ANNUAL
REPORT 2012
Disclaimer
Some of the information in this Annual Report (the “Annual Report”) may contain projections or other
forward-looking statements regarding future events or the future financial performance of Grupo
Clarín. You can identify forward-looking statements by terms such as ”expect”, ”believe”, “anticipate”,
“estimate”, “intend”, ”will”, “could”, “may” or ”might” the negative of such terms or other similar
expressions. These statements are only predictions and actual events or results may differ materially.
Grupo Clarín does not intend to or undertake any obligation to update these statements to reflect events
and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events.
Many factors could cause the actual results to differ materially from those contained in Grupo Clarín’s
projections or forward-looking statements, including, among others, general economic conditions, Grupo
Clarín’s competitive environment, risks associated with operating in Argentina, a rapid technological and
market change, and other factors specifically related to Grupo Clarín and its operations.
The Annual Report and certain boxes and charts that include highlighted information for illustrative
purposes throughout this publication, include financial information as of and for the fiscal years ended
December 31, 2012 and 2011, which was extracted from the Consolidated and the Parent Only Financial
Statements as of December 31, 2012, presented on a comparative basis, and their related notes. The
Annual Report and the Highlights should be read in conjunction with such financial statements and
related notes, the report of Grupo Clarín’s independent accountants, Price Waterhouse & Co. S.R.L.,
Buenos Aires, Argentina (a member firm of PriceWaterhouseCoopers) relating to such financial
statements, and the report of Grupo Clarín’s Supervisory Committee.
Financial and Operational Highlights
2012 Macroeconomic Environment
Perspectives for the Upcoming Year
The Year 2012 and the Media Sector in Argentina
Regulatory framework and conditions for the
journalistic and media activity during 2012
The Company. Origin, Evolution and Profile
Grupo Clarín and its Business Segments in 2012
Supplementary Financial Information
CABLE TELEVISION ANd INTERNET ACCESS
Programming, Cable Television and Internet Services
Commercialization and Customer Service
Competition
Strategy
PRINTING ANd PUBLISHING
Arte Gráfico Editorial Argentino
Diario Clarín
Internet
Other Newspapers
Ferias y Exposiciones Argentinas
BROAdCASTING ANd PROGRAMMING
Artear
Radio Mitre
dIGITAL CONTENT ANd OTHERS
Digital Content
Other Services
CORPORATE GOVERNANCE, ORGANIZATION ANd
INTERNAL CONTROL SYSTEM
Stock Information and Shareholder Structure
GRUPO CLARíN ANd ITS CORPORATE
SOCIAL RESPONSIBILITY
Our Commitment
People’s Voices
Social and Sustainability Coverage
Promoting Involvement
Community Engagement and Social Advertising
Fostering Education and Culture
Media Literacy and Protection of Young Audiences
Excellence in Journalism
Our People
Environment
03
04
05
06
07
10
12
15
16
19
21
21
21
22
23
24
27
28
31
32
34
37
38
39
43
44
47
48
49
51
52
53
54
55
56
56
57
60
1
2
3
4
5
6
Risk Factors
64
Business Projections and Planning
67
FINANCIAL STATEMENTS
AS OF dECEMBER 31, 2012
68
7
ANNUAL
REPORT 2012
FINANCIAL HIGHLIGHTSoperATING reSuLTSAdjuSTedebITdA FINANCIAL HIGHLIGHTS
(In millions of Ps.)
Net Sales
Adjusted EBITdA(1)
Adjusted EBITdA Margin(2)
Net Income(3)
2012
11,318.9
2,772.7
24.5%
972.3
2011
9,325.2
2,475.6
26.5%
785.6
YoY
21.4%
12.0%
(7.7%)
23.8%
(1) We define Adjusted EBITDA as net sales minus cost of sales (excluding depreciation and amortization) and selling and
administrative expenses (excluding depreciation and amortization). We believe that Adjusted EBITDA is a meaningful measure of our
performance. It is commonly used to analyze and compare media companies on the basis of operating performance, leverage and
liquidity. Nonetheless, Adjusted EBITDA is not a measure of net income or cash flow from operations and should not be considered
as an alternative to net income, an indication of our financial performance, an alternative to cash flow from operating activities
or a measure of liquidity. Other companies may compute Adjusted EBITDA in a different manner; therefore, Adjusted EBITDA as
reported by other companies may not be comparable to Adjusted EBITDA as we report it.
(2) We define Adjusted EBITDA Margin as Adjusted EBITDA over Net Sales.
(3) We define Net Income as Income for the period.
OPERATING RESULTS
Total Consolidated Subscribers(1)(3)(4)
Total Internet Subscribers(1)(3)(4)
Circulation(1)
Audience Share %(2)
Prime Time
Total Time
(1) Figures in thousands.
2012
3,404.7
1,504.4
311.7
35.9%
29.4%
2011
3,490.3
1,351.1
331.2
42.2%
33.0%
YoY
(2.5%)
11.3%
(5.9%)
(15.1%)
(10.9%)
(2) Share of broadcast TV audience according to IBOPE for AMBA. PrimeTime is defined as Monday through Friday from 8 pm to 12 am.
Total Time is defined as Monday through Sunday from 12 pm to 12 am.
(3) Total subscribers consolidated following the same consolidation methods used in the financial statements as of each year end.
(4) Total Consolidated Subscribers registered for the year 2011 include those from discontinued operations in Paraguay (115,882 Cable
TV Subs and 11,305 internet Subs).
AdJUSTEd EBITdA
(In millions of Ps.)
Cable TV and Internet Access
Printing and Publishing
Broadcasting and Programming
digital Content and Others
Subtotal
Eliminations
Total
2012
2,406.9
229.9
136.1
(0.2)
2011
1,963.8
259.7
252.7
(0.6)
2,772.7
2,475.6
-
-
YoY
22.6%
(11.5%)
(46.2%)
64.7%
12.0%
NA
2,772.7
2,475.6
12.0%
02
03
The second specific fact is the evolution of
the Central Bank's international reserves. The
monetary authority has again registered a drop in
its foreign currency position of more than USD3
billion. The achievement of a higher foreign trade
surplus and the substantial decrease in capital
flight and profit / dividend remittances were not
sufficient to cover the use of reserves appropriated
to the service of foreign currency sovereign debt
and, particularly, the collapse in foreign currency
inflows to the financial system. As opposed to
most other emerging countries in the region, which
were able to accumulate reserves throughout the
year, Argentina’s decrease in foreign reserves
brought this variable to USD43.1 billion at year-
end, its low record since 2007.
The continued deterioration on the fiscal
front deepened still further in 2012. Primary
spending has again outgrown revenues. The
national primary deficit (without counting profit
remittances from BCRA and ANSES) exceeded
Ps.35 billion, more than doubling the figure for
2011. The financial deficit (i.e. after payment of
interest on public debt) grew in 2012 to over Ps.80
billion. Both figures are the highest since 2003, in
absolute and relative terms.
This fiscal deterioration occurred in spite of record-
high tax pressure and is mostly financed with the
printing of currency, which fuels the already high
inflationary expectations.
2012 MACROECONOMIC
ENVIRONMENT
The dynamism that emerging economies were
able to sustain in spite the overall slowdown of
the developed countries’ economies was one of
the few positive economic highlights of 2012.
The serious social and economic crisis that
continues to affect several Euro Zone countries
led to considerable deterioration in the block of
developed countries, which could not be offset by
the modest upturn of the US or Japan's return to
growth.
Most industrial emerging countries -led by China
and, to a lesser extent, India- proved resilient to
such deterioration and were able to continue to
grow during the year under review at an above-
average rate, thus funneling growth in other
emerging countries that provide these industrial
economies with agricultural and non-agricultural
commodities. All emerging countries recorded
lower growth rates compared to 2011.
The world has continued to register growth at two
different structural paces, reflecting the operation
of the new global accumulation mechanism
focused on emerging economies.
The poor performance of the Argentine economy
in 2012 is the exception to the rule prevailing in
the emerging countries for two reasons. First of
all because, unlike its peers, the world did not
represent a burden for Argentina. In fact, even
though the slowdown of the Brazilian economy did
have a negative impact on Argentina’s industrial
exports, in 2012 the price of its agricultural
products in general and the price of soya in
particular, were higher on average than those of
the previous year and remained high compared
to historical levels (largely offsetting the lower
volume of the crop harvest).
Secondly, because unlike in other emerging
countries and the region as a whole, local economic
policies accentuated, instead of mitigating, the
effects of the global financial crisis.
The year 2012 stands out as an actual turning point
in the performance of the Argentine economy. The
change in the ground rules fuelled in the aftermath
of last year's presidential elections broadly
and significantly damaged economic activity
developing a disturbing scenario of stagflation
(stagnation plus high inflation).
