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Letter from the Chairman and Chief Executes Ofcers

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Despite it all, the year 2010 was a success. It was basically a year of major changes which Telecinco has been able to assimilate and leverage, once again evidencing its capacity to adapt.

It was efectively a year of major changes, starting with the digital switchover and the launch of the new digital ofering, followed by the amendment of the new audiovisual regulatory framework and the resulting disappearance of advertising on TVE and ending with the integration of Cuatro and the acquisition of 22% of Digital +. Moreover, there was the permanent threat hanging over general television posed by the increasingly predominant presence of the use of new technologies, mainly the Internet.

Starting at the end, the year 2010, far from living up to such ominous expectations, again evidenced the public’s preference for television as its main form of entertainment through a substantial increase in television consumption exceeding historical records.

2010 was, as we said, a year of major commitments and structural growth. We acquired Cuatro following an exemplary process from all perspectives, giving rise to an unprecedented corporate operation in television history in Spain that turned us into the top audiovisual company in the country and one of the leading companies in Europe. In practice, this transaction resulted in the largest and most varied television ofering in Spain, with a general television leader, an original channel, Cuatro, two specifc fction and entertainment oferings, FDF and LaSiete and two new channels Boing and Divinity, turning it into the sector leader for many more years to come.

The fght for viewers has had its difculties. The usual aggressiveness of the struggle has been made more interesting by the presence of a competitor, TVE,

that saw its position reinforced by the possibility of consolidating its programmes with the advantage ofered by the elimination of advertising breaks. This factor has not had the least impact on its procurement budget which is the highest by far in the sector and is fnanced through public funds and the contribution of private operators (3% of our gross revenues).

Telecinco again evidenced its ability to make the most of a bad situation and for the second consecutive year was the most watched commercial television channel in all programming blocks throughout the day while its ability to attract enabled it to grow its average to 14.6%, almost three points higher than its main competitor, Antena3. This diference persists if we look at the “commercial target”.

In addition, our defnitive commitment to “digital channels” came to fruition in September 2009, on schedule, enabling us to end 2010 in a solid position. Therefore if we consider the audience by group, taking into account accumulated audience numbers in all the channels managed (Telecinco, LaSiete, FDF and Boing), the share obtained (17.7%) difered by almost two points with respect to our immediate competitor and again consolidated our position as the leading commercial television group.

We were also leaders on the Internet thanks to the major quantitative and qualitative leap that we were able to make in 2010 and that will continue to have a short and medium- term impact, bearing out our commitment to new technologies.

We trust tobeable tocontinue to fulfl our commitments in 2011.

Paolo Vasile

Chief Executive Ofcer