and €69.0 million and €78.6 million, or 13%, 14% and 14% of our total consolidated net revenues in 2000, 2001, 2002, and 2002, respectively.2003.

        In 2002,2003, TV2 broadcast an average of 21.521 hours per day. TV2 broadcastbroadcasts American-produced programs broadcast in Hungarian, includeincluding, Melrose Place, Central Park West, Xena,Friends, JAG, Relic Hunter, FriendsSmallville, Sliders andEarly EditionKnight Rider Team. Locally-producedLocally produced programming, including news, talk shows, current affairs programming and a local versionversions of the reality show,shows such asBig Brother andThe Bachelor represented an average of approximately sixseven hours per day in 2002.2003.

        Leading international advertisers that regularly advertise on TV2 include Beiersdorf, Ferrero, Henkel, Kraft,Masterfoods, Nestlé-L'Oréal, Procter & Gamble, Reckitt- Benckiser,Reckitt-Benckiser, Unilever, Vodafone and Wrigley.

        Aside from TV2, Hungary has one other national private television broadcaster, RTL Klub. RTL Klub is also a general interest commercial channel broadcasting a range of locally produced entertainment programs, as well as foreign films and series. Hungary has three public commercial

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television channels, MTV1, MTV2 and Duna TV. In addition, there are two terrestrial stations broadcasting on a local basis and a number of cable and satellite stations whose signals can be received within Hungary.

        TV2's capital requirements have been funded through equity contributions or interim loans by its shareholders and by bank loans as described in "Item 5—Operating and Financial Review and Prospects—Liquidity and Capital Resources".

        Set forth below is information about each of the major television broadcasters in Hungary as of December 31, 2002.2003.

Hungary Television Market Television Station

											Hungarian Television Market Television Stations
		MTV1		MTV2		RTL-KLUB		TV2			MTV1		MTV2		RTL-KLUB		TV2
Estimated coverage(1)		98	%	58	%	94	%	95	%		98%		58%		94%		95%
Ownership		Government		Government		Private		Private (SBS	)		Government		Government		Private		Private (SBS)
Type of Signal		Over-the-air		Satellite-to-cable		Over-the-air		Over-the-air			Over-the-air		Satellite-to-cable		Over-the-air		Over-the-air
Commercial advertising		Yes		Yes		Yes		Yes			Yes		Yes		Yes		Yes
Estimated average daily broadcast hours(1)		20.5		24		20.5		21.5			20		24		20		21

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(1)

Source: AGB Hungary.

Romania (prima TV)(prima TV)

        On March 9, 2000, we exercised our option to acquire,acquired, for a nominal amount, 86% of the shares of Amerom Television Ltd. ("Amerom").Amerom. Amerom owns 100% of Amerom Television S.r.l., the owner and operator of prima TV in Romania.TV. On July 18, 2001, we completed the issuance, for $6 million, of new shares representing 53.5% of Romanian Broadcasting Corporation Limited ("RBC")RBC to Romanian Investment and Development S.r.l. ("RID"),RID, a company controlled by the General Manager of prima TV. At the time of RID's investment, RBC was a wholly-owned SBSour subsidiary that held an 86% interest in Amerom. We continue to own 46.5% of RBC. Substantially all of the $6 million investment in RBC has been used to fund the operations of prima TV for 2001 and 2002. RBC's interest in Amerom has subsequently been diluted to 82%80% following the issue of shares representing 4%6% of the capital of Amerom to certain managers of prima TV, including its General Manager. Such shares were issued in accordance with the terms of the original acquisition agreements. These managers areAccordingly, we currently entitled to be issued a further 2%own 37% of the capital of Amerom under that agreement.prima TV. All the other shareholders in Amerom have exercised an option, granted to them under the original acquisition agreement, to put their shareholding in Amerom onto RBC. The consideration for such shares is to be determined by an independent valuation of Amerom.Amerom, which is pending completion. Our television operations in Romania generated net revenues of €2.7 million, €8.3 million, and €10.4 million and €13.2 million for 2000, 2001, 2002, and 2002,2003, respectively.

        In 2002,2003, prima TV broadcast an average of 20 hours per day. Foreign-produced programs broadcast by prima TV are subtitled in Romanian, includingMash,Silk Stalkings, Relic Hunter, 18 Wheels of Fortune, Amigas & RivalesMutant X, Sliders, FBI Files. Locally-producedLocally produced programming, including News and Sports, local versions ofWho Wants to Be a Millionaire?Big Brother, Star Factory, andBig Class Reunion, Kids Say The Darndest ThingsSense of Murder, and original formats asBanc Show, Objectiv,The Bickering Chronicle,Police in

Action, andReporter Incognito represented an average of approximately 12 hours per day in 2002. Since September,2003. In 2003 prima TV produced and broadcast two football matches per week during the first Romanian drama series"Between Friends".Football League season.

        Leading advertisers that regularly advertise on prima TV include Procter & Gamble, Unilever, Romtelecom, Cosmorom, Mobifon, Mobilrom,Orange, Kraft Foods, Brow Union, URBB, Interbrew, Nestle, L'Oreal, Coca-Cola, McDonald's and Wrigley's. Prima TV's major competitors include two public commercial

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television channels, TVR1 and TVR2, and a number of private broadcasters, including ProTV and Antena l.

        Set forth below is information about each of the major television broadcasters in Romania as of December 31, 2002.2003.

Romania Television Market Television Station

													Romanian Television Market Television Stations
		ProTV		Antena 1		TVR		Tele7abc		prima TV			ProTV		Antena 1		TVR		Tele7abc		prima TV
Estimated coverage(1)		56	%	57	%	98	%(2)	40	%	53	%(3)		56%		57%		98%(2)		40%		53%(3)
Ownership		Private		Private		Government		Private		Private (SBS/Others	)		Private		Private		Government		Private		Private (SBS/Others)
Type of Signal		Over-the-air		Over-the-air		Over-the-air		Over-the-air		Over-the-air			Over-the-air		Over-the-air		Over-the-air		Over-the-air		Over-the-air
Commercial advertising		Yes		Yes		Yes		Yes		Yes			Yes		Yes		Yes		Yes		Yes
Estimated average daily broadcast hours(1)		24		24		19		24		20			24		24		19		24		20

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(1)

Source: Company estimates.

(2)

Coverage figure is for TVR1 only. We estimate that TVR2 has 55% coverage.

(3)

In urban areas with populations of 50,000 or more, we estimate prima TV has approximately 83% coverage.

Poland (TVN and TVN7)

        On July 26, 2000, we acquired from International Trading and Investments Holdings S.A. ("ITI") a 33% interest, together with an option to acquire an additional 17% interest, in TVN, a national over-the-air television station. On December 23, 2002, we sold 2.6% of our interest back to ITI. ITI and its affiliates continue to own the remaining 69.6% of TVN with an option to acquire all of our remaining 30.4% equity interest in TVN. In 2002, TVN reported revenues of PLN 555.8 million (€144.1 million).

        On March 1, 2002, TVN successfully launched a new channel, TVNSiedem ("TVN7"). TVN7 is distributed via satellite and cable and targets viewers aged 16 to 49. TVN7 allows TVN to maximize use of its programming library and generate incremental advertising revenues, whilst benefiting from TVN's existing infrastructure.

        In 2002, TVN broadcast 24 hours per day. American-produced programs broadcast by TVN are subtitled, voiced over or dubbed in Polish, including a number of Warner Brothers programs,The Sopranos, Beverly Hills 90210 andWest Wing. Locally-produced programming includes a local version ofBig Brother, Dog Eat Dog andLove Bugs. TVN has rights of first refusal in Poland for all formats of Endemol, a Dutch-based production company.

        Leading advertisers that regularly advertise on TVN include Unilever, Procter & Gamble, GlaxoSmithKline, Danone, Colgate Palmolive, Coca Cola, SC Johnson and Nestle.

        Poland has two public commercial television channels, TVP1 and TVP2, and a number of private channels, the largest of which are Polsat and TVN. In addition, Poland has approximately 13 regional terrestrial stations broadcasting on a local basis and over 20 Polish language cable and satellite channels, including pay television and digital platforms. Set forth below is information about each of the major television broadcasters in Poland as of December 31, 2002.

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Poland Television Market Television StationREVIEW OF LOCALIZATION AND PRINT OPERATIONS

		TVP1		TVP2		Polsat		TVN/TVN7
Estimated coverage(1)		100	%	100	%	98	%	85%/35%(2	)
Ownership		Government		Government		Private		Private (SBS/ITI	)
Type of Signal		Over-the-air		Over-the-air		Over-the-air		Over-the-air
Commercial advertising		Yes		Yes		Yes		Yes
Estimated average daily broadcast hours(1)		20		19		24		24

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(1)

Source: AGB

(2)

AGB measures household penetration by the ability of a household to detect a television signal, regardless of quality. On this basis, AGB estimates TVN's household penetration at 84%. In contrast, TVN measures its own household penetration based on the ability of a household to receive a quality signal. On this basis, TVN calculates its household penetration to be 70%.