Not even the strong acceleration in the rate of
increase in the money supply -which ended the
year with an annual increase of 40%, attributable
to increased financing from the Central Bank to
the Treasury -was sufficient to revert the halt in
economic activity.
Thus, the balance of the Argentine economy at
the end of 2012 is at best modest, as a direct
result of the policies applied in response to the
imbalances created in, and carried over from,
the previous years. The most significant negative
side effects of the policies implemented in 2012
were decrease in th|e generation of genuine
employment, the stagnation of the purchasing
power of workers’ salaries, the capital depletion
of the Central Bank, the decrease in exports and
the loss of international reserves.
The scenario of stagflation is paired with certain
additional disturbing conditions under which the
economy is operating, such as an accelerated
loss of competitiveness, increased primarization
and shortage of local and foreign reproductive
investments (noticeable mainly in the capital
depletion of key strategic sectors).
In terms of key macroeconomic equilibrium, we
note a slight improvement in the real generation
of foreign currency on the external front, which is
mainly attributable to the sudden closing of the
economy, an unusual situation that negatively
affected several aspects of the real economy.
This performance is the result of the strong
contraction of imports, in general, and intermediate
goods and capital, in particular. Consequently, the
external surplus for the year was slightly higher
than that of the previous year and remained above
USD10 billion for the eleventh consecutive year.
However, this apparent strategic achievement is
tainted by two specific facts. One of them is the
widening of the trade deficit in the energy sector,
estimated in around USD3.5 billion this year. This
phenomenon worsens an historical problem of
the Argentine economy, because in order to avoid
affecting the country’s foreign reserve position,
the surplus of the agricultural sector in the coming
years must not only cover the structural deficit of
the industrial sector, but also that of the energy
sector.
Perspectives for the
Upcoming Year
Under the new scheme in which the Argentine
economy is advancing, its short-term and medium-
term performance mostly depends on its ability
to generate sufficient foreign currency to cover
the external structural deficit of industrial (and
now also of its energy) sector and honor interest
payments on its indebtedness. With respect to
the latter, the final outcome of the claims brought
by holdouts who did not participate in any of the
various exchange offers has implications that are
difficult to assess as of the date of this report and
is an additional source of concern.
Without access to voluntary financing from capital
markets, the debt service is directly contingent
upon an increase in prices and/or volume of
exports and/or the use of reserves.
The baseline scenario for the Argentine economy
in the coming year is supported by three important
assumptions. On the external front, the US-dollar
supply is expected to increase, mostly as a
result of the harvest volume and the resulting
agricultural exports. This will be paired with the
shorter maturities of sovereign debt in foreign
currency, mainly attributable to the no service of
the 2012 coupon of the GDP-linked bonds.
Meanwhile, at a regional level, the most relevant
highlight is the expected improvement in the
performance of Brazil (estimated to grow more
than in prior years) and its related positive impact
on the Argentine exports (mostly, industrial
exports) to that market.
At the strictly local level, the mid-term congressional
elections could cause a more aggressive drive in
economic policy, albeit at the risk of worsening
carryover imbalances.
In fact and by way of example, inflationary
pressures are expected to build up again in line
with the recovery of the economic activity, which
would continue to hinder the scope of significant
improvements
the
distribution of income of the Argentine people.
indicators and
in social
In the absence of measures that address the
distortions accumulated in the last few years and
without an additional supply of US dollars from the
agricultural sector, the external restriction would
inevitably appear again beyond 2013, compromising
the economic performance and endangering the
ability to move forward with pending issues as well
as the accomplishments achieved so far.
04
05
THE YEAR 2012 ANd THE MEdIA
SECTOR IN ARGENTINA
By the end of the year 2012, the global media
industry -undoubtedly one of the most seriously
affected by the severe financial crisis of 2009-
recorded the highest growth rate in the last five
years, thus consolidating the signs of recovery
shown in the aftermath of that crisis.
That performance is mostly accounted for by
the dynamism maintained by most emerging
economies in spite of the prolonged slowdown of
the developed countries’ economic activity, and its
related direct impact on the positive performance of
this industry. By way of example, in the year under
analysis the Latin American media industry was
the one that experienced (and according to market
estimates is expected to continue to experience)
the highest growth on a global basis, even above
that of its Asian counterparts.
The macroeconomic improvement in these countries
takes some pressure off a critical source of concern
for this industry, which already faces several
challenges arising from the recurring emergence
of new technologies and the changes in the media
consumption patterns of the new generations.
In contrast, countries such as Spain and Argentina
that, for several reasons, failed to improve or had
a poorer macroeconomic performance than the
previous year have kept or otherwise incorporated
an additional problem to the already complex
micro-environment of the industry.
The accelerated migration of audiences, content
and advertisers towards the digital ecosystem is the
main phenomenon that emerges from the review of
the media industry performance worldwide during
2012. The fixed and mobile broadband revolution is
a key driver of this change.
The truth is that the digitalization process we are
undergoing is giving rise to a veritable cultural
revolution on a global basis, beyond the boundaries of
our industry. The gradual change in the way we carry
out our day-to-day activities is leading to a profound
transformation of essential aspects of our societies,
such as interpersonal relationships and access to
information and entertainment content. Digital
natives are the key drivers of this cultural change.
The gradual adoption process that involves the
initial testing of new technologies that subsequently
coexist with older technologies and, ultimately,
become the preferred choice over traditional
physical alternatives - is a common denominator
in the behavior of a considerable portion of today’s
population worldwide. In the media industry, the
multiple devices that enable Internet access and
networks of Internet access suppliers are good
examples of this.
The paid television and Internet segments continued
to expand in 2012, even though Argentina’s
penetration rates are among the highest in the region.
All of the above, coupled with this new generation
of consumers whose habits and preferences
remarkably differ from those of prior generations,
still poses an unprecedented challenge and at the
same time represents an opportunity for each of
the different segments of the media industry, which
in the face of this changing reality are bound to
reformulate their strategies and business models.
For the economy and the local media industry, the
year 2012 was characterized by slow dynamics,
in direct contrast to the regional trend. In fact,
as mentioned above, the disturbing stagflation
environment (stagnation with high inflation) that
characterized the economy throughout the year was
an additional source of risk for this industry.
Additionally, the government has escalated in
its attack against the independent press with
the clear purpose of colonizing the media and
weakening independent media in general, and
Grupo Clarín in particular. Some examples of this
are the discrediting campaigns and attacks against
journalists and directors from media that are
critical of the current administration, the arbitrary
allocation of official advertising, the law governing
newsprint, the illegal breaking into Cablevisión,
the use of publicly-owned media as promotional
tools for the government and the expansion of pro-
government media.
In this complex environment, the figures
corresponding to the main sources of revenue
of the industry were excessively modest. In fact,
advertising investment increased by 15%, less
than half the growth rate of 2011, mostly driven
by government advertising expenditure, directed to
finance a matrix with a greater share of publicly-
owned media. In terms of consumer prices, the
increase in the consolidated advertising pie of
the several industry segments fell again below
the inflation rate (of approximately 25% according
to private estimates). This reveals that although
advertising increased in nominal terms, the rate of
increase was substantially lower than the economy
as a whole, thus reducing its relative size.
Unlike most countries in the region, the newspaper
segment continued to attract the largest share
of advertising in the local market, followed by
broadcast TV.
The number of pay television subscribers
increased during 2012, but at a slower pace than
in the previous year, leveraged by the growing
penetration of additional services (incorporation of
high-definition signals to the grid and VOD, among
others), which permitted a high level of investment
in the expansion of network capacity.
Broadband demand continued to accelerate
significantly, becoming increasingly ubiquitous.
In fact, by year-end, residential fixed broadband
Internet access reached a new record high in a
fiercely competitive environment noted for the
promotional offers of its main market players. At
the same time, the mobile broadband segment
dynamics, driven by the implementation of
combined voice and data subscriptions by cell phone
companies, evidenced the complementariness that
this technology provides to the market.
is
In this regard, an emerging and curious global
phenomenon
the users’ ongoing demand
for higher speed, mostly as a result of the
predominance of video traffic over other traffic
and, to a lesser extent, as a result of the increasing
number of devices connected to the Internet
at home. Naturally, this increased demand for
bandwidth per client compels providers to add new
capabilities to their networks on an ongoing basis,
building pressure on the current business models.
