Consolidated Annual Accounts 2017

1 ATRESMEDIA CORPORACIÓN DE MEDIOS DE COMUNICACIÓN, S.A. MANAGEMENT REPORT FOR 2017 Business performance and situation of the Company Atresmedia Corporación de Medios de Comunicación, S.A. (Atresmedia or the Company) produces and distributes content of interest for its audience, in which it inserts advertising spaces sold through its wholly-owned subsidiary Atresmedia Publicidad. The Company also engages in other business that do exclusively advertising-driven: rights management; the sale of proprietary content individually or through its own television channels, distributed internationally via satellite, cable and broadband operators; and the Group's investments in innovative growth companies. Lastly, Atresmedia complies with its statutory obligations to fund European audiovisual works (set out in the Spanish Audiovisual Act, Ley General Audiovisual ) either directly or through its producer, Atresmedia Cine. Spain’s economy remained buoyant in 2017, despite the political uncertainties that cropped up during the year. Forecasts point to GDP growth of 3.1%, in line with 2016. Both net trade and domestic demand made positive contributions. With domestic demand, household consumption posted a solid 2.5% increase, which is particularly noteworthy for its impact on our business. Job creation in Spain (2.8% for the year) was a key driver of consumption in 2017, while the unemployment rate eased to 17.1%, according to the Active Population Survey for the fourth quarter. This helped boost household income, which fed through to higher consumption. Contrary to what these figures would appear to indicate, the advertising market expanded just 2.3%, according to data from Infoadex, the main industry source. This was a far more muted performance by historical measures compared to other times of economic growth. While this uncharacteristic behaviour can be explained by a number of factors, most of the weakness was concentrated in mass consumption sectors (which make up roughly a third of total investment). Other industries performed as usual, closely in line with expectations. By media type, television grew by 1.0% and radio by 1.7%, maintaining their shares of 40.0% and 8.7%, respectively, of the total. Print media sustained a 7.2% drop, while internet media expanded by 10%, raising its share to 28.9%. Also eye-catching was the 1.7% drop in television consumption, extending the trend of the past few years. That being said, average consumption per person still averaged 229 minutes a day. This includes live and on-demand consumption within the following seven days on connected TVs and excludes consumption in other devices.