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ANNUAL REPORT 2008 NIPPON TELEVISION NETWORK 1

NTV_FH(E)_1021_master.indd 1 08.10.24 7:34:44 PM

NIPPON TELEVISION NETWORK ANNUAL REPORT 20082

Cautionary Statements with Respect to Forward-Looking Statements:

Statements made in this annual report with respect to NTV’s plans and benefi ts, as well as other statements that are not historical facts, are forward-looking statements,

which involve risks and uncertainties. Potential risks and uncertainties include, without limitation, general economic conditions in NTV’s markets, exchange rates

and NTV’s ability to continue to win customers’ acceptance of its products, which are off ered in highly competitive markets characterized by continual new product

introductions and rapid developments in technology.

Contents


Overview of NTV

4 Japan’s Television Broadcasting Industry

6 NTV at a Glance

8 Eleven-Year Financial Summary

10 NTV Business Strategies

12 NTV Celebrates its 55th Anniversary

To Our Shareholders and Stakeholders

14 Message from the Chairman and the President

16 Interview with President Kubo on the New Medium-Term Management Plan

Special Feature: NTV’s Film Business Strategy

22 NTV’s Strengths in the Film Business

24 Multiple Usage of Content Originating from Films

26 Major Releases in the Fiscal Year Ending March 31, 2009

Review of Operations

28 Television Broadcasting

31 Cultural Activities

34 Other Businesses

Continuing to Evolve

36 Corporate Governance

40 CSR

43 Financial Section

70 Organization

71 NTV Group and NTV Global Network

72 Corporate Data

73 Investor Information


ANNUAL REPORT 2008 NIPPON TELEVISION NETWORK 33ANNUAL REPORT 2008 NIPPON TELEVISION NETWORK



Japan’s Television Broadcasting IndustryJapan’s Television Broadcasting Industry

STV

RAB

TVIABS

YBC

MMT

FCT

TeNY

NTV

YTV

NKT

HTVKRY

RNBRKC

JRT

RNC

FBS

NIB

KKT

TOS

UMKKYT

YBS

SDT

TSBKNBKTK

FBC

CTV

Building a Broadcasting Network Spanning Japan

The effectiveness of terrestrial television broadcasting far outstrips other

advertising media.

Commercial terrestrial television broadcasters in Japan each have broadcasting regions

specified fundamentally by prefectural and regional authorizations. National commercial

broadcasters (excluding NHK, which is a national public broadcaster) consist of five key stations

in Tokyo. Beneath each of these stations are associated regional and local stations that form

individual nationwide networks. The regional and local stations sign network agreements with

their key stations and form cooperative relationships in news, programming and other business

activities. Pursuant to the Mass Media Decentralization Rules, each local station currently operates

with independent capital. However, the enactment of the revised Broadcast Law in April 2008 has

allowed for stations to become approved broadcast holding companies under certain conditions

designed to ensure diverse broadcasts closely tied with local communities.

These network stations all across Japan, along with the equipment required for airwave

broadcasts, enable free viewing of high-quality commercial television programming anywhere

in Japan, if viewers simply install an antenna. Terrestrial television broadcasting can therefore

transmit the same information to some 40 million households at the same time through 100 million

receivers nationwide. This makes terrestrial television broadcasting the most effective advertising

medium for marketers.

NTV Network Stations (Japan)

Overview

of NTV



Major Revenue Sources for Commercial Television Broadcasters

Revenue opportunities are diversifying, centered on advertising revenue.

Commercial television broadcasters in Japan derive their revenues mainly from broadcasting

sales, specifically the fees paid by sponsors for airing commercial messages (CMs), which are

broadly classified into two types: time ads during designated programs and spot ads between

programs. The broadcasting industry voluntarily limits CMs to 18% of total weekly air time. The

minimum CM lengths are 30 seconds for time ads and 15 seconds for spot ads.

The two types of CMs are also sold in different ways. Time ads are normally sold through

six-month contracts with sponsors, with continuation confirmed and fees renegotiated in April

and October. Clients cannot place ads during their favorite programs unless slots are available.

In spot ads, clients submit their desired broadcast periods, time slots and ad prices through their

advertising firms, and the CM broadcast schedule is drawn up accordingly.

A growing new revenue source for television stations recently has been non-broadcasting

revenue, such as media commerce, films and events. In this way, revenue opportunities centered

on content are becoming more diverse.

Japan’s Largest Content Providers

TV stations in Japan are engaged in all programming aspects, from

planning to broadcasting.

Although in the United States, program production, scheduling and distribution by broadcast

and other means are each normally handled by different business entities, television stations

in Japan plan, produce, schedule and broadcast their programming all on their own. The

comprehensive nature of television stations in Japan makes them truly the country’s largest

content providers.

Recently, stations have taken advantage of the copyrights they hold on their in-house

content to create film versions of drama and animation series and to distribute content via the

Internet. Through such aggressive multiple content development, the stations are further

advancing as content providers.

Launch of Digital Terrestrial Broadcasting Broadens Scope of Television Station Business

Revised Broadcast Law enables independent program scheduling for

“1-SEG” broadcasts.

Digital terrestrial broadcasting was launched in Japan in 2003. Compared with the old analog

broadcasts, digital broadcasting offers more channels with higher image and sound quality, and

enables television broadcasts (“1-SEG” services) to mobile phones and other portable devices.

“1-SEG” is a broadcasting service that allows mobile device users to enjoy television

broadcasts free of charge, just as they do with their home television sets, as well as interactive

services that employ datacasting and communication functions, and services linked to the Internet.

Although simultaneous broadcasts of images identical to terrestrial television broadcasts were

previously mandatory for “1-SEG” services, the enactment of the revised Broadcast Law in April

2008 now enables independent program scheduling. Handsets equipped to receive “1-SEG”

broadcasts are also rapidly gaining popularity. The arrival of this new form of media is driving

continued expansion of business prospects for television stations in Japan.

Overview

of NTV


Special FeatureReview

of Operations

Approach for Sustainable G

rowth

Financial SectionFinancial Section

Continuing to EvolveReview

of Operations

Overview

of NTV


Special Feature : NTV's Film

Business Strategy



Cultural Activities

NTV produces and releases films, sponsors art exhibitions and concerts; holds

sporting events; operates a television shopping business; publishes and sells

publications; plans and produces music and music videos; operates a licensing

business; produces and sells merchandise; and plans and sells musical and video

recordings on CDs, DVDs and other media.

Among these activities, the film business has generated numerous hits, such

as Ponyo on the Cliff by the Sea, Twentieth Century Boys and DEATH NOTE. Multiuse

content development is being linked more closely with the broadcasting business

and plays a very important role in NTV’s business.

0

30

60

90

2008200720060

4

8

12

200820072006

Percentage of Net Sales

21.6%

62.562.5

5.25.2

8.28.2

6.36.3

69.469.474.074.0

(Billions of yen) Sales (Billions of yen) Operating income

Other

Other businesses involve commercial tenant and office building leasing and

management, sales of novelty goods, comprehensive management of buildings and

other structures, management of a professional soccer team and Internet-related

services.

We are also involved in the broadband business, production and sale of

art exhibit-related goods, operation of recording studios, provision of district

heating and cooling systems and market research on overseas television and radio

broadcasting.

0

6

12

18

2008200720060

10

20

30

200820072006

4.4%

15.115.12.42.4

1.31.3

2.32.314.514.5 15.115.1



Television Broadcasting

Since going on the air in 1953, NTV was the first commercial station to air color

broadcasts, multiplex broadcasting, digital terrestrial broadcasting and many other

technological innovations. More than 90% of the programming in our timetable is

produced in-house, and by broadcasting this content over our nationwide network,

we derive revenues from sales of broadcasting time to advertisers and sales of

programs.

NTV broadcasts news, variety shows and dramas, as well as animation, sports and

a host of other content according to a total programming timetable. We consistently

earn kudos from viewers and sponsors alike.

0

100

200

300

2008200720060

15

30

45

200820072006



278.0278.0

36.036.033.833.8

27.727.7

267.9267.9 262.4262.4

76.7%

NTV at a GlanceNTV at a GlanceNippon Television Network Corporation and Consolidated Subsidiaries

Years Ended March 31

Overview

of NTV


Overview

of NTV



of Operations


rowth

Financial Section


Overview

of NTV



Business StrategyReview

of Operations

Continuing to EvolveFinancial Section

Anpanman

© TAKASHI YANASE / FRÖEBELKAN ˙ TMS ˙ NTV

Ponyo on the Cliff by the Seay y

© 2008NIBARIKI ˙ GNDHDDT

Tokyo Verdy Other Businesses

The first film by director Hayao Miyazaki since his smash hit

Howl’s Moving Castle four years prior. The story depicts the

friendship and adventure shared by the fish girl Ponyo and a

human boy. The attention to hand-drawn animation makes this

work stand out in the currently CG-dominated field.

Formed in 1969, Tokyo Verdy has returned to Division 1 of the J.

League (J1)—Japan’s foremost soccer league—as this season’s

top team, and five members of the women’s team NTV Beleza

were selected to represent Japan in the Beijing Olympics, driving

Japan’s ascendance to the top four.

Since first airing in 2006, NEWS ZERO has continued to steadily

advance in ratings and enjoys strong support from young viewers,

including teenagers. Praised for its attention to medical issues and

politics, the program refines on a daily basis the concept of using

innovative methods to make issues easy to understand.

It has been 20 years since Anpanman first aired in 1988. By 2009,

more than 1,000 episodes will have broadcast. A number of

theatrical versions have been produced and released, and sales of

character merchandise are booming. To enrich business activities

in the digital arena, in 2008 we established a limited liability

partnership to enhance the Anpanman digital content business.

In addition to providing the latest video news and other content

for mobile phones, NTV distributes fee-based video content over

the Internet and conducts tenant management for restaurants,

retail stores and offices, as well as building management.

The members of ItteQ travel to the ends of the earth in search

of an answer to a simple question such as, “Can lava grill meat?”

The adventure-variety program is gaining popularity with its

illumination of natural science and exploration of rarely visited

areas of the world.

NEWS ZERO Sekai no Hate Made ItteQ!



Overview

of NTV

0

90

180

270

360

450

200320022001200019991998

(Billions of yen)

Net Sales

Recurring Profit

Recurring Profit Margin (%)

(Millions of yen)

1998 1999 2000 2001 2002 2003

Years ended March 31:Net sales ¥ 323,956 ¥ 330,976 ¥ 328,014 ¥ 352,409 ¥ 358,683 ¥ 336,299

Television broadcasting

segment revenue 275,562 273,787 283,142 310,242 304,392 294,517 Non-broadcasting revenue Operating income 48,284 48,981 54,351 67,303 63,574 47,407 Recurring profit 48,323 49,920 56,115 68,089 62,662 46,332 Net income 24,230 25,921 34,003 36,008 34,648 20,296 Depreciation 6,063 6,077 6,269 6,521 6,045 5,854 Capital expenditures 5,763 6,801 9,017 11,157 34,364 30,044

At March 31:Total assets ¥ 338,797 ¥ 316,758 ¥ 364,896 ¥ 410,042 ¥ 443,798 ¥ 476,634 Total equity*1 185,502 209,239 253,912 291,501 323,319 327,116

Cash Flows: Cash flow from operating activities — — ¥ 42,152 ¥ 45,549 ¥ 38,891 ¥ 25,981 Cash flow from investing activities — — 19,241 (21,701) (48,773) (37,393) Cash flow from financing activities — — (24,900) (2,432) (3,165) 22,464 Cash and cash equivalents, end of year — — 62,754 84,065 70,951 81,944

Per share data (Yen):Net income *2 ¥ 955.58 ¥ 1,022.28 ¥ 1,341.04 ¥ 1,419.96 ¥ 1,366.34 ¥ 801.99 Equity 14,631.67 16,504.41 20,025.50 11,495.33 12,750.14 13,102.25 Cash dividends*2,*3 67.50 70.00 80.00 120.00 120.00 120.00

Ratios (%):Return on assets (ROA) 7.2 7.9 10.0 9.3 8.1 4.4 Return on equity (ROE) 13.9 13.1 14.7 13.2 11.3 6.2 Recurring profit margin 14.9 15.1 17.1 19.3 17.5 13.8 Equity ratio 54.8 66.1 69.6 71.1 72.8 68.6 Television broadcasting

segment revenue ratio 85.0 82.7 86.3 88.0 84.9 87.6

Notes: *1. From the fi scal year ended March 31, 2007, NTV adopted the Accounting Standard for Presentation of Net Assets in the Balance Sheet (Accounting Standards Board of Japan Statement No. 5)

and the Guidance on Accounting Standards for Presentation of Net Assets in the Balance Sheet (Accounting Standards Board of Japan Guidance No. 8).

*2. Calculations for the fi scal years ended March 31, 1998 through 2000, are retroactively restated for later stock splits.

EEleven-Year Financial Summaryleven-Year Financial SummaryNippon Television Network Corporation and Consolidated Subsidiaries




Overview

of NTV




of Operations


20112008 200920062005 200720040

5

10

15

20

25

(%)

New Medium-TermManagement Plan

Shifting to

a Growth Trajectory

Shifting to

a Growth Trajectory

*3. Dividend fi gures include an extraordinary dividend of ¥22.5 per share in the fi scal year ended March 31, 1998; a dividend of ¥25 per share in the fi scal year ended March 31, 1999 to commemorate NTV’s

45th anniversary of establishment; an extraordinary dividend of ¥35 per share in the fi scal year ended March 31, 2000; extraordinary dividends of ¥70 per share in the fi scal years ended March 31, 2001 and

2002; a ¥70 per share dividend in the year ended March 31, 2003, to commemorate NTV’s 50th anniversary of establishment; a ¥70 per share dividend in the year ended March 31, 2004, to commemorate

the relocation of NTV’s head offi ce; a ¥60 per share dividend in the year ended March 31, 2006, to celebrate the launch of NTV2; and a ¥30 per share dividend in the year ended March 31, 2008, to

commemorate NTV’s 55th anniversary of establishment.

*4. Television broadcasting and non-broadcasting revenues exclude intersegment sales and transfers.

2004 2005 2006 2007 2008 2011

¥ 328,375 ¥ 357,614 ¥ 346,642 ¥ 343,652 ¥ 342,188 Net sales 427,000 Television broadcasting

285,016 289,810 277,977 267,904 262,370 segment revenue*4 310,000 69,400 76,100 80,300 Non-broadcasting revenue*4 117,000

35,937 34,325 28,551 30,344 23,077 36,800 35,591 30,014 34,142 26,705 Recurring profit 50,000 19,359 16,846 13,701 18,332 10,625 12,676 21,060 17,561 14,361 12,93949,761 9,214 6,266 6,043 5,200

¥ 513,430 ¥ 493,558 ¥ 519,952 ¥ 529,265 ¥ 512,507 354,046 366,646 398,018 411,995 407,668

¥ 30,520 ¥ 49,286 ¥ 32,683 ¥ 31,458 ¥ 26,791 (41,596) (23,046) (24,358) (24,596) (17,301)

7,131 (37,275) (15,921) (4,714) (4,124)77,930 66,878 59,369 61,524 66,863

¥ 771.74 ¥ 671.08 ¥ 545.40 ¥ 741.60 ¥ 430.27 14,183.02 14,688.07 15,945.74 16,363.52 16,153.34

120.00 165.00 165.00 170.00 180.00

3.9 3.3 2.7 3.5 2.15.7 4.7 3.6 4.6 2.6

11.2 10.0 8.7 9.9 7.8 Recurring profit margin 11.7%69.0 74.3 76.6 76.3 77.8

Television broadcasting86.8 81.0 80.0 78.0 76.7 segment revenue ratio 73.0%



Overview

of NTV

Terrestrial

broadcasting,

BS, CS, CATV

Internet (mobile

phone, PC) “1-SEG” Films

Television shopping,

e-commerce

Games

Events

Program format

sales in Japan and

overseas

Video on demand

(VoD)

Sidewalk and

in-train monitors

Videos, DVDs

Merchandise sales,

publishing

NTV Business StrategiesNTV Business Strategies

Multicontact-Point Strategy

contents

Multicontact-Point Strategy at Tokyo Marathon 2008

For the Tokyo Metro Sports Special: Tokyo Marathon 2008, broadcast on February 17, 2008,

we employed a multicontact-point strategy of linking terrestrial television, personal

computers, mobile phones and CS broadcasting.

While broadcasting live programming over terrestrial television, we used Google

Maps™ on the program Web site to display a course tour map showing the position of

the leading runner in real time. This enabled us to convey the tense atmosphere of the

race, which doubled as an Olympic trial, from a new perspective. We also took advantage

of NTV’s mobile phone site, CS broadcasting and other digital media to furnish information

about noteworthy sites and restaurants along the course, and a service automatically

distributing video clips of each participating runner crossing the finish line, provided they

enter their runner ID and finish time.

NTV will continue actively finding new ways to tie in multimedia content with its

programming.

Tokyo Marathon 2008

© TOKYO MARATHON ORGANIZATION

Terrestrial

broadcasting,

BS, CS, CATV

Internet (mobile

phone, PC) “1-SEG” Films

Television shopping,

e-commerce

Games

Events

Program format

sales in Japan and

overseas

Video on demand

(VoD)

Sidewalk and

in-train monitors

Videos, DVDs

Merchandise sales,

publishing


Overview

of NTV



of Operations


rowth

Financial Section


Overview

of NTV




of Operations


Enhancing Broadcasting Revenue through Cross-Media

Activities that Boost Media Value

Cross-Media Advertising StrategyCross-Media Advertising Strategy

Cross-Media Promotions for Nike+

NTV planned the cross-media promotion RUN! WITH YOUR NEW FRIENDS as an advertising

campaign for Nike+, a tool jointly developed by Nike and Apple, and ran the promotion for

about four months, beginning in December 2007.

Nike+ is a next-generation tool that enables runners to collect various data in their

iPod nanos by connecting a special sensor to their running shoes. RUN! WITH YOUR NEW

FRIENDS includes not only commercials on terrestrial television, but also promotions that

make use of NTV2 and mobile phone sites. In particular, through NTV2 we hosted highly

event-focused content, such as Young Entertainment Duos Face Off! Trans-Japan Race, which

used Nike+ for running distance competitions. Such content allowed us to communicate

the “joy of running” imparted by Nike+ to a large number of viewers.

NTV will continue to leverage its advanced digital media and content planning capabilities

to develop effective cross-media promotions that will capture new advertising.

Internet (mobile phone, PC)

Terrestrial broadcasting

“1-SEG”

BS, CS

Expand advertising revenue Obtain budgets for sales promotions

RUN! WITH TOUR FRIEND Web site

Special sensor that attaches to running shoes


NIPPON TELEVISION NETWORK ANNUAL REPORT 200812 NIPPON TELEVISION NETWORK ANNUAL REPORT 200812

NTV Celebrates its 55th Anniversary

To commemorate its 55th anniversary, NTV endeavors to contribute

to society and the environment in ways only a television station can.

Project Calling Japan to ACTION

The Project Calling Japan to ACTION is a 55th anniversary special produced through the collective

efforts of the NTV News Division. In the project, the four NTV news programs NEWS Real Time,

NEWS ZERO, Truth Report Bankisha! and Special Investigative Project, as well as Yomiuri TV’s Wake Up!

Plus, delve into the truth behind a number of difficult problems facing Japan and issue a call to

action in resolving those problems. Taking up such themes as misleading food labels, shortages

of doctors, the downfall of education and the truth about recycling, the programs each cover the

story behind the story and search for solutions. Not stopping at one-off broadcasts, we will air

follow-ups as part of an ACTION series running within each news program, exposing obstacles

that have arisen in attempting to solve the problems. At the end of 2008, we will put together

a large-scale special presentation as a finale to show how the project went and verify Japan’s

response to the calls to action.

Touch! eco 2008 Special: 55 Challenges for TomorrowNTV held its annual NTV Eco Week from June 2 to 8, 2008. On June 8—the final day—we aired a

13-hour, eco-themed live program Touch! eco 2008 Special: 55 Challenges for Tomorrow. To give

viewers a sense of how relevant these environmental issues are to their lives, we took a variety

of approaches in conveying our message. These approaches included status reports from glacial

lakes in the Himalayas and the island of Kiribati in the South Pacific—which are being affected

by global warming—and presentations on using fermented soybeans (natto) for the greening of

deserts and on home appliances that operate without electricity. In addition, we used bicycles to

generate electric power for the microphones and lighting at Yomiuri Land’s Open Theater EAST,

which was the main venue for the program. Wind, water and other power sources with low

environmental impact were tapped to power the production processes for the program.

Since becoming the first commercial television station in Japan to go on the air on August 28, 1953, NTV has grown on the strength of its viewers’ trust. In the year through March 2009, NTV’s 55th since its establishment the Company will deliver numerous special programs and events unlike any seen before, under the catch phrase “Nittele 55 (Nittele go, go.)” (This phrase includes a pun on the Japanese pronunciation of “55”—“go, go.”

Overview

of NTV


13ANNUAL REPORT 2008 NIPPON TELEVISION NETWORK



14 NIPPON TELEVISION NETWORK ANNUAL REPORT 2008

Message from the Chairman and the PresidentMessage from the Chairman and the President



Overview

of NTV




of Operations


We would first like to thank our shareholders and all our stakeholders for their daily support

and cooperation.

