Page 65 - MEDIASET ESPAÑA / 2012. Financial Statements, Management and Corporate Governance Report

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FINANCIAL STATEMENTS, MANAGEMENT AND CORPORATE GOVERNANCE REPORT. 2012
The commitments set Mediaset España restrictions in order to neutralize or compensate for potential anti-trust issues
arising from the transaction.These include:
• Regarding the sale of TV ad space: Mediaset España agreed that it would not jointly place advertisements with Cuatro
and Telecinco or groups of channels whose overall audience topped 22%. Specifically, commitment (ii) prohibited
formal or de-facto joint sales of advertising space with Telecinco and Cuatro. Among other stipulations, commitment
(iii) established a functional split between Publimedia and Publiespaña, in order to handle free-to-air and pay
TV separately.
• Limits were imposed for the acquisition of audiovisual contents from third parties. Commtment (vi) limited exclusive
contracts to three year durations (in general terms), also excluding automatic renewal and other similar terms, while
commitment (xii) prevented exclusive rights or first options on the entirety of national contents production/products.
The commitments were later developed unilaterally as part of the CVC-imposed Action Plan, which also set certain
obligations regarding informing the authorities, to guarantee their compliance.
The Action Plan’s interpretation of the commitments was strict to the point that it substantially modified its content,
thereby significantly making Mediaset España’s commitments more difficult to assume; this affected advertising as
well as content acquisition. For example, the duration of contracts for acquiring content was to be calculated at their
signing date, rather than when the rights commenced; thus, this was legally disputed, and a sentence is still pending.
Mediaset España did not fail to comply with any of its commitments with the CNC.
• Mediaset España did not violate commitment (ii) after the merger finalized: in 2011, it lowered its share of the
advertising market as well as the average per-ad price, while managing to keep its audience numbers constant.
Reports prepared by external advisors conclude that Publiespaña has not failed to meet its commitments, and that
it has not violated anti-trust laws.
• As regards commitment (iii), Mediaset España was careful to ensure that positions in Publimedia and Publiiespaña were
not duplicated. Likewise, there has been no indication whatsoever of a failure to meet the obligation to guarantee the
functional or commercial independence of both companies.
• With respect to commitment (vi), Mediaset España was charged with delay in granting suppliers the right to reduced
contracts, renouncing extension or preferential acquisition rights which never really existed, considering the deadlines
established to that effect as well as legal suspension periods, as a result of Mediaset’s legitimately filed appeals. No
effect would have been felt on the market, as no suppliers exercised any of the granted rights.
• With respect to commitment (xii), Mediaset España renounced all the pertinent option rights included in contracts with
producers, while fulfilling its other related obligations; thus, it did not fail to comply with any of the stated conditions.
Mediaset España provided information in conformance with the Action Plan, responded to CNC requirements, and took
all the necessary steps expected of it. None of the supposed delays or problems in delivering information represent a
material failure to comply with the established commitments.
Therefore, Mediaset España plans to file an appeal and prepare a resolution before the National Court of Justice,
to request the suspension of the fine, in accordance with articles 46 and 129 and Law 29/1998, dated July 13, which
regulates the Federal Court of Appeals on Commercial Matters.
As in the previous dossier, the accompanying balance sheet does not include a provision for this contingency, as the
Company’s directors and legal advisors do not consider it likely that this risk will materialize.
As explained in Note 15, the Company is open to inspection of certain tax returns, but its directors and tax advisors
consider that no significant tax contingencies will materialize, and if they do, they will not have a significant effect on the
accompanying balance sheet.