FY2019 Earnings Announcement（Teleconference）
Event Summary
Date：May 15, 2020

15:30-16:30

Speakers ：Akira Tanaka President
Noriaki Kuromizu Vice President
Junichi Onoue Board Director

Presentation
Moderator : Thank you for waiting. WOWOW INC. FY2019 Financial Results Briefing
Telephone Conference will now be held. Thank you very much for taking part in spite ofyour busy schedule.
Please note that the content and Q&A discussed in today's explanation will be distributedin full through external organizations and posted on our website. Please refer to theCompany's financial results briefing materials for use at telephone conferences on the IR
website and financial results briefing materials.
Today's telephone conference is attended by the President and Representative Director,
Akira Tanaka; Executive Vice President and Director, Noriaki Kuromizu; and Member of theBoard of Directors, in charge of IR accounting, Junichi Onoue.
Tanaka, the President of the Company, will explain the highlights of the FY2019 results.
Tanaka: Here is Tanaka. Thank you for today.
We recognize that the impact of the new coronavirus is still very difficult. We will explain
the impact on our business activities later, but first of all, I would like to express my deep
appreciation to healthcare professionals and the people who support the lifestyleinfrastructure.

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I would like to explain the highlights of our FY2019 results. I hope you will listen whilelooking at the materials.
The number of new subscribers was 564,000, while the number of cancellations was
611,000, resulting in a net decrease in the number of subscribers by 47,000.
New subscriptions were driven by boxing, tennis, and live music. Although the number of
new subscribers decreased from the previous fiscal year, this is due to the difference inthe number of new subscribers exceeding 0.1 million in the previous fiscal year, mainly due
to the nationwide open tennis winning by Osaka Athletes.
In the fiscal year under review, net subscriber numbers declined for the first time in 14
fiscal years, due to a number of factors, including the postponement or cancellation ofsports and live music broadcasts scheduled for February and March, due to the spread ofvideo streaming services, the increase in customer viewing options, and the impact of therecent outbreak of a new type of coronaviral infectious disease.

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We will continue to report on the following page. Consolidated [results]. See page three.
Net sales decreased by JPY172 million, due to a decrease in viewing fees and otherrevenues compared with the previous fiscal year. Ordinary income increased by JPY1.694
billion, due to a decrease in programming costs and other factors.
Net income declined from the previous fiscal year, due to extraordinary losses of JPY1.229
billion, including a loss on devaluation of investment securities.
The year-end dividend per share was JPY80, as initially forecast.
The details of the figures will be explained by the person in charge of IR accounting.

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Onoue: I will explain the account status of major consolidated closing companies on page
10. The first step is the subscription status on page four of the slide.
The number of new subscribers in the fiscal year under review was 564,000, a decrease of
96,000 from the previous fiscal year. Sports content, such as boxing and tennis drove new
subscriptions, but this was down significantly from the previous fiscal year.
As explained earlier by Tanaka, in September, the major player wins the US open tennis
game, resulting in more than 0.1 million new subscriptions. The number of cancellations
was 611,000, a decrease of 24,000 from the previous fiscal year. As a result, the net
number of subscribers decreased by 72,000 from the previous fiscal year, to a net
decrease of 47,000. The cumulative net number of subscribers was 2.855 million.
As described above, the net number of subscribers declined, resulting in a severe
situation.

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This is slide five. The cumulative net number of subscribers since FY2015.
The cumulative net number of subscribers increased for 13 consecutive years from
FY2006 to FY2018, but in FY2019, the net number of subscribers decreased to 47,000,
the first net decrease in 14 years.

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Page six of the slides shows the status of consolidated revenues and expenditures. The
consolidated income and expenditure situation in the upper row is explained.
In the fiscal year under review, sales decreased and ordinary income increased comparedwith the previous fiscal year. Revenue fell JPY172 million YoY, to JPY82.45 billion. Ordinary
income was JPY9.225 billion, an increase of JPY1.694 billion from the previous fiscal year.
An extraordinary loss of JPY1.229 billion was recorded, including a loss on devaluation of
investment securities. The Company invested in Premium Platform Japan ,Inc. which
recorded a loss on devaluation of investment securities of JPY634 million and a loss on
valuation of shares in an affiliate of non-consolidated subsidiary Actvila Corporation. of
JPY585 million.
As a result, net income decreased by JPY110 million from the previous fiscal year. The
factors behind the difference in net sales and ordinary income from the previous fiscal
year will be explained on the next page.