As the first commercial television station in Japan to go on the air in August 1953, NTV

is celebrating its 55th anniversary this year. The station’s 55 years in broadcasting closely

mirror the history of media in Japan. However, the rapid advancement of digital technology

in recent years is thrusting the operating environment for broadcast media into a dramatic

period of major change. Resting only on our successes so far, we cannot hope to prevail in

this fierce competition, which runs outside the bounds of the television business.

To respond to such changes in the business environment, the NTV Group formulated

its new Medium-Term Management Plan (from the year ending March 31, 2009 to the year

ending March 31, 2011) in May 2008, with the aim of continued development and growth as

Japan’s most powerful comprehensive media company, centered around the broadcasting

business. In July 2011, the final year of the plan, terrestrial analog broadcasting will cease and

Japan will fully transition to digital broadcasting. By steadily implementing the New Medium-

Term Management Plan, we expect the NTV Group enhance its corporate value as it forges

ahead into the digital era.

Moreover, as a member of society, NTV is always considering how it can contribute to the

global environment and society as a media company, and is constantly putting ideas into

action. We transmit a variety of social messages through such programs as 24-Hour Television:

“Love Saves the Earth”—the 31st airing of a 24-Hour Television—conveying the value of

volunteer activities and charity, the importance of preventing global warming and

highlighting social issues.

NTV remains devoted to being a media company needed and relied upon by its

stakeholders in the years to come.

We ask for your ongoing support in these endeavors.

August 2008

Noritada Hosokawa Shintaro Kubo

Representative Director, Chairman Representative Director, President



Long-Term Management VisionThe NTV Group will continue developing and growing as Japan’s most powerful comprehensive media company, centered on the broadcasting business

Long-Term Goals(1) Have the Group be rated No. 1 in quality

and quantity of content(2) Capture the most advantageous position

with respect to all contact points(3) Further expand businesses stemming from

broadcasting to diversify revenue sources(4) Attain No. 1 productivity in the broadcasting industry

Medium-Term Goals

(1) No. 1 in viewer ratings and broadcasting revenue(2) No. 1 in growth in non-broadcasting revenue (3) No. 1 in content delivery(4) No. 1 in delivering customer satisfaction

Numerical Targets of the Medium-Term Management Plan

In light of changes in the business environment, NTV has revised the Medium-Term Management Plan (from the fiscal year ended March 31, 2007 to the fiscal year ending March 31, 2010) it had been advancing since the fiscal year ended March 31, 2007, and launched the New Medium-Term Management Plan (from the fiscal year ending March 31, 2009 to the fiscal year ending March 31, 2011).

Medium- to Long-Term Management Vision

(Billions of yen, unless otherwise noted)

Fiscal Year

Ended March

31, 2008

(Actual)

Fiscal Year Ending

March 31, 2010

(Targets of Previous

Medium-Term

Management Plan)

Fiscal Year Ending

March 31, 2011

(Targets of New

Medium-Term

Management Plan)

Consolidated

net sales342.2 426.0 427.0

Television broad-

casting segment

revenue*261.9 316.0 310.0

Broadcasting

revenue242.6 280.0 281.0

Non-broadcasting

revenue*80.3 110.0 117.0

Recurring profit

(RP margin)

26.7

7.8%

46.0

10.8%

50.011.7%

Television broad-

casting segment

revenue as a pro-

portion of net sales

77% 74% 73%

Dividend policy

(non-consolidated)

¥180 per share

(including ¥30

commemora-

tive dividend)

Payout ratio of 30%

(¥150 minimum cash

dividend per share)

Payout ratio of 50%(¥180 minimum

cash dividend per share)

* Television broadcasting and non-broadcasting revenues exclude intersegment sales

and transfers.

Interview with President Kubo on the New Medium-Term Management Plan


Overview

of NTV



of Operations


rowth

Financial Section


Overview

of NTV




of Operations


AQ

AQ

AQ A

QKey Aspects of the New Medium-Term Management Plan

Please tell us the key aspects of the new Medium-

Term Management Plan.

The new Medium-Term Management Plan sets slightly higher

targets for consolidated net sales than past medium-term

management plans. Compared with the targets for the fiscal year

ending March 31, 2010 in the previous plan, the new Medium-Term

Management Plan’s target for television broadcasting segment

revenue for the fiscal year ending March 31, 2011 is ¥6.0 billion

lower (with broadcasting revenue ¥1.0 billion higher), while the

target for non-broadcasting revenue has been increased ¥7.0

billion, for a total net sales target that is ¥1.0 billion yen higher

than before.

The figure for broadcasting revenue emphasizes our goal of

regaining the top share position, premised on higher viewer ratings,

while taking seriously the changes in the advertising market. We

are aiming for 27% or more of the broadcasting revenue of the five

key commercial stations, based on projections that the television

advertising market would remain nearly unchanged.

The slightly lower target for overall television broadcasting

segment revenue is due to our having restructured the Group

companies and rearranged our IT-related businesses.

The target for non-broadcasting revenue aims for continued

growth in the film and media commerce businesses (including

sales from NitteleSeven), following a detailed review of each

business in consideration of efforts made in the past two years

and of the state of each business.

Concerning income targets, in addition to the increased

sales target, we have raised the figure for recurring profit by ¥4.0

billion from that of the previous plan as an ambitious goal, based

on our intent to clearly show our management posture oriented

toward improving profit margin—in other words, productivity—

through stronger cost controls. We recognize that this goal cannot

be achieved without considerable effort and will require bringing

out the full potential of each member of the Company. Due to the

cost-intensive events taking place in the fiscal year ending March

31, 2009, such as the Olympics in Beijing and projects related to

NTV’s 55th anniversary celebration, we expect business results to

stay roughly on par with those for the fiscal year ended March 31,

2008. However, we are confident that these efforts will bear

considerable fruit in the fiscal year ending March 31, 2010

and beyond.

Why revise the plan?

The rapid progress of digitalization, and especially the accelerating

advances in technology, are altering the environment surrounding

the broadcasting industry. We felt we needed to address such

changes quickly and positively.

Since launching the previous medium-term management

plan in the fiscal year ended March 31, 2008, NTV’s business

orientation has been taking root in all employees and has yielded

steady performance. Considering these results, rather than making

major revisions to basic policies or goals, we have primarily

reviewed implementation measures to enable more agile

response to shifts in the operating environment.

Numerical Targets for the New Medium-Term Management Plan

How have you considered the structural changes in

the television advertising market in setting the new

targets for broadcasting revenue?

In recent years, companies’ television advertising budgets

have decoupled from their business performance, and we sense

that Japan’s economic recovery will not lead to the increase

in television advertising revenue it would have in the past.

Fundamentally, we think Japan’s television advertising market will

tend slightly lower or remain flat over the medium term.

You are targeting broadcasting revenue of ¥281.0

billion for the final year of the new Medium-Term

Management Plan—nearly the same as that in the

previous plan. Is this achievable?

It is true that ¥281.0 billion is an extremely high figure, considering

the trends in the television advertising market. However, we would

like to adhere to our goal of retaking the television advertising

market throne. We aim to take the No. 1 viewer ratings spot

during the fiscal year ending March 31, 2009, and leverage that

position to bolster our market share.





AQ

AQ

AQ

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What was your intent in raising the dividend

payout ratio?

The increase was part of our active efforts to return profits to

shareholders as we strive to respond to shareholder expectations.

The Company has accumulated a relatively large amount of

retained earnings to accommodate digitalization, changes in the

legal system and investments in new businesses, and we deem

these reserves adequate for current funding needs. Moreover, as I

mentioned, regulations on the

holding of shares by foreign

entities make it infeasible for

NTV to acquire treasury stock.

Therefore, as part of our efforts

to return profits to shareholders,

we have raised the dividend

payout ratio (individual) from

33% to 50% and minimum

cash dividends per share from

¥150 to ¥180.

Please give us the specifics on the reasons given for

the slightly lower target for television broadcasting

segment revenue, namely the restructuring of

the Group companies and the rearrangement of

IT-related businesses.

Concerning the restructuring of the Group companies, we

considered the influence of the restructuring of four production

companies carried out in April 2007. After the restructuring, we

changed the target figures to reflect results for the fiscal year

ended March 31, 2008. We rearranged new IT-related businesses

by reclassifying them from “planning” to either broadcasting or

non-broadcasting.

The plan does not specify a target for the currently

sagging return on equity (ROE). What course will

you take to improve ROE?

In the fiscal year ended March 31, 2008, ROE dipped below 3% due

to decreased net income, which was partly a result of a loss on the

devaluation of investment securities. Possible steps to improve

ROE include raising profitability and reducing the equity ratio by

purchasing treasury stock. However, NTV’s status as a licensed

broadcasting company under the Radio Law will be revoked if the

voting rights held by foreign entities as stipulated in the Broadcast

Law reach 20% or more of the Company’s shares with voting

rights. Therefore, with this percentage at 19.99% as of March 31,

2008, a significant reduction in the equity ratio through acquisition

of treasury stock is currently not feasible. Accordingly, we aim to

improve ROE by enhancing

profitability. Although the new

Medium-Term Management

Plan does not specify an ROE

target, attaining the goal of

lifting the recurring profit margin

to 11.7% in the final year of the

plan would likely bring ROE up

to a corresponding degree. 0

2

4

6

8

10

20082007200620052004

5.7

4.7

3.6

4.6

2.6

(%)

ROEFiscal Years Ended March 31

Results of Efforts So Far

Please give us an overview of the past two years

under the previous Medium-Term Management

Plan (from the fiscal year ended March 31, 2007 to

the fiscal year ending March 31, 2010).

Continuing from the previous plan, the new Medium-Term

Management Plan maintains the four “No. 1” goals of becoming

No. 1 in viewer ratings and broadcasting revenue, No. 1 in growth

in non-broadcasting revenue, No. 1 in content delivery and No. 1

in delivering customer satisfaction. Progress on each goal so far is

as follows.

No. 1 in viewer ratings and broadcasting revenue: We aim to

capture 27% of the broadcasting revenue market to achieve the

top share among the five key stations. NTV has been restructuring

its timetable to achieve this goal, bringing viewer ratings onto

a recovery path in the second half of the fiscal year ended

0

40

80

120

160

200

200920082007200620052004

120

165 165 170180 180

(Yen)

Cash dividends per share andDividend payout ratio (non-consolidated)

Fiscal Years Ended March 31

0

20

40

60

80

100

(Forecast)

(%)

19

33

52

33

70

19

33

52

33

70

50

Cash dividends per share

Dividend payout ratio

Note: Dividend figures include a ¥70 per share dividend in the year ended March 31, 2004,

to commemorate the relocation of NTV’s head office; a ¥60 per share dividend in the

year ended March 31, 2006, to celebrate NTV2’s launch; and a ¥30 per share dividend

in the year ended March 31, 2008, to commemorate NTV’s 55th anniversary of

establishment. We anticipate a ¥180 per share dividend for the full fiscal year ending

March 31, 2009.



Overview

of NTV



of Operations


rowth

Financial Section


Overview

of NTV




of Operations


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stakeholders—including viewers, shareholders, sponsors,

business partners and the general public—heads of each

department broadly gather input from each category of

stakeholder and work to build and operate internal systems

to reflect their views in the course of doing business.

What is entailed in the programming overhaul

NTV is gradually carrying out to restructure its

timetable?

NTV has been implementing a daring and aggressive

programming overhaul over the past two years. For autumn 2006

(October) programming, we launched NEWS ZERO to rework

the 11 p.m. time slot; for spring 2007 (April), we made sweeping

changes to golden and prime time programming; and for autumn

2007 (October), we reviewed and reworked non-prime time

programming. Finally, in spring 2008 (April), we finished

restructuring the timetable by supplementing golden time,

prime time and all other viewing time periods.

Is the restructured timetable serving to improve

viewer ratings?

Household viewer ratings in the fiscal year ended March 31,

2008 were 8.3% for all day (no change compared with the previous

fiscal year), 12.2% for prime time (no change) and 12.1% for golden

time (up 0.2%)—the same or slightly higher than the previous year.

These results mean NTV is catching up with current viewer ratings

leader Fuji Television, with the gap standing at 0.4% for all day (was

0.9% in the fiscal year ended March 31, 2007), 1.4% for prime time

(was 2.1%) and 1.7% for golden time (was 2.2%). Moreover, for the

second half of the fiscal year ended March 31, 2008, household

viewer ratings were significantly higher than the same period in

the prior fiscal year, at 8.5% for all day (up 0.2%), 12.8% for prime

time (up 0.6%) and 12.6% for golden time (up 0.7%). In April 2008,

NTV captured the top spot for monthly viewer ratings during

golden time.

NTV has not merely endeavored to raise viewer ratings, but to

raise viewer ratings that lead to increased revenue. Our reforms

toward improved viewer ratings focus on the core target age

range from 13 to 49 years old, which is in highest demand with

our sponsors. This approach is working to boost our share of

television advertising revenues.

March 31, 2008. The Company’s share of spot advertising

revenue was 22.9% in the fiscal year ended March 31, 2008,

edging up to change course from the decline to 22.8% in the

previous fiscal year. The recovery is continuing, with viewer

ratings at 23.3% in the first quarter of the fiscal year ending March

31, 2009. However, ad placement is down from the prior year,

causing difficulties in terms of net sales. Against the broadcasting

revenue target of ¥280.0 billion for the final year of the previous

medium-term management plan (the fiscal year ending March

31, 2010), broadcasting revenue for the fiscal year ended March

31, 2008 was ¥242.6 billion—87% of the way to that goal. As for

viewer ratings, the new Medium-Term Management Plan

targets a move to the top spot during the fiscal year ending

March 31, 2009.

No. 1 in growth in non-broadcasting revenue: We think the

substantial development of our media commerce and film

businesses may have already ranked us as the fastest-growing

key station in non-broadcasting revenue. Although varying

definitions of “non-broadcasting revenue” at each station prevent

a rigorous comparison, the NTV Group’s non-broadcasting

revenue for the fiscal year ended March 31, 2007 was up 9.8%

compared with the fiscal year ended March 31, 2006, to ¥76.1

billion. This was the largest growth rate of the key stations during

the fiscal year ended March 31, 2007, compared with Fuji

Television’s 1% decrease, TBS’s 8.5% increase, TV Asahi’s 4%

increase and TV Tokyo’s 5% increase. Furthermore, in the fiscal

year ended March 31, 2008, the NTV Group attained non-

broadcasting revenue of ¥80.3 billion—an approximately

16% increase compared with the fiscal year ended March 31,

2006—facing some close competition over the same period

with Fuji Television decreasing 2%, TBS increasing 16%, TV Asahi

increasing 14% and TV Tokyo increasing 14%. However, we

remain in the top class of growth in non-broadcasting revenue

among the five key commercial stations.

Note: The figures for non-broadcasting revenue are estimates recalculated from

each station’s publicly released figures, based on NTV’s definition of

“non-broadcasting revenue.”

No. 1 in content delivery: We aim to be the top key station

in terrestrial television broadcasting, BS and CS broadcasting,

Internet content distribution, DVD sales and related areas.

The NTV Group will strive to achieve this goal through a

multicontact-point strategy for content deployment.

No. 1 in delivering customer satisfaction: As a corporation, we

must constantly keep this in mind. Although there is no

objective benchmark for this goal, to better satisfy all our






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computers, as well as around town and on the train, in addition

to terrestrial television broadcasting. Specific examples include

distribution of NTV2 content via the Internet and NTV news on

board Yamanote Line trains and via electronic displays in Shibuya

and Yokohama stations. We plan to continue developing new

technologies and business models to offer content through all

types of media.

Please tell us your strategy and the future prospects

for increasing non-broadcasting revenue.

In the film business, we will release two major animation features

in 2008: Studio Ghibli’s Ponyo on the Cliff by the Sea, directed by

Hayao Miyazaki, in July, and Sky Crawlers, directed by Mamoru

Oshii, in August. Other highly anticipated films, such as a live-

action trilogy based on the popular comic series Twentieth Century

Boys, and 252: Signal of Life—directed by NTV employee Nobuo

Mizuta—are also waiting in the wings. We will work to elevate

sales with overseas deployment in mind. For media commerce,

we will further enhance our product development capabilities and

strive to expand sales through synergies with NitteleSeven.

We also endeavor to substantially augment our copyright

business overseas. We have already had some success with format

sales of shows such as Masquerade and Dragons’ Den, and we aim

to intensively grow the business by strengthening the departments

involved through organizational changes introduced in July 2008.

What is your approach for developing “1-SEG”

services?

The enactment of the revised Broadcast Law in April 2008

has enabled non-simultaneous broadcasting, meaning “1-SEG”

programming can now be broadcast independently from

terrestrial television programming. NTV has designated the fiscal

year ending March 31, 2009 as a “1-SEG” trial period, trying out

new services such as extended versions of certain live Giants game

broadcasts exclusively on “1-SEG.” In September 2007, we tested

out a service that allowed mobile phone users watching NTV

programs via “1-SEG” to automatically receive a coupon for a free

can of coffee. We will actively pursue new business development

such as this unprecedented service linked with a sponsor’s sales

promotion.

Please show us the results from the media

commerce and film businesses individually, as

these have been the drivers of the increase

in non-broadcasting revenue.

In the media commerce business, which is centered on television-

based shopping, sales more than quadrupled from the fiscal year

ended March 31, 2006 to the fiscal year ended March 31, 2008,

from ¥1.8 billion to ¥8.1 billion.

In addition, NitteleSeven Co.,

Ltd.—a joint venture with the

Seven & i Holdings Co., Ltd.

Group and others—started

operations in April 2008 and

is expected to have a bright

future. In the film business, we

more than tripled sales over

the same two-year period,

from ¥3.8 billion to ¥11.5

billion.

Business Strategy for the New Medium-Term Management Plan

Please explain the key aspects of NTV’s business

strategy under the new Medium-Term

Management Plan.

Our new strategy assesses progress and results under the

previous medium-term management plan and builds on the

good points for further advancement. Amid the rapid penetration

of digitalization into people’s lives, we are taking a variety of steps

to speed up deployment of multiple contact points to meet the

diverse needs of viewers.

Please give us some concrete examples of the

multicontact-point strategy.

NTV advances a multicontact-point strategy to enable people

to enjoy its content in all manner of lifestyle settings, including

through BS and CS broadcasting, mobile phones and personal

0

20

40

60

80

100

20082006

69.4

3.81.8

80.3

11.5

8.1

(Billions of yen)

Non-Broadcasting RevenueFiscal Years Ended March 31

Non-broadcasting revenue

Of which, film business Of which, media commerce business



ANNUAL REPORT 2008 NIPPON TELEVISION NETWORK 2121ANNUAL REPORT 2008 NIPPON TELEVISION NETWORK



Through its history, NTV’s film business has racked up a number of major successes with animation films produced jointly with Studio Ghibli. Hence, while other television stations adapt their television drama series to the big screen, NTV has built up the ability to plan and release box office successes from the start, which significantly differentiates the Company from other broadcasters and has become a major strength. Such efforts have led to a steady stream of hit films, such as ALWAYS—Sunset on Third Street and DEATH NOTE.

Film Business at NTV

An advantage of films is their long-term usability as a Company asset.

NTV is working to enhance its film business, in accordance with the aim espoused in its new

Medium-Term Management Plan of boosting non-broadcasting revenue. We also believe the

film business contributes to the media value of terrestrial broadcasting.

One clear difference between the film business and terrestrial broadcasting is in the larger

implications of the term “capital contribution.” Secondary use of television programs is limited to

popular shows, but drama series, animation series and movies have copyrights. Film copyrights,

in particular, last 70 years, enabling them to generate value for an extended period. As our

library of films grows, secondary revenues continue to increase each year. Also, as film content

is naturally suited to multiple uses, there is still room for substantial growth. We will continue

aggressive efforts to utilize such content in all sorts of ways.

Film Production through the Production Committee System

The production committee system is an excellent production system unique to Japan.

Although NTV provides the primary capital and production resources for its film business,

operations are carried out through a production committee system that brings together the

capital infusions and copyrights of multiple media and content creation companies. The system

grants the use of media platforms held by the participating companies, with the lead manager

generally navigating production in consultation with the whole committee.

Although our competitors may have production committees, in some cases the lead

manager takes an exclusionary leadership position and dominates the copyright. At NTV, we work

to ensure that the production committee acts as an overall enhancement to the films on which

we head up production. In so doing, we recognize that if the work ultimately becomes a hit and

we succeed as a production committee, the success will lead to profits for the Company. We

therefore consider it very important to raise the morale of the production committee as a whole

and to work together toward the overall goal of creating successful movies. We also believe that

creators play a critical role in film production. Rather than hiding production and animation firms

under the NTV label, we focus on building win–win relationships as equal partners, which is what

I think attracts superior creative talent to the Company.

Seiji Okuda, Executive Producer, Content

Special Feature: NTV’s Film Business StrategySpecial Feature: NTV’s Film Business Strategy

NTV’s Strengths in the Film Business



Channeling Content Creation and Production Capabilities into

the Film Business

We are making full use of our strengths as a leading content provider.

For NTV’s film business, the power of media and capital that television makes possible is of

course of considerable assistance, but the high-level expertise and production capabilities we

have cultivated through creating television programs are also very powerful allies. I have found

that film projects planned by television stations have an exceptionally high success rate. I think

this is because the networks’ efforts in program creation hone their ability to keep their finger on

the pulse of social change, find the proper timing and select projects that would interest viewers.

