Professional Documents
Culture Documents
Contents
Directors report
Financial statements
l General
6 Supplementary information
Other information
Auditors' report
PricewaterhouseCoopersAccountants N V.
Fot identification purposes only 2
MTV Networks B.V.
AMSTERDAM (in '000)
Directors report
The Directors present their report and audited financial statements of MTV Networks B.V, for the year
ended december 31,2006.
1.1 General
The Directors herewith subrnit the financial statements for the year ended december 31, 2006. The
immediate parent company is Viacom Global (Netherlands) B.V.. It's ultimate parent company is Viacom
Inc., New York, United States of America.
The company is incorporated in the Netherlands with its statutory seat in Amsterdam. The company's
q
1 .
main activities are establishing and operating television stations and al! relating activities that support or
promote that activity.
The result for the year amounted to a net profit of B 26.901,000(2005 loss: E 8.327.000)was derived from
continuing operations. The majority of the profit is caused by an incidental receipt of EUR 22,7M relating to
a termination of a sales contract. The Directors recommend the profit be added to retained earnings and
carried forward pending a decision of the shareholder in the General Meeting regarding any distribution.
The Directors do not recommend the payment of a dividend.
No major changes are envisaged in the company's activities during the corning year. There are no plans
for significant investments in the future and no changes in the financing structure or the number of
employees are foreseen.
No subsequent events occurred during the year which had an impact on the annual report for the year
december 31,2006.
The management of the Company and execution of the Company's strategy are subject to a number of
risks. The Directors have identified the need to manage the Company's material financial risks, including
foreign exchange, liqiiidity, credit and interest rate risks. These risks are monitored through a Group
Treasury management function which invests surplus funds, mitigates foreign exchange exposure and
manages borrowings for Viacom Inc. group cornpanies (the 'Group').
Group Treasury also seeks to limit counter-party risk by conducting al1 of its banking and dealing activities
with a limited number of major international banks, whose status is kept under review.
Liquidity Risk
The Company finances its operations through a combination of retained earnings and intercompany loans.
To the extent that the Company enters int0 banking arrangements, the Company's exposure to interest
risk arises on the surplus cash bank accounts on which the interest income is based on UBOR -0.25bp.
For the deficit bank accounts the interest expenses are based on LIBOR +0.25bp. The Company does not
participate in interest rate hedging.
Credit Risk
The Company has iniplemented policies that require appropriate credit checks on potential customers
before sales are made. The arnount of exposure to any individual counterparty is subject to a limit, which
. is reassessed annually by the managing directorc.
To the extent that the Company enters into banking arrangements and inter company agreements in
currencies different to that of the Company's functional currency, there is an exposure to movements in
exchange rates. The Company does not participate in cross-currency hedging.
-
PricewaterhouseCoopersAccountants N.Y.
For identification purposes oniy
MTV Networks B.V.
AMSTERDAM (in '000)
l.7 Directors
PricewaterhouseCoopersAccountants N#.
For identification purposes only
MTV Networks B.V.
AMSTERDAM (in '000)
Financial statements
PricewaterhouseCoopersAccountants %V.
For identification purposes only
MTV Networks B.V.
AMSTERDAM (in '000)
Assefs
Intangible assets
Property, plant and equiprnent
Financial assets
Current assetc
/'
1. ,
1 Receivables
Cash and cash equivalents
PricewaterhouseCoopersAccountants N?.
For identification purposes only
M N Networks B.V.
AMSTERDAM (in '000)
Shareholders' equity
Share capital
Share premium
Retained earnings
Result for the year
Provisions
Non-current liabilities
,: ; Current liabilities
PricewaterhouseCoopersAccountants N.Y.
For identification purposes only
MTV Networks B.V.
AMSTERDAM (in '000)
Revenue
Cost of sales
Gross profit
Selling expenses
Generai and administrative expenses
Other operating expenses
Total expenses
\
Operating result
l. 1 Activities
The activities of the company and its subsidiaries mainly comprise:
- running television stations which wil1 produce, provide and broadcast commercial television programmes
nationwide via cable, satellite or other distribution methods;
l.3 Consolidation
In accordance with article 408, Book 2 of the Dutch Civil Code no consolidated financial data relating to
the subsidiary companies have been disclosed in these financial statements. The financial data of the
company and its subsidiaries are included in the consolidated group accounts of Viacorn Inc. These
accounts have been prepared in accordance with generally accepted accounting principles in the United
States. The group accounts of Viacom Inc. are filed at the Chamber of Commerce in Amsterdam.
