Letter from the CEO

2016 was undoubtedly a complex year but it has ended with a clearly positive balance. It is true that we have emerged from the economic crisis, although recovery is not yet complete, but despite everything our Group has never reached such a high turnover as that obtained this past year. Our continued commitment to management based on quality, professionalism, diversity and support for the audiovisual industry is seen in the market as a benchmark and largely explains why we are capable of exceeding expectations year after year. Knowing how to face challenges from solid foundations, without giving in to short-term temptations, defines and differentiates us, makes us consistent, shields us from adversity and allows us to optimise all opportunities presented to us. With this formula we have been able to successfully overcome the worst situations and can always look to the future from the best position.

In recent years Atresmedia has had to deal with a fall of 50 % in advertising investment; a digital switch off that brought to an end the broadcasts of the three leading channels in their genre; the entry of new operators, in both free-to-air television and in the different pay TV areas; as well as the appearance in society of new trends for consuming audiovisual content. Despite everything, Atresmedia has been able to adapt and achieve more than remarkable results. Our adaptation to environments in constant change is therefore one of our greatest assets. Over these years, the lack of certainty has not paralysed us, rather the opposite. Our activity has been enriched with innovative strategies, new lines of business and improvements in management that, based on the fundamental principles and values of our Company, have made us the greatest generator of content and the main multi-platform operator in our country.

Knowing how to face challenges from solid foundations, without giving in to shortterm temptations, defines and differentiates us, makes us consistent, shields us from adversity and allows us to optimise all opportunities presented to us

The strong performance of all Atresmedia’s Business Areas, optimised through an effective commercial policy, has enabled the Group to increase its net revenue by 5.2 % compared to 2015, reaching €1,021.1 million which, as I mentioned at the start of this letter, is the highest figure ever obtained by our Company. Our management model, based on the search for maximum efficiency and profitability, has made it possible to achieve an EBITDA of €202 million, a sales margin of 19.8 % and a net profit of €129.1 million, 30.1 % higher than last year. The work of our Commercial Division Atresmedia Publicidad has been key in achieving these figures. This excellent work is reflected in the power ratio (ratio of market share to audience share) which at 1.6 was the highest of all the sellers of television advertising. Once again this year, continuing with the principles of customer focus, innovation, efficiency and profitability, it has been the largest seller of multimedia advertising in the Spanish market with a share of 19 % of the total investment in conventional media.

Our activity has been enriched with innovative strategies, new lines of business and improvements in management, based on the fundamental principles and values of our Company

Atresmedia Televisión, our great driving force, has strengthened the leading position of its television model. This shows that a commitment to high quality, innovative and diverse television does have its rewards, and that in television it is possible to combine the highest audience levels with prestige and recognition. Its six channels have positioned this division as the television group that grew the most (27.1 % audience, +0.3 basis points) in an environment of constant fragmentation. The success of our model and its commercial effectiveness, arising from its great social relevance and influence, has also enabled us to obtain an advertising market share above 42 %, establishing ourselves as the leading operator in Spain for viewers and advertisers.

Two of its channels, Antena 3 and laSexta, were undisputed leaders in news coverage over an intense year for political, economic and social matters. Both channels obtained an excellent 24.2 % of the audience with the coverage of the general election on 26 June, unseating the public channel as leader and becoming the public’s favourite television channels for keeping them informed throughout the day. The same happened with the coverage of the American election, in which both channels achieved a strong figure of 26.6 %, once again surpassing the news coverage of the public channel. These are two signs of the perfect operation of the two channels following the merger process and confirm the great business and editorial success that has resulted.

Antena 3 and laSexta, were undisputed leaders in the news coverage over an intense year for political, economic and social matters

Antena 3 ended the year as the leader in television with a 13.3 % audience share, which allowed it to start 2017 in the same position and with the best prospects. It was also once again the leading channel in the mornings (13.3 %) and at weekends (12 %) and remained the most viewed channel in the commercial target at prime time, that preferred by the advertisers, with 14.3 %. laSexta celebrated its tenth anniversary established as the third private channel with 7.1 % of the audience compared to the 6.5 % of its direct competitor, something it has achieved for the fourth consecutive year. In 2016 we saw the largest ever distance between the two channels. laSexta was leader in prime time (7.7 %) in its commercial target (8.1 %) and beat its afternoon record (6.8 %).

laSexta celebrated its tenth anniversary established as the third private channel with 7.1 % of the audience compared to the 6.5 % of its direct competitor, something it has achieved for the fourth consecutive year

Moreover, the development of our four second generation channels has been a great success. The two channels that began broadcasting in 2015 were leaders in 2016. Mega, aimed at an adult male audience, obtained exceptional audience levels, closing the year with 1.8 % and achieving 7.4 % as absolute leader during the early hours of the morning. Atreseries, our new high-definition channel, was leader among the new concession themed channels with a 0.8 % audience share, despite the fact that the bank of HD televisions is still smaller than that of traditional ones. Both channels have demonstrated their strength, joining forces with two established brands, Neox and Nova, which achieved annual figures of 2.5 % and 2.2 % respectively.