Austria (ATV)

        On November 5, 2001, we completed the acquisition of a 20% shareholding in ATV Privat-TV Services AG ("ATV"), an Austrian satellite-to-cable television station, for total consideration of ATS 47,190,000 ($3.4 million) of cash and 108,082 of our Common Shares. For more information, see "Item 5—Operating and Financial Review and Prospects—Liquidity and Capital Resources".

        In 2002, ATV broadcast an average of 24 hours per day and locally-produced programming, including productions like News, Society, and Tabloid magazine, represented an average of approximately 1,5 hours per day. American-produced programs dubbed in German included films likeRobinson Crusoe, A river runs through it andPlunkett & McLeane and series likeStargate, Andromeda andXena.

        Leading advertisers that regularly advertise on ATV include agencies (Pan Media, Omnimedia), Teleshopping (QVC), BAWAG/PSK-group, Telekom Austria, Sony.

        The main provider of television programs is the state-run ORF (ORF1, ORF2). We believe that the ORF is ATV's main competitor. ATV's additional competition comes primarily from the German channels, as set forth in the table below.

        On February 1, 2002, ATV was awarded a 10-year broadcast license from the KommAustria (The Austrian Communication Authority) to broadcast terrestrially in Austria. This license will allow ATV to terrestrially reach approximately 75% of the Austrian households. It is anticipated that this coverage will be reached during Summer 2003.

        Set forth below is information about each of the major television broadcasters in Austria as of December 31, 2002.

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Austria Television Market Television Station

		ORF 1		ORF 2		Programs(2)		ATV
Estimated coverage(1)		97	%	97	%	30	%	30	%
Ownership		Government		Government		Private		Private (SBS, Concorde Media, Tele München, Ingebe (BAWAG), UPC, Generali, Erste Bank)
Type of signal		Over-the-air		Over-the-air		Satellite-to-cable		Satellite-to-cable
Commercial advertising		Yes		Yes		Yes		Yes
Estimated average daily broadcast hours(1)		24		24		24		24

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(1)

Source: Focus.

(2)

German stations RTL, RTL II, Super RTL, SAT1, ProSieben and Kabe11 broadcasting their signal into Austria with advertising breaks targeted at the Austrian market.

Localization (BTI)(BTI)

        In 1999, we acquired 51% of BTI in exchange for contributing subtitling agreements for a majority of our television stations, and in 2000, we acquired the remaining 49% of BTI from Telenor Plus A/S ("Telenor"). BTI generated external net revenues of €4.0 million, €5.9 million, and €6.3 million equal to 1% of our total consolidated net revenuesand €5.0 million for 2000, 2001, 2002 and 2002,2003, respectively. The BTI group consists of local subtitling companies located in the following European capitals: London, Stockholm, Oslo, Copenhagen, Helsinki, Amsterdam, Brussels and Brussels.Budapest. During 2003, the BTI group established a company located in Los Angeles in the United States in order to meet the growing demand for DVD subtitling. The local offices all have local management, although sales, marketing and technical support are coordinated through our London office. BTI has approximately 35% of the international broadcast subtitling market in Europe and a substantial share of the local markets in the subtitling regions of Europe, and supplies a full range of localization services, such as subtitling for television, cinema and DVD, translation of documents, computer games, and multimedia presentations, as well as localization of web pages. Each year BTI subtitles more than 50,000 hours of television programs, feature movies and documentaries.

        The bulk of BTI's sales are in the multilingual market and services different European and Middle Eastern regions. Todaymarket. Currently, BTI supplies first class translation subtitling to and from most European languages, either through our own offices or through a well-established network of companies and freelancers. This is aWe expect this market we expect to grow in the coming years. Another key market for the future is the DVD subtitling market, which has revolutionized the home-entertainment industry.market.

        In 2002,2003, approximately 40%50% of BTI's volume came from our own channels and 60%50% from other clients, such as National Geographic, BBC Worldwide Services, Canal Plus, United Pan-Europe Communications N.V. ("UPC") and local Scandinavian channels such as Metropol (in Norway)National Geographic.

Print (Veronica Magazine)

        On September 1, 2003, SBS's Dutch subsidiary, SBS Broadcasting B.V., acquired the company that owns and TV4 (in Sweden)publishes the weekly television and radio guideVeronica Magazine. As a result of this

transaction, Veronica Holding B.V. was issued a 10% equity interest in SBS Broadcasting B.V., subject to a final purchase price adjustment.

32        From September 1, 2003, until December 31, 2003,Veronica Magazine generated revenue of approximately €21 million and had operating income of approximately €2.5 million. During 2003, 60% ofVeronica Magazine's total revenues were from subscription sales, 30% from advertising sales and 8% from sales of individual copies.

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Veronica Magazine is the largest weekly publication in The Netherlands, with an average circulation of approximately 1.1 million in 2003, of which over 900,000 are subscribers and most of which are long-term subscribers. The second largest weekly television and radio guide in The Netherlands is theAVRObode/Televizier, which is published by Dutch public broadcaster AVRO, with an average circulation in 2003 of approximately 723,000, followed by Dutch public broadcasters' guidesVARA TV Magazine,Mikrogids andTroskompas, each with an average circulation of less than 500,000 in 2003. (Source: HOI, Instituut voor Media Auditing, The Netherlands.)

Veronica Magazine publishes detailed weekly television and radio listings and related features on specific programs or their stars. In addition,Veronica Magazine also includes articles on a number of other topics of general interest to its readers, including celebrity news, features and interviews, sports, fashion, travel, health and beauty, new products and games, movie reviews and related features and interviews. As a result of this diverse content, we believe thatVeronica Magazine appeals to a larger and broader audience than most of the other Dutch listings guides which are more narrowly focused.

        Currently, all of the leading weekly Dutch television and radio magazine guides are published by, or in connection with, Dutch television broadcasters. Publishers of Dutch newspapers and magazines may include weekly listings data in their publications or launch television and radio guides if the program data, which is proprietary, becomes widely available to publishers, which is not currently the case. Increased competition from other publishers of weekly television and radio programme information for subscribers and advertising revenues could have an adverse impact on the financial results of our print operations.

Review of Radio operationsREVIEW OF OUR RADIO OPERATIONS

        In Denmark, we own 100% of Nordisk RadioreklameSBS Radio A/S through which we operate Kiss FM, The Voice and Radio 2, which are semi-national networks comprising five and six stations, respectively, reaching approximately 60% of the population. SBS Radio A/S also operates Pop FM in Copenhagen, The Voice and Pop FMNyhedsradioen 24/7, which is a news station operating on cable.

        In Sweden, we own 51% of SBS Radio AB, through which we operate Mix Megapol, a national network of 16 stations reaching approximately 80% of the population. SBS Radio AB also operates Radio City in Odense, POP FM Aarhus (95% owned)Stockholm, Gothenburg and Malmoe; Vinyl in Stockholm, Landskrona and Malmoe; Lugna Melodier in Helsingborg and Malmoe; and 106.7 Rockklassiker and E-FM 107.5 in Stockholm.

        In Norway, we own 100% of Radio 1 AS, through which we operate Radio 1 in Oslo, Stavanger, Bergen and Trondheim; and The Voice in Aarhus (95% owned). In Sweden, we ownOslo and operate Radio City in Stockholm, Radio City in Malmoe, Radio City in Gothenbourg, Radio 106.7 RockKlassiker and Radio Easy FM in Stockholm. Together with a local newspaper we operate Radio City in Österssund (50% owned).Bergen.

        In Finland, we own andSBS Finland Oy, through which we operate Radio Sata in Turku, Radio Mega in Oulu, Radio 957 in Tampere, Radio Jyväskylä in Jyväskylä, Radio City in Helsinki (90% owned) and Kiss FM a semi nationaland Radio City, which are semi-national radio networknetworks covering 79% of the population in Finland.

        Set forth below is our percentage ownership information regarding In addition, we operate the Iskelmä/Schlager radio network in Finland:Finland, in which we hold the following percentages:

Station		SBS Ownership
Iskelmä in Turku		100	%
Iskelmä in Lohja		41	%
Iskelmä in Pirkanmaa		28	%
IkslemäIsklemä in Jyväskylä		28	%
Iskelmä in Kotka, Kouvola and Lappeenranta		28	%
Iskelmä in Lohja		40.6	%

        In Greece, we own 70% of and operate a 70% interest in LAMPSI FM ("Lampsi"), a radio station located in Athens. Lampsi currently operates under a four-year broadcasting license granted on March 14, 2002 pursuant to a license tender process,process. See also "Item 4—Information on March 14, 2002. See "—Regulation—Greece" and "Item 8—Financial Information—Legal Proceedings—Greece"the Company—Regulation".

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        Set forth below is information for 20022003 regarding our radio stations and their markets.

