1H FY2025 Financial Results Briefing Summary of Question and Answer Session

• Profit Projections

A:

Revenue from terrestrial TV advertising has returned to a considerable extent. There was a significant recovery in the second quarter, particularly from October onward. We can expect to see even further recovery in January and beyond.

We managed prices flexibly around the time of the impact of the Fuji TV incidents, but currently, with the strong market conditions, our policy is to firmly secure prices and sell advertising slots accordingly.

In the Reform Action Plan, we indicated a policy of improving gross profit in Fuji TV's broadcasting and media business. We hope to increase the gross profit margin from 26% to 35%. We are aiming to secure profits, while also keeping future market contraction in mind, based on cautious assumptions.

We will invest flexibly in production costs in line with revenue. Previously, budgets were allocated based on program time slots, but going forward, we will shift to a content-driven approach-making investment decisions based on each project's potential to recoup costs and generate profits. We intend to proactively invest in projects with strong potential for returns, including those with revenue sources beyond advertising.

A:

We will consider the divestment of businesses and assets while taking capital efficiency into account. The segment profit projections we have disclosed today are based on what can currently be projected from each business, in line with our capital

allocation policy. There may continue to be inflows and outflows of capital due to divestments or changes in the scale of investments going forward. If such changes occur, we will adjust our profit projections accordingly.

• Anime Business Q: Could you tell us about the level of investments related to IP and anime, and the speed with which they will be undertaken?

  A:

  We will continue to actively invest in the IP and anime sectors. We have made these areas key pillars of our investment policy, as they are expected to have room for growth and show potential for earnings. However, given the high volatility of anime investments depending on the nature of the project, instead of merely increasing investment amounts, we will make decisions after careful examination of the project, original work, and IP and identifying profitability and market value. We have built up considerable knowledge from our many years of experience in the anime business, including noitaminA. We will thoroughly manage risks while taking maximum advantage of that knowledge.

  At the same time, it is also important that we seek out earnings opportunities across the entire IP value chain in our anime business investments. We aim to build a structure for maximizing profit across the entire value chain, from copyright of original works (upstream), broadcasting and streaming (midstream), and services for end users, such as merchandise, live events, and streaming (downstream). In particular, there are some areas where we have not been able to fully achieve entry into upstream and downstream businesses or to monetize them sufficiently. For this reason, we will strategically add the pieces that are missing in our business portfolio.

  Q: What is the current situation and outlook for Pony Canyon, which is key to your anime strategy?

  A:

  Pony Canyon plays a core role in the Group's anime strategy, and has achieved significant outcomes through its leadership in high-profile productions. The company has expanded investment in the anime sector with the aim of acquiring original works and projects. However, the absence of major hit titles in recent years has been a primary factor behind its challenging business performance.

  As part of our improvement measures, we will review future investment projects and thoroughly assess each project and IP. We aim to further strengthen Pony Canyon's business by flexibly combining high-quality original works and focusing on balancing risk and return. We also intend to enhance collaboration with Fuji TV and other FMH Group companies.

• Reform Action Plan Q: Will the Action Plan continue to be updated in the months ahead?

  A:

  Yes, we will continue to update the Action Plan on an ongoing basis. In this update, with our strong commitment to enhancing corporate value, we have set out the timeline for achieving our 8% ROE target. Going forward, we will further refine our business portfolio and growth investments, and clearly articulate the path toward achieving this target as early as possible.

  Q: You have announced the divestment of ¥100 billion in strategic shareholdings by FY2027. What are your criteria for deciding which shares to divest and the order of priority for divestment?

  A:

  We have already achieved divestments totaling ¥50 billion in the first half of this fiscal year. We will continue to carefully examine the rationale for those strategic shareholdings and progressively divest them, starting with those whose rationale has weakened. We do need to negotiate with the issuers, so we will proceed in a planned manner.

• Utilization of AI

A:

We believe that leveraging generative AI can significantly enhance the efficiency of studio recording, for example, by enabling the use of virtual sets created in advance. In addition, AI can serve as

a tool for creators to brainstorm ideas, facilitate fresh inspiration, and generate combinations and settings based on large volumes of past data, thereby helping to improve project quality. We view AI as a supplementary tool, and as such, we believe the risk of infringing on the rights of stakeholders-including creators, performers, and scriptwriters-or causing conflicts of interest is low, even over the medium term.

A:

As targeting accuracy improves through AI, the value of advertising will increase. Fuji TV is also developing addressable advertising technology, which allows different ads to be delivered to individual viewers watching internet-connected TVs. Furthermore, as TVer IDs become more widespread, the effectiveness of targeted advertising is growing, and we aim to strengthen the persuasiveness of our ads by leveraging data. Developing this data environment is a critical issue. By working together with advertising agencies and other broadcasters, we strive to enhance the overall value of advertising- not only on television but also across multiple devices.