Lastly, newspaper circulation has continued to
show its downward structural trend, similarly to the
rest of the world. Average newspaper circulation in
the metropolitan area (City of Buenos Aires and its
surroundings) (source: Newspaper and Magazine
Circulation Verification Institute, IVC, adjusted by
the Company to account for newspapers in the City
of Buenos Aires for which circulation is not verified)
was 571,800 copies (Mondays through Sundays) - a
3.5% decrease compared to the previous year. On
Sundays, average circulation was 1,077,900 copies,
a 1.8% rise relative to 2011. In contrast, it is worth
noting the increasing number of visits to social
networks and websites with content development,
mostly news sites with the newspaper on top of the
rankings. As a logical consequence, the increased
number of readers of digital newspapers reveals
that the demand for content remains strong,
unlike preference for paper format newspapers,
though distributed among a broader variety of
technological platforms.
Regulatory framework and conditions for
the journalistic and media activity during 2012
In addition to the above and to the comments under
Note 11 to the Parent Company Only Financial
Statements, during 2012 private media in general
and Grupo Clarín in particular continued to face an
escalating level of harassment. Such harassment
was executed through the official and para-official
apparatus, with the clear intention of damaging
the media’s reputation and directly and indirectly
limiting its journalistic activities.
In the framework of this escalation, the government
reinforced certain actions that threaten and distort
the full effectiveness of freedom of speech and
information, such as the exponential increase and
discriminatory allocation of official advertising
used to create and sustain pro-government media,
as well as the use of such advertising to condition
the press. In 2012, the government spent more
than Ps.1.9 billion in official advertising, a 43%
rise compared to 2011. Nine media groups closely
related to the government were the recipients of
80% of said resources.
Further, the government continued to use
public funds and media on a discretionary basis
to generate content and programs related to
political propaganda; with several obstacles and
discriminatory conduct in the access to public
information and an aggressive campaign to
destroy non-partisan media by compromising their
economic sustainability and credibility.
This discrediting and defamatory strategy was
painfully reflected in street banner and graffiti
campaigns, banners, balloons, merchandising and
clothing, in persecution and public denunciation of
journalists, and went so far as to include the financing
of soccer hooligans to display banners against the
media and the opposition during matches.
Other tools to exert editorial pressure consisted
of abuse of bureaucratic controls or controls by
public agencies that took the form of administrative
persecutions, groundless arbitrary resolutions,
disproportionate tax controls and recurring
audits. In this scenario, the government did not
hesitate to exert pressure through entities such
as the National Antitrust Commission, AFSCA, the
Argentine Securities Commission and the Financial
Information Unit.
In addition to the discretionary allocation of
official advertising as a tool to exert pressure on
the media, private companies were banned from
including their advertising slots in independent
media. Through the Secretariat of Domestic Trade,
the government exerts pressure on advertisers from
several sectors and threatens them with penalties
if they advertise their products or services on
certain media. This modus operandi reached its
greatest expression in February -after year-end-
with the public announcement that the Secretariat
of Domestic Trade had issued an unwritten order
that is observed without exceptions by the entire
market, whereby supermarkets and home appliance
stores were arbitrarily banned from advertising in
any media from the City of Buenos Aires and its
surroundings. This virtual boycotting against private
advertising, paired with the arbitrary exclusion
of official advertising from non-partisan media,
directly affects the economic sustainability of
independent media.
In the audiovisual sector, this offensive against
the media (against both, its editorial freedom and
its economic sustainability, which guarantees
its independence) had as its utmost expression
the enactment of the controversial Audiovisual
Communication Services Law and its controversial
implementing regulations, which clearly exceed
the regulatory framework by granting powers
to the regulatory agency that are not provided
for by the law. Some examples of this are: i) the
power to intervene in the affairs of the audiovisual
broadcasting services on a discretionary basis:
whether by revoking licenses or through simple
summary proceedings, and ii) the oversight of
the organization and mandatory content of the
programming grid of subscription cable TV services,
pursuant to which Cablevisión was imposed over
400 penalties throughout 2011 and 2012 that are
now suspended by a court injunction.
06
07
and dismissed the claim of unconstitutionality with
respect to sections 41 and 161.
In a long ruling, Ricardo Guarinoni, María Susana
Najurieta and Francisco de las Carreras highlighted
“the right to freedom of speech and information
both as an inalienable right of every person and as
an essential right for the very same existence of a
democratic society.”
Regarding section 45, Judge De las Carreras held
that the Audiovisual Communication Services Law
“imposes an unreasonable limitation on the number
of audiovisual communication licenses; establishes
certain unjustified incompatibilities among holders
of certain licenses; and unfoundedly restricts the
reach of the services to an arbitrary percentage
of the aggregate population or subscribers”. The
judges also declared unconstitutional the second
paragraph of section 48, which established that
the multiple license regime may not be alleged
as an acquired right in light of any regulations set
forth under this law or which may be created in the
future. In declaring the unconstitutionality of those
aspects, the judges incorporated the opinions of
technical expert witnesses and decided that there
was no reason to maintain the unconstitutionality
of section 161, which provides for a 1-year term for
media groups to conform to the new law because it
no longer affects the license regime or the acquired
rights. The judges also decided to maintain the limit
of up to 10 broadcast radio and television licenses
held by the same media group, on the grounds
that it is necessary to restrict the use of the radio
spectrum. The decision also upheld section 41
regarding the license transfer regime.
Judge Najurieta highlighted “the power of the
judges to control the constitutionality of laws” and
held that “the media are the vehicle through which
ideas and information are disseminated. Freedom
of speech would be a mere theoretical declaration
without the instruments required to publish ideas,
provide information and have access to those ideas
and information”. “When a journalistic company
has financial and technical resources, it can provide,
without external influences, information and news
reporting services. The combination of a reduction
in audience share, a decrease in private advertising
and a lack of official advertising leads to economic
insecurity, which affects journalistic freedom”, held
the judges in their ruling.
The several activities, pressures and strategies
implemented by the national government to
interfere with the decisions of the Judicial Branch
include, but are not limited to: several attempted
appointments of judges that are in favor of the
Broadcasting Law; pressures on and changes in
majorities at the Council of the Judiciary; multiple
recussations; pressures on and criminal charges
against judges and advisors to remove them or
cause them to resign; actions that resulted in the
virtual fragmentation of the Courts on Civil and
Commercial Matters; changes in the substitution
system, and pressures on the Supreme Court up
to and including customizing the government’s
request for a per saltum appeal to by-pass the
regular process, among many other actions against
a Republic’s healthy system of checks and balances.
On December 6, the Federal Commercial and Civil
Court of Appeals granted an extension of the term
of the injunction issued in favor of the Company
until a final judgment is rendered on the case. This
was ratified by the Supreme Court of Argentina
after rejecting several court filings from the national
government. Horacio Alfonso, First Instance judge,
declared Sections 45 and 161 of the Broadcasting
Law constitutional, without considering the
prevailing Freedom of Expression issues or the
expert evidence presented in the case.
As mentioned in note 25.d to the Consolidated
Financial Statements for the year ended December
31, 2012 filed with the London Stock Exchange,
subsequent to year-end, on April 17, 2013
Chamber I of the Federal Court of Appeals on Civil
and Commercial Matters decided to declare the
unconstitutionality of some points of Section 45
and Section 48 of the Audiovisual Communication
Services Law.
The Court decided that several core points of section
45 and also part of section 48 of the Audiovisual
Communication Services Law are unconstitutional
The Company will file an appeal with the Supreme
Court of Argentina in due time and form against the
partial dismissal of the claim.
The law that gave rise to these unconstitutional
regulations continues to be challenged before the
courts for its infringement of constitutional rights,
the granting of broad and discretionary powers
over media and content to the Executive Branch,
the favoring of official voices, its effects on the
sustainability of private media, for promoting the
elimination of independent signals and establishing
dangerous indirect censorship criteria through the
arbitrary granting of licenses and the application of
penalties, among other controversial aspects.
With respect to the Company, two court decisions
that upheld preliminary
injunctions and that
provided for the suspension of the main sections of
the Broadcasting Law are still effective; including
but not limited to Section 161, which provides
for the mandatory divestiture within the term
of one year in order to conform to the new legal
restrictions. In spite of the existence and full
effectiveness of said court decisions against the
law, the government sought to move forward with
the implementation thereof in an authoritarian and
overwhelming manner. This ratifies all the warnings
about the potential danger of editorial control by an
enforcement authority that is not independent.
The government has stretched the interpretation
of certain preliminary injunctions issued in favor
of Grupo Clarín in order to launch an attack on the
group. The government’s overblown interpretation
was used as a platform to initiate a massive
propagandistic and administrative operation to
anticipate the end of Grupo Clarín and introduce the
acronym "7D", which stands for December 7, the
date on which the divestiture provision of the Law
was supposed to become effective.