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Figures are compared with the previous fiscal year on page seven of the slides.
Consolidated net sales on the left-hand side of this report are as follows.
Revenue decreased by JPY172 million from the previous fiscal year. Paid broadcasting
revenues declined by JPY518 million, due to a decrease in the cumulative net number ofsubscribers compared to the previous fiscal year. Revenues from incidental businesses
increased by JPY346 million YoY, due to an increase in revenues from events at WOWOWon a non-consolidated basis, as well as an increase in revenues from consolidated
subsidiaries outside the Group.

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This is the factor behind the difference in consolidated ordinary income on page eight ofthe slides. The left-hand side of the chart is the main factor behind profit growth, and theright-hand side is the factor behind profit decline.
The main factor behind this increase was a decrease of JPY2.227 billion in programming
costs. Details are provided on the following page.
Retirement benefit expenses decreased by JPY333 million. In the previous fiscal year, thecalculation method for retirement benefits was changed from the simplified method to theprinciple method, and temporary expenses were recorded. However, this was due to thefact that no such expenses occurred in the current fiscal year.
Share of profit of entities accounted for using equity method increased to JPY259 million.
This was due to an increase in profits at the equity-method affiliate Broadcasting Satellite
System Corporation
This is the main factor of decrease. Audience revenues declined by JPY518 million. Thiswas due to a decrease in the cumulative net number of subscribers compared to theprevious fiscal year.
Foreign exchange gains and losses decreased by JPY274 million. Depreciation andamortization increased by JPY196 million from the previous fiscal year. Depreciation and8amortization increased, due to the impact of a partial rebuilding of broadcasting centers in
the previous fiscal year in order to prepare for the commencement of 4K broadcasting,which is scheduled to commence in December of this year.
Other expenses increased by JPY136 million, primarily due to an increase in administrative
expenses for office buildings resulting from the reconstruction of the broadcasting center.

9This is the transition of program costs on page nine of the slides.
Program expenses decreased by JPY2.227 billion YoY.
The main breakdown of program expenses is shown in the graph. The expenses for paid
broadcasting, which are the dark blue portion, are expenses for programs other than
Hollywood Major. In the previous fiscal year, there were large-scale music programs, suchas Namie Amuro, but in the fiscal year under review there were no programs of the same
size. In addition, broadcasting of programs was postponed or cancelled due to the impactof a new type of coronaviral infections. As a result, net sales decreased by JPY1.667 billion
from the previous fiscal year.
In the middle of the graph, the thin blue portion of the movie program distribution cost is
the cost of the movie purchased from Hollywood Major. Revenue decreased by JPY387
million from the previous fiscal year, mainly due to a difference in the number of program
titles.
Other program costs include data broadcasting and other costs, which were down JPY173
million from the previous fiscal year.

10The table on page 10 shows the income and expenditure of major consolidated companies.
WOWOW COMMUNICATIONS INC. is a telemarketing firm. Net sales and ordinary income
were JPY9.067 billion and JPY271 million, respectively. Earnings declined due to theincurrence of initial investment costs related to new orders from existing externalcustomers.
WOWOW PLUS INC. We are developing basic channels such as BS, 110-degree CS, andcable television. Net sales and ordinary income were JPY5.233 billion and JPY220 million,
respectively. Net sales and operating income increased due to an increase in revenues
from the broadcasting business and other factors.
My explanation is finished.
Moderator: I would like President Tanaka to explain our business plans for FY2020.

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Tanaka: The following is an outline of our business plan for FY2020. Before, I will explainsome of the effects of a new type of the coronavirus infectious disease. This is page 12 of
the slides.
In FY2020, the Tokyo Olympics [were scheduled] to take place, [and it was] expected to bea year when sports would rise significantly. However, due to the impact of the newcoronavirus, sports events around the world have been postponed, or discontinued. Ourscheduled broadcast in the first half of the fiscal year, UEFA European FootballChampionship, has been postponed for one year, and the scheduled broadcast for May for
all French Open tennis has been postponed to September. The Championships, Wimbledon
was also cancelled.
In addition, numerous music concerts have been cancelled, and the production of originaldramas, which are produced in-house, has been suspended temporarily. In addition,business events sponsored by the Company have been postponed or cancelled. This has amajor impact on our business as a whole.
As will be explained below, business plans and business performance forecasts for
FY2020 are calculated based on the assumption that business activities will gradually benormalized from August onward. Due to the convergence of the new type of coronavirus in12the world, it is natural that various events will be revived or not anticipated. Therefore, wewould like to promptly disclose any revisions to our earnings forecasts, if necessary.