Atresmedia Radio ended 2016 as once again the most profitable radio group in the market per listener. This is an unquestionably outstanding result taking into account the renovation that Onda Cero faced last year in the important morning time slot. We look to 2017 with the belief that we already have the best offer on the market. A diverse, professional and high quality proposal, from morning to night, where we have been strengthened with the addition of José Ramón de la Morena. There is still work to do in order to achieve our maximum potential, but over four million listeners endorse our formula and support the three offers from Atresmedia’s Radio Division. Our generalist station Onda Cero has increased its audience with an average of more than two million listeners according to the last survey and has held third place in its segment. The General Media Survey has also shown that it is the only broadcaster to have grown its audience as the result of a solid brand, satisfactory programming and an outstanding ability to deal with challenges. In terms of annual average audience of Europa FM and Melodía FM, both have proven to be synonymous with success, with almost two million listeners for the first and growth to 286,000 listeners for the second.

Atresmedia has also been the leading audiovisual group on the Internet in 2016. Its commitment to the world of multimedia has allowed it to retain its leading position established last year. Atresmedia Digital ended 2016 with a monthly average of over 24 million unique users, 14 % more than in 2015, being a complement to the great content factory that is this Group. Flooxer, our high quality online platform for short videos, has become established with more than one million monthly users. These figures confirm the good sense behind the step taken to strengthen the Group’s multi-platform strategy. To this we must add the leadership of Atresplayer as the leading platform with more than 4.8 million monthly users and more than 600 million video playbacks throughout the year.

Atresmedia Radio ended 2016 as once again the most profitable radio group in the market per listener. An unquestionably outstanding result taking into account the renovation that Onda Cero faced last year

Our strategy of seeking new paths for growth in addition to the revenue from traditional advertising has established the Atresmedia Diversificación model. Our three international channels, Antena 3 Internacional, Atreseries and ¡HOLA! TV, have established us as the commercial operator with the most subscribed households, reaching 45 million outside of Spain and being leaders just behind the American ‘majors’. Atresmedia has also continued to encourage entrepreneurship through the Media for Equity model, through which it has holdings in ten companies including some well-known start-ups.

Atresmedia was also the leading audiovisual group on the Internet in 2016

In terms of Atresmedia Cine, this area has experienced growth in terms of box office success. Our Film Division stands out with twelve films released in 2016, which took 38.4 % of the total box office for Spanish cinema throughout the year, something which gives us great satisfaction. By law we are required to participate in Spanish film production. However, far from just seeing this as an obligation, it has been an opportunity to explore new paths for our business model with the quality standards that guide us as a Group.

Our three international channels, Antena 3 Internacional, Atreseries and ¡HOLA! TV, have established us as the commercial operator with the most subscribed households, reaching 45 million outside of Spain and being leaders just behind the American ‘majors’

In 2016, we have worked more intensely on Compromiso Atresmedia, which brings together the Group’s Corporate Responsibility initiatives such as Ponle Freno, Objetivo Bienestar, Constantes y Vitales, Hazte Eco and Crea Cultura, along with the Fundación Atresmedia initiatives and the Corporate Volunteering Programme through which our employees devote their time to various social organisations. The Tolerancia Cero campaign, in collaboration with the Mutua Madrileña Foundation, broadcast over 70 reports and pieces on Antena 3 Noticias to raise awareness about domestic violence.

Some of this work even affects those who form part of Atresmedia. This year we have converted the Group’s facilities into a cardio-protected space. Along with this, we have increased accessibility to content and platforms, provided more training and more measures for a good worklife balance and complied with the Global Compact, all of which shows our degree of commitment. In 2016 Atresmedia joined Forética, a leading corporate social responsibility organisation, marking a milestone on being the first communications group associated with this forum. The 2016 the Randstad Employer Branding Report named us as the most attractive company to work for in the communications groups sector. We have also created Atresmedia Formación to train the future professionals of the audiovisual industry in order to commit to the advancement and development of the sector.

For over ten years Fundación Atresmedia has been promoting projects in favour of children’s welfare, improving education and normalising disability through all the media channels in our multi-platform.

Another of our principles is a commitment to society. Our objective is to generate value for our shareholders but also to assume our responsibility through the multi-platform organisation that we manage and we do this through Compromiso Atresmedia

Of course, all of this is only part of the path that we still have to travel. Our commitment to a positive change in society is based on enhancing corporate responsibility and dialogue with the groups and forums dedicated to these areas. It forms part of our DNA, being committed to positive change, and we will continue to work to achieve this.

In 2016 we have not only met our objectives but also surpassed them. Atresmedia continues to be a benchmark in business but also in society as a result of our diverse and high quality model. Our ability to deal with new challenges through hard work, innovation and enthusiasm means that we can look to the future with optimism.