In this context, during the second half of 2012,
the Executive Branch embarked on a fierce and
unprecedented attack against the Judicial Branch,
particularly in connection with the cases relating to
the Audiovisual Communication Services Law.
other things, the Law created a registry where all
newsprint producers, sellers and buyers shall be
registered and set limits and established conditions
applicable to Papel Prensa for the production and
sale of newsprint. This law also contains a series
of temporary clauses, specifically and exclusively
addressed to Papel Prensa, whereby Papel Prensa
is forced to make investments to meet the total
national newsprint demand - excluding from this
requirement the other existing company that
operates in the country with installed capacity to
produce this input. The Law also provides for the
capitalization of the funds eventually contributed
by the National Government to finance these
investments, contravening public order regulations
contained in the Argentine Business Associations
Law (Law 19,550), in order to dilute the equity
interest of Papel Prensa's private shareholders.
Said law is still effective and so are the limits on
production and import of newsprint and the price
per newsprint ton.
These and other deplorable actions that are not
in line with the expected attitude of a democratic
government towards the press were part of
the challenging scenario in which private and
independent media operated in 2012.
During 2012, the Company and its subsidiaries
were also subject to other administrative attacks
and maneuvers. The effects of Resolution No.
50 et. seq. issued by the Secretariat of Domestic
Trade that arbitrarily and discriminatorily seek to fix
Cablevisión S.A.’s monthly basic subscription price
were suspended by the Federal Court of the City of
Mar del Plata, in response to a motion filed by the
Argentine Cable Television Association. Additionally,
in connection with an administrative resolution
issued by SECOM in 2010, whereby Fibertel's license
was revoked, there are preliminary injunctions that
suspend the application of the resolution and
challenge its legality that are still effective.
At the same time, during the fiscal year, the
offensive against independent media and free
journalism continued to take very diverse forms,
including the measures adopted by trade unions
linked to the government, which repeatedly tried
to prevent newspaper and magazine distribution
by blockading printing facilities. Several official
agencies also sought to control paper, the basic
input for newspaper production.
The government’s attempt to gain control of the
paper industry has intensified, through several
administrative and legislative measures that sought
systematically to hinder the management of Papel
Prensa (Papel Prensa supplies approximately 95%
of the Argentine newspapers and the Company
indirectly holds a 49% equity interest in that
company). The government has tried to interfere
with Papel Prensa’s business practices and bring
legal and administrative actions against it in a
threatening and violent environment. For example,
the government filed several motions with the
CNV to have Papel Prensa's resolutions declared
void for administrative purposes. Several summary
proceedings against the Company, its directors and
members of the supervisory committee are currently
pending before the CNV. Additionally, this agency
has recently been granted further discretionary
powers under the controversial Capital Markets
Law that was recently enacted.
On the legislative front, in 2011 Congress enacted
Law No. 26,736, which declared a matter of public
interest the production and sale of newsprint,
violating several constitutional rights and
guarantees. The bill was drafted by the National
Government with the clear intent of controlling
the production and import of this key input for
the press, as pointed out and stated by national
and regional journalistic associations, opposition
leaders and several business sectors. Among
08
09
THE COMPANY. ORIGIN,
EVOLUTION ANd PROFILE
Grupo Clarín is Argentina’s most prominent and
diversified media group and one of the most
important in the Spanish-speaking world. The
Company is organized and operates in Argentina and
its controlling shareholders and management are
Argentine. Grupo Clarín is present in the Argentine
printed media, radio, broadcast and cable television,
audiovisual production, the printing industry and
Internet access. Its leadership in the different
media is a competitive advantage that enables
Grupo Clarín to generate significant synergies and
expand into new markets. Substantially all of Grupo
Clarín’s assets, operations and clients are located in
Argentina, where it generates most of its revenues.
The Company also carries out operations at a
regional level.
The companies that comprise Grupo Clarín employ
around 17,000 people and, as of year-end, reported
annual net sales of Ps.11.319 billion.
Grupo Clarín’s history dates back to 1945, the year
in which Roberto Noble founded the newspaper
Clarín of Buenos Aires (“Diario Clarín”), with
the goal of becoming a mass-distribution and
quality newspaper, privileging information and
committing to the comprehensive development
of the country. Since 1969, Diario Clarín has been
led by his wife, Ernestina Herrera de Noble. It
became the flagship national newspaper and has
consolidated its position throughout the years
thanks to the work of its journalists and the loyalty
of its readers. Diario Clarín is now one of the
Spanish-language newspapers with the highest
circulation in the world. Grupo Clarín has been
one of the main actors in the changes undergone
by the media worldwide. It has incorporated
new and varied printing activities and decided to
embrace technological developments, investing
to reach its audiences through new platforms and
channels and through new audiovisual and digital
languages.
ThE chART bELOw iLLUsTRATEs cOmPANiEs iN which gRUPO cLARíN PARTiciPATEs,
diREcTLy OR iNdiREcTLy, ORgANizEd by bUsiNEss sEgmENT
cable tv &
internet access
printing &
publishing
broadcasting &
programming
digital content
& others
60%
cablevisión
100%
agea
99.2%
artear
100%
gestión
compartida
100%
Ferias y
Exposiciones
85.2%
Telecolor
canal 12
100%
compañía de
medios digitales
Because Argentine Corporate Law No. 19,550
(as amended, the “Argentine Corporate Law”) requires
that companies have at least two shareholders,
a small percentage of the capital stock of certain of our
subsidiaries is held by GC Minor S.A., a company owned
by Grupo Clarín (95.3%) and GC Dominio S.A. (4.7%).
This chart does not include certain intermediate
holding vehicles and certain subsidiaries that do not
have significant assets or business.
100%
Oportunidades
100%
Telba
canal 7
100%
Tinta
Fresca
100%
agr
100%
bariloche TV
55%
Pol-Ka
Producciones
100%
Unir
30%
ideas del sur
50%
impripost
100%
cimeco
80%
diario
Los Andes
81%
La Voz
del interior
37% 12%
49%
Papel
Prensa
33%
Patagonik
Film group
25%
canal Rural
satelital
100%
iesa
96%
Auto sports
50%
Tsc
50%
TRisA
100%
radio
mitre
In this way, Grupo Clarín entered the radio and
television sectors. Today, it is the owner of one
of the two leading broadcast television channels
in Argentina (ARTEAR / El Trece) and of AM/
FM broadcast radio stations. Along with the
newspaper, these media are recognized as the
most credible and considered leaders of Argentine
journalism in one of the most diverse media
markets in the world. For example, in Buenos
Aires, the Company’s media compete in a market
that has 5 broadcast television stations, 550
radios, and 12 national newspapers.
Grupo Clarín also publishes Olé, the first and
only sports newspaper in Argentina; the free
newspaper La Razón and the magazines Ñ,
Genios, Jardín de Genios, Pymes and Elle, among
other publications. Through CIMECO, the Company
holds equity interests in the newspapers La Voz
del Interior, Día a Día and Los Andes, in a market of
approximately 200 regional and local newspapers.
The Company also holds an equity interest in a
national news agency (DyN). In the audiovisual
arena, the Company also produces one of the 5
cable news signals (Todo Noticias), and the cable
television networks Volver and Magazine, among
others, sports channels and events (TyC Sports),
television series and motion pictures (through Pol-Ka,
Ideas del Sur and Patagonik Film Group).
Another strength lies in its strategic stake in
the content distribution sector, through cable
television and Internet access. Since the
beginning of Multicanal's operations in 1992 and
after the recent acquisition of a majority interest
in Cablevisión, Grupo Clarín has created one of the
largest cable television systems in Latin America
in terms of subscribers. Cablevisión is the first
cable operator in Argentina among 700 operators
and always competes with other cable or satellite
options. Through Fibertel, it also provides high-
speed Internet services and has one of the largest
subscriber bases in a highly competitive market.
In line with the global trend, Grupo Clarín has
committed itself to expanding digital content
production. Grupo Clarín’s Internet portals and
sites receive more than half of the visits to
Argentine websites.
In 1999 Grupo Clarín was incorporated as an
Argentine sociedad anónima, a corporation with
limited liability. It gradually opened its capital to
other participants and, since October 2007, it is
listed on the Buenos Aires Stock Exchange and
on the London Stock Exchange. It takes pride
in having grown in Argentina, in being a source
of influence on a local level in an increasingly
transnational market with a size that enables it
to compete without losing strength among large
international players.
Grupo Clarín’s investments in Argentina in the last
20 years have been very significant, always focused
on Journalism and the mass media. Its activities
have contributed to the creation of an important
Argentine cultural industry and generate qualified
and genuine employment. Its vision and business
model focus on investing, producing, informing
and entertaining, preserving Argentine values and
identity, and preserving business independence in
order to ensure journalistic independence.