For instance, the film DEATH NOTE incorporated sophisticated mechanisms in multiple elements

of its release, distribution, production, broadcast and spinoff. The broadcast of the series was

successful because of our status as a television station, and the planning succeeded because of

our experience in television program planning. We continue to augment the scale of our film

business from the perspective of multiple uses.

I also think there is a large pool of creative talent at television stations who have sharpened

their skills by producing vast numbers of drama and other programs, and would be valuable

in the motion picture industry. For example, Nobuo Mizuta and Ryuichi Inomata, who directed

last year’s Maiko Haaaan!!! and A Tale of Mari and Three Puppies, respectively, are both NTV

employees who earned their experience directing drama series, and both received high praise

for the films. It seems to me that these employees use their directorial instincts to create

works that viewers—their customers—enjoy, which is why they produce hits so readily.

Furthermore, NTV’s film business has many excellent producers, each of whom is able to

capitalize on the expertise they have cultivated in program production to singlehandedly

progress and coordinate multiple works at one time. People from Studio Ghibli and other

outside sources fully utilize superior knowledge and personal networks to demonstrate their

capabilities. I think these human resources have been an important factor in enabling NTV to

release hits such as DEATH NOTE, ALWAYS—Sunset on Third Street and A Tale of Mari and Three

Puppies, and in the substantial growth of the Company’s film business in the past five years.

Planning and preparation for films to be released in 2009 and 2010 are now proceeding in

tandem with current releases. Such tremendous efforts are made possible by the talented

producers at NTV. I believe our personnel maintain the strength of our film business and

will be a powerful driving force in the business’s ongoing expansion.

Tasks Ahead and Business Development

The motto of our film business, “Our audience is the world,” has become a reality.

One of our future challenges is bolstering overseas sales. This year we sold all three parts of the

new film Twentieth Century Boys in Asia and all over the world. NTV’s brand power is growing

worldwide on the success of our output thus far. Many attendees of the May 2008 Cannes Film

Festival gathered to see NTV previews. I think this was because they were expecting NTV to show

them something entertaining. We will leverage this brand strength to ramp up our overseas

development as we endeavor to capture this enormous market.

Another challenge is adapting television drama series to film. We have already had great

success with animated and live-action films, so a hit film adaptation of a television series would

be icing on the cake. In light of this situation, we are now considering bringing popular television

drama programs to the big screen.

We also intend to advance cost cutting in motion picture production. Viewers can look

forward to more successful films that capitalize on the planning ability NTV possesses as a

television station.

Films Directed by NTV

Employees

In the fiscal year under review, NTV employees Nobuo Mizuta and Ryuichi Inomata were in the spotlight. Both their films were well received, with the June release of Mizuta’s Maiko Haaaan!!! grossing ¥2,080 million at the box office and the December release of Inomata’s A Tale of Mari and Three Puppies grossing ¥3,100 million. In secondary usage, DVD sales of the films have been brisk since their release. Mizuta is also the director of 252 Survivors, to premiere in December 2008.

Maiko Haaaan!!!

© 2007 Maiko Haaaan!!! Film Partners

A Tale of Mari and Three Puppies

© 2007 "A tale of Mari and three puppies” Film Partners

Financial SectionContinuing to Evolve

Review of O

perationsSpecial Feature : N

TV's Film Business Strategy


Overview

of NTV


2006

2007

Videos

and DVDs

Overseas

deployment

Film releases

24.5%Terrestrial broadcast ratings for prequel

World premiere of DEATH NOTE

sequel in Hong Kong

Initial shipment:

Cumulative sales: 450,000 DVDs Terrestrial

broadcasts

¥2.9 billionBox office income for prequel

¥5.2 billionBox office income for sequel

Terrestrial broadcast

of animated version


2006

2007

Videos

and DVDs

Overseas

deployment

Film releases

24.5%Terrestrial broadcast ratings for prequel

World premiere of DEATH NOTE

sequel in Hong Kong

Initial shipment:

Cumulative sales: 450,000 DVDsTerrestrial

broadcasts

¥2.9 billionBox office income for prequel

¥5.2 billionBox office income for sequel

Terrestrial broadcast

of animated version

Special Feature: NTV’s Film Business Strategy

Deployment Befitting a Television Station

DEATH NOTE was designed according to a business scenario premised on multiple uses. The idea

was to link film, terrestrial broadcasting, DVDs and overseas sales in a multi-faceted manner while

enhancing synergies among these channels, culminating in one giant movement. The film was

produced for release in an experimental two-part sequence, wherein the prequel aired during Friday’s

Movie time slot before the theatrical release of the sequel to induce greater box office turnout. With

the unusual timing of the terrestrial broadcast of the prequel four months after its theatrical release,

it achieved high ratings on Friday’s Movie and helped the sequel double the box office receipts of the

prequel. The film also recorded an initial shipment of one million units for DVD sales.

Deployment to Terrestrial Broadcasting

After the theatrical release of the sequel, NTV began terrestrial broadcasts of the DEATH NOTE

animated series. Whereas the ending and other elements of the motion picture differed from the

original story, the animated series stands apart from the film by faithfully reproducing the original.

Despite being aired late-night on a weekday, the series attracted healthy ratings and also

substantially contributed to the box office success of the sequel. Using funding through D.N. Dream

Partners—established jointly with NTT DOCOMO, INC.—NTV is promoting drama and animation series

produced with DVD, merchandise and other secondary uses in mind. As the first work of this type,

DEATH NOTE has achieved DVD sales of 450,000 units.

© Tsugumi Oba, Takeshi Obata/Shueisha

© 2006 DEATH NOTE FILM PARTNERS

©Tsugumi Oba, Takeshi Obata/Shueisha

©DNDP, VAP, Shueisha, Madhouse

Multiple Usage of Content Originating from Films


2008

Asia tour of L change the WorLd

in South Korea, Hong Kong and Taiwan

1 million units

Sales of DEATH NOTE animated series DVDs

¥3.1 billionBox office income for spinoff

Theatrical release of DEATH NOTE in seven regions

of Asia, the United States, France, England and elsewhere

23.6%Terrestrial broadcast ratings for sequel19.7%

Terrestrial broadcast ratings for prequel

DVD sales of DEATH NOTE

prequel and sequel


2008

Asia tour of L change the WoorLd

in South Korea, Hong Kong aand Taiwan

1 million units

Sales of DEATH NOTE animated series DVDsE

¥3.1 billionBox office income for spinoff

Theatrical release of DEATH NOTE in seven regions enn rren n reegioonsve re nsven regionsgivenE

of Asia, the United States, France, England and elsewherglaglaand and els w e

an nd el herglag

hewhglgla

23.6%Terrestrial broadcast ratings for sequel19.7%%

Terrestrial broadcast ratings for prequuel

DVD sales of DEATH NNOTE

prequel and sequel

Deployment to Subsequent Content

Based on the record hit performance of the film, we produced and released the spinoff

L change the WorLd. We called upon Hideo Nakata—who has topped box office charts even in

Hollywood—to direct the spinoff, and created an original work without resting on the laurels of the

main film. Before the spinoff’s theatrical release, NTV used terrestrial broadcasting to provide active

support, by airing the DEATH NOTE prequel and sequel on Friday’s Movie and re-broadcasting the

entire animated series to stir up interest for the new film. Moreover, based on solid overseas sales

for the franchise before the release of L change the WorLd, we simultaneously released the spinoff in

five countries—Japan, South Korea, Hong Kong, Taiwan and Thailand—a first for a Japanese film.

Deployment Overseas

NTV has received offers to show the film DEATH NOTE (prequel and sequel) in

over 60 countries so far. As of August 2008, the film has premiered at theaters

in seven regions of Asia, topping the charts in its initial release in each country

and achieving other astounding feats as a hit film. In the West, the film is

currently being shown in France and England, and is set to screen in the United

States, Spain, Italy and more than seven other countries. For the animated

series, we signed our first overseas Internet distribution rights contract with VIZ

Media, LLC, of the United States, leading to Internet distribution and broadcast

on Cartoon Network.© Tsugumi Oba, Takeshi Obata/Shueisha

© DNDP, VAP, Shueisha, Madhouse

L change the WorLd

© 2008 L FILM PARTNERS

© 2008 L PLOT PRODUCE

Financial SectionContinuing to Evolve

ReReReRRs

of Operationspe

atoview

oew

ovievi

oSpecial Feature : N

TV's Film Business Strategy

To Our Shareholders annd Stakeholders

Stakehoe

Overview

of NTV




Business Strategy

Special Feature: NTV’s Film Business StrategySpecial Feature: NTV’s Film Business Strategy

Ponyo on the Cliff by the Sea

(July release in Toho-affiliated

theaters)

Author, screenwriter, director:

Hayao Miyazaki

Produced jointly by Studio Ghibli,

NTV, Dentsu, Hakuhodo DY Media

Partners, Disney, Mitsubishi, and Toho

Twentieth Century Boys

(August release in Toho-affiliated

theaters)

Author: Naoki Urasawa

Director: Yukihiko Tsutsumi

Produced jointly by NTV, Toho,

Shogakukan, KEN-ON, Yomiuri

Telecasting, VAP, Dentsu, The

Yomiuri Shimbun, Cine Bazaar, Office

Crescendo, Sapporo Television

Broadcasting, Miyagi Television

Broadcasting, Shizuoka Daiichi

Television, Chukyo TV Broadcasting,

Hiroshima Telecasting, and Fukuoka

Broadcasting

The Sky Crawlers

(August release in Warner-affiliated

theaters)

Author: Hiroshi Mori

Director: Mamoru Oshii

Produced jointly by NTV, Production

I.G, Bandai Visual, Warner, D.N. Dream

Partners, The Yomiuri Shimbun,

The Hochi Shimbun, CHUOKORON-

SHINSHA, Yomiuri Telecasting,

d-rights, VAP, Hakuhodo DY Media

Partners, Sapporo Television

Broadcasting, Miyagi Television

Broadcasting, Shizuoka Daiichi

Television, Chukyo TV Broadcasting,

Hiroshima Telecasting, and Fukuoka

Broadcasting

252 Survivors

(December release in Warner-affiliated

theaters)

Author: Yoichi Komori

Screenwriters: Yoichi Komori,

Hiroshi Saito, Nobuo Mizuta

Director: Nobuo Mizuta

Planned and produced by NTV as the

lead manager

Major Releases in the Fiscal Year Ending March 31, 2009

Hayao Miyazaki devoted himself to this ambitious work, in which he

adheres to animation’s roots of drawing by hand and endeavors to

express his ideas through animation that is a clear contrast from his

style to date. The film tells the story of Ponyo, a fish girl who longs to be

human, and the five-year-old boy Sosuke.

This live-action adaptation of a popular comic series with a total of

20 million copies published is being shown in three parts with a total

production cost of ¥6 billion. Parts two and three are scheduled to

premiere in 2009. The science-fiction/suspense film tells of how, in

1969, the elementary school student Kenji draws several imaginary

“Books of Prophecy” for play with his friends, but then in 1997 terrifying

incidents resembling those depicted in the imaginary books begin to

take place. The main character of Kenji is played by Toshiaki Karasawa.

This motion picture is an animated adaptation by director Mamoru

Oshii—one the world’s most watched filmmakers—of a popular novel

with a total of more than eight million copies published thanks to

enthusiastic support from fans in the younger generation. The film

depicts the “kildren,” who are destined to live eternally in adolescence, in

their struggle to live each day to the fullest as they fight in a war created

by adults for their own entertainment.

252 Survivors is a real spectacle of a film, starring Hideaki Ito and

Masaaki Uchino, with NTV director Nobuo Mizuta at the helm. The

motion picture focuses on the tribulations of the hyper-rescuers

who risk their lives to save others as Japan faces the largest typhoon

in history. Highlights include scenes such as those depicting the

destruction of Tokyo, which have the impact of a Hollywood movie.

© 2008 NIBARIKI ˙ GNDHDDT ©MH/NI, BWDVYHDYCH

©2008 "252" Film Partners©1999,2006 Naok i Urasawa, Studio Nuts/

Shogakukan

©2008 "20th Centur y Boys” Fi lm Par tners



Operating IncomeFiscal Years Ended March 31

SalesFiscal Years Ended March 31

0

10

20

30

40

50

(Billions of yen) (%)

<Total advertising expenditures

<Television advertising expenditures

Television advertising expenditures as a percentage of total advertising expenditures

0

1,400

2,800

4,200

5,600

7,000

200720062005

6,823.5

29.9 29 28.5

6,939.9 7,019.1

2,041.1 2,016.1 1,998.1

(calendar year)

Total Advertising Expenditures and Television Advertising Expenditures in Japan

0

60,000

120,000

180,000

240,000

300,000

200820072006

267,904262,370

0

8,000

16,000

24,000

32,000

40,000

20082007 2006

36,00833,843

27,656

277,977

(Millions of Yen) (Millions of Yen)

Review of OperationsReview of Operations

Overview of Results

During the fiscal year ended March 31, 2008, time sales were down year on year as a result of fewer

large-scale, single-episode programs, such as the 2006 FIFA World Cup™. While program viewer

ratings continued to improve, spot sales shrank due to a drop in spot advertising expenditures

in the Kanto region, significantly affecting market conditions. As a result, sales decreased ¥5,534

million, or 2.1%, to ¥262,370 million. Drastic overhauls increased program production costs, and

operating income declined 18.3%, or ¥6,187 million, to ¥27,656 million.

The 2007 Television Advertising Market

Amid a recovering Japanese economy, in 2007 total advertising expenditures in Japan reached

¥7,019.1 billion, up 1.1% from 2006, marking the fourth consecutive year of growth. Despite the

repercussions of large-scale events in the first half of the year, advertising expenditures were

strong in the second half, buoyed by the Upper House elections, the IAAF World Championships

in Athletics and the Tokyo Motor Show.

Television advertising expenditures were ¥1,998.1 billion, down 0.9%. Unable to overcome the

drop from last year’s Torino Winter Olympics and the 2006 FIFA World Cup™, time ad expenditures

were down 0.6%, to ¥877.3 billion. Spot ad expenditures shrank, due to a regional drop and

intense competition for share among broadcasters, resulting in a 1.1% decline in these expenditures,

to ¥1,120.8 billion.

A breakdown of television advertising expenditures by industry shows that time spot

advertising expenditures by the finance and insurance segment declined for the second consecutive

year, owing to a downturn in consumer finance ad placements and payment problems plaguing

the insurance industry. Although overseas sales were strong, domestic sales were sluggish in

the automobiles/related products and home electric appliances/AV equipment sectors, causing

them to reduce spot advertising expenditures. At the same time, ad placements rose in health

and environment-related sectors, led by the medical, pharmaceutical and food industries. The

Upper House elections also contributed to a significant increase in spot ad placements by

government, public offices and other organizations.

(Source: Dentsu, Inc., Advertising Expenditures in Japan)


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0

3

6

9

12

0807060504

(%)

All Day

(6:00–24:00)

0

5

10

15

20

0807060504

(%)

Golden Time

(19:00–22:00)

0

5

10

15

20

0807060504

(%)

0

3

6

9

12

0807060504

(%)

Prime Time

(19:00–23:00)

Non-Prime Time

(6:00–19:00, 23:00–24:00)

NTV TV Company A TV Company B TV Company C TV Company D

Zoom In!! SUPER

Radicul

LINE-UP LAW OFFICE

Business StrategyViewer Ratings by Viewing Time Period

Fiscal Years Ended March 31

Programming Strategy

Since October 2006, we have made incremental timetable improvements to achieve higher

viewer ratings with programs that have greater appeal for our target audience, aged 13 to 49.

In turn, we expect higher viewer ratings to generate greater broadcasting revenues.

NTV implemented a major reorganization of its timetable in April 2007, affecting more than

33% of golden and prime time programming. Viewer ratings of our regular weekend prime

time programming have increased significantly because of these efforts. In October 2007, we

made changes to non-prime time programming, most notably during the morning time slots

(06:00-12:00), boosting viewer ratings for the programs Zoom In!! SUPER, Freshen Up!! and Radicul,

and creating a trend toward increased viewer ratings across all days. Furthermore, the afternoon

program Afternoon Omoikkiri Ii TV was renewed for its 20th year as Omoikkiri Ii TV in an effort to

expand the target audience demographic. Successfully strengthening our timetable has resulted

in higher core target viewer ratings and an improved spot share.

NTV completed enhancements to golden time, prime time and other time slots in April 2008.

As a result, viewer ratings improved where they were needed most—in the highly competitive

first half of the programming week. The wildly successful drama series GOKUSEN, now in its third

season, boasts a 22.8% average viewer rating. In addition to the television broadcast, a GOKUSEN

spinoff appears on the Internet-based NTV2 along with an original infomercial-style program

developed to augment our attractive content offerings. We will continue to enhance our timetable

with exciting new programming, building on these successes as we focus on recapturing the top

position in viewer ratings.

Overview

of NTV



of Operations


rowth



of Operations


Business StrategyTo O

ur Shareholders and StakeholdersO

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TV



Main menu screen for NTV’s “1-SEG” broadcast

“1-SEG” broadcasts continuing after digital terrestrial

broadcasts have ended

Campaign to win a can of coff ee by watching NTV

“1-SEG” broadcasts


“1-SEG” Services

More than 30 million devices equipped with one-segment (“1-SEG”) receivers have been

produced during the three years since “1-SEG” services began. Also, revisions to the Broadcast

Law have made possible proprietary “1-SEG” broadcasting.

Advances in digitalization have created a diverse range of possibilities for viewers to enjoy

visual content. NTV focuses on promoting a multicontact-point strategy, with particular emphasis

on “1-SEG” services. Through “1-SEG” and other new media, we will continue to work towards

making the ability to enjoy NTV anytime, anywhere a reality.

An Industry First: Proprietary “1-SEG” Broadcasting

In May 2008, NTV began proprietary broadcasts of the “1-SEG” Premium Night Game” featuring

live broadcasts of Yomiuri Giants baseball games. Different from 12-segment terrestrial

broadcasts, the “1-SEG” broadcast features unique visual and audio content during commercial

breaks and extends coverage until the end of games, even after terrestrial broadcasts have

ended. NTV is the first network to provide this kind of “1-SEG” service, and we aim to continue

developing this new business model to offer unique “1-SEG” content to our viewers.

“1-SEG” Promotional Advertising Experiment

In September 2007, NTV joined NTT Mobile Communications Network, Inc., in experiments

aimed at developing a new sampling advertising method called “‘1-SEG’ info.” This method

employs a new advertising technology developed by NTV that utilizes “1-SEG” data transfer

technology to send coupons and other data to viewers’ mobile phones. The experiment

provided viewers of a “1-SEG” broadcast with a digital coupon for a free sample of a Coca-Cola

(Japan) Co., Ltd., brand of canned coffee, which was compatible with Cmode* radio frequency

identification (RFID) technology-equipped vending machines. Mobile phone users could use

the coupon to obtain free samples using their mobile phones’ RFID function. The “1-SEG” info

experiment demonstrated the tremendous potential of this type of advertising campaign.

In the past, taking advantage of such a campaign required the mobile phone user to

first search for the coupon URL, save that URL to the phone’s memory, and then access the

campaign Web site to download the coupon. “1-SEG” info provides the promotional coupon to

the user automatically, enabling quick and easy access. Furthermore, the campaign coupon

can be e-mailed or copied to another user’s mobile phone via infrared data transfer, providing

viral marketing potential. Combined with television advertising’s efficacy at delivering advertising

to multiple viewers simultaneously, “1-SEG” advertising has the possibility of becoming

a driving force in advertising.

* Cmode is the name Coca-Cola (Japan) uses for the RFID-equipped vending machine

technology that enables beverage purchases using mobile phones.

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0

20,000

40,000

60,000

80,000

100,000

2008 2007 2006

62,475

69,411

(Millions of Yen)

0

2,000

4,000

6,000

8,000

10,000

2008 2007 2006

5,185

8,193

6,292

(Millions of Yen)

73,999



Always—Sunset on Third Street 2

© 2007 “Always2” Film Partners

Overview of Results

In the period under review, the NTV film production committee scored a major hit with

ALWAYS—Sunset on Third Street 2, contributing to segment revenues. In addition, aggressive new

project development significantly increased sales from media commerce business, and character

merchandise licensing revenues increased. These factors helped raise segment sales ¥4,588

million, or 6.6%, to ¥73,999 million. Operating income was ¥6,292 million, reflecting the impact of

last year’s DVD sales of the record-breaking hit movie DEATH NOTE (1 & 2) and expenses related

to the screening of new films in March 2008, causing operating income to fall ¥1,901 million, or

23.2%.

Business Strategy

Film BusinessOperating Environment Data

2007 National Overview (Calendar year)

2003 2004 2005 2006 2007

Attendance (thousands) 162,347 170,092 160,453 164,585 163,193

Box Office Sales (millions of yen) 203,259 210,914 198,160 202,934 198,443

Japanese films 67,125 79,054 81,780 107,944 94,645

Theatrical Releases 622 649 731 821 810

Japanese films 287 310 356 417 407

Theaters (total screens) 2,681 2,825 2,926 3,062 3,221

Source: Motion Picture Producers Association of Japan, 2007

Business Overview

To generate other non-television broadcasting revenues, NTV engages aggressively in the film

business, funding approximately 15 film projects per year. During the year, our production

committee funded several hit films, including TOKYO TOWER—Mom & Me, and Sometimes Dad;

Maiko Haaaan!!!; ALWAYS—Sunset on Third Street 2; A Tale of Mari and Three Puppies; and L change

the WorLd.

