Message from the chief executive officer

2017 has been a tough year, but in the end we put in a very strong performance. Admittedly, the advertising market did not behave as expected, and new consumption patterns, coupled with the ongoing influx of new operators, compel us to redouble our efforts to compete from our leadership position for our audiences’ leisure time. But it is equally true that Atresmedia ended the year with record revenue and higher profits than the previous year.

We have had to face many challenges and uncertainty continues to prevail over certainty: and yet we are aware of our strengths, which are considerable. One of those strengths is our Organisation’s ability to embrace change, rather than remain paralysed by the fear of change. In 2017, our Company proved that it is a highly dynamic market player. We successfully opened up new lines of business and reinforced and adapted existing divisions with innovative new measures. Moreover, our way of doing business, which is recognised by and recognisable to our stakeholders, is still the best possible defence in the face of a swiftly changing media landscape.

In 2017 we proved that ours is a highly dynamic Company by opening up new lines of business and strengthening existing ones

We were the first to understand – and to understand more accurately than our competitors – that the focus of our business must be our content. We proved able to break resistance to change so as to become Spain’s leading content factory. We create quality brands, brought into being by the best professionals and bringing together both prestige and audience ratings. The useful life of our content goes beyond conventional linear broadcasting, and includes third parties in the value chain. The emergence of Atresmedia Studios, which was founded to create, design and produce for other operators, is therefore the natural consequence of a horizontal strategy that cuts across the Company and places us at the forefront of the industry. That same strategy has enabled us to acquire 50 million subscriber households around the world via our international channels and to become a leading player in the main markets with our fiction series.

And, on the strength of our high-quality offering and our consistent commitment to always provide the best product, even in the awareness that results might not be immediately forthcoming, in 2017 Atresmedia tasted success in its news and current affairs programming, and thus enhanced its influence in wider society. To be influential and become a benchmark source of news on the topics that the public is genuinely concerned with is a wonderfully valuable attribute that sets us apart from new operators and buttresses our leadership position. The plural and diverse nature of our Group, our professionalism, our ability to respond swiftly and our consistent willingness to serve the public, unsullied by short-term tactics or gimmicks, clearly shone forth last year, which was a period laden with crucial events. Atresmedia Radio and Atresmedia Televisión led their respective fields in meeting the needs of society, making our brand an undisputed benchmark for news and current affairs.

We were the first to undestand that the focus of our business must be our content. We proved able to break resistance to change so as to become Spain’s leading content factory

Another factor in our excellent performance in 2017 was our ongoing commitment to innovation. Innovation runs through each and every one of our activities, and springs directly from our refusal to conform or to rest on our laurels. In addition to Atresmedia Studios - which in record time closed crucial deals, soon to be followed by still more - the Company set in motion a start-up incubator in partnership with Boomerang to create new entertainment formats. In the radio division, despite the maturity and robustly entrenched nature of the market, we continue to tweak our offering to further enhance what we believe is already the best proposal out there. Our offering is at the forefront of 21st-century radio in terms of both content and broadcasting technology. In the online division, we beefed up our position by acquiring Smartclip Latam, while we continue to optimise our multiplatform distribution policy with product and functionality improvements.

All these factors enabled us to raise revenue by 3.0% in the year, to 1.05 billion euros. As I said earlier, this is the highest revenue figure in the Company’s entire history. Our management model seeks out the highest standards of effectiveness and profitability. We achieved EBITDA of 202.1 million euros, with an EBITDA margin of 19.2%, and net profit of 142.1 million euros, 10.0% more than in 2016. A key factors in achieving these figures was the strong performance of our commercial division, Atresmedia Publicidad. Our advertising people have shown our clients that we provide the best setting for communications about their products. Their excellent work is reflected in our power ratio – market share to viewership share – which at 1.6 is the highest of any television advertising marketer. Following our philosophy of customer focus, innovation, effectiveness and profitability, Atresmedia was again the leading multimedia advertising marketer in Spain, with a 19% share of the total spend in conventional media.

