Audiofina, CLT-UFA and Pearson Television merge to create Europe's leading integrated broadcast and content group.

Business Editors

LONDON--(BUSINESS WIRE)--April 7, 2000

Bertelsmann AG, Groupe Bruxelles Lambert S.A. ("GBL") and Pearson plc ("Pearson") have today agreed to merge CLT-UFA, Europe's leading commercial television and radio broadcaster, with Pearson Television ("PTV"), the world's leading international independent television production company.

The new group will be the leading pan-European integrated broadcast and content company with annual revenues of some 4 billion euros. It will seek a primary listing on the London Stock Exchange as from completion of the merger.

Bertelsmann and GBL, the two co-controlling shareholders in CLT-UFA, will reorganize their interests in CLT-UFA and Audiofina. As a result, Bertelsmann, along with WAZ, the German publishing company, will have an economic interest of around 37% in Audiofina, with GBL holding an economic interest of approximately 30%. Pearson will hold an economic interest of 22% and around 11% will be publicly held. Audiofina, which is listed in Brussels and Luxembourg, will be renamed, with the new name of the company announced at a later date.

In 1999, the combined group generated proforma earnings before interest and tax of 459 million euros (including associates) on proforma revenues of 3.78 billion euros. At 1 January 2000, the group had a proforma net cash position of 308 million euros.

CLT-UFA

CLT-UFA has interests in 22 television channels, which attract more than 120 million daily viewers, and 18 radio stations, which attract more than 25 million daily listeners, across Europe. The main broadcast brands are RTL, M6 and Channel 5. In a joint venture with PTV, CLT-UFA is a major force in television production company in Germany. CLT-UFA also operates one of Europe's leading sports rights businesses, marketing the broadcast rights of some 40 national football teams and 250 soccer clubs across Europe. It has a rapidly growing online presence, with more than 70 branded internet sites across Europe that generate some 150 million page views per month.

PTV

PTV has some 160 television programs in production in 35 countries around the world, producing over 10,000 hours of programming every year. It makes sales from its library of some 17,500 hours of programming to over 100 territories. It owns a leading selection of game show formats, is the largest producer of serial dramas and makes a wide range of entertainment programs. It has shareholdings in broadcasters in the UK, Hungary, Spain and Australia and in Uproar.com, one of the world's leading online entertainment sites.

Audiofina

Listed on the Luxembourg and Brussels stock exchanges, Audiofina (AUFI.LX/AUFI.BB) currently controls 49.85% of CLT-UFA. In addition, it holds a 28% interest in Groupe Jean-Claude Darmon, the Paris-listed sports rights marketing group. At 31 December 1999, Audiofina had net cash balances of 794 million euros.

Reasons for the merger

The combination of CLT-UFA and PTV will create an integrated pan-European company with highly successful business operations spanning television and radio broadcasting, television production, sports rights and online activities. This will put the combined company in a better position to achieve stronger revenue and earnings growth:

-- PTV's content will enrich the broadcast channels, enabling them to attract
bigger audiences with more in-house productions;

-- CLT-UFA's broadcast channels will provide expanded routes to market for
PTV's content;

-- Access to Europe's most important broadcast network will enable the combined
company to be more innovative in developing new television genres, shows and
formats;

-- Combining rich content with powerful cross-promotional platforms on tv and
radio will enable the company to build one of Europe's leading online and new
media presences;

-- The combined company will have the financial, management, production and
broadcasting strengths to accelerate growth, both organically and through
acquisition, in existing European markets and break into new markets worldwide;


-- The combined company will also own a 65% stake in Channel 5, the UK's
fastest growing terrestrial channel.

Management and board structure

Didier Bellens, chief executive of CLT-UFA, will be chief executive of the new group. Richard Eyre, chief executive of PTV, will be the executive director responsible for leading the content business and directing the new group's future development and strategy. Richard Eyre is also expected to become chairman of Channel 5. Ewald Walgenbach, chief operating officer of CLT-UFA, will take up the same role in the new group.

In addition to the executive directors, the company's board of directors will include 11 non-executive directors, of which six will be appointed by Bertelsmann and GBL and two by Pearson. Thomas Middelhoff (CEO of Bertelsmann), Siegfried Luther (Bertelsmann's CFO), Erich Schumann (CEO of WAZ), Marjorie Scardino (CEO of Pearson) and John Makinson (Pearson's CFO) are all expected to join the board. GBL will nominate its board representatives at a later stage. Three independent non-executive directors will be appointed, of whom one will be nominated as chairman.

Commenting on the merger, Bertelsmann CEO Thomas Middelhoff said: "Bertelsmann, in the last few weeks, clearly strengthened its positions in the area of content and significantly boosted the e-commerce business. We are now catapulting our television business into a new dimension, enabling the new group to develop new content and genres for combined television and internet operations. Through Audiofina, one of our expansive core businesses can utilize the tremendous potential of the stock market for further expansion for the first time."