Looking Ahead

In the fiscal year ending March 31, 2009, NTV plans to release many new popular movies,

including director Hayao Miyazaki’s Ponyo on the Cliff by the Sea from Studio Ghibli and director

Mamoru Oshii’s The Sky Crawlers. NTV also plans to actively pursue new promotional opportunities

through tie-ups with its Friday Movie program, which broadcasts feature-length films.

Greatly enhancing NTV brand strength outside Japan are sales of such hit films as DEATH

NOTE and ALWAYS—Sunset on Third Street. We expect new offerings including The Sky Crawlers

and Twentieth Century Boys to bolster our brand further, as we anticipate an increasing number of

offers for our films from countries in Europe, the United States, Asia and other parts of the world.

Going forward, we aim to strengthen our global presence as we continue to seek a wider market

for our products.

Cultural Activities

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TV



Leveraging its high-caliber programs and planning production expertise, NTV will actively

seek opportunities to create feature-length films from popular television drama series, taking

advantage of the low-cost film production uniquely available to television networks.

Media Commerce Business

Operating Environment Data

Trends in Direct Marketing Sales (Fiscal Years Ended March 31)

2003 2004 2005 2006 2007Direct Marketing Sales (billions of yen) 2,630.0 2,790.0 3,040.0 3,360.0 3,680.0

Source: Direct Marketing Business Survey Report, Vol. 25, Japan Direct Marketing Association

Business Overview

NTV is actively involved in the media commerce business and is increasing its scale of involvement.

During the year, the Genie Instant Line Smoother and our original HAMANO bag were particular

hits, resulting in significantly higher sales.

Looking Ahead

In December 2007, NTV created shopping portal site NitteleSeven with Seven & i Holdings Co.,

Ltd., Dentsu Inc. and three other companies. NitteleSeven is a joint venture that unites television,

the Internet and retail distributors under the concept of media and consumption integration.

NitteleSeven brings together television, the most powerful medium for delivering information,

physical shops and electronic commerce, on-site sales and product development capabilities of

the companies in the Seven & i Holdings group. NitteleSeven also employs Dentsu’s marketing

and advertising expertise to create new choices in program viewing and product purchases

while developing new sales and communication vehicles.

In April 2008, NTV launched Le Marché de la Déesse, an informative shopping and variety

program sponsored by Seven & i Holdings. In addition to showcasing various products, celebrity

guests are invited to create their own original merchandise on the program, with all products

featured on the show available for purchase at any of the 12,000 7-11 convenience stores, 180

Ito-Yokado outlets, and via Web sites introduced through the NitteleSeven portal site.

Through efforts such as these, we are striving to integrate and concentrate the assets and

expertise of our television broadcasting, retail, distribution, advertising and marketing businesses.


Infomercial Program

Le Marché de la Déesse

Infomercial Program

Le Marché de la Déesse

NitteleSeven

Portal Site

StoresE-commerce

siteE-commerce

site

NitteleSeven Business Model

POSHLET late-night department store

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Main screen of NTV2 video distribution service

International Program Sales

Business Overview

International program sales continue to be successful in the worldwide distribution and sales of

animated programs such as DEATH NOTE and NANA as well as in program format. During the year,

NTV sold the Magical Brain Power!! format to Italian television network Canale 5.

Looking Ahead

Format sales have been very successful, particularly Dragon’s Den, which is broadcast in more

than 20 countries, and Masquerade, which aired on TF1, France’s largest commercial network,

capturing the highest viewer ratings in its time slot. Since May 2005, NTV has had an agreement

with International Creative Management. The largest entertainment management firm in the

United States, this company sold the Master of Champions format to the ABC network. NTV’s

international program sales will continue to provide content to serve global market needs and

trends using its wide network of professionals and expertise in program development and sales.

NTV is committed to providing the world with unique content that only NTV’s “originality DNA”

can deliver.

Video on Demand (VoD)

Business Overview

In October 2005, NTV became the first terrestrial television broadcaster to begin streaming

content on the Internet. Through portal site NTV2, designed to be a commercial avenue for

NTV’s creative content production, visitors can view archived broadcasts, behind-the-scenes

and extra footage from their favorite shows, as well as television program linked and original

NTV2 content. This service operates on fee-based content and advertising revenues from

sponsored content.

Looking Ahead

Part of our effort to develop and provide attractive content involves exploiting Internet media

and developing advertising models that increase ad revenues. In spring 2008, NTV2 successfully

implemented a cross-media promotion of the Kirin Beverage Co., Ltd., ad campaign for KIRIN

NUDA. A “Sukkiri-Man” page was created on NTV2 where visitors could watch an original movie

linked to the terrestrial spot commercial. We also planned a campaign linked with mixi, Japan’s

biggest social networking service, to draw viewers to the Kirin Beverage product homepage.

Advantages of such cross-media campaigns are that they combine the effectiveness of

advertising, sales promotion and other marketing approaches. As they also provide access to

sponsors’ advertising and sales promotion budgets, NTV has high expectations for cross-media

promotion’s potential as a new source of revenues.

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TV



0

4,000

8,000

12,000

16,000

20,000

200820072006

(Millions of Yen)

15,082 15,14514,536

0

600

1,200

1,800

2,400

3,000

2008 20072006

1,323

(Millions of Yen)

2,356 2,339



Nittele-ya Tokyo Station shop


Overview of Results

Total sales in this segment for the year ended March 31, 2008, were ¥15,145 million, up ¥609

million, or 4.2%, from the previous year, representing a significant revenue contribution from

our leasing business. Bolstered by earnings from Nippon Television Football Club Co., Ltd., and

the return of Tokyo Verdy to the J1 league division, operating income surged ¥1,016 million, or

76.8%, to ¥2,339 million.

Looking Ahead

In March 2008, NTV opened Nittele-ya (“Nittele Shop”) in the underground shopping mall of First

Avenue Tokyo Station’s “Tokyo Character Street,” where it sells official merchandise and other

program-related products. This Nittele-ya is our second shop, with the original located inside

Shiodome Tower.

Tokyo Character Street is the home of the official merchandise shops for five key commercial

stations and NHK. The street includes Studio Ghibli and Sanrio’s Hello Kitty shops and has an

event space for promotional activities. This Nittele-ya offers the same merchandise as the

Shiodome Tower shop, plus exclusive items such as a popular news/weather character Sora-Jiro

mobile phone strap. Through original merchandise offerings and promotional events, NTV will

further enhance its brand strength.

Other Businesses

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Corporate GovernanceCorporate Governance

governance and ensure thorough compliance and a high degree

of transparency in NTV’s activities, thus striving to reinforce society’s

trust and earn its support.

The Executive Officer System is a means of delegating authority,

accelerating decision-making and clarifying responsibilities for the

execution of operations. In addition, oversight and auditing functions

are conducted by the Board of Directors, statutory auditors and the

Board of Statutory Auditors, all of which include outside officers.

To enhance internal control systems, the Company has established

an Internal Control Committee chaired by a representative director, to

review and improve business controls across the entire Group.

Concerning third-party contribution to NTV’s corporate

governance framework, the Company has reinforced its legal risk

management system by concluding advisory agreements pertaining

to corporate management and daily business tasks with multiple law

offices, and by seeking advice as necessary. We have also concluded

audit agreements concerning audits relating to the Companies Act

and the Securities and Exchange Law with audit corporations, which

conduct audits from an independent standpoint.

Corporate Governance Framework

NTV has a Board of Statutory Auditors with a management structure

under which the Board of Directors oversees the operational

execution of the representative directors. Meanwhile, the statutory

auditors and Board of Statutory Auditors audit the operational

execution of the directors.

The Company has also emphasized external monitoring of

management, incorporating six outside directors pursuant to Article

2, Paragraph 15, of the Companies Act into the 17-member Board of

Directors for greater management integrity and more transparent

decision-making processes. The three-member Board of Statutory

Auditors includes two outside auditors pursuant to Article 2,

Paragraph 16, of the Companies Act for greater independence from

the Board of Directors and stronger auditing functions related to

the execution of duties.

Under the Board of Directors, NTV has established an Internal

Audit Committee to supervise overall business execution and

monitor internal control systems. The Remuneration Committee,

charged with fielding inquiries about compensation for directors, has

also been formed under the Board of Directors. The Company has

additionally set up a Compliance Committee to reinforce corporate

LegalOffice

CounselNTV

Whistle

Affiliated CompaniesBusiness Divisions

Charges

Direction/Supervision


Governance/Supervision

ProgrammingDeliberations

Council

General Meeting of Shareholders

IndependentAuditors

Independent Audit

Appointment/Dismissal

Reporting

Reporting

ReportingReportingAppointment/

DismissalAppointment/

Dismissal

Direction/Supervision Audit

Audit

Oversight

Reporting

Reporting

Assignment

Reporting

Appointment/Supervision

Appointment/Supervision

Business ExecutionFramework

Reporting

Counsel

InternalControl

Committee

Deliberation and reporting on

important matters


Systempreparation

ComplianceCommittee

InternalAudit

Committee GroupManagement Council

Board of Statutory AuditorsThree Statutory Auditors

(including two outside auditors)

Board of Directors17 Directors (including

six outside appointments)

(Supervision of operational execution)

Full-TimeDirectors Council

10 Directors(Decision-making regarding

execution of operations)

Board of Executive Officers

(18 members) (Business execution)

NTV’s Corporate Governance Organization

Basic Corporate Governance Philosophy

The NTV Group recognizes that stable growth of corporate value over the long term and greater contributions to society lead

to increased shareholder value. The Company strives to further develop its corporate governance for swift decision-making and

operational execution in response to changes in the business environment and to facilitate transparent and sound management.


Overview

of NTV



of Operations


rowth

Financial Section


Overview

of NTV




of Operations


Progress on Implementation of Initiatives to Enhance Corporate Governance in the Past Year

Two new outside directors were appointed at the General Meeting

of Shareholders held in June 2007. The new appointments brought

the number of outside directors to six in the 17-member Board of

Directors. As of the General Meeting of Shareholders held in June

2008, there remain six outside directors in the 17-member Board of

Directors.

Moreover, in response to the Personal Information Protection

Act, NTV advances daily information management by designating

a person responsible for control of personal information in each

department. To ensure appropriate handling of personal information,

the Company also provides detailed training to managers, general

employees, new employees and cooperating staff, and steadily

implements audits for each department based on the audit plan. In

addition, concerning the Act against Delay in Payment of Subcontract

Proceeds, etc., to Subcontractors, we hold periodic internal training

sessions and are implementing an order management system for

more appropriate and legally compliant subcontracting.

NTV Sustainability is our corporate management program

encompassing activities aimed at contributing to sustainable

development of the environment, global society and business.

As part of the program, we have actively advanced our NTV Eco

environmental preservation initiative, with a keen awareness of

our responsibility as a corporate media leader in prevention of

destruction of the global environment.

Other efforts included educational sessions on insider trading

regulations for officers of the Company and the Group companies

held in April 2007 as part of initiatives to strengthen compliance.

In May 2008, to further enhance internal information management

systems, NTV amended regulations prohibiting insider trading and

revised related rules. We also organized educational sessions for all

officers and cooperating staff to keep everyone informed on the

content of the regulations.

Organization of Internal Audits and Mutual Cooperation with Independent Auditors

Statutory auditors receive explanations from independent auditors

on the outline of the audit plan before the independent audit is

carried out. Statutory auditors also exchange information with

independent auditors on the progress of audit procedures and

issues arising during the course of the audits performed by the

independent auditors, and receive explanations on the results of the

independent audit following completion of the audit.

Statutory auditors can also order employees who belong to

the Board of Statutory Auditors Management Office to investigate

matters necessary for auditing duties. Employees working for the

Board of Statutory Auditors Management Office concurrently work

as a secretariat for the Internal Audit Committee and assist the

statutory auditors with their duties. The statutory auditors maintain

close contact with the Internal Audit Committee.

Independent Auditing

NTV has concluded an audit agreement with audit corporation

Deloitte Touche Tohmatsu to have independent audits carried out

pursuant to the Companies Act and the Securities and Exchange

Law. For the fiscal year ended March 31, 2008, audit duties were

performed by certified public accountants Akihide Fukuda and

Yoshiyuki Higuchi, who executed independent audit duties, and

11 assistants—five certified public accountants and three assistant

certified public accountants.

Compensation to the audit corporations employed by NTV and

its consolidated subsidiaries in the fiscal year ended March 31, 2008,

is as follows.

(Millions of yen)

Compensation based on Duties

Specified in Article 2, Paragraph 1 of

the Certified Public Accountant Law

Other Compensation

NTV 38 11

NTV and its

consolidated

subsidiaries

46 11

Support Framework for Outside Directors and Outside Auditors

Corporate Administration supports outside directors from the

standpoint of management of the Board of Directors, and Finance

and related departments transmit information to the outside

directors as needed by distributing materials and giving explanations.

NTV has also established the Board of Statutory Auditors

Management Office as a dedicated section to support outside

auditors. Employees who belong to the Office assist statutory

auditors with their duties and transmit information by distributing

materials and giving explanations.




Corporate GovernanceCorporate Governance

Executive Compensation

NTV has established executive compensation regulations, which

incorporate the idea that remuneration is tied to business

performance as a basic policy. Executive compensation for the

Company’s directors and statutory auditors in the fiscal year ended

March 31, 2008, was as follows.(Millions of yen)

Executive

RemunerationExecutive Bonuses

Executive Retirement

Allowance

AmountOfficers

paidAmount

Officers

paidAmount

Officers

paid

Directors 477 17 50 16 97 5

Directors

Statutory

auditors

34 4 - - - -

Notes:

1. The number of officers as of March 31, 2008, was 17 directors and three

statutory auditors.

2. The remuneration amounts listed above do not include the employee

portion of salary or bonuses for those officers who are also employees.

3. Executive bonuses were approved at the 75th Ordinary General Meeting

of Shareholders held in June 2008.

4. According to a resolution of the General Meeting of Shareholders,

remuneration is limited to ¥50,000,000 per month for directors and

¥6,000,000 per month for statutory auditors. The yearly limit on the

amount of remuneration was revised to ¥950,000,000 for directors

(of which, up to ¥110,000,000 may be paid to outside directors) and

¥72,000,000 for statutory auditors, pursuant to a resolution of the 75th

Ordinary General Meeting of Shareholders.

5. Besides the amounts listed above, NTV accounted an additional

¥50,000,000 in the fiscal year ended March 31, 2008, as provision for

reserve for bonuses to directors and statutory auditors, allotted for the

payment of executive bonuses. The Company also posted ¥187,000,000 in

the fiscal year ended March 31, 2008, as provision for liability for retirement

benefits for directors and statutory auditors, allotted for the payment of

executive retirement allowance.

Progress on Implementation of Measures Concerning Shareholders and Other Interested Parties

Progress on Initiatives to Vitalize the General

Meeting of Shareholders and Facilitate the Exercise

of Voting Rights

NTV issues convocation notices for the General Meeting of

Shareholders one week prior to the legal date of record. The

Company is also working to facilitate the exercise of voting rights by

implementing a system for exercising voting rights over the Internet

and by compiling English versions of its convocation notices for

foreign shareholders and posting such materials on the Company

Web site.

Progress on Initiatives for Investor Relations

To encourage fuller understanding of the NTV Group’s business

content and strategies by our shareholders and investors, the

Company holds explanatory sessions for analysts and institutional

investors in Japan four times a year, timed to the settlement of

accounts each quarter. For institutional investors based overseas,

representative directors conduct overseas investor relations activities

and the Company actively participates in conferences organized by

securities firms.

Furthermore, NTV posts explanatory materials in Japanese and

English on its Web site each quarter. We distribute videos of corporate

representatives conducting explanatory sessions to provide the same

level of disclosure to individual investors as to session attendees.

Basic Philosophy and Development

Progress on Internal Control Systems

NTV has established the following basic policy on

internal control mechanisms.

1. System to ensure that the execution of duties of directors and

employees conforms to laws and the Articles of Incorporation

NTV promotes compliance with laws and regulations, as well

as highly transparent corporate activities, by maintaining a

Compliance Committee consisting of lawyers and other outside

professionals to serve as directors and observers.

The Company has formulated the NTV Compliance Charter, to

which all full-time officers and employees pledge, to ensure that

corporate activities conform to laws, the Articles of Incorporation

and corporate ethics. To disseminate the Charter throughout the

Company, employees receive education from Human Resources

Administration, Corporate Administration and Compliance &

Standards. In addition, the NTV Whistle has been established as an

internal reporting hotline to enable employees to report directly

on legally doubtful acts inside the Company and request an

investigation.

To ensure the compliance of directors’ execution of duties, the

Company emphasizes the supervisory function of the outside

directors and outside auditors and works to activate the Board of

Directors to pursue higher corporate governance.

NTV has established an Internal Audit Committee to prevent

fraudulent acts through internal audits.

Furthermore, we resolutely confront any antisocial elements

and ensure that such elements play no part in our business

relationships or transactions. There will be no offer of illegal profits:

any unjust demands or wrongful intervention will be reported to

the police and other authorities concerned as part of an organized

response based on close liaison with such agencies.


Overview

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Financial Section


Overview

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of Operations


2. System relating to retention and management of information

concerning directors’ execution of duties

Pursuant to the document handling regulations, information

related to directors’ execution of duties is recorded in writing or

via electromagnetic media (hereinafter “documents, etc.”) and

retained for a specified period. Under the supervision of Corporate

Administration, such documents, etc., are retained at each division,

at which a person in charge of and a person responsible for

retaining them are designated. The directors and statutory auditors

are able to view such documents at any time.

3. Regulations and other risk management systems for losses

The Company has established an Internal Control Committee to

manage risk on a companywide basis and a Risk Management

Committee to manage newly emerging risks in an expedient

manner, with each committee being chaired by a representative

director.

Various committees throughout the Company address risks related

to disasters, information management, program production,

copyright contracts, broadcasting and fraudulent acts, thereby

improving each system and updating regulations. Broadcasters

such as NTV have a special obligation to conduct emergency

broadcasts following earthquakes and other disasters. The

Company therefore maintains equipment and systems to enable

uninterrupted broadcasting after such emergencies and has

created the Metropolitan Area Anti-Disaster Manual as the basis

for training simulations.

4. System to ensure efficient execution of directors’ duties

The Company maintains a system to ensure that directors

execute their duties appropriately and efficiently by clarifying their

administrative authority and establishing decision-making rules

based on internal regulations on division of duties and rules for

ringi (circulating agendas and seeking approval before or without

holding a meeting). Moreover, we have introduced an Operating

Officer System to streamline directors’ execution of duties and

created systems to encourage more dynamic execution of duties.

We also strive to enhance corporate governance by having

outside directors, who have no interest-based relationships with

the Company, supervise the execution of duties in a working

system of checks and balances.

5. System to ensure the appropriateness of duties conducted by

the Company and the corporate group consisting of the parent

company and its subsidiaries

The NTV Group Strategy center formulates and implements

comprehensive strategies for Group management and business

content, and handles general operations-related tasks, to enforce

Groupwide compliance with laws and regulations and to maintain

the risk management system. Compliance-related training is given

to officers and employees of the Group as necessary. The Company

also maintains a Group Management Council—consisting of

representatives of the Group companies—to share information,

thereby reinforcing the appropriateness of operations.

6. Matters concerning employees who are to assist statutory auditors

upon statutory auditors’ request

Statutory auditors can order employees who belong to the Board

of Statutory Auditors Management Office to investigate matters

necessary for auditing duties. Such employees shall assist the

statutory auditors with their auditing duties and concurrently

work as a secretariat for the Internal Audit Committee.

7. Matters concerning the independence of the employees who

assist statutory auditors from directors

Directors are not allowed to give orders different from those of

the statutory auditors to the employees who assist the statutory

auditors. Directors must obtain the approval of the statutory

auditors for transfer of and disciplinary actions against employees

who assist the statutory auditors.

8. A system that requires directors to report to the Board of Statutory

Auditors, and a means for employees to report to statutory auditors

Directors must report to the Board of Statutory Auditors on

matters stipulated by law that could have a substantial impact

on the Company or the Group, as well as on the status of internal

auditing.

In case employees find matters stipulated by law that could have

a substantial impact on the Company or the Group, or facts that

violate laws or the Articles of Incorporation, they can directly

report such instances to the statutory auditors through the NTV

Whistle, which is an internal reporting system.

9. Other systems to ensure effective auditing by statutory auditors

Standing statutory auditors shall attend the Full-Time Directors

Council and exchange opinions with the full-time directors.

Statutory auditors may attend the Group Management Council,

which consists of representatives from the Group companies, and

may receive advice regarding auditing duties from lawyers,

Certified Public Accountants and other professionals if necessary.



NTV has been selected as a member of the

FTSE4Good Index series of environmental

sustainability indices provided by FTSE

International Limited of the United Kingdom,

for fi ve consecutive years.

CSRCSR

NTV’s Basic Policy on Sustainability

Sustainability is our corporate management program encompassing activities aimed at

contributing to sustainable development of the environment, global society and business.

The program pursues the three key areas of financial, environmental and social sustainability.