Atresmedia Televisión has strengthened the lead of its television model. Atresmedia’s television division is still living proof that quality, innovative and broadly based television is appreciated and rewarded by the general public. High viewership is compatible with prestige: we have become one of the game￾changers in Spain’s audiovisual industry, as against other operators who merely farm out their licences. Atresmedia Televisión’s six channels proved the strongest in withstanding the onrush of fragmentation and the shift in consumption trends, thus reaffirming the success of their model and their commercial appeal.

Atresmedia Televisión reinforced the leadership of its television model, based on high quality, a diversity of viewpoints and innovation: all six of its channels reaffirmed their success and market strength, and received the applause of the public

I would like to highlight that, propelled by its two flagship channels, Antena 3 and laSexta, Atresmedia Televisión ended 2017 with an audience share of 26.6%, and in leading the commercial target audience —we are the most highly valued showcase for advertisers in the two main day parts, prime-time and early fringe. The year has been intense from a news standpoint, the Catalan independence process being an especially hot issue. These events were covered by a major media deployment that was rewarded by growth in news and current affairs programmes. Antena 3 news programmes were the only private television offering to grow, achieving an average rating of 12.6% across all editions, while laSexta news achieved the second best rating result of its history, at 9.9%. Espejo público reached a new annual high with a share of 17.7%, while Al rojo vivo, with 12.3%, cemented its leadership as the news programme with the biggest following in its time slot. These figures show that our strategic bid to provide high-quality news and current affairs content was the right move.

Antena 3, which finished the year with an average audience share of 12.3%, was the preferred channel for the commercial viewership in prime time (13.9%). It ended the year as the absolute leader in audience share for morning shows (12.9%) and weekend programming (11.4%). In addition, it achieved the year’s most-viewed broadcast, most-viewed series, most-viewed film and most-viewed programme. laSexta, for its part, ended 2017 in a strengthened position as the third-biggest private TV channel by audience share at 6.8%, and for the fifth year running it again outstripped its direct competitor, this time by the largest difference ever recorded between the two channels (+0.6). laSexta also took the lead in commercial target (7.4%), and widened its edge in the prime-time slot (7.1%).

Our four new-generation special-interest channels continued to reinforce their successful programming ranges, taking the lead in their respective targets. Neox, with 2.5%, retained its 2016 share and its place as the second most widely viewed special-interest channel. Nova, with 2.2%, also retained last year’s share and was the leading women’s special-interest channel in the commercial time slot. The men’s special-interest channel Mega, for its part, held onto its share of 1.8%. Atreseries, our youngest HD channel, has been positioned since its launch as the leading new concession special-interest channel, and increased its average audience share to 1.1% –HD televisions are still not as widespread as conventional devices.

Atresmedia Radio continued to reinforce its range of voices and promoted internal talent, ending 2017 with four million listeners. Onda Cero increased its audience share yet again, achieving two million listeners and proving that we have made the right decisions

In 2017 Atresmedia Radio continued to reinforce its radio programming, based on diversity, professionalism and quality throughout the day. We announced that Jaime Cantizano will be joining the weekend morning show at Onda Cero. As a result, our radio division attracted four million listeners across our three stations. We continue to work every day to make the most of our potential. This includes internal talent promotion thanks to our amazing team of professionals, who, like Carlos Alsina and Juan Ramón Lucas, attract increased audiences every season, thus proving that we make the right choices. The Group’s general-interest station, Onda Cero, increased its audience to two million listeners and retained its position as the third-largest broadcaster in its segment. The Estudio General de Medios (EGM, Spain’s leading audience measurement survey) showed that Onda Cero was the only general-interest radio station to grow in the past two consecutive survey waves and ended 2017 with growth of 3%, twice the rate seen in the wider market. This is the outcome of a firmly established brand name and an attractive programming offer. Europa FM and Melodía FM held onto their strong positions, the former as a leading pop music station with 1.8 million listeners and the second growing to an audience of 300,000 and equalling its second-best ever figure.

Atresmedia was again the leading audiovisual group on the Internet in 2017, a place it has held since 2015. The Group’s online division ended the year with an average of 27 million unique users a month, 12% more than in 2016, and placed among the top 10 most visited properties in Spain according to Comscore. Atresplayer, our main non-linear content distribution window, attracted more than 4.2 million users, thus living up to its key role in the Company’s multiplatform strategy. That role will be reinforced in 2018 with a key update.