1.6 Estimafes
In applying the accouriting poticies and guidelines for preparing the financial statements, the Management
Board of MTV Networks B.V. makes a range of estimates and judgments that might be essential for the
amounts disclosed in the financial statements. If necessary for the purposes of providing the view required
under Section 362(1), Book 2, of the Netherlands Civil Code, the nature of these estimates and
judgments, including the related assumptions, is disclosed in the notes to the financial statement items in
question.
2.1 Generai
The financial statements have been prepared in accordance with the statutory provisions of Part 9, Book
2, of the Netherlands Civil Code and the firm pronouncements in the Guidelines for Annual Reporting in
the Netherlands as issued by the Dutch Accounting Standards Board. The financial statements are
denominated in euros.
In general, assets and liabilities are stated at the amounts at which they were acquired or incurred, or fair
value. If not specifically stated otherwise, they are recognised at the amounts at which they were acquired
or incurred. The balance sheet, income statement and cash fiow statement include references to the
notes.
Functional currency
Items in the financial statements of group companies are stated with due observance of the currency of
the primary economic environment in which the respective group company operates (the functional
currency). The financial statements are denominated in euros, i.e. the functional and reporting currency of
MTV Networks B.V.
Where the currency risk on monetary assets and liabilities has been hedged, transiation gains and losses
are not yet taken to the income statement, but included under accruals and deferrals if unrealised gains on
these hedges should neutralise these gains or losses at the balance sheet date.
Goodwill
Goodwill arising from acquisitions is capitalised and arnortised on a straight-line basis over the estimated
econornic life with a maximum of 20 years.
Other
Other intangible assets are valued at acquisition cost and amortised on a straight-line basis over the
remaining economic life based on the underlying license.
For determining whether an impairment charge in respect of an intangible fixed asset applies, reference is
made to note 2.7.
Group companies
As a consequence of applying article 408, Book 2 of the Dutch Civil Code, investments in gtoup
companies and other participating interests in which the Company exercises significant influence are
carried at cost or lower market value. The Company is considered to exercise significant influence if it
holds at least 20% of the voting rights. A provision against subsidiaries whose net equity value is below
their carrying value is made only when management believes that the diminution is of permanent nature.
Assocated companìes
Participating interests in which no significant influence can be exercised are stated at acquisition price. If
an asset qualifles as irnpaired, it is measured at its impaired value; any write-offs are discfosed in.the
income statement.
Ofherreceivables
Other receivables disdosed under financial assets are stated at the fair value of the amount owed, which
normally consists of its face value net of any provisions considered necessary.
PricewaterhouieCoopersAccountants Ny
,
For identification purposes only
MTV Networks B.V.
AMSTERDAM (in '000)
2.8 Receivables
Trade receivables are carried at the fair value of the consideration, usually its face vatue. If payment of the
receivable is postponed under an extended payment deadline, fair value is measured on the basis of the
discounted value of the expected revenues. The difference between fair value and face value is
accounted for as interest income during the period up to the expected receipt of payment. A provision is
made for expected bad debts.
Deferred income taxes are recognised for temporary differences concerning group companies, associates
and joint ventures, unless MTV Networks B.V. is able to determine the moment of expiry of the temporary
difference and it is not likely that the ternporary difíerence wil1 expire in the foreseeable future. Deferred
incorne taxes are recognised at face value.
2.12 Leasing
Financial lease
The Cornpany leases part of the equipment and has, to a large extent, the risks and rewards incidental to
ownership of these assets. When the lease contract is entered into, the assets are capitalised on the
balance sheet at their fair value, or the cash value of the minimum'lease terrns, if lower. The lease
amounts payable are split on a linear basis between a redemption and interest part, based on a fixed
interest rate. The relating lease obligations, excluding the interest element, are taken up under noncurrent
liabilities. The interest component of the lease term is recognised in the income statement. The reIating
assets are depreciated over the rernaining economic life or lease term, if shorter.