Station		Market		Station Format		Target Demographics		Audience Reach(1)		Total Number of Commercial Stations in Market
Denmark
The Voice(2)(3)		Copenhagen		Contemporary Hit Radio		Age 18-34		43%		8
The Voice(2)(3)		Odense		Contemporary Hit Radio		Age 18-34		41%		6
The Voice(2)(3)		Aarhus		Contemporary Hit Radio		Age 18-34		40%		7
Pop FM(3)		Copenhagen		Adult Contemporary		Age 25-44		23%		8
Pop FM(3)		Odense		Adult Contemporary		Age 25-44		21%		6
Pop FM(3)		Århus		Adult Contemporary		Age 25-44		10%		7
Kiss FM(3)		Copenhagen		Dance Hit Radio		Age 15-24		9%		8
Sweden
Radio City		Stockholm		Adult Contemporary		Age 20-39		33%		10
106.7 Rockklassiker		Stockholm		Classic Rock		Age 25-49		27%		10
Easy FM		Stockholm		Adult Contemporary		Age 20-49		19%		10
Radio City		Gothenbourg		Adult Contemporary		Age 20-39		55%		5
Radio City		Malmoe		Adult Contemporary		Age 20-39		38%		4
Radio City		Österssund		Adult Contemporary		Age 20-39		40%		2
Finland
KISS FM(4)		Finland		Contemporary Hit Radio		Age 15-34		47%		Semi-national
Radio City		Helsinki		Classic Rock		Age 25-44		20%		12
Radio Sata		Turku		Adult Contemporary		Age 25-54		32%		12
Iskelmäradio		Turku/Tampere/Jyväskylä/South East/South West		Finnish Hits		Age 30-54		31%		Semi-national
Radio 957		Tampere		Adult Contemporary		Age 25-54		30%		10
Radio Jyväskylä		Jyväskylä		Adult Contemporary		Age 25-44		26%		11
Radio Mega		Oulu		Adult Contemporary		Age 25-54		41%		9
Greece
Lampsi		Athens		Contemporary Hit Radio		Age 13-34		28%		35

34

Station		Market		Station Format		Target Demographics		Audience Reach(1)		Total Number of Commercial Stations/Networks in Market
Denmark
The Voice		Semi-national network		Contemporary Hit Radio		Age 15-30		43	%	5
Radio 2		Semi-national network		Soft Adult Contemporary		Age 25-39		34	%	5
Pop FM		Copenhagen		Adult Contemporary		Age 25-39		22	%	7
Nyhedsradioen 24/7		Cable		News		Age 25+		1	%	5
Sweden
Mix Megapol		National network		Variety Adult Contemporary		Age 25-44		31	%	3
Radio City		Stockholm		Contemporary Hit Radio		Age 15-24		36	%	10
106.7 Rockklassiker		Stockholm		Classic Rock		Age 25-44		36	%	10
E-FM107.5		Stockholm		1980's gold		Age 20-34		17	%	10
Vinyl		Stockholm, Malmoe and Landskrona		1960's oldies		Age 50-64		36	%	3
Radio City		Gothenburg		Adult Contemporary		Age 20-34		52	%	5
Radio City		Malmoe		Adult Contemporary		Age 20-34		38	%	8
Lugna Melodier		Malmoe and Helsingborg		Soft Adult Contemporary		Age 20-49		17	%	11
Norway
Radio 1		Oslo, Stavanger, Bergen, Trondheim		Contemporary Hit Radio		Age 18-34		49	%	4
The Voice		Oslo and Bergen		Contemporary Hit Radio		Age 13-25		6	%	15
Finland
KISS FM		Semi-national network		Contemporary Hit Radio		Age 15-34		38	%	6
Radio City		Semi-national network		Classic Rock		Age 20-39		19	%	6
Iskelmäradio		Semi-national network		Schlager		Age 35-54		24	%	6
Radio Sata		Turku		Adult Contemporary		Age 25-44		18	%	12
Radio 957		Tampere		Adult Contemporary		Age 25-44		35	%	9
Radio Jyväskylä		Jyväskylä		Adult Contemporary		Age 25-44		28	%	9
Radio Mega		Oulu		Adult Contemporary		Age 25-54		31	%	9
Greece
Lampsi		Athens		Contemporary Hit Radio		Age 13-34		32	%	40

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(1)

Sources: With respect to audience reach: inIn Sweden, Radioundersoekningar AB; in Finland, Kansallinen Radionkuuntelutukimus; in Denmark, Gallup; in Norway, Radioundersøkelsen, TNS Gallup and in Greece, Bari Report. Audience reach is the percentage of the audience in the target demographic that has listened to the station at least once over a one-week period.

(2)

The Voice is a group of owned and affiliated radio stations located throughout Denmark. The audience reach figure for The Voice represents a national reach.

(3)

The Voice, Pop FM and Kiss FM broadcast in multiple markets.

(4)

KISS FM is licensed to broadcast into all major cities and regions across Finland.

SeasonalitySEASONALITY

        Television advertisingAdvertising sales in our markets tend to be lowest during the third quarter of each calendar year, which includes the summer holiday schedule (typically July and August), and highest during the fourth quarter. Television advertisingAdvertising sales are generally slightly higher in the second half of each year.

Competition, Property and RegulationCOMPETITION

Competition

        Our television and radio stations compete for audience, programming and advertising revenues with other television and radio stations in their respective markets. For advertising revenues, they also compete with other forms of advertising media, such as newspapers, magazines, outdoor advertising, teleshopping services, telephone directory advertising, on-line advertising, and direct mail. Some competitors are government-supported operations or are part of larger corporations with substantially greater financial resources than ourselves.

        In each of our principal television markets, we primarily compete with three basic types of television stations: publicly-owned, non-commercial and commercial television stations and privately-owned, commercial television stations, including also pay or subscription television stations. All of such types are distributed via various means, over-the-air, satellite-to-cable and direct-to-home. While we compete for viewers and programming with non-commercial, publicly-owned television stations in each of our markets, we do not compete with those stations for national advertising revenues. Some competitors are government supported operations or are part of larger corporations with substantially greater financial resources than ourselves.

        A number of foreign satellite channels are carried on cable systems in the markets in which we operate. While these channels generate some audience ratings, they do not generally broadcast advertising directed at specific local markets and, therefore, do not compete directly with us for local advertising revenues. These channels include, among others, MTV Europe, CNBC, Eurosport, TV5 Europe, Discovery, BBC World and CNN International.

        Our Dutch print operations compete for subscribers and advertising revenues with other print and electronic media, and, in particular, with publishers of other weekly television and radio program guides and electronic program guides.

Property
PROPERTY

        We own or lease, through our subsidiaries, properties in each market in which we operate, from which we conduct our sales, production, broadcasting and administrative activities. We also lease transmitters, transmitting towers and transponders for our broadcast operations. We believe that our facilities are adequate for our current operations. Our current commitments under operating leases for 2003 are approximately €112€93.7 million. See note 17 to our consolidated financial statements included elsewhere in this annual report.

Regulation
REGULATION

        Set forth below is a general summary of broadcasting and Internet-related regulations promulgated by the European Union and countries in which we operate.

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Broadcasting Regulations

        Within the European Union, broadcasters are required to obtain a broadcasting license in the member state in which they are established. Under EU law, broadcasters validly licensed in one member state may freely broadcast to or retransmit their programming in other member states.

        Although there are some differences in the broadcasting and advertising laws across the countries in which we operate, some legislative provisions, particularly those relating to broadcast advertising, are similar. In each country in which we operate, advertising is generally required to conform to good marketing practice and unfair competition laws and is prohibited from misleading the audience, using subliminal techniques or promoting illegal goods and services. Similarly, it is generally prohibited in every country in which we operate forfrom broadcasting programming or advertising targeted towards children to endangerwhich endangers children's moral, psychological or physical development, especially through the inclusion of pornographic, exploitative or gratuitously violent content. Furthermore, in most countries in which our broadcasts are carried, we are required to observe advertising restrictions concerning tobacco, alcohol and prescription drug products.

European Union

        SevenEight of the countries into which our programs are broadcast or from which we broadcast are EU member states: the United Kingdom, Sweden, Denmark, Belgium, Greece, Finland, and The Netherlands and Hungary and we operate under broadcasting licenses issued by the authorities of each of these member states. Our operations within these countries fall within the ambit of EC broadcasting and advertising laws. The Television Without Frontiers Directive (Council Directive 89/552/EEC of 3 October 1989, OJL 298 of 17 October 1989, p.23, as amended by Directive 97/84/EC of 30 June 1997, OJL 202 of 30 July 1997, p.60) (the "Television Directive") establishes basic principles for the regulation of broadcasting activity in the European Union. In essence, it requires member states to ensure that broadcasts emanating from itstheir territory comply with the national broadcasting rules in thatthose member state,states, and it requires that each member state demand certain minimum standards of all broadcasting services regulated by the authorities of such state. Member states are free to impose more detailed or stricter rules in the areas covered by the directive on television broadcasters within their jurisdiction.

        Likewise, any states wishing to join the EU must incorporate a large portion of EU law, including the Television Directive. Hungary, Poland and Romania are all in the process of completing this process, but only Hungary has implemented the Television Directive into national law. Poland has partially aligned its legislation with the Television Directive and Romania (which is expected to join the EU later than Hungary and Poland) has yet to implement it.

