TELEVISION			MAGAZINES
	12 mth 97/8	12 mth 96/7	% chg on prev year	12 mth 97/8	12 mth 96/7	% chg on prev year
Revenue	383.7	361.7	6.1	259.0	248.6	4.2
Expenditure	262.9	241.4	(8.9)	204.7	182.6	(12.1)
EBIT (Before abnormals)	120.8	120.3	0.4	54.3	66.0	(17.7)

	ENTERPRISES			GROUP
	12 mth 97/8	12 mth 96/7	% chg on prev year	12 mth 97/8	12 mth 96/7	% chg on prev year
Revenue	2.4	12.8	N/A	645.1	623.1	3.5
Expenditure	2.3	4.7	N/A	469.9	428.7	(9.6)
EBIT (Before abnormals)	0.1	8.1	N/A	175.2	194.4	(9.9)

The major factors which impacted the 1998/99 half year EBIT result were:

Television	: loss on televising Commonwealth Games	$10.0 M
Magazines	: F/X related increase in paper price	$9.6 M
	: new titles launch costs expensed	$2.5 M
Enterprise	: loss of dividend income from sale of Fairfax shares and Sky Channel investment	$7.9 M
	Total:	$30.0M

In addition, the capital return that PBL made to its shareholders in December 1997 has resulted in an increase in interest costs of approximately $6.9 million on the corresponding period.

Television

1998 was another strong year for the Nine Network. Our three owned stations continued to perform well, particularly Sydney and Melbourne which turned in exceptional performances. In these markets we won 39 of the 40 ratings weeks for the year. In Brisbane, we won 33 of the 40 ratings weeks. We have made gains in 1998 in the 16-39 year old demographic while maintaining a depth of schedule unparalleled by any other Network.

During 1998 the division's success can best be demonstrated by the number of top ten regular programs it had in the three major demographic groups.

• 16-39 year olds 8 out of 10
• 25-54 year olds 9 out of 10
• Grocery shoppers 7 out of 10

Gross advertising revenue for our major television stations (TCN-9, GTV-9 and QTQ-9) increased 6.4% compared with the previous period and represents an estimated market share of 41.5% for calendar year 1998.

While Television expenditure shows an increase of 8.9% over the previous period this is almost entirely due to the one-off factor of televising the Commonwealth Games.

Magazines

1998 has been another tough year for our Magazine division. Revenue is up 4.2% on the corresponding period, reflecting solid growth in advertising revenue and a number of new magazine launches offset by continuing pressure on copy sales of major titles in Australia and New Zealand.

Costs increased 12.1% as a result of the additional costs associated with new magazine launches and the increased cost of paper of $9.6 million primarily due to the fall in the $US/$A conversion rate from a hedged 77 cents last year to 63 cents in the six months to December 1998.

Enterprises

Foxtel

In November 1998, PBL acquired a 25% interest in Foxtel for $157 million.

PBL also has an option to acquire from The News Corporation Limited a 50 percent interest in Fox Sports, Australia's leading pay television sport channel provider. This option is exercisable in the period up to October 1999.

As at December 1998, Foxtel had approximately 400,000 subscribers. It has recently concluded a satellite transponder lease arrangement with Optus, and will commence satellite services in March.

PBL Online / ninemsn

PBL is investigating the prospect of floating PBL Online by the public issue of a direct stake in PBL Online and has appointed Goldman Sachs to advise on the opportunities that may exist in such a process.

PBL Online's initial Internet investment, ninemsn (joint venture with Microsoft) which commenced operations in March 1998 continues to be a leading Australian player in consumer Internet services. ninemsn's strategic business focus continues to be to establish itself as Australia's leading portal and consumer ecommerce site. Its performances as measured by consumer use ("visits" and "page impressions") continue to exceed our expectations. ninemsn continues to benefit from the contributions of its joint venture partners. For example:

• Microsoft's free email service, Hotmail, has over 1.3 million Australian accounts. The advertising and other rights for this service in Australia sits with ninemsn thus providing ninemsn with the largest free email service in Australia.
  
• ninemsn continues to leverage major brands and content from the Nine Network and ACP making Internet sites such as 60 Minutes', Wide World of Sport', Dolly', Money', Australian Personal Computer' and Getaway' significant generators of visits.
  
• The combination of Microsoft's proven commerce technology in areas such as travel (with its Expedia travel service) with the Getaway' content and brand provides for Australia's most advanced Internet travel site.
  
  
• The cross promotion of ninemsn and its subsidiary brands across the Nine Network provides for dramatic traffic increases for the sites and the development of truly mass media Internet brands.

Outside of ninemsn, PBL Online is continuing to develop other Internet business which will ensure that PBL Online has a very broad and diverse range of Internet offerings for Australian consumers.

Net Debt / Cash Flow

Net debt of the Group as at 31 December increased to $1,174 million from $1,021 million at 30 June 1998, as a result of the investment in Foxtel and additional share's acquired in C&W Optus.

The cash flow generated by the Group remained strong during the half and will be further enhanced upon completion of the merger with Crown.

Dividend

The directors announced an interim dividend on ordinary shares of 9 cents per share payable 15th on April 1999, to shareholders registered on the books close at 5.00pm on 15th March 1999.

Outlook
In commenting on the future, Mr Nick Falloon, PBL's CEO said:

"Calendar 1999 will be an exciting year for the PBL group starting with an improved profit outlook.

The Television division starts 1999 having completed the recent advertising rate negotiations with increases in the high single digits. Our Nine Network stations look forward to continued ratings strength in 1999 and the year has started well. New overseas shows such as Jesse' and Sex in the City' should be well accepted by Australian viewers. In addition, the Nine Network has secured the format rights to locally produce Who Wants To Be A Millionaire'. This game show has been one of the most successful in the United Kingdom in the last 15 years. The Nine Network's strategy in sporting coverage is unchanged with Cricket, Rugby League, Formula One and overseas tennis and golf majors joined by a long term contract to provide coverage of the annual World Swimming Championships and the Cricket World Cup in May. The Network's strong commitment to news, current affairs and Australian drama will also continue.

The above positive revenue implications coupled with recent cost initiatives and an ongoing commitment to improved operating efficiencies should see a lift in second half earnings over the corresponding period last year.
The Magazine division will continue to experience difficult trading conditions in a fragmented market but we are expecting some profit growth over the previous corresponding period. Continued strong advertising revenue together with a significantly reduced (comparative) impact from increased paper prices and cost initiatives implemented together with a positive contribution from the launch of new titles, including Good Medicine, Burke's Backyard, Take Five and Teletubbies in 1998 and Sony Playstation in 1999 should assist this turnaround.

The Group will continue development of its exciting investments in PBL Online/ninemsn and Foxtel, and anticipates the successful conclusion to the Crown merger which will deliver to PBL a third strong cash flow generating division.

In addition the sale of our remaining C&W Optus stake, at current prices, would generate a pre tax profit in excess of $125 million and cash flow of approximately $240 million.

The Explanatory Memorandum on the proposed Crown merger has been despatched to shareholders today. Included in the Memorandum is a copy of the Rothschild's Independent Expert report which concludes that the Proposed Merger is fair and reasonable to the PBL shareholders not associated with CPH."

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