Operational lease
Lease contracts for which a large part of the risks and rewards incidental to ownership of the assets does
not lie with the Company, are recognised as operational leases. Obligations under operational leases are
recognised on a straight-line basis in the income statement over the term of the contract, taking into
account reimbursements received from the lessor.
PricewaterhouseCoopersAccountants N.h
For identification purposes only
MTV Networks B.V.
AMSTERDAM (in '000)
3.1 General
The result represents the difference between the value of the services rendered and the costs and other
charges for the year. The results on transactions are recognised in the year they are realised; losses are
taken as soon as they are foreseeable.
3.4 Revenue
Revenue is determined as income frorn the supply of services, less discounts and such like, exclusive of
revenue taxes.
Revenue includes:
- advertising sales consisting of airtime revenue and sponsorships on analogue television stations;
- online and digitaf media sales including banner sales and online sponsorships and revenue from
consumers through SMS and 0900 phone numbers;
- syndication sales resulting frorn the exploitation of the brands of MTV Networks;
- dissimilar barter sales representing agreements with third parties, which wil1 invoice an equal arnount in
barter cost;
- affiliate sales consisting of sales of digital channels to distributors throughout Scandinavia and ernerging
' markets (Eastern Europe, Israel and South Africa);
- other sales including ticket sales, distribution services and other incidental revenues.
3.5 Cosfs
Costs are recognised at the historica1cost convention and are allocated to the reporting year to which they
relate.
PricewaterhouseCoopers Accountan~N , k
For identification purposes only
MTV Networks B.V.
AMSTERDAM (in '000)
3.9 Personnelremuneratjon
Regular payments
Salaries, wages and social security costs are charged to the incorne statement when due, and in
accordance with employrnent contracts and obligations.
Pensions
The Company runs a defined benefit scheme. This career average-pay pension plan is accommodated by
the industry sector pension fund, PNO Media. The Group has accounted for the defined benefit scheme as
if it was a defined contribution scheme.
No costs related to the share options are incurred at MTV Networks B.V. level. The related costs are
beared by Viacom lnc., the ultimate parent company.
3.10 Depreciation
Intangible assets, including goodwill, are amortised and property, plant and equipment depreciated over
their expected useful Jives as from the inception of their use. Land and investment property are not
depreciated. Future depreciation and amortisation is adjusted if there is a change in estirnated useful life.
Gains and losses on the sale of property, plant and equipment are included in other operating income and
expenses.
Other operating incorne includes recharges to other Viacom entities and income which does not fall within
the regular operations.
PricewaterhouseCoopercAccountznts v#.
For identification purposes only
MTV Networks B.V.
AMSTERDAM (in '000)
Dividends
Dividends receivable from participations are recognised as soon as the Company acquired the right to the
dividends.
3. j3 Taxation
Tax on result is calculated on the profit/loss before taxation in the income statement, taking into account
any losses carried forward from previous financial years, tax-exempt items and non-deductible expenses,
and using current tax rates. Account is also taken of changes in deferred tax assets and deferred tax
liabilities owing to changes in the applicable tax rates.
3. i 4 Financial instruments
Market risk
MTV Nehvorks B.V. rnainly operates in the European Union. The currency risk for MTV Networks B.V.
largely concerns positions and future transactions in US dollars and pounds Sterling. The denominated
currency is euros, so the currency risk is minimal and there is no hedging.
Where variable-interest loans are concerned, MTV Networks B.V. incurs risk regarding future cash flows.
Credit risk
MTV Networks B.V. does not have any significant concentrations of credit risk. Sales are made to
* customers that meet the company's credit rating. Goods are soldlservices provided subject to payment
deadlines for 30 days. A different payment period may apply to major supplies, in which case additional
securities are demanded, including guarantees.
PticewaterhouseCoopersAccountants N.Y7
For identification purposes only
MTV Networks B.V.