        The Agreement on the European Economic Area ("EEA Agreement") has been ratified by all the members of European Free Trade Association ("EFTA") and EU member states (except Switzerland, which has decided not to participate in the EEA) and became effective on January 1, 1994. The EEA Agreement requires parties to incorporate a large portion of existing EU law (the "acquis communautaire") as of January 1, 1994, the date on which the EEA Agreement became effective, and any subsequent EU laws, which are within the scope of the Agreement. As a result, the relevant EU rules on broadcasting-related matters apply to such member states (e.g., Norway).

        The Television Directive mandates that all EU member state broadcasters shall be regulated by the authorities of the member state in which the broadcaster is established and that certain minimum broadcasting regulations should be applied by each member state to all broadcasters within its jurisdiction. All member states are required to permit the reception or retransmission in their territories of a broadcaster's programs broadcast from another member state, provided that the broadcaster is licensed under the broadcasting laws of another member state.

36        Likewise, any states wishing to join the EU must incorporate a large portion of EU law, including the Television Directive. Hungary joined the EU on May 1, 2004, and has implemented the Television Directive into national law. Romania (which is expected to join the EU in 2007) has also adopted a legislative framework to align its legislation with the Television Directive.

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        The Agreement on the European Economic Area ("EEA Agreement") has been ratified by all the members of European Free Trade Association ("EFTA") and EU member states and became effective on January 1, 1994. The EEA Agreement requires parties to incorporate a large portion of existing EU law (theacquis communautaire) as of January 1, 1994, the date on which the EEA Agreement became effective, and any subsequent EU laws, which are within the scope of the EEA Agreement. As a result, the relevant EU rules on broadcasting-related matters apply to EFTA member states that are not EU member states, such as Norway.

        The Television Directive sets minimum standards regarding program content, European and independent production quotas for programming and the content, quantity and scheduling of television advertising. Broadcasts within the European Union may not seriously damage the physical, mental or moral development of children, especially as a result of pornographic or gratuitously violent content, and broadcasts likely to inflict such damage may only be aired at a time or using technical measures designed to ensure that minors cannot watch the programs. In addition, broadcasts may not contain any incitement to hatred on the grounds of race, nationality, religion or gender.

        Member states must, where practicable and by appropriate means, use their best efforts to reserve a majority of broadcasting time (not including news, sports events, games, advertising, teletext and teleshopping programming) for European programming. Furthermore, at least 10% of broadcasting time or, at each member state's discretion, 10% of a broadcaster's programming budget, must be devoted to independently produced European programming, an adequate proportion of which must have been produced within the last five years.

        In addition, member states may designate certain major events that cannot be broadcast exclusively by a single television station if the effect is to deprive a large proportion of the public of any member state from seeing a specific event on a live or deferred basis.

The Television Directive sets out detailed regulations concerning television advertising and television advertising targeting children. In general, television advertisements and teleshopping may not be misleading and must be readily distinguishable from ordinary programming. Television advertisements and teleshopping must respect human dignity and religious or political beliefs and may

not discriminate on the grounds of race, gender, religion or nationality, or encourage behavior prejudicial to public health and safety or the environment. The advertising of tobacco products and prescription medicines is prohibited and advertisements for alcoholic beverages are subject to additional regulations. Television advertising targeting children may not exploit their credulity or inexperience. Advertisements or teleshopping may only interrupt programs longer than 45 minutes once in every complete 45-minute period, or, for programs shorter than 45 minutes, must be separated by at least 20-minute intervals. Children's programs less than 30 minutes long may not be interrupted by advertisements or teleshopping. Advertising may not exceed 15% of daily broadcasting time, and a maximum of 20% of any one-hour period of broadcasting time may be devoted to advertising and teleshopping.

        The Rental and Lending RightsEuropean Commission has recently completed a review of the Television Directive. Any formal proposals to amend the Television Directive (No. 92/100/EEC of November 19, 1992) provides writers, composers, directors, performers, producers (and possibly set designers, cinematographers, choreographers, film editors and visual artists) whose work is embodiedare expected to be presented in films or other television programming indefinitely continuing equity claims for payments in compensation for rental and lending of their works. Although there is significant national variation in the implementation of this directive, this directive may result in higher costs for us and our competitors' European programming.late 2004.

        The EC Directive on Satellite Broadcasting and Cable Retransmission (No. 93/83/EEC of September 27, 1993) (the "Satellite and Cable Directive") requires member states to permit a satellite broadcaster to obtain the necessary copyright licenses for its programs in just one country (generally, the country in which the satellite broadcaster is established), rather than obtaining copyright licenses in each country in which the broadcast is received.

        The Term of Copyright Directive (93/98 of October 29, 1993) requires greater conformity in the term of copyright protection for copyrighted works, including films. This will result in a longer period of copyright protection for films and other television programs.

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        The Distance Selling Directive (1997/7/EC) was adopted by the European Union in 1997 and has been implemented in a majority of European Union member states, including the United Kingdom and The Netherlands. Essentially, it concerns the protection and legal rights of consumers in respect of distant contracts, e.g. it applies to transactions where the buyer and seller never meet, and covers teleshopping and the Internet.

        The Copyright in the Information Society Directive (2001/29/EC) was due to be implemented by December 22, 2002. It has now been implemented in seven of the member states, including the United Kingdom, Denmark and Greece. The directive aims to harmonize copyright law as it applies to the Internet and digital technology. The directive requires member states to provide three key rights for rights holders, including the rights of "making available to the public", essentially a new right in many jurisdictions introduced to deal with the protection of copyright material used in on-line, interactive and on-demand services, as well as more traditional broadcasting.

Council of Europe

        The Transfrontier Convention (the "Convention") established by the Council of Europe contains provisions that are substantially similar to the Television Directive with two significant effects:

•

It allows EU member states to designate certain major events as events that cannot be broadcast exclusively by a single television station if the effect is to deprive a large proportion of the public of any member state from seeing a specified event on a live or deferred basis;



•

It provides that if a broadcaster wholly or principally directs transmissions at a member state, other than the one in which it is established for the purpose of evading the laws of the member state at which the broadcasts are directed, that broadcaster can become subject to the laws of the country of reception.

National Regulations

National RegulationNorway

Norway

        The Norwegian Broadcasting Act of December 4, 1992 (the "Norwegian Act") empowers the Norwegian Ministry of Cultural and Church Affairs (the "Ministry") to grant franchiseslicenses for private television broadcasting. The Ministry has granted TVNorge a provisional franchiselicense to operate a satellite television station in Norway. Although the franchiseThe license currently has no specific expiration date or conditions attached to it. The Ministry issued at the end of 2003 a Green Paper in which it we anticipateis proposed to replace licenses for operating satellite broadcasting television with a registration requirement at the Norwegian Mass Media Authority. It is anticipated that the Ministryproposed change will impose a limit on the duration of the franchise in the future. We believe we are currently in compliance in substantially all material respects with the conditions imposed by the relevant broadcasting regulations.

come into force during 2004. The Norwegian Act is substantially similar to the EU regulations with respect to television advertising and programming.

        In Norway, we and our affiliates have necessary licenses for local radio broadcasting, which expire on December 31, 2006. Local radio broadcasting in Norway is governed by the Norwegian Act and the broadcasting regulations. According to the broadcasting regulations, no entity may have a holding in more than one license for local radio broadcasting in one and the same license area. Furthermore, no entity may control more than one-third of the total national local radio broadcasting market, which is measured through the potential number of listeners, being equivalent to the number of inhabitants of the relevant area. The Ministry has recently issued a Green Paper in which it is proposed to repeal these restrictions. Radio advertising is restricted to 15% of daily broadcasting time and to 12 minutes per hour.

Sweden

        In Sweden, we and our affiliates have the necessary licenses for local radio broadcasting, which expire on December 31, 2008. We believe we are currently in compliance in all material respects with the conditions imposed by the2008, except for three licenses, and the relevant broadcasting regulations.which expire on December 31, 2004.

        RadioLocal radio broadcasting in Sweden is governed by the Radio and Television Act (1996) and monitored by the LocalSwedish Radio and Television Authority. In addition, the Electronic Communications Act (1993), as amended. Atprovides for provisions regarding the license to use radio transmitters in connection with local radio broadcasting. Activities under the Electronic Communications Act are monitored by the Swedish Post and Telecom Agency.

        Pursuant to the Radio and Television Act at least one-thirdthree hours of the radio broadcast time in each 24 hour broadcast periodbetween 6:00am and 9:00pm must contain programs produced specifically for the radio channel. Commercials may beFollowing provisional regulations that were introduced when the Radio and Television Act was amended in 2001, certain provisions of the abrogated Local Radio Act shall continue to apply until December 31, 2008 to those of our licenses that expire in 2008, including the requirement that at least one-third of the broadcasts during each 24-hour period must consist of material specifically produced for the channel. For licenses granted after July 1, 2001, including those of our licenses expiring in 2004, the license conditions contain other, individual requirements on broadcast for upcontent. Advertising is restricted to eight minutes eachper hour.