In relation to its mission and values, since its
foundation, Grupo Clarín has undertaken intense
community activities. Grupo Clarín, together with
the Noble Foundation, which was established in
1966, organizes and sponsors several programs
and activities, particularly focused on education,
culture and citizen participation. Furthermore,
as an indication of its social responsibility
throughout its history, Grupo Clarín focuses on
the ongoing improvement of its processes and
develops initiatives that arise from discussions
with different stakeholders.
wE ANTiciPATEd mARKET TRENds ANd AdAPTEd OUR bUsiNEss mOdEL,
TO bEcOmE ThE LARgEsT mEdiA gROUP iN ARgENTiNA
Technology
Convergence &
Regional Expansion
2012
Horizontal
Integration
2000
Vertical
Integration
1990
Foundation
1970
1945
Relevant Dates
July 16, 1999: Grupo Clarín S.A. is created to
reorganize and consolidate the direct and indirect
holdings of the Clarín Shareholders.
October 19, 2007: Grupo Clarín launches its Initial
Public Offering (IPO).
10
11
GRUPO CLARíN ANd ITS
BUSINESS SEGMENTS IN 2012
In terms of results, Grupo Clarín and its business
segments grew again in 2012 in a highly
challenging context. During this year the Company
consolidated the positive economic and financial
performance trends of the previous years.
Net consolidated sales increased by 21.4%, from
Ps.9.325 billion to Ps.11.319 billion. The growth in
cable modem Internet access subscribers played
a key role in the performance of subscription
revenues. Sales of the remainder of the Company's
products and services also increased.
SALES BREAKdOWN BY SOURCE OF REVENUE - dECEMBER 2012 vs. dECEMBER 2011
(In millions of Ps.)
CABLE TV &
PRINTING &
BROAdCASTING
dIGITAL CONTENT
ELIMINATIONS
TOTAL
%
INTERNET ACCESS
PUBLISHING
& PROGRAMMING
& OTHERS
2012
2011
2012
2011 2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
Advertising
49.7
44.0
1,251.8
1,184.3 1,069.6
979.3
51.2
21.6
(126.5)
(125.7) 2,295.7 2,103.5
20.3
22.6
Circulation
Printing
-
-
-
-
879.5
645.4
169.0
184.9
Video Subs
5,704.8 4,429.0
Internet Subs 1,595.2
1,356.1
Programming
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
244.9
191.0
-
-
-
-
-
-
-
-
-
-
-
-
879.5
645.4
(43.5)
(34.3)
125.6
150.6
7.8
1.1
6.9
1.6
-
- 5,704.8 4,429.0
50.4
47.5
(6.8)
(2.9) 1,588.4
1,353.2
14.0
14.5
(70.4)
(57.9)
174.5
133.1
Other Sales
251.9
268.3
85.4
74.6
134.5
98.4
312.6
261.4
(234.0)
(192.1)
550.5
510.6
1.5
4.9
1.4
5.5
total sales
7,601.6 6,097.3
2,385.7 2,089.2 1,449.0 1,268.7
363.8
283.0
(481.2)
(412.9) 11,318.9 9,325.2
100.0
100.0
Cost of sales (Excluding Depreciation and
Amortization) reached Ps.5,713.0 million, an
increase of 21.9% from Ps.4,685.5 million reported
for 2011 due to higher costs in our business
segments, mainly in Cable TV and Internet Access
and in Broadcasting and Programming segments.
Selling and Administrative Expenses (Excluding
Depreciation and Amortization) reached Ps.2,833.2
million, an increase of 30.9% from Ps.2,164.1
million in 2011. This increase was mainly due to
higher costs in the Cable TV and Internet access
and Printing and Publishing segments.
Adjusted EBITDA reached Ps.2,772.7 million, an
increase of 12.0% from the Ps.2,475.6 million
reported for 2011, driven by higher sales in
the Cable TV and Internet access segment,
though partially offset by a lower EBITDA in the
Broadcasting and Programming and Printing and
Publishing segments.
Financial Results Net totaled Ps.(916.2) million
compared to Ps.(582.1) million for 2011. The
increase was mainly due to higher interest
expenses and peso depreciation during 2012,
which went from Ps.4.30 per dollar at the end
of December 2011, to Ps.4.92 per dollar as of
December 31, 2012.
Equity in Earnings from Unconsolidated Affiliates
in 2012 totaled Ps.13.7 million, compared to
Ps.33.7 million for 2011.
AdJUSTEd EBITdA
(In millions of Ps.)
Cable TV and Internet Access
Printing and Publishing
Broadcasting and Programming
digital Content and Others
Subtotal
Eliminations
Total
dEBT ANd LIQUIdITY
(In millions of Ps.)
Short Term and Long Term Debt
current Financial debt
Financial loans
Negotiable obligations
Accrued interest
Acquisition of equipment
Sellers Financing Capital
Sellers Financing accrued interest
Related Parties Capital
Related Parties accrued interest
Bank overdraft
non-current Financial debt
Financial loans
Negotiable obligations
Accrued interest
Acquisition of equipment
Sellers Financing Capital
Sellers Financing accrued interest
Related Parties Capital
Related Parties accrued interest
Bank overdraft
total Financial debt(a)
Measurement at fair Value
total short term and long term debt
Cash and Cash Equivalents(B)
Net Debt(A) - (B)
Net Debt/Adjusted EBITDA (Last 12 Months)
% USD Debt
% Ar. Ps. Debt
2012
2,406.9
229.9
136.1
(0.2)
2011
1,963.8
259.7
252.7
(0.6)
2,772.7
2,475.6
-
-
YoY
22.6%
(11.5%)
(46.2%)
64.7%
12.0%
NA
2,772.7
2,475.6
12.0%
FY12
FY11
% Change
501.3
130.6
165.2
95.0
70.1
1.1
-
13.2
0.1
25.9
2,738.3
24.5
2,576.7
-
131.0
0.3
-
4.2
1.5
-
3,239.7
(50.9)
3,188.8
1,304.7
1,934.9
0.70x
96.6%
3.4%
446.7
118.6
129.0
86.0
40.3
8.2
-
13.2
0.1
51.3
2,808.7
127.8
2,584.0
-
90.4
0.8
-
4.2
1.5
-
3,255.4
(54.7)
3,200.7
865.6
2,389.8
0.97x
94.5%
5.5%
12.2%
10.1%
28.1%
10.5%
74.1%
(86.5%)
NA
0.3%
6.8%
(49.5%)
(2.5%)
(80.8%)
(0.3%)
NA
44.9%
(60.2%)
NA
-
3.9%
NA
(0.5%)
7.0%
(0.4%)
50.7%
(19.0%)
(27.7%)
2.1%
(37.1%)
12
13
debt Profile as of december 31, 2012*
(USD MM, Balance Sheet)
635
640
600
560
520
480
440
400
360
320
280
240
200
160
120
80
40
0
151
171
80
100
89
44
2013
2014
2015
2016
2017
2018
Total debt
*Exchange Rate: 4.92 ARS/USD.
Other Income (expenses), Net reached Ps.0.6
million, compared to Ps.1.5 million in 2011.
Income Tax as of December 2012 reached Ps.(524.9)
million, from Ps.(425.0) million in December 2011.
Income from Discontinued Operations, reached
Ps.498.7 million, compared to Ps.47.3 million in 2011.
Net Income totaled Ps.972.3 million, an increase
of 23.8% from Ps.785.6 million reported for 2011.
This was mainly a consequence of higher EBITDA
in the Cable TV and Internet access and the income
relating to the sale of the discontinued operations
of Cablevisión’s subsidiaries in Paraguay. Also
it was partially offset by a lower EBITDA in the
Broadcasting and Programming and higher peso
depreciation. The Equity Shareholders Net Income
amounted to Ps.482.3 million, a decrease of 6.3%
compared with figures of December 2011.
Cash used in acquisitions of property, plant and
equipment (CAPEX) totaled Ps.1,383.0 million in
2012, a decrease of 6.4% from Ps.1,478.1 million
reported for 2011. Out of the total CAPEX in 2012,
93.5% was allocated to the Cable TV and Internet
access segment, 3.7% to the Broadcasting and
Programming segment and the remaining 2.8%
to other activities. Capex in the Cable TV and
Internet Access segment pertains to subscriber
growth, network upgrades and digitalization.