AMSTERDAM (in '000)
Goodwill Other
O i January 2006
Acquisition costs
Accumulated amortisation
Movements 2006
Additions
Amortisation
31 December 2006
Acquisition costs
Accumulated amortisation
The goodwill resulted from the acquicition of TMF B.V. in 2001. Subsequent to the acquisition date, the
assets, liabilities and activities of TMF were included in M N Networks B.V. and the company TMF B.V.
was liquidated.
Other intangibte assets comprise the Nickelodeon library for Scandinavia and emerging markets acquired
per 1 January 2003 from Nickelodeon International Ltd. and the cost of subsequent additions to the library.
Amortisation is catculated based on the estimated economic life of the individual titles.
O 1 January 2006
At cost
Accumulated decreases in value
and depreciation
Book value
Movements 2006
Acquisitions:
Additions
Disposals
i;
-
Decreases in value:
Depreciation
Depreciation disposals
Revaluations
31 December 2006
At cost
Accumulated decreases in value
and depreciation
Book value
Depreciation rates
Investments in
gr*uP Assoclated Other
cornpanles cornpanlos Jolnt ventures receivables Total
01 January 2006
Book value
Movements 2006
New acquisitions
Reclass
Disposals
, 1
31 December 2006
. i Book value
In 2006 the Company incorporated a 100% share in Viacom Acquisition KK in Tokyo, Japan.
The Company acquired an additional 12% share in Game One SAS and has funded MTV Networks
Productions BV with share premium.
Participations
Participations directly held by MTV Networks B.V. are:
Share in
equity
PricewaterhouseCoopers Accountants
For identification purposes only
MTV Networks B.V.
AMSTERDAM (in '000)
Other receivables
Other receivables include an interest-bearing loan to group company Game One SAS. This loan bears
interest at EONIA +2.5% per year. No repayment schedufe is in place.
4.4 Receivables
2006
Trade debtorc
Arnounts due from affiliated cornpanies
Accrued income
Other receivables and prepayrnents
Share capita1
The authorised share capital of the company amounts to EUR 90.000 and consists of 180 ordinary shares
of EUR 500 each.
Issued share capital amounts to é18.500 and consists of 37 ordinary shares with a nomina1 value of
EUR 500 each (2005: 37).
On 23 December 2005, 37 shares in the capital of the Company, jointly representing the entire issued
share capital of the Company, were transferred from Viacom International (Netherlands) B.V. to Viacom
Global (Netherlands) B.V.
Movements 2005
Share issue
Appropriation of result prior year
Result current year
31 December 2005
01 January 2006
Movernents 2006
Share issue
Appropriation of result prior year
Result current year
31 December 2006
In 2006 the parent company Viacom Global (Netherlands) B.V. funded M N Networks B.V. with additional
share capita!.
PricewaterhouseCoopersAccountants &y.
For identification purposes oniy
MTV Networks B.V.
AMSTERDAM (in '000)
Deferred tax
liabillties
01 January 2006
Additions
Releases
31 December ZOOG
Bank overdrafis
Trade creditors
Arnounts due to affiliated companies
Corporate income tax
Accruals and deferred income
Other liabilities
PricewaterhouseCoopersAccountants N%
For identification purposes only
MTV Networks B.V.
AMSTERDAM (in '000)
Pension obligations
The Company has made use of the option to account for a defined benefit scheme as a defined
contribution scherne. Therefore, the risks relating to thic pension scherne are not refiected in the balance
sheet.
Fiscal unity
The Company forms a fiscal unity for corporate incorne tax with MTV Networks Productions B.V., MTV
Networks Japan B.V., Preview Investments B.V., Invisions Holding B.V., Visionair Television B.V.,
Kindernet C.V. and MTV Networks Polska vof. Under the Tax Collection Act, the Company is jointly and
severally liable for the taxes payable by the group.
..
I '
a
Lease cornmitments
The lease comrnitments as at 31 December 2006 can be specified as follows:
31 December 2006
PricewaterhouseC~opersAccountants N-(.
For identification purposes only
M N Networks B.V.
AMSTERDAM (in '000)
5.l Revenue
The revenue increased by 16,0%compared to last year.