        Swedish broadcasting legislation applies to broadcasters established either in Sweden or in a foreign country that is not a party to the EEA Agreement. Our wholly owned subsidiary, Kanal 5 Limited, is a United Kingdom company and is the holder of a satellite television services license in the United Kingdom. Accordingly, Kanal 5 is not subject to regulation in Sweden. See "—United Kingdom" below.below and see also "Item 8—Financial Information—Legal Proceedings" for further information on a claim alleging that Kanal 5 ought to be licensed in Sweden and not in the United Kingdom. Our wholly ownedwholly-owned Swedish subsidiary, Kanal 5 AB, has been granted permission to operate a terrestrial digital television service in Sweden.

        Swedish law provides that the violation of any statutory provision (for example, the provision in the 1996 Act on the prohibition of advertising aimed at children under the age of 12) is regarded as an unfair marketing practice, which contravenes the Marketing Act. In 1997, the European Court of Justice (the "ECJ") ruled that the Marketing Act does not apply to the broadcasts by TV3 in which

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advertising is aimed at children under the age of 12. Like Kanal 5, TV3 is a satellite services operator licensed in the United Kingdom. The ECJ concluded that TV3 was under the jurisdiction of United Kingdom broadcasting legislation, which permitted advertising aimed at children, and the Marketing Act did not apply to TV3. We believe that, as a United Kingdom licensed broadcaster, Kanal 5 is also exempt from the provisions of the Marketing Act.

Denmark

        In Denmark, we and our affiliates have the necessary operating agreements with the license holders for our TvDanmark 2 television station and our radio operations, which expire on various dates (except for TvDanmark's its television satellite license, which is of indefinite duration). The main television license, which is for the Copenhagen area, expires in MarchSeptember 2008. We believe we are currently in compliance in all material respects with the conditions imposed on us by the operating agreements with the license holders and the relevant broadcasting regulations. Because TvDanmark 1Kanal 5 (Denmark) is a satellite channel established in the United Kingdom, TvDanmark 1Kanal 5 is not subject to regulation in Denmark.

        Amendments to theThe Danish Radio and Television Activities Act which became effective January 1, 1997, provideprovides for, among other things, the networking of local television stations. Pursuant to this legislation, the local television committee in Copenhagen granted a network license to a new company, Kanal 60 A/S, to permit 24-hour transmission until September 30, 2008 in Copenhagen. Our subsidiaries, Kanal 2 Primetime A/S and TvDanmark A/S (which do not have broadcasting licenses themselves) have entered into contracts with Kanal 60 A/S and 9nine local channels that have enabled the networked transmission of the TvDanmark 2 channel since April 7, 1997.

        In Denmark, radio broadcasting licenses are issued by municipal radio and television committees to local associations in accordance with the Danish Radio and Television Act. In addition to the broadcasting licenses, the use of radio frequencies in Denmark must be authorized by virtue of a license granted by the Danish National IT and Telecom Agency. The Radio and Television Broadcasting Act requires local radio associations to carry on their programming services independently but allows them to enter into production agreements with providers of radio programs. By entering into such production agreements with the holders of licenses, our Danish subsidiaries SBS Radio A/S, Radio2 A/S and Nyhedsradioen 24-7 A/S (which do not have such licenses themselves) have obtained the right to broadcast radio programs in several parts of Denmark. Under the Radio and Television Broadcasting Act, radio advertising is restricted to 15% of daily broadcasting time and to 12 minutes per hour.

Finland

        In Finland, we and our affiliates holdhave the necessary licenses for radio broadcasting, in Finland. These licenses are valid untilwhich expire on December 31, 2006. We believe we are currently in compliance in all material respects with the conditions imposed by the licenses and the relevant broadcasting regulations.

        The Finnish Television and Radio Broadcasting Act restricts1998 regulates the public broadcast of radio programming. The licensing authority is the Council of State and the implementation of the act is supervised by the Ministry of Transport and Communications. The effective implementation of the legislation is vested in Finland's Communications Regulatory Authority and as applicable the Consumer Ombudsman. Radio advertising is restricted to 10% of daily broadcasting time and to 24 minutes during any two-hour back-to-back broadcast period.

Belgium

        Until February 28, 2002, VT4 was established inIn Belgium, we and our affiliates have the United Kingdom and was thus subject to United Kingdom, not Belgian, regulations. See "Item 8—Financial Information—Legal Proceedings—Belgium". On March 1, 2002, VT4 transferred the assets and liabilities of its Belgium operations to SBS5 N.V., a Belgium company which was renamed as SBS Belgium N.V.necessary licenses for television broadcasting for VT4. VT4 is now broadcast out of Flanders, using a license granted by the Flemish Media Commission("Vlaams Commissariaat voor de Media")Media) on January 29, 2001. Licenses are granted for a period of nine years. VT4 is subject to the Flemish Media Act and related regulations as of March 1, 2002. The Flemish Media Act regulates the licensing of public and commercial television broadcasting. Licenses are granted for a period of nine years.

United Kingdom

        In the United Kingdom, we and our affiliates have the necessary licenses for the television broadcasting operations of Kanal 5 (Sweden) and TvDanmark 1, each of which is licensed in the United Kingdom as a satellite broadcaster. The licenses of Kanal 5 and TvDanmark 1 expire in July 2006, and October 2009, respectively. We believe we are currently in compliance in all material respects with the conditions imposed by the licenses and the relevant broadcasting regulations.(Denmark).

        Kanal 5 (Sweden) and TvDanmark 1Kanal 5 (Denmark) are licensed in the United Kingdom by the Office of Communications ("OFCOM"), the regulatory authority which replaced the Independent Television

Commission ("ITC") asat the end of 2003. Previously, Kanal 5 (Sweden) and Kanal 5 (Denmark) held satellite television services ("STS") operators.licenses issued by the ITC. These were converted to television licensable content services ("TLCS") issued by OFCOM under the new UK regulatory and licensing regime introduced by the Communications Act 2003. TLCS licenses are of indefinite duration unless surrendered or revoked. There are no foreign ownership restrictions applying to TLCS licenses. The STSTLCS licenses placecontain specific

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conditions as to the operations of service providers includingproviders. OFCOM is intending to set out general standards and specific advertising and sponsorship standards in new codes. These will be under consultation in the obligationcourse of 2004. In the meantime, the TLCS licenses require licensees to abide by the ITC's Codes of Practices. The key Codes of Practice are: (1) the ITC Program Code; and (2) the ITC Code of Program Sponsorship; (3) the ITC Code of Advertising Standards; (4) the ITC Rules on the Amount of Advertising and Scheduling of Advertising; (5) the ITC Code on Sports and other Listed Events; and (6) the ITC Code on Electronic Program Guides.Sponsorship.

        The UK Broadcasting Act contains restrictions intendedOFCOM has recently been consulting on a proposal to preventcontract out a large part of the accumulation of interests in certain licensed broadcasting services and limits cross-media ownership. The UK Broadcasting Act also prohibits any persons from holding or having a qualifying interest (that is, more than 20%) in two or more specified licenses issued by the ITC where that person's share of national audience time exceeds 15%. These media ownership rules are due to undergo a number of changes when the new Communications Bill (as discussed below) comes into force. The duration of any STS license, including the Kanal 5 and TvDanmark 1 licenses, is ten years and such licenses may be renewed for one or more further periods of ten years. There are no foreign ownership restrictions applying to STS licenses.

        The regulation of broadcast advertising to an industry co-regulator as part of a self-regulatory system operating under the communications industries insupervision of the United Kingdom has undergone extensive review in recent years. As a result, a new regulatory regime is dueAdvertising Standards Association. A decision isexpected to be introduced, as set outtaken in the Communications Bill. The Bill is expected to receive royal assent in November 2003.

        The centerpieceautumn of the new regulatory regime is the creation of a single independent regulatory body for the communications and media industry, an Office of Communications ("OFCOM"), which will take the form of a corporate body operating at arms length from the government and be governed by a Chairman, a Chief Executive and other executive and non-executive members. OFCOM will replace various regulators currently regulating telecommunications, television, radio and the electronic communications sector including the Broadcasting Standards Commission, the ITC, OFTEL, the Radio Authority and the Radio Communications Agency. It will aim to reduce the regulatory burden upon communications operators by using general authorizations rather than individual licenses wherever possible.

        Under the Communications Bill, STS licenses will be abolished and replaced with television licensable content services licenses. The Bill envisages that licensees will need to comply with standards set by OFCOM and embodied in a code, which will contain similar principles to those currently set out in the ITC Codes. The Bill contains transitional provisions so that any person holding an abolished license will be regulated by OFCOM as if that person held a television licensable content service license and will need to comply with OFCOM's standards code.2004.

The Netherlands

        In The Netherlands, we and our affiliates have the necessary licenses for television broadcasting for SBS6 and NET5, which expire in August 2005 and January 2004,March 2005, respectively. We furthermorealso have the necessary licenses for the Tele 6 and Via 5 teleshopping channels, which will expire in July 2006. We believeIn addition, we are currently in compliance in all material respects with the conditions imposed by the licenses and all relevant broadcasting regulations. We also own a 50% interest in TV10 Holdings LLC, which owns TV10 B.V. TV10 B.V. holds the television broadcasting license by which we broadcast V8,Veronica (formerly known as V8), which expires in May 2005. Through our wholly ownedwholly-owned subsidiary, V8 Broadcasting B.V. (formerly Lamalea Investments B.V.), we provide programming and sell advertising for the broadcast hours of V8. See "Item 4—Information on the Company—Television—The Netherlands".Veronica.