By the end of 2012, Grupo Clarín’s gross
consolidated financial indebtedness (including
sellers financing, accrued interest and fair
value adjustments) was approximately Ps.3.2
billion, while net consolidated indebtedness
was approximately Ps.1.88 billion, representing
a decrease of 0.4% and 19.3%, respectively,
compared to the previous year. Debt coverage
ratio(1) for the period ended December 31, 2012
was 1.17x and the Net Debt at the end of this
period totaled Ps.1,934.9 million.
(1) Debt Coverage Ratio is defined as Total Financial Debt divided by
Adjusted EBITDA (Last Twelve Months). Total Financial debt is defined as
financial loans and debt for acquisitions, including accrued interest.
SUPPLEMENTARY
FINANCIAL INFORMATION
The information included in the Supplementary
Financial Information is part of this Annual Report
and, therefore, should be read in conjunction with
same.
Setting Up Of Reserves
Pursuant to the Argentine Coporate Law and CNV
resolutions, Grupo Clarín is required to set up a
legal reserve of no less than 5% of each year’s
retained earnings until such reserve reaches 20% of
its outstanding capital stock plus the corresponding
adjustment. The legal reserve is not available for
distribution to shareholders.
Financial Position and
Results of Its Operations
During this year, the main changes in the Company’s
financial position and results of its operations were
the following:
Working capital (current assets minus current
liabilities) at year-end decreased by Ps.22.3 million
compared to the previous year, from (negative)
Ps.46.3 million to (negative) Ps.68.6 million. This
decrease is basically evidenced in the decrease
in Company funds (the items Cash and Banks and
Other Current Investments) in the amount of Ps 19.8
million, paired with a net decrease in receivables
and liabilities, mainly between related parties.
With respect to non-current items, the most
significant variation was recorded under
Investments, due to the results obtained by Grupo
Clarín’s subsidiaries, mainly Cablevisión S.A.
(indirectly), Arte Gráfico Editorial Argentino S.A.
and Arte Radiotelevisivo Argentino S.A.
The Statement of operations as of December 31,
2012 recorded a net income of Ps.482.3 million.
Such income is basically derived from earnings of
Ps.511 million resulting from equity investments in
affiliates and subsidiaries.
Grupo Clarín S.A. is still controlled by GC Dominio
S.A., which holds 64.2% of its voting rights.
Balances and transactions with related parties
are detailed in Note 8 to the Parent Company Only
Financial Statements.
Proposal of the
Board Of directors
Net income for the year ended on December 31,
2012 was Ps.482,310,720. The Board of Directors
proposed to the Annual Ordinary Shareholders’
Meeting that such income be distributed as follows:
Net income 2012 (Attributable to Equity Shareholders)
To the Legal Reserve
To absorb the Accumulated deficit
To the Optional Reserve to give financial aid
to its subsidiaries and the broadcasting Law
Ps.24,057,630
Ps.1,158,122
Ps.457,094,968
Below is a summary of the main criteria on which
the above allocation proposed by the Board of
Directors is based:
-Legal reserve: The legal reserve was calculated
pursuant to Section 70 of Law No. 19,550 and CNV
resolutions, considering 5% of the net income for
the year, minus previous years' adjustments and
accumulated losses until it reaches 20% of the
capital stock, plus the balance of the Capital Stock
Adjustment account.
-Accumulated deficit: To absorb the difference
arising from presenting the annual financial
statements under the International Financial
Reporting Standards (IFRS) for the first time.
-Optional Reserve to give financial aid
to subsidiaries and the broadcasting
Law: Even though net income for the year will
become liquid if the subsidiaries distribute the
related cash dividends, this year there are other
issues to be considered that, under a prudent
management, make it advisable to allocate said
income to an optional reserve only to deal with
the potential implications of such other issues.
As mentioned throughout this annual report, the
outlook for the Company and its main subsidiaries
is expected to be uncertain due to the discretionary
allocation of official advertising in detriment of
independent media, the fact that private companies
were banned from including their advertising slots
in independent media, and the eventual impact of
an adverse and final judgment on the Broadcasting
Law case, among other uncertainties described
in this Annual Report, coupled with the existing
financial commitments. Therefore, the Board of
Directors proposes to the Shareholders that the
remaining net income for the year be allocated to
set up this optional reserve.
Subsequently to the end of the period, on April
25, 2013, Grupo Clarín held its General Annual
Ordinary Shareholders Meeting. On that occasion,
the shareholders considered and approved the 2012
Financial Statements and the Annual Report and
other related documentation and the performance
and compensation of Directors, Supervisory
Committee and Audit Committee. Also, they
elected members of the Board of Directors and
mentioned committees for fiscal year 2013, along
with an external auditor.
14
15
CABLE TELEVISION
AND INTERNET ACCESS
1 CABLE TELEVISION AND INTERNET ACCESS
Grupo Clarín operates, through Cablevisión, one
of the main regional integrated cable television
and broadband systems. This segment’s revenues
mainly derive from monthly subscriptions to basic
cable television service and high-speed Internet
access. To a lesser extent, its revenues also
derive from connection and advertising charges,
sales of premium and pay-per-view programming,
digital packages, DVR, and high definition
signal packages (HD) and sales of the magazine
“Miradas”.
Out of Grupo Clarín’s total sales in 2012, the
Cable television and Internet access segment
was the Company’s main revenue driver, with
sales of Ps.7.768 billion, taking into consideration
intersegment sales and sales from discontinued
operations.
Regarding the geographic availability of Grupo
Clarín's services, by the end of 2012, its network
reached approximately 7.3 million Argentine
households. Grupo Clarín provides services in
the City of Buenos Aires and suburban areas, as
well as in the provinces of Buenos Aires, Santa
Fe, Entre Ríos, Córdoba, Corrientes, Formosa,
Misiones, Salta, Chaco, Neuquén and Río Negro.
Regionally, Grupo Clarín also operates in Uruguay.
net sales*
(In millions of Ps.)
adjusted ebitda*
(In millions of Ps.)
8,000
7,500
7,000
6,500
6,000
5,500
5,000
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
YoY
7,601.6
6,097.3
s
s
e
c
c
a
t
e
n
r
e
t
n
I
&
V
T
e
b
a
C
l
2011
2012
24.7%
2,600
2,400
2,200
2,000
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
YoY
2,406.9
1,963.8
s
s
e
c
c
a
t
e
n
r
e
t
n
I
&
V
T
e
b
a
C
l
2011
2012
22.6%
*Figures do not include those from discontinued operations in Paraguay.
16
17
During 2012, the Company completed the sale
of Cablevisión’s subsidiaries in Paraguay to the
Paraguayan company Telefónica Celular del
Paraguay S.A. (“Telecel”), a subsidiary of Millicom
International Cellular S.A. At the time of the sale,
Cablevisión offered paid TV and Internet services in
Asunción and Gran Asunción. It had 122,900 paid
TV subscribers and 13,700 Fibertel subscribers.
In Argentina, at year-end, it had approximately
3,288,800 paid TV subscribers and 1,504,500
Internet subscribers.
Cablevisión’s network’s backbone consists entirely
of fiber optic cable. The bi-directional service
network architecture and the new networks
rely on a fiber to service area (“FSA”) design,
which combines cable network fiber trunks with
coaxial cable extensions and allows bi-directional
transmission.
By the end of 2012, most of the homes in
Cablevisión’s network were passed by its 750 MHz
bi-directional broadband. Cablevisión’s 750 MHz
networks enable it to offer services and products
that generate additional revenues, such as access
to Internet, digital services and premium channels.
Operating statistics - Cable tV and inteRnet aCCess
Homes Passed(1)
bidirectional Homes Passed
Cable tV
Total Consolidated Subscribers(1)(3)
Subscribers - Argentina
Subscribers - International
Uruguay
Paraguay
% over Homes Passed
total equity subscribers(5)
Churn Rate %
digital VideO(1)(3)
Digital Ready Pay TV Subs
Total Digital Decoders
Argentina
International
Penetration over Digital Ready TV Subs
inteRnet subsCRibeRs(1)(3)(4)
total internet subscribers(1)(4)
Cablemodem(1)
ADSL(1)
Dial Up(1)
% over Bidirectional Homes Passed
total aRPu(2)
(1) Figures in thousands
2012
7,455.9
63.9%
3,404.7
3,288.8
115.9
115.9
-
45.7%
3,523.2
15.0%
2,689.3
1,107.2
990.0
117.2
41.2%
1,504.4
1,489.4
8.4
6.6
31.6%
186.9
2011
7,586.5
63.2%
3,490.3
3,264.4
225.9
110.0
115.9
46.0%
3,566.6
15.1%
2,656.0
1,082.5
875.0
207.6
40.8%
1,351.1
1,331.3
12.1
7.6
28.2%
153.4
YoY
(1.7%)
1.1%
(2.5%)
0.7%
(48.7%)
5.4%
-
(0.7%)
(1.2%)
(0.2%)
1.3%
2.3%
13.1%
(43.5%)
1.0%
11.3%
11.9%
(30.8%)
(13.9%)
12.0%
21.9%
(2) Net Sales / Average Pay TV Subscribers (does not include subscribers from discontinued operations in Paraguay).