Netherlands
Europe
Rest of the world
Advertising
Syndication
Barters
Online
Affiliates
Others
Mobile Other
PricewaterhouseCoopersAccountants
For identification purposes only y?.
MTV Networks B.V.
AMSTERDAM (in '000)
5.3 Amortisation of intangibie assets and depreciation of propetfy, plant and equipmenf and other
changes in value
Amortisation and depreciation
2006 2005
PricewaterhouseCoopersAccountaris N.V.
For identification purposes oniy 26
MTV Nehvorks B.V.
AMSTERDAM (in '000)
Operating incorne
Income tax expense
The applicable tax rate is based on the relative proportion of the group companies' contribution to profit and the tax
rates ruling in the countries concerned.
The effective tax rate differs from the applicable tax rate due to the amortisation of goodwill, which is not
tax-facilitated, and the exclusion of deferred income tax assets in respect of losses for the financial year.
The effective tax rate differs from last yeafs rate due to the relatively higher amortication of goodwill in the
income statement.
PricewaterhouseCoopersAccocintanis N&
For identification purposes oniy
MTV Networks B.V.
AMSTERDAM (in '000)
6 Supplementary information
6.1 Employees
During this financial year an average of 158 employees (2005: 153) were employed by the company.
6' The exercise price of options granted shall not be less than the fair market value of the common stock on
.. 1 the date of grant. Options generally vest equally over a four-year period from the date of grant and have a
maximum term of up to 10 years after the date of grant. Restricted share units vest equally over a five-
year period from the date of grant.
Share options
The movements in share options outstanding can be specified as follows:
Weighted
Nurnber of average
share options exercise price
Granted
Forfeitedlcancelled
PricewaterhouseCoopersAccc:!niari:s i426
For identification purposes oiiiy
M N Networks 8.V.
AMSTERDAM (in '000)
Welghted
average
remalnfng
Number of contractual life
Exercise price share optlons (years)
Number of Weighted
restricted average grant-
share units date falr value
Granted
Vested
Forfeited
PricewaterhouseCoopersAccountat-its N
For identification purposes oniy
MTV Networks B.V.
AMSTERDAM (in '000)
2006
Amounts due from aJfliatedcompanies
PricewaterhouseCoopersAccouritantS %l.
For identification purposes only
MTV Networks B.V.
AMSTERDAM (in '000)
Sales to affiliated companies and costs charged by afiliated companies are as follows:
n
Costs charged by affiliatedcompanies
PricewaterhouseCoopersAc~:o!~nt;tiis N.V.
For identification purposes only 31
MTV Networks B.V.
AMSTERDAM n (in '000)
Currell, J.R.
M W Networks B.V.
tt. Neveritaweg 6
1033 W C AMSTERDAM
Other information
Appropriation of net result
in accordance with the company's articles of association, the result for the year is at the disposition of the
shareholders at the Annual General Meeting.
The Directors propose is to add the profit of € 26.901 .O00to retained earnings. This proposal has already
been reflected in the financial statements.
Auditors' report
Auditor's report
We have audited the accompanying financial statements 2006 of MTV Nehivorks B.V.,
Amsterdam as set out on pages 6 to 32 which comprise the balance sheet as at 31
December 2006, the income statement for the year then ended and the notes.
Auditor's responsibility
Our responsibility is to express an opinion on the financial statements based on our audit.
We conducted our audit in accordance with Dutch law. This law requires that we comply
with ethica1 requirements and plan and peiform the audit to obtain reasonable assurance
whether the financiai statements are free frorn material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor's
judgment, including the assessment of the risks of material misstatement of the financial
statements, wkiether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the company's preparation and fair presentation of
the financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of
the company's internal control. An audit afso includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting estimates made by the
directors, as wel1 as evafuating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufíicient and appropriate to
provide a basis for our audit opinion.
Pursuant to the legal requirement under 2393 sub 5 part e of the Netherlands Civil Code,
we report, to the extent of our cornpetence, that the directors' report is consistent with the
financial statements as required by 2:391 sub 4 of the Netherlands Civil Code.
PricewaterhouseCoopersAccountants N.V.
Originalfy signed by
drs. J.W. Middelweerd RA