        The 1987 Dutch"Mediawet"Mediawet and the 1987"Mediabesluit"Mediabesluit regulate the licensing of public television and radio broadcasting, as well as commercial broadcasting, transmitted either over-the-air, by cable or by satellite. The licensing of the use of frequency space with respect to over-the-air broadcasting is regulated in the Telecommunications Act. Licenses for commercial broadcasting are granted by a body called theCommissariaat voor de Media. Licenses for both television and radio are validgranted for a period of five years.

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Hungary

        In Hungary, we and our affiliates have the necessary license for television broadcasting, pursuant to a broadcasting agreement (the "Broadcasting Agreement") dated July 9, 1997, between TV2 and National Radio and Television Committee (the "ORTT"), an independent authority whose members are elected and supervised by the Hungarian Parliament, for television broadcasting, which expires in July 2007.

        The Radio and Television Broadcasting Act 1996 has beenwas amended in 2002 in order to harmonizefor the harmonization of Hungarian media lawlaws with EU laws and regulations (the "Hungarian Broadcasting Act").

The Hungarian Broadcasting Act specifies that broadcasters must be natural persons, residents or legal entities registered in Hungary. The Hungarian Broadcasting Act furthermorealso establishes rules in relation to program content, which are similar to the requirements imposed by the EU.European Union. The Act, among othersother things, provides that national television channels, such as TV2, must broadcast at least one 20-minute news service during prime time (6:30 p.m.-9:30 p.m.)30pm to 9:30pm). National and regional television channels must spend at least 6% of their annual total advertising revenue on new Hungarian productions.

        The Hungarian Broadcasting Act also contains certain cross-media ownership restrictions between print and electronic media. In the case of national television broadcasters like TV2, no single natural or legal person may hold—hold, whether directly or indirectly—indirectly, more than 49% of the voting shares in any such broadcaster. Any person having a decisive interest (more than 25%) in a national broadcaster may not hold a decisive interest in any other Hungarian broadcaster with the exception of thematic channels, and at channels. At

least 26% of the voting shares in a national broadcaster must be held by Hungarian natural persons or legal entities registered in Hungary and that a majority of the board of directors of a national broadcaster must be Hungarian nationals resident in Hungary.

        Among other things, the Broadcasting Agreement sets out TV2's obligations with respect to program structure, including its public service programming obligations. Under the Broadcasting Agreement, TV2 is also required to submit semi-annual reports to the ORTT demonstrating TV2's performance of its obligations under the Broadcasting Agreement. The ORTT has attempted to imposeimposed fines orand other sanctions on TV2 from time to time for violation of the Hungarian Broadcasting Act and the Broadcasting Agreement, substantially all of which TV2 has appealed to the Hungarian courts. See "Item 8—Financial Information—Legal Proceedings—Hungary". The Broadcasting Agreement was amended as of January 1, 2004. The amended Broadcasting Agreement reduces certain of TV2's public service programming obligations. In certain cases it also sets lower fine levels than the original Broadcasting Agreement. The amended Broadcasting Agreement also regulates the protection of minors more rigorously and establishes increased penalties for breaches of the associated provisions of the Agreement.

Romania

        In Romania, we and our affiliates have the necessary licenses for television broadcasting for prima TV. Its license for satellite television broadcasting expires in February 2007, and its license for terrestrial television broadcasting expires in September 2003.2012. Licenses are granted for nine-year periods and can be renewed for anotheradditional nine-year period. We believe prima TV is currently in compliance in all material respects with the conditions imposed by the license and the relevant broadcasting regulations.

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periods.

        The Romanian Radio and Television Broadcasting Act 1992,Audio-visual Law, as amended, specifies that private broadcasters that are subject to the jurisdiction of Romania have to be organized as commercial companies. A person cannot be a direct or indirect majority investor in or shareholder of more than one broadcasting company, nor may a majority investor in or shareholder of one broadcasting company hold more than 20% of the share capital of any other broadcasting company. There are no foreign ownership restrictions. Any legal entity or individual that holds or becomes the holder of 10% or more of the socialshare capital or voting rights of a commercial company holding an audiovisual or broadcasting license or of a company that controls a company holding such a license is obligedobligated to notify the Council thereof, within one month from reaching such a quota.this threshold. The Romanian Broadcasting Act furthermoreAudio-visual Law also aims at preventing the creation of a dominant position in the formation of public opinion, which is considered to exist, at a national level, in caserespect of a broadcaster whose market share exceeds 30% of the total market of services at the national level and, at a local or regional level, in caserespect of a broadcaster whose market share exceeds 25% of the market of services at the local or regional level.

The Romanian Broadcasting ActAudio-visual Law provides regulations similar to those imposed by the European Union.

PolandGreece

        Broadcasting activities in Poland are regulated by the Radio and Television Broadcasting Act 1992 (the "Polish Broadcasting Act") and the Telecommunications Law 2000, under which it is necessary to obtain a license in order to broadcast television and radio channels and a permit to useIn Greece, broadcasting facilities.

        We broadcast in Poland through TVN, in which we currently hold an indirect 30.4% equity interest, see "Item 10—Additional Information—Material Contracts". TVN's broadcasting licenses for its channel TVN will expire on various dates between November 2004 and August 2008. TVN's license for TVN7 will expire in February 2012. TVN believes that it is currently in compliance in all material respects with the terms and conditions of all its licenses, with the exception of its license for broadcasting of TVN via satellite for which TVN has not obtained a regulatory consent relating to the investment of TVN's foreign shareholder, Strateurop International B.V. ("Strateurop"). The failure to obtain this consent may give rise to grounds for the revocation of TVN's satellite broadcasting license. However, because all of TVN's broadcasting activities are terrestrial and not by satellite, the importance of this particular license for TVN's broadcasting activities is not considered to be material. In addition, the requirement to obtain consent for Strateurop's investment is unclear, because Strateurop's investment predated the May 2000 law establishing the requirement. Accordingly, the risk of such revocation is considered to be insignificant. TVN7 is distributed primarily by direct-to-home and by satellite-to-cable.

        Under the Polish Broadcasting Act, foreign ownership in a broadcaster's share capital may not exceed 33% and the broadcaster's articles of association or statutes must contain a clause, which provides that Polish citizens resident in Poland constitute a majority of the members of the board of directors and the board of management of the company. A breach of the restrictions on foreign participation can lead to the revocation of a license. It is necessary to notify, and to obtain prior permission from the President of the Broadcasting Council for the acquisition by a foreign entity, or an affiliate of a foreign entity, of shares in a broadcaster's share capital. If such approval is not obtained, the acquisition may be nullified.

        The Polish Broadcasting Act provides regulations similar to those imposed by the European Union. Programming content restrictions provide that TV broadcasters are required to allocate at least 30% of their quarterly airtime to programs originally produced in the Polish language (this does not refer to news, sporting events, commercials or telesales). In the case of music programs, TV and radio

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broadcasters are required to allocate at least 30% of monthly airtime to music and songs, which are either connected with the Polish culture or performed in Polish or by Polish artists.

        On January 1, 2001, a new Telecommunications Act came into force. This act applies to broadcasters' activities as it regulates, among other things, the use by broadcasters of broadcasting facilities (i.e. frequencies). The act aims to simplify the procedures and criteria involved in providing authorization for the use and provision of telecommunications services. The act further stipulates that transmission of radio and television signals requires the permission of the Chairman of the Telecommunication Office, and such permission is usually granted for a period of ten years.

Greece

        Greek broadcasting law provides for the licensing and operational framework of both radio and television broadcasting. Broadcasting licenses are issued, renewed and revoked by the Greek Ministry of Press and Mass Media (the "Greek Ministry") with the consent of the National Radio & Television Commission (the "NRTC"). Licenses for the operation of radio stations are granted to public legal entities, Greek or other EU citizens, companies controlled by Greek or other EU citizens or companies registered pursuant tothat have been formed under the legislative frameworklegislation of aan EU member state havingand which maintain their main registered offices in the European Union.an EU state, provided that a constant and permanent nexus to that state can be evidenced. Greek rules limit the granting of such licenses to companies in which non-EU shareholders directlyshareholders' stake in the total equity of the company exceeds 25%. The shares of a broadcasting company must be registered. If registered shares of a broadcasting company are owned by a legal entity, then that entity's shares must be registered and must be owned by individuals. Companies limited by shares whose shares are traded on a local or indirectly hold lessforeign exchanges may own up to 25% of the equity of a radio licensed company. As described more fully below, we are involved in pending proceedings regarding the

interpretation and legality of these provisions. An individual or entity may not be granted more than 25%one radio broadcasting license and may only participate in total and prohibit the same personone company that has such a license. Shareholders are prohibited from holding an interest,owning equity, whether directly or indirectly, in more than one radio station or in more than two of the three categories of mass media (radio, television and press). The same restrictions apply in relation to the management of such companies. Greek law also requires broadcasting companies to notify the authorities of any significant structural change, any share pledge agreement and any loan or facility agreement exceeding 15% of the total share capital of the company.