(3) Total subscribers consolidated following the same consolidation methods used in the financial statements as of each year end.
(4) Total Internet Subscribers includes those from discontinued operations in Paraguay (11,305 subs for period 2011).
(5) Total subscribers considering the equity share in each subsidiary.
Programming, Cable television
and internet services
Cablevisión offers subscribers a basic service
plan that includes the main programming signals,
depending on the capacity of local networks.
It offers basic and premium programming from
more than 25 providers and broadcast television
stations of the City of Buenos Aires. Most of the
programming agreements include pricing terms
denominated in Argentine Pesos generally linked
to the number of subscribers.
By paying an additional fee and renting a digital
set-top box, Cablevisión subscribers receive
premium packages and pay-per-view programming
that include additional movie channels and adult
programming, among other products.
Cablevisión is also offering digital services to its
subscribers that include a basic digital package,
as well as Premium and High Definition (HD)
services. Such products are offered in the City
of Buenos Aires and its surrounding areas (the
“AMBA Region”), in the province of Buenos Aires,
and in the main markets of the provinces (such
as, Córdoba, Rosario, Santa Fe, etc.). This service
allows to broaden the signal offering and features
an on-screen guide.
Cablevisión has a high definition signal package
(HD) as well as the Cablevisión Max HD product,
a state-of-the-art digital set-top unit with digital
video recorder enabled (DVR). By the end of 2012,
Cablevisión had 29 HD signals comprising different
genres in order to enhance this product’s offering.
During 2012, Cablevisión broadcast events using
3D technology for clients that are subscribed to
the Premium HD service and have the adequate
equipment to support that technology.
In order to increase its brand value, move
forward with innovation and content production
to meet client demands and continue with the
development of the digital products launched in
2007, during the last quarter of 2012, Cablevisión
launched the VOD (Video On Demand) platform
that allows subscribers to buy programs or event
packages on demand through a programming
library and that features video functions (pause,
fast-forward, rewind).
As of December 31, 2012 there were approximately
1,099,500 digital set-top units for the Premium
service in all of Cablevisión’s operational regions
(including Uruguay), resulting in a penetration rate
of approximately 32.3% of all subscribers to its
basic cable service provided through its digital
network. Cablevisión also offers Cablevisión Flex,
an optional social service of digital paid television
with a reduced subscription, to approximately
500,000 neighbors of
low-income areas.
This service, which seeks to enhance "digital
inclusion", includes the installation of digital set-
top units and allows clients to buy a service with
fewer signals for half the price and gradually buy
additional signal packages until completing a full
basic product.
As to Internet access services, Cablevisión offers
connectivity products specially designed to meet
the needs of both residential and corporate users.
The products offered comprise high-speed cable
modem Internet access through its 750 MHz
network under the Fibertel brand and through
other broadband technologies.
18
19
CABLE TELEVISION AND INTERNET ACCESS
total internet subscribers(1)
1,600
1,500
1,400
1,300
1,200
1,100
1,000
900
800
700
600
500
400
300
200
100
0
YoY
1,504.4
1,351.1
s
s
e
c
c
a
t
e
n
r
e
t
n
I
&
V
T
e
b
a
C
l
2011
2012
11.3%
(1) Figures in thousands and Total Internet Subscribers includes
those from discontinued operations in Paraguay (11,305 subs for
period 2011).
Fibertel is undoubtedly the broadband service
that offers the highest speed in the market,
widely and at competitive prices. It continues to
offer Fibertel Evolution, a product with 30-mega
downstream speed and 3-mega upstream speed.
It is the first internet provider in the country to sell
a product of the new Wideband generation -a new
technology that allows clients to surf the web at
substantially higher speeds. Wideband is based
on Docsis 3.0 technology. Its main functionalities
following: browsing with multiple
are
“windows” opened at the same time, real-time
streaming, viewing instant high-definition videos
uninterruptedly and ability to connect several
devices browsing simultaneously to a single
modem without sacrificing speed. This service is
currently available in the AMBA region, Córdoba,
Rosario, La Plata, Santa Fe, Paraná and other
cities in the country’s provinces.
the
As of December 31, 2012, Cablevisión had
1,483,000 clients to cable modem Internet access
in Argentina through its own networks; 6,600
clients to the dial-up system; 8,400 clients to
the ADSL system and 6,500 to other broadband
technologies. Even though Cablevisión has
these three technologies, its main focus and
differentiating feature is cable modem. It has a
leading position in that market under the brand
Fibertel and is a clear referent in its category.
During 2012, Cablevisión launched Fibertel Zone,
the first Argentine WI-FI circuit. This service
allows surfing the web for free at the highest
speed at bars, restaurants, movie theaters,
gyms and parks, among many other spots. The
requirements to surf the web at a Fibertel Zone
point are a Wi-Fi enabled mobile device and
selecting the applicable network.
signal. Additionally, under a project aimed at
implementing the Argentine Terrestrial Digital
TV System, the National Government handed
out digital set-top units among certain sectors of
society that allow free access to certain signals.
industry has
The Argentine cable television
more than 700 operators. The most significant
competitors are Telecentro S.A. located in the
AMBA region and DIRECTV (DTH technology), and
Internet video streaming systems (Netflix, Arnet
play, Speedy) that compete against Cablevisión
nationwide.
The Company can effectively compete against
other cable television providers on the basis of
a competitive price, a higher number of quality
programs and the customer service it renders
through its call-center.
been launched in March 2009, making a drastic
organizational change through the implementation
of a new customer management system.
The main purpose was implementing a world-
class telecommunications system that allowed
Cablevisión to improve its capacity to launch new
products and services, such as, VoIP, triple-play,
VOD (Video on demand), more cable signals and
broadband improvements.
Two major competitors (Arnet and Speedy) are
identified in the high-speed Internet access
segment; each of them related to one of the
country's two fixed-telephony providers. These
companies also render 3G services through their
brands Personal and Movistar, respectively. Claro
-which had already been selling 3G technology,
started to offer high-speed Internet services
through fiber optics.
Video subscriber turnover rate for the year ended
December 31, 2012 was 15.0%, compared to
15.1% recorded in the previous year. During the
year 2012, Cablevisión gained 46,700 subscribers
(including net new subscriptions from Paraguay
during January-September), compared to 132,400
subscribers during the prior year.
Competition
Therefore, the Internet access segment faces
fierce competition from several providers in an
ever-growing market.
strategy
The long-term business strategy in the cable TV
and Internet access segment involves ongoing
investments in updating the networks, seeking to
increase value for each customer, by introducing
innovative and competitive services and products
while staying focused on customer satisfaction.
The core elements of the long-term strategy
include: an expansion of the cable television and
Internet broadband connectivity subscriber base,
focusing on maintaining the highest speed in the
market and stressing customer service and the
brand. This strategy also involves improvements in
technology, and broader investments intended to
streamline a flexible network architecture serving
as a platform for developing additional video
Internet and voice services to realize the potential
provided by technology convergence.
Commercialization
and Customer service
Cablevisión uses several market positioning
mechanisms, including promotions, customer
service center locations, newsletters about
the company, institutional information and
programming through its websites. It advertises in
the printed media and over its own broadcasting
signals. Cablevisión also publishes a free monthly
guide distributed to most of its cable television
service subscribers and a monthly magazine
called "Miradas", which is sold to a portion of its
subscriber base.
Customer service is provided through an
integrated service center that offers round-the-
clock support, with the aim of optimizing the
customer relationship. In this regard, it launched
“Sucursal Virtual”, a website that enables its
subscribers to interact with the company to follow
procedures that were previously carried out
through a telephone call or even in person.
Even though most interactions take place over the
phone, subscribers may also contact the customer
service by e-mail, fax, chat and the web site.
During 2012, in terms of technological innovation,
Cablevisión introduced a new tool that allows the
company to render customized customer service
to subscribers that contact it through social
networks, particularly Facebook and Twitter.
During 2012, Cablevisión took improvement
actions that consolidate the customer service
model in order to address client questions with a
satisfaction level above the market average.