In addition to striving to produce quality programs that attract high viewer ratings, NTV works to

remain financially viable in the new digital era through efficient use of the cutting-edge capabilities

of the NTV Tower. For the environment, the Company promotes ecology through its programming

and works to reduce the environmental footprint of its business activities, and thus leave behind

a beautiful world for future generations. Socially, we aim for swift decision-making and business

execution in response to changes in the business environment, to achieve sustainable growth of

corporate value and enhanced contributions to society.

Stance on Environmental and CSR Activities

The Company is keenly aware of its social responsibilities as a leading media company and strives

to promote global environmental preservation through programs and events in line with NTV

Sustainability. We advance our environmental protection and CSR activities primarily through the

NTV Eco Committee, established in March 2003, and the NTV Environmental Management Office,

established in June 2003. In August 2005, we also formulated the NTV Environment Policy, and

in November 2005 the environmental management system (EMS) in place at the NTV Tower was

awarded ISO 14001 certification—the international standard for such systems. This achievement

marked the first time that a key commercial broadcaster in Tokyo was recognized with certification

on a companywide basis. We expanded the Company’s ISO 14001 certification in November

2006 to cover the Kansai Office, the Nagoya Sales Office, the Kojimachi Building and the Ikuta

Studio. In addition, since 2005 we have been actively participating in Team Minus 6%, an initiative

advanced by Japan’s Ministry of the Environment.

The Company actively implements thorough compliance measures, as incorporated in the

NTV Compliance Charter. Concerning disclosure, the charter calls for the Company to disclose

pertinent information in a timely and accurate fashion and conduct its activities with fairness

and transparency.




Nagasaki International


Kamiagata-cho, Tsushima,

Nagasaki Prefecture, May 31

(Sat.) to June 1 (Sun.)

Yomiuri Telecasting

Shore of Lake Biwa, Shiga

Prefecture, July 6 (Sun.)

Yamagata Broadcasting

Tobishima Island, Sakata,

Yamagata Prefecture, May 31 (Sat.)

Shizuoka Daiichi Television

Fuji, Shizuoka Prefecture, June 14 (Sat.)

Nippon Television

Arakawa, Edogawa-ku, Tokyo, June 1 (Sun.)

Miura, Kanagawa Prefecture, July 27 (Sun.)

Okinawa Television Broadcasting

Yomitan-son,

Okinawa Prefecture,

June 15 (Sun.)

Chukyo TV Broadcasting

Chisaki Coast, Ikobe-cho,

Toyohashi, Aichi

Prefecture, June 1 (Sun.)

Kagoshima Yomiuri Television

Yakushima Island, June 1 (Sun.)

Tanegashima Island , July 20 (Sun.)

Minamisatsuma, July 21 (holiday)

Kumamoto Kenmin Television

Amakusa, Kumamoto


Television Oita

Motosaru Coast,

Kamae, Saiki, Oita


Fukushima Central Television

Lake Inawashiro, Fukushima

Prefecture , August 23 (Sat.)

MIYAGI TELEVISION

BROADCASTING

Watari-cho, Miyagi

Prefecture, July 5 (Sat.)

Aomori Broadcasting

Nakadomari-machi, Aomori

Prefecture, July 2 (Wed.)

Yamanashi Broadcasting

Mt. Fuji 5th Station and Fuji Five

Lakes areas, August 9 (Sat.)

Yamaguchi Broadcasting

Kiyogahama, Abu-cho, Yamaguchi

Prefecture, August 10 (Sun.)

NIHONKAI TELECASTING

(Shimane, Tottori),

June 8 (Sun.)

List of Cleanup Japan Project Activities Conducted in 2008

NTV Original Social Contribution Activities through Television

Broadcasts

24-Hour Television: “Love Saves the Earth”

This year marked the 31st annual broadcast of this program since its inception in 1978. In 2008, the

special aired on August 30 and 31 with the theme “Vow: The Most Important Promise.” Guided by the

principle “Love Saves the Earth,” viewer donations raised through this broadcast are used in charitable,

environmental and disaster-relief causes through the 24-Hour Television Charity Committee. In

addition to donating special vehicles for public service activities—an ongoing activity that started

from the first broadcast—the funds go toward popularization of assistance dogs for the disabled,

support for people with visual and hearing disabilities, environmental conservation, disaster relief and

other social causes. In 2008, we used donated funds for additional special vehicles for public service

activities; lake, river, ocean and other cleanup activities at waterfronts and at Mt. Fuji; and relief

contributions for the Sichuan Earthquake in China and the Iwate-Miyagi Inland Earthquake.

As of September 30, 2007, funds raised in the 30 times this program has aired totaled

¥26,164,747,249.

Implementing the Cleanup Japan ProjectTo leave behind a beautiful world for future generations, through 24-Hour Television we began

supplementing the mainstay support for environmental preservation in 2004. Beginning with

initiatives within our reach, we removed illegally dumped garbage on Mt. Fuji and cleaned up

the shores of Lake Biwa. From 2007, we have cooperated in the removal of drifting ocean trash,

which mars the coastal landscape and negatively impacts ocean ecosystems. In 2008, the circle

of cooperation expanded to all of Japan, and NTV and 15 other commercial broadcasters

carried out cleanup activities with the cooperation of more than 7,500 volunteers.

This year, NTV also started collecting floating trash from rivers in Tokyo’s Edogawa and

Arakawa wards to remove the refuse before it flows into the ocean. We also continued coastal

cleanup activities begun last year on Jogashima Island in the city of Miura, Kanagawa Prefecture

and engaged in other accessible activities to protect the natural environment.

24-Hour Television

the 31st anniversary of NTV’s annual charity

program

Implementing the Cleanup Japan Project

in Arakawa, Edogawa-ku, Tokyo

l

Overview

of NTV



of Operations


rowth



of Operations




verview of N

TV



Yomikikasekai Anpanman Picture-Story Show

for children and their parents to think about

the Earth together

© YANASE ̇ F ̇ N

Yomiuri Shimbun presents the Children’s

Soccer Classroom with Ramos Rui of

Tokyo Verdy

CSRCSR

NTV Eco Week: “Touch! eco”NTV’s environmental preservation activities have been aimed at ensuring that the world we

entrust to future generations remains one filled with promise, under the key phrase, “ Let’s Think

about the Earth Together.” As part of these activities, every year since 2005 we have hosted NTV

Eco Week in conjunction with United Nations World Environment Day on June 5. In 2008, during

the week from June 2 to June 8, we held a large-scale NTV Eco Week event to commemorate the

55th anniversary of NTV’s establishment under the unifying theme of “Touch! eco.” This entailed

furnishing viewers with information and news programs with eco-related information every

day in set time slots for a week, and actively incorporating ecological themes into an array of

regular programming, including variety programs and talk shows broadcast during golden time.

In the 13-hour live special presentation Touch! eco 2008 Special: 55 Challenges, we took a variety of

approaches in conveying the crisis we face from global warming and the importance of recycling,

to give viewers a sense of how relevant these environmental issues are to their lives. Furthermore,

we aired the environmental documentary Hidetoshi Nakata: The World as I Have Seen it; Travel and

Sometimes Soccer, in which we followed the travels of Hidetoshi Nakata—who has been sorely

missed by fans after his withdrawal from the soccer world in June 2006—and expressed the

preciousness of the environment through views of world travel destinations.

At the same time, NTV’s head office in Shiodome, Tokyo, held its fifth annual eco event. This

year, we built on the previous weekend-only event to hold a week-long event to coincide with

NTV Eco Week.

We consider it part of our mission as a television station to create programming that prompts

many viewers to think about the environment through such programs and events, and we will

continue working to fulfill this mission.

Promoting Free Access to Information

NTV strives to bridge gaps in information accessibility across an array of programs. Such efforts

include sign language interpretation and on-screen text display of closed-captioning for the

hearing impaired, as well as audio narration tracks of drama series scenes for the visually impaired.

NTV has long worked to eliminate differences in access to information. In 1973, the Company

established the NTV “Dove of Love” Welfare Foundation out of the desire to support those who

cannot fully enjoy television due to visual and hearing disabilities. The foundation primarily

supports early detection and treatment of disabilities, rejuvenation of functionality, and

cooperative activities to raise public understanding of such conditions. In the 30 years since its

establishment, the foundation’s activities have ranged from offering courses in sign language

and distributing Braille calendars to aiding programs for early detection of hearing and speech

impediments in children. In addition, in August 2001 NTV launched Japan’s first full-length, real-

time closed-captioned news programs, known as RealCap broadcasts.




Financial Section

Contents

44 Management’s Discussion and Analysis

52 Consolidated Balance Sheets

54 Consolidated Statements of Income

55 Consolidated Statements of Changes in Equity

56 Consolidated Statements of Cash Flows

57 Notes to Consolidated Financial Statements

69 Independent Auditors’ Report

NTV_(E)_p43-72_1006.indd 43 08.10.24 7:40:28 PM

Financial Section


Management’s Discussion and AnalysisNippon Television Network Corporation and Consolidated Subsidiaries


Overview

Operating Environment

The fiscal year ended March 31, 2008 started out with a continuation of the recovery of the Japanese

economy, but the subsequent part of the year saw a partial slowdown brought on by global market

factors, including high raw materials prices and turbulence in the financial sector. According to research

by Dentsu Inc., against the backdrop of Japan’s economic recovery, domestic spending on advertising

during 2007 came to ¥7,019.1 billion, an increase of 1.1% compared to the preceding year. However,

total spending on television advertising was ¥1,998.1 billion, down 0.9%—the third consecutive year of

decrease. Within this spending, expenditures for time ads edged down 0.6%, to ¥877.3 billion, failing to

compensate for a drop from the previous year’s coverage of the Torino Winter Olympics and the 2006

FIFA World Cup™. Expenditures for spot ads slipped 1.1%, to ¥1,120.8 billion, due to stiffer competition for

market share among televisions stations brought on by lower regional ad placement, and the influence of

apparent cost-cutting trends for new ad placement.

Net Sales

In the year ended March 31, 2008, the NTV Group posted consolidated net sales of ¥342,188 million—

a decrease of 0.4% compared with the previous fiscal year. Robust growth in television-based shopping,

films, events and other non-broadcasting revenue sources was offset by declines in the Group’s core

television broadcasting segment in the sagging television advertising market, with time sales falling 0.9%

and spot sales dropping 2.5%.

Gross Profit and Operating Income

Gross profit decreased 5.0% during the fiscal year, to ¥99,511 million, and operating income plunged

24.0%, ¥23,077 million. These declines resulted from an 1.6% uptick in cost of sales, to ¥242,677 million,

based on increased production costs to fund major restructuring of the golden and afternoon viewing

time periods, offsetting a falloff in depreciation of digital terrestrial broadcasting facilities.

Starting in the fiscal period under review, NTV has revised the “cost of sales” and “selling, general and

administrative expenses” categories. Consequently, cost of sales decreased ¥4,404 million, while gross

profit and selling, general and administrative expenses both increased ¥4,404 million.

Income Before Income Taxes and Minority Interests

Income before income taxes and minority interests plummeted 40.9%, to ¥19,141 million. Major factors

included a ¥9,064 million higher loss on devaluation of investment securities, despite ¥2,280 million in

gain on sales of investment securities.

Net Income

As a result, net income amounted to ¥10,625 million—a 42.0% decrease.

0

100.0

200.0

300.0

400.0

20082007200620052004

Net Sales(Billions of yen)

328.4357.6 346.6 343.7 342.2

368 355300

341

0

10.0

20.0

30.0

40.0

20082007200620052004

Operating Income(Billions of yen)

35.9 34.3

28.6 30.3

23.1

0

5.0

10.0

15.0

20.0

20082007200620052004

Net Income(Billions of yen)

19.416.8

13.7

18.3

10.6

0

2.5

5.0

7.5

10.0

20082007200620052004

ROA and ROE (%)

ROA ROE

3.9

5.74.7

2.7

3.64.6

3.52.6

2.13.3

0

15.0

30.0

45.0

60.0

20082007200620052004

EBITDA(Billions of yen)

34.6

12.747.4

52.9

43.9 46.80.10

0

31.8

21.1

26.3

17.6

32.4

14.432.0 0

19.1

12.9

Income Before Income Taxes and Minority Interests

Depreciation and Amortization

Interest Expense

0

NTV_(E)_p43-72_1006.indd 44 08.10.24 7:40:28 PM


Financial Section

Segment Information

Net Sales (Billions of yen)

2004 2005 2006 2007 2008

Television Broadcasting 285.0 289.8 278.0 267.9 262.4Cultural Activities 38.9 62.1 62.5 69.4 74.0Other 11.9 13.7 15.1 14.5 15.1Elimination/Corporate (7.4) (8.0) (8.9) (8.2) (9.3)Total 328.4 357.6 346.6 343.7 342.2

Operating Income (Billions of yen)

2004 2005 2006 2007 2008

Television Broadcasting 31.1 25.3 36.0 33.8 27.7Cultural Activities 3.9 8.2 5.2 8.2 6.3Other 0.9 1.2 2.4 1.3 2.3Elimination/Corporate (0.0) (0.4) (15.0) (13.0) (13.2)Total 35.9 34.3 28.6 30.3 23.1


Sales in the NTV Group’s core television broadcasting business in the fiscal year ended March 31, 2008

slid 2.1% compared with the prior fiscal year, to ¥262,370 million. To bolster time sales, NTV aggressively

promoted such large-scale sports programs as the FIFA Club World Cup Japan 2007 soccer event, the 84th

Hakone Ekiden and the Tokyo Marathon 2008, in addition to 24-Hour Television 30: Love Saves the Earth and

other large-scale single-episode flagship programs representing for the Company. However, the drop

from the previous year’s coverage of the 2006 FIFA World Cup™ contributed to a decrease in time sales

of 0.9%, to ¥136,981 million. Despite marked improvement in our viewer ratings trends, marketwide spot

sales in 2007 were negatively impacted by lagging spot advertising expenditures in the Kanto region,

which were off 30% from the previous calendar year. These factors led to a 2.5% contraction in spot sales

during the fiscal year under review, to ¥105,572 million. Program circulation and other income dipped

7.3%, to ¥19,815 million.

Operating expenses edged up 0.3%, to ¥234,714 million, mainly because of higher production costs to

fund major restructuring of the golden and afternoon viewing time periods, despite reductions in variable

expenses, such as a falloff in the depreciation of digital terrestrial broadcasting facilities and a decline in

agency commissions. Consequently, operating income shrank 18.3%, to ¥27,656 million.

Cultural Activities

Net sales in the cultural activities segment reached ¥73,999 million, up 6.6% from a year earlier. The

event business experienced elevated revenues, partially thanks to popular support of the Kazuo Oga

Exhibition and other art gallery exhibitions, and events such as Disney On Ice. Films recorded substantial

revenue advances, spurred by major hits during the fiscal year for which NTV headed up the production

committee, such as the release of TOKYO TOWER—Mom & Me, and Sometimes Dad in April, Maiko Haaaan!!!

in June, ALWAYS—Sunset on Third Street 2 in November, A Tale of Mari and Three Puppies in December and

L change the WorLd in February. The media commerce business, which we are aggressively expanding,

sustained its rapid upsurge in sales from the previous fiscal year. In addition, although the drop-off from

the strong DVD sales in the prior year depressed revenues from consolidated subsidiary VAP Inc., healthy

income from merchandising rights for character merchandise at Nippon Television Music Corporation

helped generate a net gain in revenue for the cultural activities segment as a whole.

Operating expenses rose 10.6%, to ¥67,707 million, based on higher net sales and the anticipatory

accounting of expenses for the movie Sweet Rain: Shinigami no Seido, which was released on March 31,

2008. Meanwhile, operating income dropped 23.2%, to ¥6,292 million.

0

10.0

20.0

30.0

40.0

20082007200620052004

Television Broadcasting Operating Income(Billions of yen)

31.1

25.3

36.033.8

27.7

0

100.0

200.0

300.0

400.0

20082007200620052004

Television Broadcasting Sales(Billions of yen)

285.0 289.8 278.0 267.9 262.4

0

30.0

60.0

90.0

120.0

20082007200620052004

Program Production Costs (Non-Consolidated Basis)(Billions of yen)

110.2 109.6 111.5 109.5 114.1

0

20.0

40.0

60.0

80.0

20082007200620052004

38.9

62.1 62.569.4

74.0

Cultural Activities Sales(Billions of yen)

0

2.5

5.0

7.5

10.0

20082007200620052004

Cultural Activities Operating Income(Billions of yen)

3.9

8.2

5.2

8.2

6.3

NTV_(E)_p43-72_1006.indd 45 08.10.24 7:40:29 PM

Financial Section


Management’s Discussion and Analysis

Cash Flows (Billions of yen)

2004 2005 2006 2007 2008

Net cash provided by operating activities 30.5 49.3 32.7 31.5 26.8Net cash used in investing activities (41.6) (23.1) (24.4) (24.6) (17.3)Net cash provided by (used in) financing activities 7.1 (37.3) (15.9) (4.7) (4.1)Net increase (decrease) in cash and cash equivalents (4.0) (11.1) (7.5) 2.2 5.3Cash and cash equivalents, end of year 77.9 66.9 59.4 61.5 66.9

Financing and Capital Expenditure Policy

In the context of its ongoing content investment, the NTV Group utilizes retained earnings and determines

the optimal method of funds procurement based on a variety of factors, including future operating

conditions, financial market trends and the impact on the Company’s corporate value.

In specific terms, the Group’s estimates for capital expenditures over the next seven-year period are

determined in line with forecast profits and cash flows. Group companies formulate their own capital

plans, but NTV makes adjustments to ensure there is no overlap among plans. In the fiscal year ended

March 31, 2008, the Group’s total capital expenditures were ¥5,200 million, centered on capital outlay for

digital terrestrial broadcasting in the television broadcasting segment.

In the fiscal year ending March 31, 2009, the NTV Group is budgeting capital expenditures of ¥8,182

million, to be funded primarily through retained earnings.

Capital expenditures by business segment are as follows.

Television BroadcastingFor equipment related to program production, NTV invested to fully upgrade its live broadcast of the

Hakoke Ekiden to high definition, achieving full high-definition live broadcasting for the event on New

year’s Day, 2008.

Other

Sales in the other segment climbed 4.2% year on year, to ¥15,145 million, owing to higher income from

tenant rents.

Operating expenses eased 3.1%, to ¥12,806 million, primarily thanks to cost-cutting efforts at

consolidated subsidiary Nippon Television Football Club Co., Ltd.

Consequently, operating income surged 76.8%, to ¥2,339 million.

Liquidity and Financial Resources

Cash Flows

As of March 31, 2008, cash and cash equivalents stood at ¥66,863 million, up ¥5,339 million from one year

earlier.

Net Cash Provided by Operating ActivitiesNet cash provided by operating activities reached ¥26,791 million, up from ¥31,458 million at the end

of the preceding fiscal year. The primary contributing factors were posting of income before income

taxes and minority interests of ¥19,141 million and depreciation and amortization of ¥12,939 million,

versus ¥13,235 million in income taxes paid.

Net Cash Used in Investing ActivitiesNet cash used in investing activities totaled ¥17,301 million, compared with ¥24,596 million a year

earlier. The main uses of cash were purchases of marketable and investment securities.

Net Cash Used in Financing ActivitiesNet cash used in financing activities was ¥4,124 million, down from ¥4,714 million. Dividends paid was

the primary contributor to this reduction.

0

4.0

8.0

12.0

16.0

20082007200620052004

Other Sales(Billions of yen)

11.913.7

15.1 14.5 15.1

0

0.7

1.4

2.1

2.8

20082007200620052004

Other Operating Income(Billions of yen)

0.91.2

2.4

1.3

2.3

Cash and Cash Equivalents, End of Year(Billions of yen)

0

20.0

40.0

60.0

80.0

20082007200620052004

77.9

66.959.4 61.5

66.9

NTV_(E)_p43-72_1006.indd 46 08.10.24 7:40:30 PM


Financial Section

Concerning transmission equipment, we continue adapting relay stations for digital output to

further expand the digital terrestrial broadcasting area. Capital outlay also went toward accommodating

broadcasts of “1-SEG”-only programs that are not paired with simultaneous television broadcasts of the

same content.

As a result of the above, capital expenditure in the television broadcasting segment amounted to

¥4,585 million.

Cultural ActivitiesCapital expenditure in the cultural activities segment was ¥140 million, which was mainly used to

construct systems at consolidated subsidiaries.

OtherCapital expenditure in the other segment reached ¥249 million, which was mainly used to construct

systems at consolidated subsidiaries.

CompanywideWe are currently reconstructing the heat source for the Kojimachi Building, to ensure efficient property

management. As a result, capital expenditure companywide totaled ¥224 million.

Financial Position

AssetsAs of March 31, 2008, total current assets were ¥198,341 million, an increase of ¥4,797 million from

a year earlier, primarily owing to an increase in marketable securities based on the acquisition of

certificates of deposit.

The total of net property and equipment and total investments and other assets declined ¥21,555

million compared with the end of the preceding fiscal year, to ¥314,166 million, as a result of reduction

in investment securities reflecting a decrease in market value and advancing depreciation.

Consequently, total assets fell ¥16,758 million, to ¥512,507 million.

LiabilitiesTotal current liabilities stood at ¥77,488 million—a decrease of ¥4,582 million—due primarily to a

decrease in income taxes payable, reflecting lower profits.

Total non-current liabilities slackened ¥7,849 million, to ¥27,351 million, owing to a decrease in

deferred tax liabilities, which reflected the fall in market prices of investment securities.

