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The strategic logic behind the moves was clear and easily understood by the market; the capital increase with pre-emptive subscription was nearly 10 times oversubscribed. The deals reinforced Telecinco’s position as the Spanish free-to-air TV leader, while adding Spain’s most popular and successful pay TV platform. As a result, Telecinco has emerged as the country’s top audiovisual group (head and shoulders above the rest) and one of Europe’s largest by market cap, paving the way for future growth with a host of opportunities.

Also worth pointing out is that the deals did not lead to any increase in debt, since the acquisitions were carried out through capital increases, leaving the company’s fnancial wherewithal intact and leverage low enough to cover both operational and investment needs and opportunities that arise.

The analogue blackout took place on 3 April 2010. This was mostly a technical issue and did not change the trend towards increasing audience fragmentation started long before, which Telecinco had begun preparing for in terms of the production of new channels and the sale of advertising on all of them.

Comparing the Company’s results in 2010 with those of 2009 the following is apparent:

Operating income (revenue plus other operating income) increased 29.25% from EUR 535,643 thousand in 2009 to EUR 692,320 thousand in 2010. Growth was mainly driven by higher advertising revenue on the back of: 1) price increases after advertising on TVE stopped, 2) Telecinco’s leadership in audience share among private networks, 3) the Group’s efcient commercial policy entailing the sale of advertising by modules, and 4) the impact of the network’s flm productions, which were mostly running in the early part of the year

Operating expenses increased from EUR 473,156 thousand in 2009 to EUR 552,687 thousand, pushed up mainly by the impact of the cost of sales related to these flm productions, the extraordinary costs from the World Cup retransmissions and the impact of the levy of 3% of the Company’s revenue to fnance TVE.

Proft from operations amounted to EUR 146,349 thousand, up from EUR 70,505 thousand in 2009. This leaves an operating margin (proft from operations/operating income) of 20.93% in 2010 compared to 12.9% in 2009. Given the operational leverage inherent in the TV business, this increase relates mainly to higher sales. Given the operational leverage inherent in the TV business, this increase relates mainly to higher sales.

Lastly, proft for 2010 attributable to the Company amounted to EUR 113,934 thousand, compared to EUR 68,461 thousand in 2009.

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Financial Statements, Management and Corporate Governance Report. 2010