13See page 13 of the slides.
Currently, in addition to intensifying competition, including the emergence of video
distribution services, the effects of the new coronaviral infections, the successive
postponement and cancellation of domestic and overseas events, and the effects ofentertainment, as I have explained today, are enormous.
Under these circumstances, in the first half of the fiscal year, we will work to maintain our
subscribers by making every effort to disseminate WOWOW while forming tags with rights
holders, creators, artists, and other stakeholders. On the other hand, in the second half ofthe fiscal year, in addition to strengthening content, we will make strategic investments,
such as launching BS4K broadcasting and further expanding distribution services. We will
also make aggressive investments to revive the business.
There are three key elements of our business plan for FY2020 are:First, comprehensive content differentiation. Leveraging WOWOW's two service bases ofbroadcasting and distribution to the fullest, we will provide customers with entertainmentthat is unique to WOWOW, which can only be seen in WOWOW and WOWOW. In order todo so, we recognize the need to develop highly differentiated, scarce, and monopolistic
content centered on original content.

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Second, expansion of digital services. In addition to making it possible to subscribe andrecruit without registering B-CAS cards, the Group will also work to enhance content thatcan be recruited on WOWOW Members' On-Demand. In addition, the Group will work todevelop such new member services that enable 1-stop experiences of complex services
centered on use with smartphones and tablets.
Third, we are responding to the sophistication of broadcasting. We are preparing to launch
BS4K broadcasting in December in order to further enhance our broadcasting services,which we are working on as a core service. Details of the services will be announced assoon as they are decided.

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Next, please see page 14. The content will be slightly supplemented.
Due to the impact of the new coronavirus, the programming for the first half of the fiscal
year is very difficult, but we are working with creators and artists to make this WOWOW
possible.
To give you an example, on the 6 of next month, we will have a special get together with
Southern All Stars and Keisuke Kuwata, will have a free broadcast for 12 hours. I would liketo work with fans who spend time at home at the time of the free WOWOW release, June 6.
I am currently full of plans, such as previous live movies, because I would like to [figure out]
what to do with fans who spend time free of charge in this WOWOW.
In addition, there is L'Arc-en-Ciel in the middle and lower sections of this document. Other
artists and executives are also choosing WOWOW as a place for sending messages, andwill be released from time to time.

16This is slide 15.
In the plan for FY2020, we plan to have 630,000 new subscribers, 630,000 cancellations,and net subscribers plus or minus zero. The cumulative net number of subscribers was
285,5000, unchanged from the previous fiscal year.
I would like to reiterate that, while it is anticipated that in the first half of the fiscal year, it
will be a struggle to acquire subscribers, due to the impact of the new coronavirus, in thesecond half, by actively launching content such as sports, music, and original dramas, wewill recover the net number of subscribers that is expected to decline in the first half in thesecond half. That is our plan.
The impact of this coronavirus is causing a dark shadow in the world, but as anentertainment Company, we intend to provide bright content and bright topics that people
will enjoy in the future.

17See page 16. The income and expenditure plan.
Revenue plans for FY2020 are expected to decrease in revenues and revenues.
Consolidated net sales are expected to decrease, due to a decline in viewer fees resulting
from difficulties in acquiring subscribers caused by the impact of the new coronavirus.
Ordinary income is expected to decline due to higher depreciation, technical costs, andsystem costs resulting from the launch of BS4K broadcasting and the expansion of digital
services. Program expenses are expected to account for approximately 38% of
non-consolidated net sales.
The assumed exchange rate is JPY110 to the US dollar.
The Company plans to pay an annual dividend of JPY80 per share, the same amount as in
the previous fiscal year, based on the basic policy of continuously and stably paying
dividends, as in the past.