As a result, total liabilities reached ¥104,839 million, down ¥12,431 million.

Net AssetsA significant reduction in unrealized gain on available-for-sale securities, reflecting the downtrend in

market value of investment securities, was offset by an increase in retained earnings accompanying

capitalization of net income. Accordingly, net assets at end of year came to ¥407,668 million, a ¥4,327

million decrease.

Earnings Outlook for the Year Ahead

For the fiscal year ending March 31, 2009, the NTV Group anticipates net sales of ¥338.4 billion, operating

income of ¥13.4 billion and net income of ¥8.5 billion.

Concerning net sales, we are assuming decreases in time sales and spot sales of 1.5% and 6.2%,

respectively, in consideration of the stagnant market environment for television advertising. Despite

expectations of strong performance for investment films, especially the July 2008 release of Ponyo on the

Cliff by the Sea, our forecasts indicate a 1.1% decrease in revenues compared with the fiscal year ended

March 31, 2008.

0

15.0

30.0

45.0

60.0

20082007200620052004

49.8

12.7 9.2

21.1

6.3

17.6

6.014.4

5.212.9

Capital Expenditures Depreciation

Capital Expenditures and Depreciation(Billions of yen)

0

100

200

300

400

20082007200620052004

Liquidity Ratio (%)

207230 236

160

256

0

150.0

300.0

450.0

600.0

20082007200620052004

513.4 493.6 520.0 529.3 512.5

Total Assets(Billions of yen)

0

25

50

75

100

20082007200620052004

Equity Ratio (%)

74.3 76.6 76.3 77.869.0

NTV_(E)_p43-72_1006.indd 47 08.10.24 7:40:31 PM

Financial Section



In terms of expenses, in addition to elevated cost of sales accompanying increased income in the

cultural activities segment, for the first half of the fiscal year we predict a 6.9% increase in program

production costs from the same period a year earlier. The main factors envisioned for the increase are

the Beijing Olympics and large-scale single-episode specials to commemorate NTV’s 55th anniversary,

and a greater number of new production slots and other programming reorganization. Although we

intend to continue the 55th Anniversary Plan through the period and beyond, we expect stringent cost

control measures to reduce expenses 2.5% year-on-year in the second half.

Dividend Policy

NTV recognizes return of profits to shareholders as an important task of management. Our basic policy

is to emphasize dividend payout ratio in linking dividends to performance, while building a corporate

structure able to flexibly adapt to changes in market conditions, strengthening our revenue base and

harmonizing these endeavors with the maintenance of internal reserves for aggressive future expansion.

Full-year cash dividends for the fiscal year ended March 31, 2008 totaled ¥180 per share, consisting

of an interim dividend of ¥75 and a year-end dividend of ¥105. These figures were derived from NTV’s

dividend policy stipulating a minimum full-year dividend of ¥150 per share and a target payout ratio* of

33% on an individual basis, to which a ¥30 dividend per share was added to commemorate NTV’s 55th

anniversary.

We intend to further prioritize return of profits to shareholders from the fiscal year ending March 31,

2009, by raising the minimum full-year dividend to ¥180 per share—consisting of a ¥90 interim dividend

and a ¥90 year-end dividend—and the target payout ratio to 50% on an individual basis.

*Individual full-year dividend per share of common stock, divided by individual net income per share of common stock

Business Risks

Risk factors deemed to have the potential to significantly affect the NTV Group’s business activities are

given below.

The many items regarding the future described in the following have all been evaluated as of the

time of publication of this Annual Report, and are provided from the standpoint of active disclosure to

investors.

Note that the following statements do not comprehensively identify all possible risks related to

investing in the Company’s stock.

Risk Factors as a Broadcaster

Dependence on Advertising RevenueThe television broadcasting segment, which forms the core of the NTV Group’s operations, is dependent

on television advertising revenues from sale of commercial message (CM) time slots, with such revenues

comprising 70.9% of total net sales in the fiscal year ended March 31, 2008.

Although the advertising market in Japan is considered to be related to macroeconomic trends

in the country, the advertising market is not consistently reflecting the current economic recovery.

Moreover, the share of the advertising market accounted for by television advertising expenditures,

which had risen with the increase in the media value of television broadcasting, is experiencing a

plateau.

The NTV Group recognizes the continued dominance of the media value of television broadcasting

and remains committed to enhancing that value. However, future macroeconomic trends in Japan and

shifts in the advertising market could impact the Group’s business performance and financial position.

NTV_(E)_p43-72_1006.indd 48 08.10.24 7:40:32 PM


Financial Section

Legal Regulations for Television BroadcastersThe NTV Group’s core television broadcasting business is regulated by Japan’s Broadcast Law and

Radio Law.

The objective of the latter is to promote robust development of broadcasting by stipulating freedom

of program editing and establishing broadcast program deliberative bodies.

The Radio Law also aims to enhance public welfare by ensuring the fair and efficient usage of

the airwaves. Article 4 of the Radio Law stipulates that parties seeking to open radio stations for

the transmission of radio waves must receive a license from the Minister of Internal Affairs and

Communications. Article 13(2) of the Radio Law and Article 7(6) of the Order of the Enforcement of

the Radio Law specify that the validation period of such a license is five years.

On July 31, 1952, the Company was the first in Japan to be authorized for television broadcasting.

We have subsequently continued to renew our status as a licensed broadcasting company.

Under the authority to the Minister of Internal Affairs and Communications in the event of

prescribed circumstances, the Radio Law provides stipulations for discontinuance of radio transmissions

(Article 72) and revocation of status as a licensed broadcasting company (Article 75 and Article 76).

Continued television broadcasting is the linchpin for the NTV Group’s future existence, so the Group

is ever-conscious of and vigilant toward the emergence of such circumstances in the fulfillment of its

social mission of broadcasting. However, if the Company’s status as a licensed broadcasting company

were revoked under the Radio Law, the Group’s business performance and financial position could be

seriously affected. Further, current debates concerning broadcasting and communications may cause

legal revisions and other changes that could ultimately impact the operating performance of the Group.

Risk Factors Regarding Competition with Other Companies

Competition with Other Forms of MediaSince the rollout of digital terrestrial broadcasting in December 2003, single receivers that enable

viewing of any of terrestrial, BS and CS digital broadcasts have steadily gained popularity. At the

same time, broadband access has improved and sophisticated personal computers have broadly

penetrated the general household market. This popularization of digital media is drawing the

interest of many people, rapidly raising the advertising value of such forms of media. Increases in BS

digital broadcasting and Internet-related advertising expenditures have particular potential to weigh

on terrestrial broadcasting revenues. New BS digital broadcasting frequencies are slated for launch

in 2011, which could further impact future advertising expenditures in the terrestrial broadcasting

business.

In addition, multimedia broadcasts to mobile phones are set to begin in 2011. The appearance of

such new media could pose similar risks to existing television broadcasting companies. Although the

increase in scale of cable television with its improved services through mergers and the emergence of

IP broadcasting using fiber optics are assisting the spread of digital terrestrial broadcasting in certain

ways, multichannel and Video on Demand (VoD) services could cut into viewing time for digital

terrestrial broadcasts. The Group’s business performance and financial position may be affected by

the advancement of such other forms of media.

Risk Factors Regarding Content

Surging Licensing FeesWith television broadcasting as its core business, the NTV Group has carried out its mission as a

television broadcaster by covering the Olympics, World Cup soccer and other sporting events closely

watched by Japan’s citizens.

At the same time, television licensing fees for these international sporting events are rising each

year, which is eroding profits for television broadcasters.

The Group remains committed to airing international sporting events, to execute its mission as a

television broadcaster of continuing to provide citizens with entertainment. However, additional price

hikes on licensing fees have the potential to negatively influence the Group’s business performance

and financial position.

NTV_(E)_p43-72_1006.indd 49 08.10.24 7:40:32 PM


Financial Section

Copyrights and Other Intellectual Property RightsThe television programs produced by the NTV Group intimately combine copyrights and neighboring

rights (hereinafter “copyrights, etc.”) that represent the results of the creative intellectual and cultural

efforts of authors, screenwriters, musical lyricists and composers, record producers, performers and

many others (hereinafter, “authors, etc.”).

Japan’s Copyright Act states in its first Article that it is intended to spell out the rights of such

authors, etc. who engage in creative activities, protect the rights of such authors, etc. and contribute to

cultural development, while giving due regard to fair use.

In recent years, demand has arisen for multiple uses of content to supplement conventional

terrestrial broadcasting, including content distribution via BS and CS satellite broadcasts, cable television

and the Internet; packaging in the form of DVDs and other physical media; and merchandising and

publishing related to program characters. While carefully considering the rights of the various authors,

etc., the Group plans to continue aggressively pursuing multiple uses for the television programs and

other content it produces.

However, the rights for use of television programs produced by the Group from the authors, etc.

are premised on terrestrial broadcasting usage as a general rule, leaving the Group with numerous

television programs for which rights premised on uses other than terrestrial broadcasting have not

been adequately obtained.

In deploying content for multiple uses on the Internet and in other new media, it will therefore

be essential to re-acquire permission from the authors, etc. Such rights handling could require large

amounts of time and expenditures. At the same time, in the event that the Group fails to properly

accommodate the authors, etc., it may face broadcast cancellation orders or claims for damages. In

such cases, the Group’s business performance and financial position may be affected.

Risk Factors Regarding Investment in New Businesses

Film BusinessThe NTV Group is actively engaged in the film business in the pursuit of revenue outside of television

broadcasting, and contributes capital to approximately 15 films each year. Our capital participation in

the film business is determined based on careful simulations of potential income and outlay during

the planning stages of each film. However, there is no guarantee that actual box office receipts and

secondary usage revenues after theatrical release will generate the projected earnings. Failure to secure

the amount of revenue initially planned may impact the Group’s business performance and financial

position.

Media Commerce BusinessTo secure revenue outside of television broadcasting, the Group is actively engaged in the media

commerce business, which is growing in scale each year. We select products carefully, using a

thoroughly comprehensive checking system. However, failure to secure the amount of revenue initially

planned may impact the Group’s business performance and financial position.

VoD Business and NTV2NTV2—launched on October 31, 2005—is the Group’s first full-fledged foray into the VoD business as

a terrestrial television station, and is operated on the two bases of advertising and fee-based revenues.

Being a new business, the VoD business cannot be built on the same business model as similar

entities that have preceded it. Accordingly, advertising revenues may not grow if the business is

unable to provide content that fulfills sponsors’ needs, and fee-based revenues may fail to expand if

the business cannot supply content that satisfies users’ needs. These factors may result in the business

being unable to recover its expenses, thereby affecting the business performance and financial position

of the Group.


NTV_(E)_p43-72_1006.indd 50 08.10.24 7:40:32 PM


Financial Section

Other Risk Factors

Handling of Shares Purchased by Foreign EntitiesNTV’s status as a licensed broadcasting company under the Radio Law will be revoked if the voting

rights held by foreign entities (defined as (1) an individual without Japanese citizenship, (2) a foreign

government or its representatives, (3) a foreign juridical person or organization or (4) a juridical person or

organization the ratio of voting rights of which to be held directly by the entity described in items (1) to

(3)) reach a ratio of 20% or more of the Company’s shares with voting rights, such ratio being defined by

the Ministry of Internal Affairs and Communications Ordinance as the sum of the ratios of the rights held

directly by entities described in (1) through (3) and held indirectly through the entities described in (4).

In this situation, the Company may refuse to describe or record such foreign entities on the

shareholders’ register (including a substantial shareholder) in accordance with the provisions of the

Broadcast Law Article 52(8)(i) and 52(8)(ii). Furthermore, based on Article 52(8)(iii) of the Broadcast Law,

the Company may also restrict exercise of voting rights.

Large-Scale Acquisitions of NTV’s SharesMany large-scale acquisitions of shares benefit neither the corporate value of the target company nor

the common interests of its shareholders. Such large-scale acquisitions include those with a purpose

that would obviously harm the corporate value of the target company and the common interests of

its shareholders; those with the potential to substantially coerce shareholders into selling their shares;

those that do not provide sufficient time or information for the target company’s board of directors and

shareholders to consider the details of the large-scale acquisition, or for the target company’s board

of directors to make an alternative proposal; and those that require the target company to discuss or

negotiate with the acquirer in order to procure more favorable terms for shareholders than those

presented by the acquirer.

NTV renewed the effective period of the plan for countermeasures to large-scale acquisitions

of shares in the Company (takeover defense measures) at its 74th Ordinary General Meeting of

Shareholders held on June 28, 2007 until the conclusion of the 75th Ordinary General Meeting of

Shareholders held on June 27, 2008. The Company then, as a result of further considerations in light

of recent amendments to laws and judicial rulings, obtained shareholder approval for and carried out

a renewal of its plan for countermeasures to large-scale acquisitions of shares in the Company

with necessary amendments (takeover defense measures) at its 75th Ordinary General Meeting of

Shareholders as a measure (Article 127, Item (ii)(b) of the Ordinance for Enforcement of the Companies

Act) to prevent decisions on the Company’s financial and business policies from being controlled

by persons viewed as inappropriate under the basic policy regarding persons who control decisions

on the Company’s financial and business policies (defined in the main clause of Article 127 of the

Ordinance for Enforcement of the Companies Act).*

The Company, as a group, strives to ensure and enhance its corporate value, whose source lies in

particular in its superior content development capability. The bedrock of our content development

capability is founded mainly on acquisition and development of high-caliber personnel, preservation

of mutual trust relationships with external parties involved in content production, sustainment of

relationships of cooperation and mutual trust with network companies, maintenance of a corporate

culture with a mid- to long-term outlook that encourages the development of high-quality content,

assurance of stable business results and financial structure, and fulfillment of the Company’s public

responsibilities as a broadcaster. Unless the acquirer of a proposed large-scale acquisition of shares in

the Company understands the source of the corporate value of the Company and would ensure and

enhance these elements over the medium-to-long-term, the corporate value of the Company and,

in turn, the common interests of its shareholders would be harmed, which could have a considerable

impact on the Company’s management.

* Please refer to the May 15, 2008 press release, Renewal of Countermeasures to Large-Scale Acquisitions of Nippon Television

Shares (Takeover Defense Measures) on the NTV Web site:

(http://www.ntv.co.jp/ir/library/result/pdf/20_4q_2.pdf)

NTV_(E)_p43-72_1006.indd 51 08.10.24 7:40:32 PM

Financial Section


Consolidated Balance SheetsNippon Television Network Corporation and Consolidated Subsidiaries

March 31, 2008 and 2007

Millions of Yen

Thousands of

U.S. Dollars

(Note 1)

ASSETS 2008 2007 2008

Current Assets:

Cash and cash equivalents ¥ 66,863 ¥ 61,524 $ 667,362

Marketable securities (Note 3) 5,030 4,526 50,205

Short-term investments (Note 4) 13,709 9,300 136,830

Receivables:

Trade notes 4,747 4,969 47,380

Trade accounts 77,587 83,647 774,399

Other 3,182 3,002 31,759

Allowance for doubtful accounts (65) (80) (649)

Program rights 12,332 13,210 123,086

Deferred tax assets (Note 8) 4,640 4,799 46,312

Prepaid expenses and other 11,014 9,345 109,931

Allowance for doubtful accounts (698) (698) (6,967)

Total current assets 198,341 193,544 1,979,648

Property and Equipment—At cost (Notes 5 and 9):

Land 114,850 114,850 1,146,322

Buildings and structures 89,340 89,325 891,706

Machinery, vehicles and equipment 95,890 95,189 957,082

Construction in progress 557 335 5,559

Total 300,637 299,699 3,000,669

Accumulated depreciation (110,740) (102,398) (1,105,300)

Net property and equipment 189,897 197,301 1,895,369

Investments and Other Assets:

Investment securities (Note 3) 74,634 90,750 744,925

Investments in unconsolidated subsidiaries and associated companies 21,418 21,143 213,773

Long-term deposits 8,100 8,100 80,846

Deferred tax assets (Note 8) 3,707 1,039 37,000

Other assets 16,524 17,502 164,927

Allowance for doubtful accounts (114) (114) (1,138)

Total investments and other assets 124,269 138,420 1,240,333

Total ¥512,507 ¥529,265 $5,115,350

See notes to consolidated fi nancial statements.

NTV_(E)_p43-72_1006.indd 52 08.10.24 7:40:32 PM


Financial Section

Millions of Yen

Thousands of

U.S. Dollars

(Note 1)

LIABILITIES AND EQUITY 2008 2007 2008

Current Liabilities:

Payables:

Trade notes ¥ 1,470 ¥ 1,991 $ 14,672

Trade accounts 55,037 56,702 549,326

Other 9,441 6,667 94,231

Income taxes payable 6,065 8,520 60,535

Accrued expenses and other 5,475 8,190 54,646

Total current liabilities 77,488 82,070 773,410

Non-Current Liabilities:

Liabilities for retirement benefi ts (Note 6) 7,011 6,430 69,977

Guarantee deposits received (Note 5) 20,293 20,156 202,545

Deferred tax liabilities (Note 8) 12 7,760 120

Other 35 854 349

Total non-current liabilities 27,351 35,200 272,991

Commitments and Contingent Liabilities (Notes 9 and 10)

Equity (Notes 7 and 11):

Common stock, no par value—

authorized, 100,000,000 shares in 2008 and 2007;

issued, 25,364,548 shares in 2008 and 2007 18,576 18,576 185,408

Capital surplus 17,928 17,928 178,940

Retained earnings 369,909 363,526 3,692,075

Unrealized gain on available-for-sale securities 2,411 14,028 24,064

Foreign currency translation adjustments (19) 12 (190)

Treasury stock—at cost, 669,916 shares in 2008 and 664,852 shares in 2007 (9,904) (9,896) (98,852)

Total 398,901 404,174 3,981,445

Minority interests 8,767 7,821 87,504

Total equity 407,668 411,995 4,068,949

Total ¥512,507 ¥529,265 $5,115,350

NTV_(E)_p43-72_1006.indd 53 08.10.24 7:40:32 PM

Financial Section


Consolidated Statements of IncomeNippon Television Network Corporation and Consolidated Subsidiaries

Years Ended March 31, 2008 and 2007

Millions of Yen

Thousands of

U.S. Dollars

(Note 1)

2008 2007 2008

Net Sales ¥342,188 ¥343,652 $3,415,391

Cost of Sales 242,677 238,914 2,422,168

Gross profi t 99,511 104,738 993,223

Selling, General and Administrative Expenses (Note 9) 76,434 74,394 762,891

Operating income 23,077 30,344 230,332

Other Income (Expenses):

Interest and dividend income 1,487 1,328 14,842

Interest expense (3) (1) (30)

Gain on sales of investment securities 2,280 76 22,757

Loss on devaluation of investment securities (9,064) (1,417) (90,468)

Other—net 1,364 2,083 13,614

Other income (expenses)—net (3,936) 2,069 (39,285)

Income before Income Taxes and Minority Interests 19,141 32,413 191,047

Income Taxes (Note 8):

Current 10,779 13,184 107,586

Deferred (3,012) (511) (30,063)

Total income taxes 7,767 12,673 77,523

Minority Interests in Net Income (749) (1,408) (7,476)

Net Income ¥ 10,625 ¥ 18,332 $ 106,048

Yen U.S. Dollars

Per Share of Common Stock (Note 2. n):

Net income ¥430.27 ¥741.60 $4.29

Cash dividends applicable to the year 180.00 170.00 1.80


NTV_(E)_p43-72_1006.indd 54 08.10.24 7:40:32 PM


Financial Section

Consolidated Statements of Changes in EquityNippon Television Network Corporation and Consolidated Subsidiaries


Thousands Millions of Yen

Issued Number

of Shares of

Common Stock

Common

Stock

Capital

Surplus

Retained

Earnings

Unrealized Gain

on Available-

for-sale

Securities

Foreign

Currency

Translation

Adjustments

Treasury

Stock Total

Minority

Interests

Total

Equity

Balance, April 1, 2006 25,365 ¥18,576 ¥17,928 ¥350,025 ¥ 21,085 ¥(56) ¥(9,540) ¥398,018 ¥398,018

Reclassifi ed balance as of

March 31, 2006 (Note 2.h) ¥6,972 6,972

Net income 18,332 18,332 18,332

Cash dividends,

¥190 per share (4,741) (4,741) (4,741)

Bonuses to directors (90) (90) (90)

Increase in treasury

stock—net (356) (356) (356)

Net change in the year (7,057) 68 (6,989) 849 (6,140)

Balance, March 31, 2007 25,365 18,576 17,928 363,526 14,028 12 (9,896) 404,174 7,821 411,995

Net income 10,625 10,625 10,625

Cash dividends,

¥170 per share (4,242) (4,242) (4,242)


stock—net (8) (8) (8)

Net change in the year (11,617) (31) (11,648) 946 (10,702)

Balance, March 31, 2008 25,365 ¥18,576 ¥17,928 ¥369,909 ¥ 2,411 ¥(19) ¥(9,904) ¥398,901 ¥8,767 ¥407,668

Thousands of U.S. Dollars (Note 1)

Common

Stock

Capital

Surplus

Retained

Earnings

Unrealized Gain

on Available-

for-sale

Securities

Foreign

Currency

Translation

Adjustments

Treasury

Stock Total

Minority

Interests

Total

Equity

Balance, March 31, 2007 $185,408 $178,940 $3,628,366 $ 140,014 $ 120 $(98,772) $4,034,076 $78,062 $4,112,138