Marjorie Scardino, chief executive of Pearson, commented: "This deal puts Pearson Television at the heart of one of Europe's most extensive - and most popular - broadcasting networks. It provides the stage on which talent can really flourish, creating compelling entertainment across radio, television and new media. We also see the chance for other parts of Pearson to work with this new company to cross promote our brands and content through all media."

Albert Frere, Chairman of GBL, said: "My business partner, Paul Desmarais, and I are very happy with the tremendous progress made by CLT-UFA since the merger some three years ago in transforming Europe's largest broadcaster into a highly profitable and tightly focused group. Today's merger marks a further step in the successful strategy developed with our partner, Bertelsmann. The alliance between CLT-UFA and Pearson Television offers great opportunity for growth and the creation of shareholder value."

Notes to Editors

THE TERMS OF THE AGREEMENT

Under the terms of an agreement, dated 7 April 2000, between Audiofina S.A., ("Audiofina") BWTV GmBH (a subsidiary of Bertelsmann A.G.) ("BWTV"), Groupe Bruxelles Lambert S.A., ("GBL") and one of its subsidiaries, Electrafina, and Pearson plc ("Pearson"), the parties have agreed the following principal terms:

I. In exchange for the contribution of Pearson TV, Pearson will

receive 22% of the enlarged fully diluted share capital of

Audiofina;

II. BWTV and GBL will reorganize their interest in CLT-UFA and

Audiofina such that they will own, on a 50/50 basis, directly or

indirectly, 60% in Audiofina (of which at least 50.1% will be held

through a joint structure or arrangement ("BWTV/GBL Alliance"));

III. Pearson TV will be entitled to all future dividends on Audiofina

shares other than the proposed dividend of 114 Lux Francs per

share proposed in respect of the year to 31 December 1999;

IV. The transaction will be conditional on inter alia; (a) the

approval of appropriate competition and regulatory authorities

(including the European Commission, under the Hart Scott Rodino

Act and the Independent Television Commission in the UK); (b)

the listing of Audiofina on the London Stock Exchange; (c) certain

tax clearances considered necessary by the parties; (d) the

approval of Audiofina shareholders; and (e) there being no material

breach of certain covenants and warranties given in the agreement;

V. To give certain mutual pre-completion undertakings,

representations and warranties and tax indemnities;

VI. Certain limited matters relating to dividend policy, capital

increase, corporate governance, major transactions and significant

debt increase will require the approval of the BWTV/GBL Alliance

and Pearson;

VII. The existing rights of the employees of Pearson TV will be fully

safeguarded;

VIII. The parties other than Audiofina will agree for the period to 31

December 2003 not to compete with Audiofina in the business of

television and radio station broadcasting (subject to certain

exceptions);

IX. Pearson will be granted warrants to subscribe for a further 2% of

Audiofina shares in the period to 3 December 2003 at prices

ranging from 160 - 180 euros to maintain its holding above 20% of

Audiofina;

X. Each of the parties will have certain pre-emption rights over the

sale of shares in Audiofina and, in the event of a sale of a

direct or indirect holding of 40% of Audiofina, that Pearson will

have a right to "tag along" (ie sell out to any purchasers of any

such holding on the same terms); and

XI. Pearson will lose its minority protection, board representation,

pre-emption and tag along rights if its stake in Audiofina fall

below 15% (although it may appoint one director until its holding

falls below 10%). It will also lose such rights on a change of

control.

CLT-UFA

CLT-UFA's major business operations are in free-to-air broadcasting, content production and radio broadcasting. In 1999, it generated earnings before interest and tax of 346 million euros (including associates) on sales of 3.211 billion euros (excluding exceptional items.)

Free-to-Air Broadcasting

CLT-UFA has interests in 22 television channels, in 11 European countries, which reach over 120 million viewers per day. In both reach and revenue terms, it is the largest broadcaster in Europe.

In Germany, it owns RTL TV, holds a 74.8% stake in Vox and also has stakes in RTL 2 (35.9%) and the children's channel, Super RTL (50%.) In the UK, it owns a 35% stake in Channel 5, the UK's fastest-growing terrestrial channel. In France, it owns a 42% stake in the M6 Group. M6 is France's second-largest commercial channel and the group also operates six thematic channels and owns 25% of the pay tv channel, TPS. Outside of the M6 Group, CLT-UFA has a stake in RTL 9 (35%), a general entertainment cable channel, and TMC (23.8%), Monte Carlo's family channel. In the Netherlands, it owns HMG Group, operating RTL 4, a general entertainment channel, RTL 5, a specialist news channel and Veronica, which is aimed at teenagers and young adults. In Belgium, it has stakes in RTL TVI (66%), a leading French-speaking channel and Club RTL (66%), a themed channel aimed at the youth market. It also owns RTL Tele Luxembourg, RTL 7 in Poland and has a 49% stake in RTL Klub in Hungary. It also owns a 5% stake in Premiere, the German pay-tv sports channel.

