Page 185 - MEDIASET ESPAÑA / 2012. Financial Statements, Management and Corporate Governance Report

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FINANCIAL STATEMENTS AND MANAGEMENT. ANNUAL CORPORATE GOVERNANCE REPORT. BALANCE SHEETS 2012
The huge efforts and sacrifices made regarding economic policies as well as the restructuring of important sectors,
especially the financial, have led to improved productivity as well as a reversal of Spain’s trade deficit; thus, at the end
of 2012, it reached a balance and headed towards a surplus. Net capital flow during the first part of 2012 was fluid,
to then reverse during the second half, demonstrating the increasing confidence of foreign investors in the Spanish
economy.This has pushed risk premiums for Spanish public debt downwards, with a public and private degearing process
which is crucial, and without which it would not be possible to get back on the road to recovery. Against this backdrop,
encouraging news has begun to emerge regarding financial markets as well as Spain’s competitive edge, but has yet
to influence the economy’s flow of credit in reasonable quantities and conditions making it possible to guarantee that
economic agents will able to obtain necessary financing when conditions make it possible to do so.
THE TELEVISION INDUSTRY IN 2012: LEADING
DURINGTROUBLEDTIMES
As explained in the Management Report corresponding to the interim consolidated financial statements for for the
first half of 2012, last year,TV advertising was greatly influenced by the second phase of the recession, which began at
the beginning of 2011, effectively dashing any hopes of economic recovery which had been in the air due to the brief
upturn during 2010.
As mentioned previously, the economic policies implemented during the year have had a direct effect on the disposable
income of families: the severe destruction of employment and its psychological impact on consumers, including those
with job security, has forced private consumption below the GDP, as well as causing very harsh cuts in budgets devoted
to television advertising, leading to a very pronounced drop in income fromTV ads which has affected the entire sector.
Data available at the date of preparation of these financial statements (pending confirmation by Kantar Media) estimates
that theTV advertising market plummeted 18.5% in 2012, confirming it as the second worst year of the crisis after 2009.
The overall TV sector has lost over 50% of its invoicing since its record during 2007, mainly as a result of the steep drop
in sales prices over recent years.
In 2012, Mediaset España has employed a strategy aimed at bolstering its position as sector leader (45.3% at year end),
ensuring balanced operation of channels according to market conditions, and optimizing income from sporting events
(most notably the UEFA European Football Championship, won by Spain, as well as the Moto GP Championship, which
the Group recently acquired the rights to); this has enabled it to increase market share during the year.
Turning to audience figures, after the integration of Cuatro in 2011 and the launch of the new “Divinity” channel the
same year, the Group moved forward with its diversification and complementation strategies by launching “Energy” in
2012, which mainly addresses the male population via the sporting events to which the Group bought the rights, as
well as content specifically acquired for the channel. Thus, along with its more consolidated channels, such as Factoría
de Ficción, La Siete, and Boing, and its driving force, Telecinco, the Company has managed to consolidate the overall
audience of its family of channels as well as each of them individually. It has avoided cannibalization within an environment
in which TV consumption has reached its maximum limits, despite a pervading economic crisis, and achieved a greater
diversification and audience loyalty through segmentation.
To illustrate, data show Mediaset España was the overall leader in 2012, with a 28.1% share, 9.2 points ahead of RTVE
and 2.3 ahead of Antena 3 (once the merger with La Sexta was completed). The Telecinco channel reached a 13.9%
share in the year, 1.7 points ahead of RTVE’s La Primera, while Cuatro’s 6% share situated it 1.1 points ahead of La Sexta.
Finally, as regards the newer-generation digital channels, those comprising the Mediaset España Group registered an 8.3%
audience share, which is 9 points higher than its main competitor’s group of channels, which attests to its unequivocal
position at the head of the pack.