Net income 106,048 106,048 106,048

Cash dividends,

$1.70 per share (42,339) (42,339) (42,339)


stock—net (80) (80) (80)

Net change in the year (115,950) (310) (116,260) 9,442 (106,818)

Balance, March 31, 2008 $185,408 $178,940 $3,692,075 $ 24,064 $(190) $(98,852) $3,981,445 $87,504 $4,068,949


NTV_(E)_p43-72_1006.indd 55 08.10.24 7:40:32 PM

Financial Section


Consolidated Statements of Cash FlowsNippon Television Network Corporation and Consolidated Subsidiaries


Millions of Yen

Thousands of

U.S. Dollars

(Note 1)

2008 2007 2008

Operating Activities:

Income before income taxes and minority interests ¥19,141 ¥32,413 $191,047

Adjustments for:

Income taxes—paid (13,235) (9,783) (132,099)

Depreciation and amortization 12,939 14,361 129,145

Increase of liabilities for retirement benefi ts 581 888 5,799

Gain on sales of investment securities (2,280) (76) (22,757)

Loss on devaluation of investment securities 9,064 1,417 90,468

Equity in gains of unconsolidated subsidiaries and associated companies (1,192) (715) (11,897)

Changes in operating assets and liabilities:

Decrease (increase) in trade notes and accounts receivables 6,282 (8,824) 62,701

Decrease in program rights 878 2,947 8,763

Increase (decrease) in trade notes and accounts payables (2,186) 2,223 (21,819)

Other—net (3,201) (3,393) (31,949)

Total adjustments 7,650 (955) 76,355

Net cash provided by operating activities 26,791 31,458 267,402

Investing Activities:

Increase in long-term deposits (2,014) (2,700) (20,102)

Decrease in long-term deposits 1,000 9,981

Purchases of marketable securities (18,371) (10,595) (183,362)

Proceeds from sales of marketable securities 19,820 2,030 197,824

Purchases of property and equipment (6,071) (4,894) (60,595)

Proceeds from sales of property and equipment 54 138 539

Purchases of intangible assets (771) (1,050) (7,695)

Purchases of investment securities (18,163) (5,605) (181,286)

Proceeds from sales of investment securities 4,690 273 46,811

Other—net 2,525 (2,193) 25,202

Net cash used in investing activities (17,301) (24,596) (172,683)

Financing Activities:

Change in short-term bank loans—net (104) 104 (1,038)

Dividends paid (4,224) (4,493) (42,160)

Purchases of treasury stock (3) (6) (30)

Other—net 207 (319) 2,066

Net cash used in fi nancing activities (4,124) (4,714) (41,162)

Foreign Currency Translation Adjustments on Cash and Cash Equivalents (27) 7 (268)

Net Increase in Cash and Cash Equivalents 5,339 2,155 53,289

Cash and Cash Equivalents, Beginning of Year 61,524 59,369 614,073

Cash and Cash Equivalents, End of Year ¥66,863 ¥61,524 $667,362


NTV_(E)_p43-72_1006.indd 56 08.10.24 7:40:33 PM


Financial Section

1. Basis of Presenting Consolidated Financial Statements

The accompanying consolidated fi nancial statements have been prepared in accordance with the provisions set forth in

the Japanese Financial Instruments and Exchange Law (formerly, the Japanese Securities and Exchange Law) and its related

accounting regulations and in conformity with accounting principles generally accepted in Japan (“Japanese GAAP”),

which are diff erent in certain respects as to application and disclosure requirements of International Financial Reporting

Standards.

In preparing these consolidated fi nancial statements, certain reclassifi cations and rearrangements have been made to

the consolidated fi nancial statements issued domestically in order to present them in a form which is more familiar to read-

ers outside Japan. In addition, certain reclassifi cations have been made in the 2007 fi nancial statements to conform to the

classifi cations used in 2008.

The consolidated fi nancial statements are stated in Japanese yen, the currency of the country in which Nippon Television

Network Corporation (the “Company”) is incorporated and operates. The translations of Japanese yen amounts into U.S.

dollar amounts are included solely for the convenience of readers outside Japan and have been made at the rate of ¥100.19

to $1, the approximate rate of exchange at March 31, 2008. Such translations should not be construed as representations

that the Japanese yen amounts could be converted into U.S. dollars at that or any other rate.

2. Summary of Signifi cant Accounting Policies

a. Consolidation—The consolidated fi nancial statements as of March 31, 2008 include the accounts of the Company and its

14 (13 in 2007) signifi cant subsidiaries (together, the “Group”).

Under the control or infl uence concept, those companies in which the Company, directly or indirectly, is able to exercise

control over operations are fully consolidated, and those companies over which the Group has the ability to exercise signifi -

cant infl uence are accounted for by the equity method.

Investments in 11 (11 in 2007) unconsolidated subsidiaries and 18 (19 in 2007) associated companies are accounted for by

the equity method.

On September 8, 2006, the Accounting Standards Board of Japan (the “ASBJ”) issued Practical Issues Task Force No. 20,

“Practical Solution on Application of Control Criteria and Infl uence Criteria to Investment Associations” which was eff ective

for fi scal years ending on or after September 8, 2006. The practical solution clarifi es how the control and infl uence concept

should be practically applied to the consolidation scope of collective investment vehicles, such as limited partnerships,

Tokumei-Kumiai and other entities with similar characteristics. The Company applies this task force and consolidates one

such collective investment vehicle in 2008 (one in 2007).

Goodwill is amortized over 20 years on a straight-line basis.

All signifi cant intercompany balances and transactions have been eliminated in consolidation. All material unrealized

profi t included in assets resulting from transactions within the Group is eliminated.

b. Cash Equivalents—Cash equivalents are short-term investments that are readily convertible into cash and that are

exposed to insignifi cant risk of changes in value.

Cash equivalents include time deposits and mutual funds investing in bonds that represent short-term investments, all

of which mature or become due within three months of the date of acquisition.

c. Program Rights—Costs incurred in connection with the production of programming and the purchase of rights to

programs are capitalized and amortized as the respective programs are broadcasted. Program rights are carried at cost,

determined by the specifi c identifi cation method.

Notes to Consolidated Financial StatementsNippon Television Network Corporation and Consolidated Subsidiaries


NTV_(E)_p43-72_1006.indd 57 08.10.24 7:40:33 PM

Financial Section


d. Marketable and Investment Securities—Marketable and investment securities are classifi ed as trading securities,

held-to-maturity debt securities or available-for-sale securities depending on management’s intent. The Group classifi es

securities as held-to-maturity debt securities and available-for-sale securities.

Held-to-maturity debt securities are stated at amortized cost.

Marketable available-for-sale securities are stated at fair value with unrealized gains and losses, net of applicable taxes,

reported in a separate component of equity. The cost of securities sold is determined based on the moving-average

method.

Non-marketable available-for-sale securities are stated at cost determined by the moving-average method. For other

than temporary declines in fair value, non-marketable available-for-sale securities are reduced to net realizable value by a

charge to income.

e. Property and Equipment—Property and equipment are stated at cost. Depreciation is computed by the declining-bal-

ance method over the estimated useful lives of the assets, while the straight-line method is applied to buildings acquired

after April 1, 2000. The range of useful lives is from 3 to 50 years for buildings and structures and from 2 to 20 years for

machinery, vehicles and equipment.

f. Long-lived Assets—The Group reviews its long-lived assets for impairment whenever events or changes in circumstance

indicate the carrying amount of an asset or asset group may not be recoverable. An impairment loss would be recognized

if the carrying amount of an asset or asset group exceeds the sum of the undiscounted future cash fl ows expected to result

from the continued use and eventual disposition of the asset or asset group. The impairment loss would be measured

as the amount by which the carrying amount of the asset exceeds its recoverable amount, which is the higher of the

discounted cash fl ows from the continued use and eventual disposition of the asset or the net selling price at disposition.

g. Retirement and Pension Plans—The Company has a defi ned contribution pension plan, an unfunded lump-sum retire-

ment benefi ts plan and a prepaid retirement plan. Subsidiaries have a defi ned contribution pension plan, an unfunded

lump-sum retirement benefi ts plan and a non-contributory funded pension plan.

Eff ective April 1, 2000, the Group adopted a new accounting standard for employees’ retirement benefi ts and accounted

for the liability for retirement benefi ts based on the projected benefi t obligations and plan assets at the balance sheet date.

The Company’s transitional assets, determined at the beginning of the year, are being amortized over 10 years.

The annual provision for retirement benefi ts for directors and corporate auditors is calculated to state the liability at the

amount that would be required if all directors and corporate auditors retired at each balance sheet date.

h. Presentation of Equity—On December 9, 2005, the ASBJ published a new accounting standard for presentation of equity.

Under this accounting standard, certain items which were previously presented as liabilities or assets, as the case may

be, are now presented as components of equity. Such items include stock acquisition rights, minority interests, and any

deferred gain or loss on derivatives accounted for under hedge accounting. This standard was eff ective for fi scal years

ending on or after May 1, 2006. The balances of such items as of March 31, 2006 were reclassifi ed as separate components

of equity as of April 1, 2006 in the consolidated statement of changes in equity.

i. Leases—Under Japanese accounting standards for leases, fi nance leases that deem to transfer ownership of the leased

property to the lessee are to be capitalized, while other fi nance leases are permitted to be accounted for as operating lease

transactions if certain “as if capitalized” information is disclosed in the notes to the consolidated fi nancial statements. All

other leases are accounted for as operating leases.

NTV_(E)_p43-72_1006.indd 58 08.10.24 7:40:33 PM


Financial Section

j. Bonuses to Directors and Corporate Auditors—Bonuses to directors and corporate auditors are accrued at the year end

to which such bonuses are attributable.

k. Income Taxes—The provision for income taxes is computed based on the pretax income included in the consolidated

statements of income. The asset and liability approach is used to recognize deferred tax assets and liabilities for the

expected future tax consequences of temporary diff erences between the carrying amounts and the tax bases of assets

and liabilities. Deferred taxes are measured by applying currently enacted tax laws to the temporary diff erences.

l. Foreign Currency Translations—Receivables and payables denominated in foreign currencies are translated into Japanese

yen at the exchange rates at the balance sheet date.

Foreign exchange gains and losses are recognized during the fi scal year in which they occur.

m. Foreign Currency Financial Statements—The balance sheet and revenue and expense accounts of the consolidated

overseas subsidiaries are translated into Japanese yen at the current exchange rates as of the balance sheet date except for

equity, which is translated at the historical exchange rate.

Diff erences arising from such translation were shown as ”Foreign currency translation adjustments” in a separate compo-

nent of equity.

n. Per Share Information—Basic net income per share is computed by dividing net income available to common sharehold-

ers by the weighted-average number of common shares outstanding for the period.

Diluted net income per share is not disclosed because it is anti-dilutive.

Cash dividends per share presented in the accompanying consolidated statements of income are dividends applicable

to the respective years including dividends to be paid after the end of the year.

o. New Accounting Pronouncements

Measurement of Inventories (Including Program Rights)—Under Japanese GAAP, inventories are currently measured either

by the cost method, or at the lower of cost or market. On July 5, 2006, the ASBJ issued ASBJ Statement No. 9, “Accounting

Standard for Measurement of Inventories,” which is eff ective for fi scal years beginning on or after April 1, 2008 with early

adoption permitted. This standard requires that inventories held for sale in the ordinary course of business be measured

at the lower of cost or net selling value, which is defi ned as the selling price less additional estimated manufacturing costs

and estimated direct selling expenses. The replacement cost may be used in place of the net selling value, if appropriate.

The standard also requires that inventories held for trading purposes be measured at the market price.

Lease Accounting—On March 30, 2007, the ASBJ issued ASBJ Statement No. 13, “Accounting Standard for Lease

Transactions,” which revised the existing accounting standard for lease transactions issued on June 17, 1993. The revised

accounting standard for lease transactions is eff ective for fi scal years beginning on or after April 1, 2008 with early adoption

permitted for fi scal years beginning on or after April 1, 2007.

Under the existing accounting standard, fi nance leases that deem to transfer ownership of the leased property to the les-

see are to be capitalized, however, other fi nance leases are permitted to be accounted for as operating lease transactions

if certain “as if capitalized” information is disclosed in the note to the lessee’s fi nancial statements. The revised accounting

standard requires that all fi nance lease transactions shall be capitalized recognizing lease assets and lease obligations in the

balance sheet.

NTV_(E)_p43-72_1006.indd 59 08.10.24 7:40:33 PM

Financial Section


3. Marketable and Investment Securities

Marketable and investment securities as of March 31, 2008 and 2007 consisted of the following:

Millions of Yen

Thousands of

U.S. Dollars

2008 2007 2008

Marketable securities:

Government and corporate bonds ¥ 5,004 ¥ 4,526 $ 49,945 Trust fund investments and others 26 260Total ¥ 5,030 ¥ 4,526 $ 50,205Investment securities:

Equity securities ¥54,718 ¥67,992 $546,142 Government and corporate bonds 14,638 14,063 146,103 Trust fund investments and others 5,278 8,695 52,680Total ¥74,634 ¥90,750 $744,925

The carrying amounts and aggregate fair value of marketable securities and investment securities at March 31, 2008 and

2007 were as follows:

Millions of Yen

March 31, 2008 Cost Unrealized Gains Unrealized Losses Fair Value

Securities classifi ed as:

Available-for-sale:

Equity securities ¥29,558 ¥8,132 ¥1,945 ¥35,745 Government and corporate bonds 14,550 662 13,888 Trust fund investments and others 1,138 5 10 1,133 Held-to-maturity 5,753 9 5,762

Millions of Yen



Available-for-sale:

Equity securities ¥36,621 ¥23,518 ¥2,543 ¥57,596

Government and corporate bonds 13,065 14 251 12,828

Trust fund investments and others 2,203 2,477 4,680

Held-to-maturity 5,761 8 5,753

Thousands of U.S. Dollars



Available-for-sale:

Equity securities $295,019 $81,166 $19,413 $356,772 Government and corporate bonds 145,224 6,607 138,617 Trust fund investments and others 11,359 50 100 11,309 Held-to-maturity 57,421 90 57,511

NTV_(E)_p43-72_1006.indd 60 08.10.24 7:40:33 PM


Financial Section

Available-for-sale securities whose fair value is not readily determinable as of March 31, 2008 and 2007 were as follows:

Carrying Amount

Millions of Yen

Thousands of

U.S. Dollars

2008 2007 2008

Available-for-sale—Non-marketable securities ¥23,145 ¥14,511 $231,011

Proceeds from sales of available-for-sale securities for the years ended March 31, 2008 and 2007 were ¥4,690 million

($46,811 thousand) and ¥273 million, respectively. Gross realized gains on these sales, computed on the moving average

cost basis, were ¥2,280 million ($22,757 thousand) for the year ended March 31, 2008 and ¥76 million for the year ended

March 31, 2007.

The carrying values of debt securities by contractual maturities for securities classifi ed as available-for-sale at March 31,

2008 are as follows:

Available for Sale Millions of Yen

Thousands of

U.S. Dollars

Due in one year or less ¥20,025 $199,870Due after one year through fi ve years 3,015 30,093Due after fi ve years through ten years 5,073 50,634Due in ten years and after 11,356 113,345Total ¥39,469 $393,942

4. Short-Term Investments

Short-term investments as of March 31, 2008 and 2007 consisted of the following:

Millions of Yen

Thousands of

U.S. Dollars

2008 2007 2008

Time deposit ¥ 2,714 ¥1,700 $ 27,089Certifi cate of deposit 9,000 7,600 89,829Commercial paper 1,995 19,912Total ¥13,709 ¥9,300 $136,830

5. Collateralized Property

At March 31, 2008, land of ¥101,031 million ($1,008,394 thousand) was pledged as collateral for guarantee deposits received

of ¥19,000 million ($189,640 thousand).

6. Retirement and Pension Benefi ts Plan

The Company and certain subsidiaries have severance payment plans for employees, directors and corporate auditors.

Retirement benefi ts for employees are determined on the basis of length of service, basic rate of pay at the time of

termination and certain other factors. If the termination is involuntary, the employee is usually entitled to greater payment

than those in the case of voluntary termination.

NTV_(E)_p43-72_1006.indd 61 08.10.24 7:40:34 PM

Financial Section


The liability for employees’ retirement benefi ts at March 31, 2008 and 2007 consisted of the following:

Millions of Yen

Thousands of

U.S. Dollars

2008 2007 2008

Projected benefi t obligation ¥5,952 ¥5,383 $59,407Fair value of plan assets (313) (297) (3,124)Unrecognized net transitional assets 129 193 1,288Prepayment of pension cost 1

Net liability ¥5,768 ¥5,280 $57,571

The components of net periodic benefi t costs for the years ended March 31, 2008 and 2007 are as follows:

Millions of Yen

Thousands of

U.S. Dollars

2008 2007 2008

Service cost ¥ 768 ¥1,012 $ 7,665Interest cost 58 53 579Amortization of prior service cost 129 1,288Recognized actuarial loss (gain) (51) 20 (509)Amortization of net transitional assets (64) (64) (639)Defi ned contribution pension plan premium cost 666 620 6,647 Net periodic benefi t costs 1,506 1,641 15,031Loss on revision of retirement benefi t plan 374

Total ¥1,506 ¥2,015 $15,031

Assumptions used for the years ended March 31, 2008 and 2007 are set forth as follows:

2008 2007

Discount rate 2.3% 2.3%

Amortization period of prior service cost 1 yearRecognition period of actuarial gain/loss 1 year 1 year

Amortization period of net transitional asset 10 years 10 years

Retirement benefi ts for directors and corporate auditors are paid subject to approval of the shareholders in accordance

with the Corporate Law of Japan (the “Corporate Law”). Retirement benefi ts as of March 31, 2008 and 2007 included those

for directors and corporate auditors in the amount of ¥1,243 million ($12,406 thousand) and ¥1,150 million, respectively.

NTV_(E)_p43-72_1006.indd 62 08.10.24 7:40:34 PM


Financial Section

7. Equity

Since May 1, 2006, Japanese companies have been subject to the Corporate Law, which reformed and replaced the

Commercial Code of Japan. The signifi cant provisions in the Corporate Law that aff ect fi nancial and accounting matters are

summarized below:

a. Dividends

Under the Corporate Law, companies can pay dividends at any time during the fi scal year in addition to the year-end

dividend upon resolution at the shareholders meeting. For companies that meet certain criteria such as; (1) having the

Board of Directors, (2) having independent auditors, (3) having the Board of Corporate Auditors, and (4) the term of service

of the directors is prescribed as one year rather than two years of normal term by its articles of incorporation, the Board

of Directors may declare dividends (except for dividends in kind) at any time during the fi scal year if the company has

prescribed so in its articles of incorporation.

The Corporate Law permits companies to distribute dividends-in-kind (non-cash assets) to shareholders subject to a

certain limitation and additional requirements.

Semiannual interim dividends may also be paid once a year upon resolution by the Board of Directors if the articles of

incorporation of the company so stipulate. The Corporate Law provides certain limitations on the amounts available for

dividends or the purchase of treasury stock. The limitation is defi ned as the amount available for distribution to the share-

holders, but the amount of net assets after dividends must be maintained at no less than ¥3 million.

b. Increases/Decreases and Transfer of Common Stock, Reserve and Surplus

The Corporate Law requires that an amount equal to 10% of dividends must be appropriated as a legal reserve (a com-

ponent of retained earnings) or as additional paid-in capital (a component of capital surplus) depending on the equity

account charged upon the payment of such dividends until the total of aggregate amount of legal reserve and additional

paid-in capital equals 25% of the common stock. Under the Corporate Law, the total amount of additional paid-in capital

and legal reserve may be reversed without limitation. The Corporate Law also provides that common stock, legal reserve,

additional paid-in capital, other capital surplus and retained earnings can be transferred among the accounts under certain

conditions upon resolution of the shareholders.

c. Treasury Stock and Treasury Stock Acquisition Rights

The Corporate Law also provides for companies to purchase treasury stock and dispose of such treasury stock by resolution

of the Board of Directors. The amount of treasury stock purchased cannot exceed the amount available for distribution to

the shareholders which is determined by specifi c formula.

Under the Corporate Law, stock acquisition rights, which were previously presented as a liability, are now presented as a

separate component of equity.

The Corporate Law also provides that companies can purchase both treasury stock acquisition rights and treasury stock.

Such treasury stock acquisition rights are presented as a separate component of equity or deducted directly from stock

acquisition rights.

NTV_(E)_p43-72_1006.indd 63 08.10.24 7:40:34 PM

Financial Section


8. Income Taxes

The Company and its domestic subsidiaries are subject to Japanese national and local income taxes which, in the aggre-

gate, resulted in a normal eff ective statutory tax rate of approximately 40.7% for the years ended March 31, 2008 and 2007.