Content and Rights Ownership

CLT-UFA is a major producer of television programs in Germany, producing over 1,000 hours of programming per year. Its production companies are UFA Productions, Trebitsch Produktion, Delux Productions and Grundy-UFA, a joint venture with PTV. Its sports rights company, UFA Sports, owns the broadcast rights for over 300 clubs and 40 national teams. It also has a TV Rights business, which owns a library with 5,500 hours of television programs and 700 video titles.

Radio

CLT-UFA is one of Europe's leading radio companies, owning stakes in 18 radio channels across Europe. In Germany, it owns stakes in 2 national radio stations and 5 regional stations covering Berlin, Hamburg, Cologne and Bavaria. In France, it owns RTL, a general interest radio station, RTL 2, which is aimed at the 20-40 age range, and Fun Radio, which is aimed at the 20-25 age range. It also owns stakes in radio stations in the UK (80%), Luxembourg (100%), two stations in Belgium (43% and 35%), one in the Netherlands (39.5%), two stations in Scandinavia (49% and 100%) and one in Austria (25.1%).

PEARSON TELEVISION

Pearson Television is one of the leading independent international television production companies in the world. It has some 160 programs in production in 35 countries around the world and makes sales from its library of over 10,000 hours of programming to over 100 territories. It owns an important selection of game show formats, is the largest producer of serial dramas and makes a wide range of entertainment programs, including situation comedies, children's animation and action adventures. Its most popular programs include Baywatch, The Bill, Salatut Elamat, Skilda Varldar, Gute Zeiten, Schlechte Zeiten, Verbotene Liebe, Unter Uns, Hinter Gittern, The Price is Right, Family Feud, Night Fever, 100%, Match Game and Neighbours.

It also owns a 29% stake in the UK's Channel 5, 20% stakes in RTL Klub in Hungary and UKTV in Australia and a 7% stake in Uproar.com, one of the world's leading online entertainment sites. From its studios in central London, PTV also runs a transmission business, which transmits 50 channels for broadcasters such as Flextech, Discovery and Universal.

MAJOR SHAREHOLDERS IN THE NEW COMPANY

Bertelsmann AG: Bertelsmann ranks among the world's premiere media enterprises. The company's 72,000 employees generate some 15 billion euros in revenues in 53 countries. Founded in 1835 as a Christian publishing company in the State of North Rhine Westphalia's town of Gutersloh, the firm has evolved to become a full-fledged media and entertainment business serving the full range of media segments, covering the book, newspaper, magazine, scientific literature, music, radio, television, film production and printshop submarkets. Moreover, Bertelsmann provides media services of all kinds and has established a formidable Internet and e-commerce presence that is second to none in its peer group. Bertelsmann's characteristic features are the company's decentralized structure counting over 600 individual firms, most of which are independent, its policy of internal journalistic pluralism and its clear commitment to a multiple-brand policy for media audiences in its various language and cultural regions of activity. The majority of the company's capital stock is owned by the Bertelsmann Foundation. Voting rights are held by the administrative body Bertelsmann Verwaltungsgesellschaft to which post WWII founder, co-owner and benefactor Reinhard Mohn transferred his voting rights.

Groupe Bruxelles Lambert S.A.: Groupe Bruxelles Lambert S.A. is an investment holding company incorporated in 1953 which has been quoted on the Brussels Stock Exchange since 15 October 1956. GBL is controlled by the families Frere and Desmarais through their respective holding companies. The Group has a market capitalization of 5.5 billion euros. GBL aims to grow a rich and balanced portfolio of industrial investments, focusing on a small number of first-class companies acting in a diversified range of sectors, in which GBL can exercise its role as a professional shareholder. GBL's actual portfolio includes five long-term investments: CLT-UFA, TotalFina, Suez Lyonnaise des Eaux, Imerys and Rhodia, held directly or through two intermediate companies: Electrafina (80.8 %) and Audiofina (72.6 %). Since the merger of the group CLT and UFA in 1997, GBL has participated, through its joint venture with Bertelsmann, in the development of CLT-UFA as a major European broadcasting group. GBL's 50% investment in CLT-UFA, through the quoted company Audiofina, represents presently nearly 50% of the estimated value of GBL.

Pearson plc is an international media company. In 1999, it made operating profits of (pound)549 million on sales of (pound)2,395 million. In addition to Pearson Television, its major business operations are: The Financial Times group, which has an international network of business and financial newspapers and online services which are read by millions of business executives and investors every day; Pearson Education, the world's leading education business, which helps teachers teach and students learn at every stage and in every part of the world; The Penguin Group, which is one of the pre-eminent names in consumer publishing, with an unrivaled range of fiction and non-fiction, bestsellers and classic titles; and Recoletos, one of the top media companies in Spain, which is also breaking out into new Spanish- and Portuguese-speaking markets.