162
MEDIASET ESPAÑA COMUNICACIÓN, S.A. AND SUBSIDIARIES
NOTES TOTHE CONSOLIDATED FINANCIAL STATEMENTS AT DECEMBER 31, 2013
(Expressed in thousand of euros)
f) Acquisition of Editora Digital de Medios, S.L.U.
On September 26, 2012, Mediaset España Comunicación, S.A., subscribed the entirety of the new shares which
Editorial Ecoprensa, S.A. agreed to issue as a capital increase, paying in 500 thousand euros. Following the capital
increase, Mediaset España Comunicación, S.A. currently owns 500,000 shares with a par value of 1 euro each,
representing 50% of Editora Digital de Medios, S.L.
g) Impairment testing of equity method investments
•
DTS Distribuidora de TV Digital, S.A.
In accordance with accounting standards, at December 31, 2013, the Group performed an impairment test on its
investment in DTS Distribuidora de TV Digital, S.A.
It was done by comparing the recoverable amount with the net carrying amount.
To calculate the recoverable amount, the Group discounted estimated future cash flows based on forecasts and
hypotheses using different business parameters for upcoming years.
These included Group estimates of future number of subscribers as well as average income based on forecasts
regarding the economy in general as well as penetration of pay TV in other markets.
Estimated projected income for upcoming years is calculated based on reasonable hypotheses regarding the number
of subscribers and the market.
Programming cost assumptions took into account primarily forecasted internal and external audiovisual production
costs, rights to sporting events, as well as the amount of investment necessary to maintain audience levels.
The estimates cover a period of 5 years; for cash flows not included, income to perpetuity is estimated using a growth
rate of around 2%. Estimated cash flows are discounted at a rate that represents the current market assessment of
the risk-free rate and the specific situation of the industry.The discount rate used was 8.65%.
Based on the assumptions used and the estimated cash flows calculated, the Group has made an impairment provision
totaling 49,363 thousand euros.
Sensitivity to changes in assumptions
Changes equivalent to one percent which affect any of the basic business parameters included in projections (such
as WACC, number of subscribers, ARPU, or to perpetuity growth rates) would imply the recovery of the original
acquisition cost in the case of an increase, or additional devaluation not to exceed 90 million euros in the case of a
decrease. Consequently, based on a 1% reduction hypothesis, the growth rates of some of the business parameters
would be negative.
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