Basic HTML Version
94
MEDIASET ESPAÑA COMUNICACIÓN, S.A.
MEDIASET ESPAÑA: LEADER INTHE CRISIS
As we have explained other years, the adverse economic backdrop caused demand for television adver tising to fall
more in 2008 and 2009 that at any time before. Prices plummeted as public TV benefited from a dual financing model,
not to mention excess supply of TV space, with too many operators vying for the adver tising pie.
RTVE stopped broadcasting commercials in 2010 by law.This was something commercial networks had been lobbying for
and became even more impor tant with the adver tising market contracting sharply since 2008. In 2010, the disappearance
of adver tising from RTVE, which prompted private operators to attempt to push up prices, coupled with a relatively
more propitious economic and business environment, at least in the early par t of the year (e.g. subsidies on automobile
purchases, imminent hike in VAT on 1 July,World Cup in South Africa), boosted TV adver tising sales by 5.2%.This was a
healthy increase considering the state of the economy.
However, in 2011, theTV adver tising market plummeted again, even despite signs early on pointing to a year of moderate
growth, as we suggested in our 2010 management report.
Unfor tunately, the truth was far worse.With final data on the performance of the adver tising market by Kantar Media
still to be released at the date of preparation of these financial statements, estimates point to a decline inTV adver tising
revenue of around 10% in 2011, with far steeper falls in the third and four th quar ter.
The highlight of 2011 for Mediaset España was the integration of Cuatro into the rest of the Group’s operations
following its acquisition on 28 December 2010.This integration boosted the Company’s share of global adver tising sales
and provided a target complement to the Group’s commercial strategy.That said, when the market really slumped from
the second quar ter, expectations of unlocking the value of the advantages of the integration were pushed back until
demand effectively recovered. Nonetheless, its leadership position on this front (43.5% share in 2011, more than 10
points above its closest rival and moving up to 44% in the last quar ter) leaves the Group poised to benefit when the
trend reverses.
Turning to audience, Cuatro’s integration came at the time when specific TDT channels (Divinity, La Siete, FDF, Boing)
were growing and solidifying their positions through a strategy aimed at diversifying and targeting different viewer profiles.
This strategy shored up both overall family and individual audience shares of each, thereby avoiding cannibalisation.
What’s more, TV consumption was at its highest ever, not only due to the economic crisis, but also to the greater
audience diversification and penetration through fragmentation.
To illustrate, data show Mediaset España was the overall leader in 2011, with a 26.4% share, more than 4 points ahead
of RTVE and 9.3 ahead of its main commercial competitor.TheTelecinco channel reached a 14.2% share in the year, just
three-tenths below La Primera (RTVE) but 2.7 points above the second operator. Meanwhile, Cuatro’s share was 6.1%,
0.4 points below its main competitor, La Sexta. A new channel, Divinity, began airing in the first quar ter of 2011. Mainly
targeting young, urban women, this channel achieved a highly satisfactory 0.7% average share for the year.
Comparing the Company’s results in 2011 with those of 2010, we see:
• Total operating income increased from EUR 692,320 thousand in 2010 to EUR 859,631 thousand in 2011.
• Operating expenses increased from EUR 552,687 thousand to EUR 784,488 thousand due to the acquisition of
Cuatro. In like-for-like terms, however, the Company’s effor ts to reduce costs (mainly programming) were evident,
especially once the downtrend in the adver tising market was clear.The ability to lower costs in a highly operation-
ally geared industry like TV stems from Mediaset España's naturally flexible television model, predicated on having
a greater weight of in-house vs. outside production. Also helping to lower costs in the year were the absence of
major spor ting events, the extraction of synergies from the integration of Cuatro and the fewer number of films
screened compared to 2010.
• Profit from operations amounted to EUR 89,439 thousand, down from EUR 146,439 thousand in 2010.This leaves
an operating margin (profit from operations/operating income) of 10.40% in 2011 compared to 21.14% in 2010.