        Law 2863/2000 has been issued by the Greek Parliament with respect to the NRTC and other authorities regulating the radio-television services sector. Pursuant to this law, the NRTC has become an independent administrative authority, which is not subject to supervision by other bodies. The NRTC exercises direct supervision in the radio and television services sector, by issuing enforceable administrative acts.

        Under Greek law, all radio stations, including Lampsi, broadcasting on November 1, 1999, were deemed to be operating lawfully until the current licensing process, which was then being initiated by the Greek Ministry, of Press and Mass Media (the "Greek Ministry"), was finalized. On March 14, 2001, Lampsi submitted an application for a radio license in accordance with the new license tender procedures. On March 27, 2001, the Greek Ministry ordered Lampsi, as well as a number of other radio stations, to suspend their operations, effective immediately, on the grounds that their continued operations would interfere with the communications of the Greek civil aviation authority in connection with the commencement of operation of the new Athens International Airport (the "Order"). We believe that Lampsi was in compliance in all material respects with relevant Greek radio laws and regulations; an injunction against the Order was sought in the Greek courts but was denied. We also filed a complaint with the European Commission. In the meantime, we submitted an application for a new license as part of a tender process organisedorganized by the NRTC. On March 14, 2002, a broadcasting license was granted to Lampsi under the terms of the license tender process.process, which license expires in March 2006. Lampsi successfully resumed on-air operations on March 19, 2002. Seven radio stations however, have submitted applications before the Greek Council of State for the annulment of the licenses that were granted to Lampsi and fourteen other radio stations as part of the license tender process. The applications are pending. See "Item 8—Financial Information—Legal Proceedings—Greece".

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Austria

        In Austria, ATV Privatfernseh-GmbH ("ATV") obtained the only nationwide license for terrestrial TV-broadcasting under the new Private TV-Act on January 31, 2002. The license expires ten years after granting. Apart from the terrestrial broadcasting license, ATV also obtained licenses for satellite and cable television broadcasting. Whereas several other companies are licensed to provide satellite and cable television broadcasting, terrestrial television may only be broadcast by ATV and the state owned Austrian Broadcasting Corporation ("ORF").

Internet RegulationRegulations

        Regulation of Internet activities takes two forms: existing laws at the EU and national levels apply to the extent they are relevant to such activities and additional rules specifically targeting Internet activities may apply.

        In 1995, the European Community adopted a Data Protection Directive harmonizing the protection of individual rights with regard to the processing of personal data and the free movement of such data across the EEA (the "Data Protection Directive"). The deadline for implementing this directive was October 24, 1998. In addition, the European Community has adopted several regulations aimed at activity on the Internet such as the Electronic Commerce Directive, the Electronic Signatures Directive, the Distance Selling Directive and the Copyright Directive. These directives set forth EU rules for determining which nation's law will apply to such Internet activities.

        Directive 2000/31/EC of June 8, 2000, known as the Electronic Commerce Directive, is concerned with the legal aspects of information society services, in particular electronic commerce in the internal market. It gives broadcast organizations exclusive rights relating to the on-line exploitation of their broadcastsmarket and provides legal protection against the circumvention of technological measures to avoid infringing reproduction, communication to the public and distribution of their broadcasts.covers services such as video on demand. This directive was due to have been implemented by EU member states by January 16, 2002. The Electronic Signatures Directive (1999/93/EC of December 13, 1999) sets out a EU framework for the use of electronic signatures and was due to have been implemented by July 19, 2001. The Distance Selling Directive (⁹⁷/7/EC adopted on May 20, 1997) concerns the protection and legal rights of consumers in respect of distant contracts and should have been implemented by June 4, 2000. According to the European Commission, none of these directives appear to have been implemented by all the EU member states by the set deadlines.

        Directive 2000/29/EC of May 22, 2000, known as the Copyright Directive, harmonizes the core rights relevant to uses of copyright material in the information society and electronic commerce, namely the rights of reproduction (copying) and communication (electronic transmission, including digital broadcasting and "on-demand" services). This directive was due to be implemented by December 22, 2002.

        In 2002, the EU adopted a regulatory framework for regulation of electronic communications networks and services. The framework regulates communications networks, including the Internet, as well as the transmission of signals over these networks, such as telecommunications and email, but excluding the transmission or editing of content. The framework consists of five directives: a framework directive and four directives dealing with authorisation, access to, and interconnection of, electronic communications networks and services, universal service and users' rights relating to electronic communications networks and services, and the processing of personal data and the protection of privacy in the electronic communications sector. The framework is supplemented by a further directive on competition in the markets for electronic communications networks and services. This regulatory framework is unlikely to have a significant impact on the activities of the company.

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        As noted above, each country may also have regulations specifically targeting Internet activity. The type and the extent of such regulation will vary by country. We cannot be certain that existing or proposed legislation regulating the Internet that may come into force in the European Union or in any country where we plan to conduct Internet activities would not have an adverse impact on our current and planned Internet activities.

U.S. AgentAGENT

        Our U.S. agent for service is CT Corporation System, 111 Eighth Avenue, New York, New York 10011.

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ITEM 5—OPERATING AND FINANCIAL REVIEW AND PROSPECTS

        This discussion includes forward-looking statements. Our actual results in the future could differ materially from those anticipated in these forward-looking statements. See "Forward-Looking Statements" and "Item 3—Key Information—Risk Factors". You should read the following discussion in conjunction with our financial statements and the financial statements of TVN and the accompanying notes included elsewhere in this annual report.

Operating ResultsOPERATING RESULTS

Overview

        We create, acquire, package and distribute programming and other content via television channels, radio stations and the internetInternet in Europe. We currently own and operate television stations that broadcast in or into Norway, Sweden, Denmark, Flemish Belgium, The Netherlands and Hungary. Additionally, we own 40%37% of prima TV, a television station in Romania, a 30.4% interest in TVN, Poland's second largest private television broadcaster, and a 20% interest in the Austrian television station ATV.Romania. We also own and operate radio stations in Denmark, Sweden, Norway, Finland, Denmark and Greece.Greece, and theVeronica Magazine, a weekly television and radio guide in The Netherlands. We intend to continue acquiring interests and developing television and radio stations in our current markets and other parts of Europe as opportunities arise.

        Our consolidated financial statements for 2002 compared with those for 2001 reflect a reduction in amortization expense of €16.3 million of goodwill in accordance with Statement of Financial Accounting Standards No. 142,Goodwill and Other Intangible Assets, which became effective January 1, 2002.

        Our consolidated financial statements for 2003 reflect the sale of our 30.4% equity interest in TVN and TVN7 in Poland in December 2003, our acquisition of the print operations from Veronica Holding B.V. in September 2003, the acquisition of radio operations in Norway and Denmark in September 2003, and the merger of our Swedish Radio operations with Bonnier Radio AB in October 2003. The impact of the transactions is discussed in "Results of Operations".

        Currency translation adjustments relating to our transactions and those of our subsidiaries in currencies other than the functional currency of the entity involved are reflected in the results of operations. Currency rate fluctuations reduced euro-reported revenues and euro-reported operating income by €6.6 million and €235,000, respectively, when comparing 2003 to 2002, and increased euro-reported revenues and reduced euro-reported operating income by €8.1 million and €294,000, respectively, when comparing 2002 to 2001.

        In 2002 and 2003, the euro displayed a strengthening trend versus the U.S. dollar. This trend has reduced our cost of acquiring U.S. programming rights. However, since December 31, 2003, the U.S. dollar has strengthened against the euro by 4%. Future exchange rate trends cannot be predicted with any certainty.

        For a more detailed description of our operations, see "Item 4—Information on the Company".

        In 2002, 83%2003, 80% of our total revenue derived from the sale of advertising time on our television and radio stations, and other revenues, such as cable and magazine subscription fees, sale of air time (including teleshopping), teletext fees, product placements and non-cash revenues from barter transactions accounted for the remaining 17%20%. Our most significant station operating expenses are programming and distribution expenses, employee salaries and commissions, and advertising and promotional expenditures.

        Inflationary trends in the markets in which we operate were stable (downward in the case of Hungary) from 2001 through 2003. Such trends have an impact upon many of our operating costs. In 2003, inflation in our markets ranged from approximately 2% to 4% in Western Europe to

approximately 5% in Hungary. Management does not believe that current inflationary trends will have a material effect upon our business, although future inflationary trends cannot be predicted with any certainty.

Recent Developments

Television

        On May 14, 2002 the Company acquired 100% of MTM Produkcio Kft. ("MTM Productions"), a Hungarian television production company that produces programming for TV2. As part of this transaction, the Company acquired, for $225,000 (€241,000), Concorde Media Beteiligungs GmbH's ownership interest in MTM Productions. In addition, the Company acquired Ferenc Tolvaly and Robert Prokopp's ownership interest in MTM Productions for an aggregate purchase price of $2.8 million (€2.9 million).