The tax eff ects of signifi cant temporary diff erences which resulted in deferred tax assets and liabilities as of March 31,

2008 and 2007 are as follows:

Millions of Yen

Thousands of

U.S. Dollars

2008 2007 2008

Current:

Deferred tax assets:

Devaluation of program rights ¥ 3,054 ¥ 2,727 $ 30,482 Accrued enterprise taxes 452 630 4,512 Accrued bonuses 634 852 6,328 Unrealized loss on available-for-sale securities 508 5,070 Other 596

Less valuation allowance (1) (1) (10) Total 4,647 4,804 46,382 Deferred tax liabilities—other (14) (5) (140) Net deferred tax assets ¥ 4,633 ¥ 4,799 $ 46,242Non-current:

Deferred tax assets:

Retirement benefi ts ¥ 3,130 ¥ 3,467 $ 31,241 Devaluation of property and equipment 343 320 3,423 Devaluation of investment securities 7,950 4,469 79,349 Other 577 554 5,759 Less valuation allowance (128) (98) (1,278) Total 11,872 8,712 118,494 Off set with deferred tax liabilities (8,177) (8,712) (81,614) Net deferred tax assets ¥ 3,695 $ 36,880 Deferred tax liabilities:

Tax benefi t from deferred gain on sales of property

and equipment ¥(5,907) ¥ (5,923) $(58,958) Unrealized gain on available-for-sale securities (2,243) (9,478) (22,387) Other (27) (32) (269) Total (8,177) (15,433) (81,614) Off set with deferred tax assets 8,177 8,712 81,614 Net deferred tax liabilities ¥ (6,721)

For the years ended March 31, 2008 and 2007, the diff erence between the statutory tax rate and eff ective tax rate is less

than 5% of the statutory tax rate; therefore, a tax rate reconciliation is not disclosed.

NTV_(E)_p43-72_1006.indd 64 08.10.24 7:40:34 PM


Financial Section

9. Leases

a. Finance Lease Transactions

As lessee

The Group leases certain machinery, vehicles and equipment, offi ce space and other assets.

Total rental expenses including lease payments under fi nance leases for the years ended March 31, 2008 and 2007 were

¥300 million ($2,994 thousand) and ¥330 million, respectively.

Pro forma information of leased property such as acquisition cost, accumulated depreciation, obligations under fi nance

leases, depreciation expense and interest expense of fi nance leases that do not transfer ownership of the leased property

to the lessee on an “as if capitalized” basis for the years ended March 31, 2008 and 2007 was as follows:

Millions of Yen

Thousands of

U.S. Dollars

Machinery, Vehicles and Equipment 2008 2007 2008

Acquisition cost ¥1,535 ¥1,601 $15,321Accumulated depreciation 1,188 996 11,858Net book value ¥ 347 ¥ 605 $ 3,463

Obligations under Finance Leases

Due within one year ¥ 192 ¥ 300 $ 1,916Due after one year 155 305 1,547Total ¥ 347 ¥ 605 $ 3,463

Depreciation expense, which is not refl ected in the accompanying consolidated statements of income, is computed by

the straight-line method and was ¥300 million ($2,994 thousand) and ¥330 million for the years ended March 31, 2008 and

2007, respectively.

The amounts of obligations, acquisition cost and depreciation under fi nance leases include the imputed interest expense

portion.

As lessor

Total lease receipts were ¥162 million ($1,617 thousand) and ¥164 million for the years ended March 31, 2008 and 2007,

respectively.

Pro forma information on leased property such as acquisition cost, accumulated depreciation, receivables under fi nance

lease, depreciation expense and interest income of fi nance leases that do not transfer ownership of the leased property to

the lessee on an “as if capitalized” basis for the years ended March 31, 2008 and 2007 was as follows:

Millions of Yen

Thousands of

U.S. Dollars

Machinery and Equipment 2008 2007 2008

Acquisition cost ¥934 ¥1,093 $9,323Accumulated depreciation 861 973 8,594Net book value ¥ 73 ¥ 120 $ 729

Receivables under Finance Leases

Due within one year ¥123 ¥ 161 $1,228Due after one year 122

Total ¥123 ¥ 283 $1,228

NTV_(E)_p43-72_1006.indd 65 08.10.24 7:40:34 PM

Financial Section


Depreciation expenses were ¥47 million ($469 thousand) and ¥129 million for the years ended March 31, 2008 and 2007,

respectively. The amount of receivables under fi nance leases includes the imputed interest income portion.

b. Operating Lease Transactions

The minimum rental commitments under noncancelable operating leases at March 31, 2008 and 2007 were as follows:

Millions of Yen

Thousands of

U.S. Dollars

As Lessee 2008 2007 2008

Due within one year ¥ 53 ¥ 47 $ 529Due after one year 265 313 2,645Total ¥ 318 ¥ 360 $ 3,174

As Lessor

Due within one year ¥ 130 ¥ 130 $ 1,298Due after one year 5,731 5,861 57,201Total ¥5,861 ¥5,991 $58,499

10. Contingent Liabilities

The Group’s contingent liabilities as of March 31, 2008 as guarantors of indebtedness were as follows:

Millions of Yen

Thousands of U.S.

Dollars

Employees ¥ 511 $ 5,100Broadcasting Satellite System Corporation 877 8,754Total ¥1,388 $13,854

11. Subsequent Event

The following appropriation of retained earnings at March 31, 2008 was approved at the Company’s shareholders meeting

held on June 27, 2008:

Millions of Yen

Thousands of

U.S. Dollars

Year-end cash dividends, ¥105 ($1.05) per share ¥2,620 $26,153

NTV_(E)_p43-72_1006.indd 66 08.10.24 7:40:34 PM


Financial Section

12. Segment Information

Information about industry segments, geographic segments and sales to foreign customers for the years ended March 31,

2008 and 2007 was as follows:

(1) Industry Segments

2008

a. Sales and operating income

Millions of Yen

Television

Broadcasting Cultural Activities Other

Elimination/

Corporate Consolidated

Sales to outside customers ¥261,895 ¥71,641 ¥ 8,652 ¥342,188Intersegment sales/transfers 475 2,358 6,493 ¥ (9,326) Total sales 262,370 73,999 15,145 (9,326) 342,188Operating expenses 234,714 67,707 12,806 3,884 319,111Operating income ¥ 27,656 ¥ 6,292 ¥ 2,339 ¥(13,210) ¥ 23,077


Television


Elimination/


Sales to outside customers $2,613,983 $715,052 $ 86,356 $3,415,391Intersegment sales/transfers 4,741 23,535 64,807 $ (93,083) Total sales 2,618,724 738,587 151,163 (93,083) 3,415,391Operating expenses 2,342,689 675,786 127,817 38,767 3,185,059Operating income $ 276,035 $ 62,801 $ 23,346 $(131,850) $ 230,332

b. Assets, depreciation and capital expenditures

Millions of Yen

Television


Elimination/


Assets ¥257,310 ¥64,753 ¥62,830 ¥127,614 ¥512,507Depreciation 10,310 258 1,214 1,157 12,939Capital expenditures 4,585 140 250 225 5,200


Television


Elimination/


Assets $2,568,221 $646,302 $627,108 $1,273,719 $5,115,350Depreciation 102,905 2,575 12,117 11,548 129,145Capital expenditures 45,763 1,397 2,495 2,246 51,901

NTV_(E)_p43-72_1006.indd 67 08.10.24 7:40:34 PM

Financial Section


2007

a. Sales and operating income

Millions of Yen

Television


Elimination/


Sales to outside customers ¥267,459 ¥68,042 ¥ 8,151 ¥343,652

Intersegment sales/transfers 445 1,369 6,385 ¥ (8,199)

Total sales 267,904 69,411 14,536 (8,199) 343,652

Operating expenses 234,061 61,218 13,213 4,816 313,308

Operating income ¥ 33,843 ¥ 8,193 ¥ 1,323 ¥(13,015) ¥ 30,344

b. Assets, depreciation and capital expenditures

Millions of Yen

Television


Elimination/


Assets ¥267,303 ¥64,259 ¥63,943 ¥133,760 ¥529,265

Depreciation 11,600 242 1,516 1,003 14,361

Capital expenditures 5,158 113 549 223 6,043

(2) Geographic Segments

Sales and total assets of the Company and its domestic subsidiaries for the years ended March 31, 2008 and 2007 repre-

sented more than 90% of the consolidated sales and total assets of the respective years. Accordingly, geographic segments

are not disclosed.

(3) Sales to Foreign Customers

Sales to foreign customers for the years ended March 31, 2008 and 2007 represented less than 10% of the consolidated

sales of the respective years. Accordingly, sales to foreign customers are not disclosed.

NTV_(E)_p43-72_1006.indd 68 08.10.24 7:40:35 PM


Financial Section

Independent Auditors’ Report

NTV_(E)_p43-72_1006.indd 69 08.10.24 7:40:35 PM

BOARD OF STATUTORYAUDITORS

EXTERNALDISCUSSION

COUNCIL

INTERNALAUDIT

COMMITTEE

INTERNAL AUDITCOMMITTEE

MANAGEMENTOFFICE

BOARD OF DIRECTORS

BOARD OF OPERATING OFFICERS

BOARD OFSTATUTORY AUDITORSMANAGEMENT OFFICE

*DOMESTIC BUREAUS YOKOHAMA CHIBA SAITAMA NAHA

*OVERSEAS BUREAUS LONDON (NNN) PARIS (NNN) MOSCOW (NNN) CAIRO (NNN) CHINA (NNN) SHANGHAI (NNN) SEOUL (NNN) BANGKOK (NNN)

NEW YORK (NNN) WASHINGTON, D.C. (NNN) LOS ANGELES (NNN)

EXECUTIVE ADMINISTRATIONPUBLIC RELATIONSCORPORATE ADMINISTRATIONCORPORATE SHARES MANAGEMENTFACILITY PLANNING & DEVELOPMENTNTV ENVIRONMENTAL MANAGEMENT OFFICECORPORATE STRATEGY PLANNINGINVESTOR RELATIONSMEDIA BUSINESS STRATEGY PLANNINGINTERNATIONAL PLANNING & DEVELOPMENTIT PLANNING & DEVELOPMENT INFORMATION SECURITY MANAGEMENT OFFICENETWORK STRATEGY PLANNINGNETWORK OPERATIONSNIPPON TV NETWORK SYSTEMLEGAL AFFAIRSBROADCAST STANDARDSVIEWER RELATIONSPERSONAL INFORMATION MANAGEMENT OFFICEHUMAN RESOURCESLABOR WELFAREHUMAN RESOURCES DEVELOPMENTNTV GROUP STRATEGY PLANNINGNTV HEALTH CLINICCORPORATE GOVERNANCE PLANNING & DEVELOPMENTACCOUNTINGFINANCEASSET MANAGEMENTNETWORK SALESSPOT COMMERCIAL SALESLOCAL SALESSALES PLANNING & ADMINISTRATIONSALES PROMOTION & DEVELOPMENTON-AIR COMMERCIAL OPERATIONSADMINISTRATIONSALESNAGOYA SALES OFFICEEVENTSVENUE PLANNING & DEVELOPMENT “24-HOUR TV” ADMINISTRATION OFFICELICENSING BUSINESSCONTENT FUND MEDIA COMMERCE BUSINESSESFILM BUSINESSPUBLISHINGSATELLITE BROADCASTING BUSINESSBUSINESS MANAGEMENTPROGRAM PLANNINGPROGRAMMING FILM PROGRAMMING & ACQUISITIONMULTI-USE PROGRAM PLANNING & DEVELOPMENTDIGITAL PRODUCTIONDIGITAL BUSINESS PLANNING & DEVELOPMENTMARKETING & RESEARCHPUBLICITYANNOUNCERSRIGHTS & CONTRACTS MANAGEMENTPROGRAM ADMINISTRATIONBUSINESS MANAGEMENTADMINISTRATIONDRAMA PRODUCTIONCP GROUPSADMINISTRATIONCP GROUPSCP GROUPSSPORTS CONTENT PLANNING & DEVELOPMENTPOLITICAL NEWSECONOMIC & FINANCIAL NEWSNATIONAL NEWSFOREIGN NEWSCAMERA CREWSPECIAL PROGRAM PRODUCTIONNEWS PROGRAMS & DOCUMENTARIESNEWS EDITINGMULTI-NEWS PRODUCTIONCOMMENTATORS COMMITTEENEWS CODE COMMITTEEADMINISTRATIONNIPPON NEWS NETWORK ADMINISTRATION OFFICEPRODUCTION ENGINEERING MANAGEMENTNEWS ENGINEERINGTECHNICAL OPERATIONSMASTER CONTROL OPERATIONSTRANSMISSION OPERATIONSTECHNOLOGY STRATEGY PLANNINGTECHNOLOGY RESEARCH & DEVELOPMENTTECHNOLOGY MANAGEMENTCONTENT ARCHIVE

IT PLANNING & DEVELOPMENT

NETWORK

NTV GROUP STRATEGY

KANSAI OFFICE

EVENTS

CONTENT

PROGRAM PLANNINGPROGRAMMING STRATEGY

DIGITAL CONTENT

CONTENT PROMOTION

PRODUCTION PLANNING & DEVELOPMENT

PRODUCTION ENGINEERING

BROADCAST ENGINEERING

TECHNOLOGY STRATEGIC PLANNING

EXECUTIVE ADMINISTRATION

CORPORATE ADMINISTRATION

MEDIA STRATEGY PLANNING & DEVELOPMENT

COMPLIANCE & STANDARDS

HUMAN RESOURCES

FINANCE

SALES

CONTENT BUSINESS

PROGRAMMING

PRODUCTION

INFOTAINMENTSPORTS

NEWS

ENGINEERING & TECHNOLOGY

CORPORATE ADMINISTRATION

INVESTOR RELATIONS


Organization (As of July 1, 2008)

NTV_(E)_p43-72_1006.indd 70 08.10.24 7:40:35 PM

NTV Group (As of July 1, 2008)


Program Planning and Production

NTV Group Holdings Inc.*

NTV Technical Resources Inc.*

AX-ON Inc.*

Nippon Television Art Inc.*

NTV America Company*

NTV International Corporation*

Nippon Television Network Europe B.V.

NTV Personnel Center Corp.

J.M.P Co., Ltd.

Nishinihon Eizo Corporation

Nagasaki Vision Corp.

Kagoshima Vision Corporation

Kanazawa Eizo Center Corporation

Nagano Visual Center Corporation

Cosmo Space Co., Ltd.

Promedia Co., Ltd.

Broadcasting Service

BS Nippon Corporation

CS Nippon Corporation

YOMIURI TELECASTING CORPORATION

Fukuoka Broadcasting Corporation

Culture-Related Business

Event Planning and Production

NTV EVENTS Inc.*

Copyright Management

Nippon Television Music Corporation*

Rights Inn Corporation

Audio and Visual Content Planning, Production and Sale

VAP Inc.*

VAP Music Publishing Inc.

Shopping portal site and other businesses

NitteleSeven Co., Ltd.*

Art Exhibition Planning

Mamma Aiuto Inc.

Creation and operation of a portal site for modern art

TOKYO ART CROSS Inc.

Other Business

Novelty Product Sales

NTV Service Inc.*

Facility Management

Nippon Television Work 24 Corporation*

Professional Football Team Management

Nippon Television Football Club Co., Ltd.*

(TOKYO VERDY 1969)

Internet and Broadband

Forecast Communications Inc.*

NTV IT Produce Corporation

B-BAT Inc.

CYBIRD Mobilecasting Inc.

Art Exhibition Goods Sales

Art Yomiuri Co., Ltd.

Other

SOUND INN STUDIOS INC.

RF Radio Nippon Co., Ltd.

Radio Nippon Create Inc.

RF Music Publisher Inc.

Shiodome Urban Energy Corporation

*Consolidated subsidiary

NTV Global Network

NTV Network Stations (Japan)

The Sapporo Television Broadcasting Co., Ltd. (STV)

RAB Aomori Broadcasting Corporation (RAB)

TV IWATE CORPORATION (TVI)

MIYAGI TELEVISION BROADCASTING CO., LTD. (MMT)

Akita Broadcasting System (ABS)

Yamagata Broadcasting Co., Ltd. (YBC)

Fukushima Central Television CO., LTD. (FCT)

TELEVISION NIIGATA NETWORK (TeNY)

TV.Shinshu Broadcasting Co., LTD. (TSB)

Yamanashi Broadcasting System (YBS)

Shizuoka Daiichi Television Corporation (SDT)

KITANIHON Broadcasting CO., LTD. (KNB)

TELEVISION KANAZAWA Corporation (KTK)

FUKUI BROADCASTING CORPORATION (FBC)

CHUKYO TV BROADCASTING CO., LTD. (CTV)

YOMIURI TELECASTING CORPORATION (YTV)

NIHONKAI TELECASTING CO., LTD. (NKT)

Hiroshima Telecasting Co., Ltd. (HTV)

Yamaguchi Broadcasting Co., Ltd. (KRY)

JRT Shikoku Broadcasting Co., Ltd. (JRT)

NISHINIPPON BROADCASTING CO., LTD. (RNC)

Nankai Broadcasting CO., LTD. (RNB)

Kochi Broadcasting Co., Ltd. (RKC)

Fukuoka Broadcasting Corporation (FBS)

NAGASAKI INTERNATIONAL TELEVISION

BROADCASTING, INC. (NIB)

KKT Corporation (KKT)

Television Oita System Co., ltd. (TOS)

Miyazaki Telecasting Co., ltd. (UMK)

Kagoshima Yomiuri Television Corporation (KYT)

NTV/NNN Overseas News Bureaus

NTV International Corporation

Nippon Television Network Europe B.V.

London

Paris

Moscow

Cairo

Beijing

Shanghai

Seoul

Bangkok

New York

Washington, D.C.

Los Angeles


NTV_(E)_p43-72_1006.indd 71 08.10.24 7:40:41 PM


Corporate Data (As of March 31, 2008)

Head Offi ce

Nippon Television Network Corporation

1-6-1 Higashi Shimbashi, Minato-ku,

Tokyo 105-7444, Japan

Tel: 81-3-6215-1111

Date of Establishment

October 28, 1952

Start of Operations

August 28, 1953

Capital

¥18,575,997,144

Fiscal Year End

March 31 of each year

Number of Employees

3,126 (Consolidated)

1,103 (Non-consolidated)

Board of Directors, Corporate Auditors and Corporate Offi cers (As of June 27, 2008)

Representative Director,

Executive Chairman Seiichiro Ujiie

Representative Director,

Corporate Advisor Kohei Manabe

Representative Director, Chairman Noritada Hosokawa

Representative Director, President Shintaro Kubo

Board Director, Senior Managing Offi cer Katsuhiro Masukata

Board Director, Managing Offi cer Yoichi Shimada

Board Director, Managing Offi cer Shinichi Tamura

Board Director, Managing Offi cer Yoshimichi Hironaka

Board Director, Operating Offi cer Hime Miura

Board Director, Operating Offi cer Haruhisa Murokawa

Board Director Toru Shoriki

Board Director Tsuneo Watanabe*

Board Director Nobuo Yamaguchi*

Board Director Hiroshi Maeda*

Board Director Seiji Tsutsumi*

Board Director Takashi Imai*

Board Director Yukimasa Iwamoto*

Standing Statutory Auditor Seiji Urushido

Statutory Auditors Tomonari Doi**

Statutory Auditors Kenya Mizukami**

Managing Offi cer Fumihiro Hirai

Managing Offi cer Yasuhiro Nose

Senior Operating Offi cer Kazuo Gomi

Operating Offi cer Etsuro Oshima

Operating Offi cer Tomoaki Kataoka

Operating Offi cer Shinji Takada

Operating Offi cer Hiroshi Watanabe

Operating Offi cer Yoshinobu Kosugi

Operating Offi cer Eiji Yamaguchi

Operating Offi cer Hirotaka Kobayashi

* Outside directors pursuant to Article 2.15 of the Corporation Law

** Outside auditors pursuant to Article 2.16 of the Corporation Law

NTV_(E)_p43-72_1006.indd 72 08.10.24 7:40:42 PM

Investor Information (As of March 31, 2008)

Stock Exchange ListingFirst Section of Tokyo Stock Exchange

Stock Code9404

Common StockAuthorized 100,000,000 shares

Issued 25,364,548 shares

Number of Shareholders45,525

Transfer Agent and RegistrarThe Chuo Mitsui Trust and Banking Company, Limited

3-33-1 Shiba, Minato-ku, Tokyo 105-0014, Japan

Number of shares held

Percentage of total shares issued (%)

The Yomiuri Shimbun Holdings 3,764,948 14.84

YOMIURI TELECASTING CORPORATION 1,574,836 6.20

The Yomiuri Shimbun 1,363,920 5.37

Japan Trustee Services Bank, Ltd. (Trust Account) 990,260 3.90

Teikyo University 897,270 3.53

NTT DOCOMO, INC. 760,500 2.99

The Master Trust Bank of Japan, Ltd. (Trust Account) 743,790 2.93

CBNY-ORBIS SICAV 732,680 2.88

CBNY-ORBIS FUNDS 683,900 2.69

Recruit Co., Ltd. 645,460 2.54

0

5,000

10,000

15,000

20,000

25,000

0

1,000

2,000

3,000

4,000

Trading Volume

(Thousands of shares)

Stock price (Yen)

05/4 5 6 7 8 9 10 11 12 2 3 4 5 6 7 8 9 10 11 12 07/1 2 3 4 5 6 7 8 9 10 11 12 08/1 2 306/1

Stock Price Range and Trading Volume (Tokyo Stock Exchange)

Major Shareholders

Financial institutions

16.94%Individuals and others

10.98%

Foreignentities

19.67%

Securities firms

1.40%

Other domestic firms

51.01%

Distribution of Shares

This annual report was produced using waterless printing, a computer-to-plate process and soy ink.

The paper used herein is certified by the Forest Stewardship Council (FSC) as being made from sustainably managed forests.


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