Atresmedia further cemented our position as the leading audiovisual group on the Internet, placing among the top ten most visited properties in Spain, according to Comscore

Atresmedia Diversificación continued to seek new avenues for growth that are not dependent on the conventional advertising market. With our three international channels – Antena 3 Internacional, Atreseries and ¡HOLA! TV, joined in 2018 by AtresCine – we have retained our foothold as the private European operator with the most channels and subscribers overseas: over 50 million households subscribe to us. Moreover, in 2017 we continued to support entrepreneurship through our “Media for Equity” model for investing in start-ups, which we financed to a value of more than 80 million euros. With 10 investee companies, Atresmedia is already a relevant player in the venture capital sector in Spain.

Our film division, Atresmedia Cine, became Spain’s leading film production firm. We released nine titles in 2017, and accounted for 30% of box office takings by Spanish films over the year. The law places us under a duty to take part in Spanish film production by means of a minimum “investment share”. Although we are uncomfortable with the fact that this duty is an imposition, we also view it as an opportunity to open up a new business pathway that cleaves to the standards of quality which the Group practises across all its divisions.

Atresmedia’s four international channels – Antena 3 Internacional, ‘¡HOLA! TV, Atreseries and Atrescine – buttressed our position as the European private operator with the most channels and the largest number of subscribers: 50 million connected households

One of the Group’s business activities, Atresmedia Formación, created to train the future professionals of audiovisual media, has successfully integrated its concern for education with financial viability, by means of a training catalogue of more than 400 courses that are recognised both in Spain and overseas.

For yet another year, Atresmedia has delivered on its commitment to responsible business practices and support for positive change in wider society. In 2017, therefore, the Company adopted its second corporate responsibility master plan, which will provide a structure for all actions in this domain for the next three years, enabling us to continue to mainstream corporate responsibility activities throughout all the Company’s strategic areas and corporate culture.

One of the factors identified in the Master Plan is our Company’s contribution to and impact on the wider community, as part of our Organisation’s commitment of the past decade. Throughout 2017 we reinforced the Compromiso Atresmedia, the initiative that brings together all the Group’s corporate responsibility campaigns (Ponle Freno, Objetivo Bienestar, Constantes y Vitales, Hazte Eco, Crea Cultura and Tolerancia Cero): our range of actions go beyond merely raising awareness and achieve real changes in society.

Our Group is continuosly betting for a more responsible business management and for a strong support to a positive change in the society. That is why in 2017 we reinforced all the Organisation’s corportate responsibility activities through the initiative Compromiso Atresmedia

Our outward-facing efforts are reflected internally among Atresmedia’s employees, through our initiatives to train our people in road safety and healthy lifestyle choices. In addition, our professionals have dedicated some of their time to working with charities and NGOs through the Corporate Volunteering Programme, which in 2017 completed its first decade, and to Project Th’nk, which supports Group employees’ entrepreneurial ideas: its first year of activity involved a number of initiatives to encourage innovation within the firm.

Fundación Atresmedia continued to provide support to hospitalised children, help teach people with disabilities about the audiovisual industry so they can find work, and champion major initiatives for better education, such as ‘Great Teachers’ and ‘Discover Vocational Training’. In 2017, for the sixth year in a row, it led the corporate foundation transparency ranking.

Alongside its work for the broader community, the Group has focused on the environment and sustainability, increasing investment in this respect and cutting down on the emissions from our premises. The Group also joined the Environment Cluster hosted by Forética, the leading corporate responsibility forum in Spain.

I would also like to highlight the #companies4SDG campaign, which raises awareness of and calls for action on the United Nations Sustainable Development Goals, to which Atresmedia is strongly committed.

So 2017, despite difficulties and challenges, was an excellent year for the achievement of our aims. It wasn’t easy, but yet again we outperformed the goals we had set ourselves. We are still a leading company in terms of both business and our role in the community, thanks to our strategy and our diverse, high-quality model. Our understanding of the business leads to tangible results, and is perceived positively by the market and society as a whole. We have a clear strategy and are not scared of change. For us, 2017 now lies in the past. Our Organisation will continue to be put to the test throughout 2018. But I am confident that, with our professionals and the support of the Board and shareholders, we shall again achieve all our goals.