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Please refer to the explanation of the investment plan on page 17.
In FY2020, we plan to spend equipment primarily for BS4K broadcasting and otherservices scheduled to begin in December.

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The business plan for FY2020 is as described on page 18.
I would like to explain the difference between the Mid-Term Management Plan announced
in May 2017 and the Mid-Term Management Plan for FY2017 to FY2020.
Under the Medium-Term Management Plan announced in 2017, we targeted cumulative
net enrollment of 3 million contracts, consolidated net sales of JPY92.5 billion, andconsolidated ordinary income of JPY10 billion in FY2020. The cumulative net number ofsubscribers reached the target until FY2018. Consolidated ordinary income exceeded thetargets for FY2019 and until the previous fiscal year, but consolidated net sales fell shortof the targets. Unfortunately, we do not expect to achieve any of the targets in our
performance forecasts for FY2020.
The business environment is undergoing dramatic change. Currently, we are considering
the formulation of a new medium-term management plan, but with the spread andexpansion of video distribution services, the choice of viewing options for customers is
dramatically increasing. We are also facing an extremely challenging business environment,
including the recent worldwide expansion of the new coronavirus. We will examine theimpact of these external factors on us, carefully consider our management strategies, andformulate them.

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I have explained the business plan and the outlook for this fiscal year, as I have justmentioned, as I would like to reiterate, that if the impact of the new coronaviral infections
prolongs globally, domestic and overseas events will be further postponed, or
discontinued. There is a possibility that the broadcasting of sports, live music, stages, etcetera, which we are planning to broadcast, will disappear.
As a result, we may not be able to procure or develop competitive content, which could
affect the number of subscribers. It should be noted that this may have an adverse effecton the Company's performance.
I would like to finish my explanation.

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Question & Answer
Moderator: We will move to Q&A now. If you have any questions, please go ahead, thankyou.
Questioner A: I think it's a very hard time, Mr. Tanaka. I have one question. I have also heardthat the entertainment industry in Japan is very tough because it has little support. If thatis the case, there are concerns about whether or not the Japanese entertainment industry
will be able to do its utmost in the second half of the fiscal year. What kind of collaboration
do you think Mr. Tanaka and others will have? Of course, I think there will be manycollaborations with you, such as sound-related collaborations, but because they are alldone by a small company, there is a little worry about that.
Tanaka: Thank you for your participation. In the present situation, I would like to express agreat deal of attention that has been interviewed in a very aggressive manner. We havereceived your questions and opinions, but it is true that, as is the case with major players,
many people involved in entertainment are having a great deal of trouble right now.
Unfortunately, various types of support have been postponed, although it may be said inother words, but we cannot say that progress is being made successfully.
It is also true that artists and creators are joining hands to expand various activities. For
example, the Mini-Theater Aid Fund for movies, and we are making some donations to this.
It is a great concern and hope that in the second half of the year they will be able torecover, but we will do as much as possible. For example, even a small audience would
broadcast a live concert as our broadcast, and we were able to provide thorough supportand deliver the concert to the customer at the same time. We are still making plans for theconcert.
At the moment, we are not at the stage where we can say anything big, such as how far avery small WOWOW can go, but we intend to proceed from what we can do right now.
Moderator: Is there anyone else who has any other questions?
Questioner B: One point is that, due to corona, video distributors, or some operators, haveseen an extremely high increase in membership because of people staying at home. In that
context, I would like to ask your opinion on why WOWOW has not been able to turn it into
a tailwind.
For what reason, unfortunately, the number of members has not increased, and you thinkthat WOWOW has not been chosen while people are not going out? Thank you very much.
Tanaka: I, Tanaka, will reply. Although we are analyzing the impact of the coronavirus in
March and April, the benefits for WOWOW as more time has been spent viewing the TV athome -- I don't think the term benefit is appropriate. The number of new subscribers

