Page 202 - MEDIASET ESPAÑA / 2013. Financial Statements, Management and Corporate Governance Report

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MEDIASET ESPAÑA COMUNICACIÓN, S.A. AND SUBSIDIARIES
MANAGEMENT REPORT FOR THEYEAR ENDED DECEMBER 31, 2013
(Expressed in thousand of euros)
THE TELEVISION INDUSTRY IN 2013:THEYEAR THE SECTOR
WAS CONSOLIDATED
As reflected in the Management Report corresponding to the interim consolidated financial statements for for the first
half of 2013, the TV advertising market showed a trend to gradual improvement from drop heights close to 20% (last
quarter of 2012).These negative growth rates gradually decreased throughout the year, to finally become positive during
the last quarter, riding the wave of the abovementioned incipient economic recovery.
During the year, overall advertising investment declined in line with the past six years, with the exception of 2010, which
pushed the TV advertising market over the edge into a 50% drop since its peak in 2007.
It is not all bad news in the advertising sector, however, thanks to the positive trend during the final months of 2013,
which was confirmed by the market during the first months of 2014. The weight of the TV advertising market with
respect to the market in general rose in 2013, while consumption of TV measured by number of minutes per person
and day has increased during the year; therefore, ignoring the impact of the crisis on viewing habits, the communications
and entertainment is robust, with great potential. For the first time in three years, ad sales prices remained stable after
a continual decline commencing the second half of 2008.
At the date of preparation of these financial statements, the data estimates (as of yet unconfirmed by Infoadex data),
indicate that the TV advertising market will have ended 2013 with a drop of 6.2%.
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 spor ting events to which the Group bought
the rights, as well as content specifically acquired for the channel, and “La Nueve” at the beginning of 2013. 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 records.
Audience data indicate that Mediaset España was the absolute leader during 2013, with a 29% share, representing a 0.9
point increase as compared to 2012, and a 0.2 point advantage with respect to Grupo Atresmedia. Our year-end 2013
data is 12.3% over RTVE’s.
Telecinco reached 13.5% during the year, which is 0.1 points over its main competitor and 3.3 points ahead of “La
Primera” (RTVE) while Cuatro’s 6% share is identical to that of “La Sexta.” Finally, as regards the newer- generation
digital channels, those comprising the Mediaset España Group registered an 9.4% audience share, which matches its
main competitor’s group of channels, with a 1.1 point increase with respect to the prior year; this all attests to the
competitiveness of the market as well as the merit inherent in once again being leaders in audience levels.
Comparing the Group’s results in 2013 with those of 2012, the following is evident:
• Total operating income dropped from 886,727 thousand euros in 2012 to 826,820 thousand euros in 2013 as a result
of a drop in ad revenue.
• On a year-to-year basis, operating expenses went from 837,924 thousand euros to 756,648 thousand euros,
representing a 10% decrease, which can be explained by the Group’s ongoing cost-saving strategy designed to adapt
to different advertising market circumstances, as well as by the decrease of sporting events during the year.
• Operating profit amounted to 70,172 thousand euros as compared to the 48,803 thousand euros recognized
during 2012, a 44% increase. This leaves an operating margin (operating profit/operating income) of 8.8% vs.