Page 170 - MEDIASET ESPAÑA / 2013. Financial Statements, Management and Corporate Governance Report

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MEDIASET ESPAÑA COMUNICACIÓN, S.A. AND SUBSIDIARIES
NOTES TOTHE CONSOLIDATED FINANCIAL STATEMENTS AT DECEMBER 31, 2013
(Expressed in thousand of euros)
As explained in Note 19.2, the Group is open to inspection of certain tax returns; however, the parent’s 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 consolidated statement of financial position.
Federal Court of First Instance 6 - Madrid: Regular process # 1181/10
The Company filed a lawsuit of ordinary proceedings on November 19, 2010 against a contents supplier requesting that
a contract granting a licensing format, as well as other related contracts, be deemed null and void.The suit requested that
the defendant be ordered to return amounts paid within the scope of the agreements, as well as be fined for damages
and losses.
The defendant requested that the claim be dismissed and also filed a counterclaim requesting that the Company be
ordered to pay the contract transaction costs as well as an indemnity for damages and losses (estimated at 15 million
euros).
On February 3,2014,the Court handed down a sentence overturning the order while partially upholding the counterclaim,
declaring that the Company had not complied with the agreements reached with the supplier, and that it was in violation
of certain rights; the Company was ordered to pay the amounts claimed in the appeal.
The Company is currently preparing an appeal which should be filed soon, to include a number of sound supporting
arguments.
From a factual point of view, the Court did not consider any of the numerous items of proof submitted indicating that
the defendant is not solely entitled to legal protection, which is the most substantive aspect of the case. Also, a good
portion of the reasoning in the Sentence is based on a conceptual error: it does not differentiate between “format” and
“program”, which leads to a confusion regarding the ownership and the rights arising from one and the other.
Legally speaking, it is contradictory as it grants protection to elements lacking originality to the detriment of those which
would make the program easily distinguishable from others similar in nature.
Finally, the fine should be limited to the industrial margin or profit which the supplier would have earned had the terms
in the contracts been met, rather than the total amount of the estimated invoicing, as the supplier did not provide any
services at all.
Based on the above, we consider it probable that the Appellate Court will overturn the sentence in question, and
therefore, no provisions were made in the financial statements.