22increased in March and April compared to the previous fiscal year. The number of new
subscribers exceeded that of the previous fiscal year for both subscription motivations,motivations for viewing movies and seeing dramas, as well as for such customers.
However, among the customers who have entered WOWOW for a long time, the number ofcustomers who have entered for a long time exceeds the number of new customers who
have canceled their contracts, because they want to watch tennis, or they want to watch
boxing or soccer, or WOWOW standard content. Unfortunately, the result is a net decreasein net subscribers.
How do you think about it?
Questioner B: Yes, thank you.
Moderator : Is there anyone else who has any other questions?
Questioner A: I would like to ask you about the second aspect of our business plan, theexpansion of digital services. There are two items, and the following are those that are
centered on smart devices.
I was asked by the former Toyo Economists, it is worldwide that the growth ofsatellite-based pay-per-view is extremely severe. On the other hand, in light of the fact thatIPTV pay-per-view broadcasting is remarkably fast, I think that the second digital service isa lifeline in the future. In this sense, what is the image of satellite-per-pay-per-view service?
Tanaka: I, Tanaka will answer. As you said, there is virtually no alternative to subscribing toWOWOW by registering a B-CAS card or ACAS card, and then subscribing from a TV.
What is written here is to register and subscribe to WOWOW members on demand fromthe website, from the Internet, from a smartphone, or directly from a tablet. In other words,
even if you do not have a CAS-card, we are currently developing a system to become amember of WOWOW.
Since WOWOW Members On Demand has been broadcasting WOWOW on three channels
simultaneously for more than a year, you can enjoy all of WOWOW's contents simply byentering WOWOW Members On Demand via the website. In addition, beyond broadcasting
content, some WOWOW Members On Demand includes content that is missed, archivalcontent, or original content that is only available on WOWOW Members On Demand or
online.
More importantly, we are broadcasting on tennis broadcasts, and we only broadcast one
game on the broadcast, but we also offer a service where customers can choose andwatch other matches that are held simultaneously on Members On Demand.
The most important pillar of this service is to create an integrated app that can be seenfrom a smartphone, rather than only from broadcasting. Naturally, if you subscribe to thisintegrated app, you will not only be able to utilize the strengths of the Internet and enjoy
the other content that you have just described, but will also be able to attract a variety ofmember services and enjoy it. I think we will be able to make such a proposal in the future.

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I have such an image.
Questioner A: Okay. When do you start?
Tanaka: We are currently in the process of preparing for this, and we have initially planned
to do so by the end of this year. However, the current situation is that it is delicate about
how many people will be able to gather and prepare for the construction of this facility.
Questioner A: Okay. But faster is better. I think everyone is waiting for such a good service,so please don't say it's by the end of the year.
Tanaka: Yes. Expect it.
Questioner A: Yes, I see. Thank you very much.
Moderator: Is there anyone else who has any other questions?
Questioner A: I would like to ask about the one channel where BS4K begins. What are thecharacteristics of the program? In addition to the three existing channels, what you would
like to do with the three channels?
Tanaka: Basically, we are planning to organize the contents centered on the contents
produced by 4K. Currently, in preparation for that, all the original dramas are being
produced in 4K. We also have a track record of sending 4K content to tennis andinternational soccer. Basically, our policy is to organize pure 4K content into such content.
Questioner A: Okay.
Moderator : Do you have any other questions? Now that you don't seem to have any
questions, I'll close Q&A here.
President Tanaka, please say a word.
Tanaka: I am afraid that it was very difficult to hear in today's unfamiliar telephone briefing,but I would like to ask for your understanding.
Today, at the meeting of the Board of Directors, we have decided on a proposal that will beapproved at the next month's general meeting of shareholders. Nominating [Inaudible]
director candidates have been selected. This is as shown in the press release.
In anticipation of the unprecedented impact of the new coronavirus, we have placed toppriority on the [defense] of management and re-elected all of our full-time directors. At thesame time, as part of our crisis management, we have appointed two candidates asrepresentatives.
I have received many questions today. In response to this rapidly changing competitiveenvironment, which has been affected by the coronavirus, we established a new executive
officer system and promoted human resources to ensure the implementation of thebusiness plan described in this report.
We will respond flexibly and promptly in FY2020, when there are many uncertainties. We
would like to ask for your understanding and support.
Thank you for today.
Moderator: We have decided to complete our briefing on the financial results for FY2019.

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Thank you very much for attending the telephone conference today.
[END]______________

Document Notes
1.

Portions of the document where the audio is unclear are marked as follows:[Inaudible].
2.

This document has been translated by SCRIPTS Asia.

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