        At the same time as the transaction described above took place, on May 14, 2002, as part of an overall re-organization of TV2, we entered into an agreement with Albene Befektetesi Kft. (to be renamed MTM-TV2 Kft.) ("Albene"), MTM, the controlling shareholders. Albene is a subsidiary of MTM, which in turn is a company controlled by MTM's controlling shareholders. Pursuant to this agreement, we made an initial payment of $3.3 million (€3.8 million) to Albene, with the ability to make a further payment of $5.0 million (€5.7 million), towards the purchase of Albene's 16% interest in TV2. Our present intention is to assign this agreement, in whole or in part, to a Hungarian partner, as the Hungarian Media laws prohibit us from holding more than 49% of the voting rights in TV2 and require that a Hungarian person or legal entity owns at least 26% of the voting rights in a Hungarian company.

        On December 23, 2002,2, 2003, we sold a 2.6% equity interest in TVN to ITI for a cash consideration of $11 million (€10.5 million). In connection with the sale, the Company granted ITI an option to purchase all of our remaining 30.4% equity interest in TVN and TVN7 in Poland to ITI for €131.6 million, at a loss of €8.9 million.

        On December 4, 2003, we sold our 20% equity interest in ATV in Austria for €1.0 million, at a gain of €1.0 million.

Radio

        In July 2003, we agreed to acquire Radio 1 Norge AS in Norway and Radio 2 A/S in Denmark from wholly-owned subsidiaries of Clear Channel Communications, Inc. and from Norsk Aller AS, respectively. The total purchase price of these acquisitions was approximately €17.5 million, payable in SBS Common Shares, subject to certain guarantees. The acquisitions were completed on September 8, 2003.

        In July 2003, we also agreed to merge our Swedish radio operations with Bonnier Radio AB. The jointly owned company, SBS Radio AB, is 51%-owned and controlled by SBS and 49%-owned by Bonnier. The merger, which comprises our five Swedish stations and Bonnier's 14 Swedish stations, was completed on October 1, 2003.

Print

        On September 1, 2003, we completed our acquisitions of certain media assets from Veronica Holding B.V. in The Netherlands. In the transaction, our Dutch subsidiary, SBS Broadcasting B.V., obtained the exclusive right to use the "Veronica" brand for television, print and related uses and subsequently rebranded and relaunched its television channel V8 as Veronica on September 20, 2003. In addition, SBS Broadcasting B.V. acquired the company that publishes the weekly television and radio guideVeronica Magazine. Veronica Magazine is the largest weekly publication in The Netherlands, with a circulation of approximately 1.1 million. As consideration for this transaction, Veronica Holding was issued a 10% equity interest in SBS Broadcasting B.V., subject to a final purchase price adjustment. We recorded a non-cash investment gain of €29.2 million on this transaction, which is reflected in our net income for the greater of our pro rata share of

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(i) twelve times TVN's average EBITDA for 2002 and 2003 less TVN's net debt, or (ii) twelve times TVN's 2003 EBITDA less net debt, with a minimum cash consideration of $130 million. The call option is exercisable untilyear ended December 31, 2003.

Other

        On March 24,April 15, 2003, the Company, TV2 and Postabank entered into various agreements whereby Postabank extendedwe sold our 4.3% interest in BetandWin.com Interactive Entertainment AG for €1.7 million.

        In June 2003, we sold 4,012 shares of Lions Gate Entertainment Corp.'s 5.25% Convertible Redeemable Preferred Shares, Series A, to Lions Gate Entertainment for $9.0 million (€7.7 million), realizing a loanloss of HUF 1.4 billion (€5.7 million) to TV2 (the "New Loan"), secured by a guarantee issued by the Company, to replace the previous loan agreement dated€0.7 million. We retain 1.7 million warrants that are exercisable for Common Shares of Lions Gate Entertainment Corp.

        On November 18, 2003, we called for redemption of all of our 7% Convertible Subordinated Notes Due December 1, 1997. The maturity date of the New Loan is March 24, 2006. All of the2004, which had an outstanding principal amount of $53.6 million after the New Loan is payablerepurchase and cancellation of $11.4 million on October 31, 2003. By the maturity date. Interest onredemption date, December 19, 2003, holders of notes with a total principal amount of $53.2 million had elected to

convert their notes into 1,827,047 SBS Common Shares at the New Loan accrues at 9.24%conversion price of $29.13 per annum, payable quarterly in arrears.

Radio

        On October 22, 2002, we sold our interest in Publimusic to Talpa Management B.V. ("Talpa") as part of a transaction involving the sale of 100% of Publimusic to Talpa.Common Share. The cash consideration receivedremaining outstanding principal amount, $0.4 million, was €10.2 million, of which our share was approximately €7.1 million. As part of the transaction, Publimusic will be entitled to receive €1.8 million in advertising time on SBS6, NET5 and V8, which must be used before December 31, 2004, subject to availability. In addition, Talpa may be able to recover up to approximately 31% of the cash consideration in the transaction from the sellers under certain circumstances related to the granting of radio broadcasting licenses in The Netherlands.redeemed for cash.

Financial Reporting and Accounting

        Effective January 1, 2002, we prepare our financial statements in euro. Consistent with prior years, we prepare them in accordance with US generally accepted accounting principles ("US GAAP").GAAP. Comparative prior year financial statements have been restated to reflect the euro as the reporting currency.

        Our consolidated broadcasting operations generate revenues primarily in Norwegian kroner, Swedish kronor, Danish kroner, Hungarian forint and euro, and incur substantial operating expenses in these currencies. We also incur significant operating expenses for programming in U.S. dollardollars and other currencies. Balance sheet accounts are translated from foreign currencies into euro at the period-end exchange rates and statement of operations accounts are translated at the average exchange rates for the period. Any resulting translation adjustments are recorded as other comprehensive income (loss) within shareholders' equity. Currency translation adjustments relating to our transactions and those of our subsidiaries in currencies other than

        In the functional currencydiscussions of the entity involved are reflected inresults for the results of operations. Currency rate fluctuations increased euro reported revenues and reduced euro reported operating income by €8.1 million and €294,000, respectively, when comparingyear ended December 31, 2003, compared to the year ended December 31, 2002, we divide our operations into three segments:

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"Television operations", which include: TVNorge (in Norway); Kanal 5 (in Sweden); TvDanmark and Kanal 5 (in Denmark) and jointly referred to as "our Danish Television operations"; VT4 (in Flemish Belgium); SBS6, NET5 and Veronica (in The Netherlands) and jointly referred to as "our Dutch Television operations"; TV2, and from June 2002 MTM-Produktion and Interaktive (in Hungary) and jointly referred to as "our Hungarian Television operations"; and other related operations that are not material. Our New Media activities are no longer considered a reportable segment and the year endedresults are included within our Television operations.



•

"Radio operations", which include: The Voice, Pop FM and from September 2003 Radio 2 (in Denmark) and jointly referred to as "our Danish Radio operations"; The Voice in Stockholm, Radio City in Malmoe and Gothenburg, Radio 106.7 Rockklassiker and Easy FM in Stockholm, and, since October 2003, Mix Megapol and Vinyl (in Sweden) and jointly referred to as "our Swedish Radio operations"; from September 2003, Radio 1 and The Voice (in Norway) and jointly referred to as "our Norwegian Radio operations"; Radio Sata, Radio Mega, KISS FM, Radio City, Radio 957, Radio POP and Iskelmäradio (in Finland) and jointly referred to as "our Finnish Radio operations"; and Lampsi FM (in Greece).



•

"Print operations", which includeVeronica Magazine andSatellite in The Netherlands. We acquired these magazines on September 1, 2003, and accordingly, the results of operations have been reflected in our consolidated financial statements since that date.

        Results from TVN and TVN7 in Poland (through December 31, 2001,2, 2003), prima TV in Romania, ATV in Austria (through December 4, 2003), and reduced euro reported revenues and euro reported operating loss by €5.1 million and €120,000, respectively, when comparingRadio Noordzee in The Netherlands (through October 21, 2002) are not included in the year ended December 31, 2001,operations referred to above, but are included in equity in income (loss) from unconsolidated subsidiaries. These are subsidiaries in which we hold an interest of less than half of the year ended December 31, 2000.voting rights or are otherwise unable to exercise control over the operations.

        In the discussions of the results for the year ended December 31, 2002, compared to the year ended December 31, 2001, we report our operations in threetwo segments:

•

"Television operations", which include: TVNorge (in Norway); Kanal 5 (in Sweden); TvDanmark 1 and TvDanmark 2Kanal 5 (in Denmark), jointly referred to as "our Danish Television operations"; VT4 (in Flemish Belgium); SBS6, NET5 and, from October 1, 2001, V8Veronica (in The Netherlands), jointly referred to as "our Dutch Television operations"; TV2, and from June 2002 MTM-Produktion and Interaktive (in Hungary), jointly referred to as "our Hungarian Television

operations"; prima TV (in Romania) through to June 30, 2001, and other related operations that are not material.