In November 2012, Cablevisión successfully
completed “Open Project”, an initiative that had
Cablevisión competes in the cable television
segment against other cable television operators
and providers of other television services, including
direct, satellite and broadcast services. Given the
fact that licenses are granted on a non-exclusive
basis, Cablevisión's systems have been frequently
subject to overlapping of one or multiple competing
cable networks; in addition to the satellite service
that is available throughout the company’s entire
coverage area. Free broadcasting services are
currently available to the Argentine population;
in the AMBA region, these services primarily
include four private television signals (one of
them is controlled by Grupo Clarín) and its local
subsidiaries and a national state-owned television
20
21
PRINTING
AND PUBLISHING
2 PRINTING AND PUBLISHING
Grupo Clarín, through Arte Gráfico Editorial Argentino
S.A. (“AGEA”), is the main newspaper publisher in
Argentina and one of the most prominent editorial
content producers in Latin America.
Out of Grupo Clarín’s total sales in 2012, the printing
and publishing segment accounted for Ps.2.386
billion, taking into consideration intersegment
sales. This segment derives revenues primarily
from the sale of advertising, copies of newspapers
and magazines and optional products.
arte gráfico editorial argentino
AGEA publishes Clarín, the flagship Argentine
newspaper and one of the most important in terms
of circulation in the Spanish-speaking world;
Olé, founded in 1996, the first and only sports
newspaper of its kind in the Argentine market;
Diario La Razón, a pioneer in the free newspaper
segment as well as Diario Muy, launched in 2011;
regional supplements; Genios, a magazine with
a high penetration rate in the schoolchildren’s
segment. It also publishes Jardín de Genios, aimed
at children between 2 and 5 years of age with a
supplement for parents; Ñ, a cultural magazine
that reflects all cultural news and trends; Revista
Pymes, aimed at small- and medium-sized
businesses; and Diario de Arquitectura, aimed at
the construction world, architects, designers and
building contractors, among other products.
Through Artes Gráficas Rioplatense S.A. (“AGR”),
a controlled subsidiary, the Company is also
engaged in color printing, publishing and
distribution activities. AGR prints Viva, Clarín’s
Sunday magazine and the monthly magazine Shop
& Co and carries out other production activities
for third parties, including book series, telephone
directories and flyers.
AGEA has a strong presence in the online classified
ads segment through vertical sites, including Autos,
Inmuebles y Empleos and in the Internet content
market through its websites clarin.com, ole.com.ar,
entremujeres.com and biencasero.com. Through
its subsidiary and controlled company, Tinta Fresca
Ediciones S.A., the Company entered the textbook
editorial market.
net sales
(In millions of Ps.)
adjusted ebitda
(In millions of Ps.)
2,400
2,200
2,000
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
YoY
2,385.7
2,089.2
259.7
229.9
260
240
220
200
180
160
140
120
100
80
60
40
20
0
i
g
n
h
s
i
l
b
u
P
&
g
n
i
t
n
i
r
P
i
g
n
h
s
i
l
b
u
P
&
g
n
i
t
n
i
r
P
2011
2012
2011
2012
14.2%
YoY
(11.5)%
22
23
diaRiO ClaRín
With a long-standing journalistic and commercial
leadership consolidated in its 67-year track record,
Clarín is the most prominent Argentine newspaper
in terms of outreach, influence, circulation and
advertising.
The success of its prestigious editorial line lies
in its identification with the needs and emotions
of its audience through a plural and independent
journalistic style that includes the most diverse
opinions. Clarín’s approach to reality is in tune
with its audience, supporting this bond with the
responsibility and credibility that characterizes
its journalists. Its extensive and thorough
investigations, approaches and analyses are
conveyed in clear and direct language, providing
its readers with easy access to the different
sections and issues.
During 2012, its daily circulation reached almost
271,000 copies, 1.6 times higher than its closest
competitor. On Sundays, over 595,000 copies are
sold, which places it among the major Sunday
newspapers of the world. Clarín has a 38.7%
share of the newspaper market in the City of
Buenos Aires and the province of Buenos Aires
and a 9.7% share in the provinces. On a national
level, it had a 24% market share.
Clarín 365 was launched on October 11, 2010
to build loyalty among readers and to reinforce
its close bond with them, as well as to retain
circulation. It is a Benefits Program for Clarín
subscribers that offers discounts, promotions and
benefits in more than 1,600 brands and 4,700
stores nationwide. With an average of 461 new
subscriptions per day as of December 31, 2012,
the program had almost 219,000 subscribers.
Given its broad circulation and reach to all social
classes, Diario Clarín leads the print media
market. It is ranked first in terms of advertising
revenues and sold advertising space, and also
leads all advertising categories (display, special
section and classified ads). With advertising
sales revenues exceeding Ps.823 million in 2012,
Clarín maintains its advertising leadership both
in Display and Classified ads. Online advertising
sales rose by 20% to Ps.98.7 million, compared to
the previous year.
From an editorial perspective, Clarín reaffirmed
its long-standing journalistic leadership. Its in-
depth coverage of this year’s most outstanding
news revealed once again the production quality
of its reports and the depth of its approaches and
insights. The work of the paper’s investigation
team, the constant proposal of new editorial
products and the launch of new publications
continue to reflect the work of the greatest team
of journalists in Argentina.
Honoring its traditional journalistic excellence,
Clarín received again the Rey de España award,
the most important recognition to the Spanish-
speaking press. As in 2011, Clarin.com won
the Rey de España award in the category “best
approach over the Internet”. This year the
price was awarded to a special program on the
historical trial referred to as Juicio a las Juntas
(the claim brought against the members of the
military juntas). A team from Clarin.com led by
Operating statistics - PRinting and PublisHing
Circulation (1)
Circulation share % (2)
advertising share %(3)
2012
311.7
38.7%
50.3%
2011
331.2
40.0%
54.0%
YoY
(5.9%)
(3.3%)
(6.9%)
(1) Average number of copies according to IVC (including Diario Clarín and Olé)
(2) Share in Buenos Aires and Greater Buenos Aires Area (AMBA) Diario Clarín. Source: AGEA and IVC.
(3) Share in Buenos Aires and Greater Buenos Aires Area (AMBA) Diario Clarín. Source: Monitor de Medios Publicitarios S.A.
During 2012, the Company completed the second
stage of the web project for regional newspapers,
including the launch of 8 new sites exclusively
devoted to reporting local news in the province of
Buenos Aires, in addition to the sites that under
operation since 2011.
Pablo Loscri, from Clarín's Arts and Infographics
Department, did an impressive job reconstructing
each and every instance of the historical trial
against the military juntas in a multimedia special
site at Clarin.com.
In addition, Clarín received the following awards:
Universidad de Buenos Aires: Award to the
Education Supplement; Adepa: Award to Revista
VIVA, Ana Laura Pérez and Alejandra Gallo;
IPYS Transparencia Internacional: Nicolás Pizzi,
Omar Lavieri, Nicolás Wiñazki, Rodolfo Lara
and Daniel Santoro were distinguished with
honorable mentions for their investigation on the
Schoklender case and Madres de Plaza de Mayo;
Citi Journalistic Excellence Award to Ezequiel
Burgo. In November 2012, a special series on drug
trafficking at Villa 1-11-14, a slum located in the
Bajo Flores neighborhood, received the second
Latin-American Drug Journalism Award, organized
by the Latin-American Conference on Drug Policy.
In 2012, Diario Clarín offered outstanding
promotions that increased interaction with
readers, among them, the edition of the game
“El Gran DT”. Argentina’s most popular game
engaged more than two million participants last
year. As of year-end, the game had 500,000 unique
users, more than 60 million visits, almost 1 billion
page views, an average time on site of 11 minutes
and visits from over 140 countries.
Diario de Arquitectura has continued to launch
high-quality collectibles, such as, “Patrimonio
argentino”.
During 2012, ARQ launched a series of special
editions and products, such as the special
edition ARQ 10 AÑOS commemorating the 10th
anniversary of the magazine. During the year,
Clarín announced the latest winners of the ARQ
award, which recognizes the best Argentine
architectural work of the last five years on a
regional basis and held the award ceremony of
the contest Gran Premio Nacional Arq.
During the year, the Company continued to offer
its 12 regional newspapers. Keeping its close
bond and symmetry with readers, the product
yielded considerable profitability and was a good
support to the Thursday’s edition of Diario Clarín.
During the year, the Company made efforts to
strengthen the newspaper’s position among local
audiences (through special editions and instant
promotions). The regional newspapers cover the
following locations: Vicente López, San Isidro,
Morón - Ituzaingó and Hurlingham, Lomas de
Zamora, Avellaneda - Lanús, San Martín - Tres de
Febrero, La Matanza, Tigre - San Fernando, San
Miguel - Malvinas Argentinas - José C. Paz and
Quilmes - Berazategui - Florencio Varela, while
monthly newspapers cover Pilar, Escobar, Zárate
and Campana, and Moreno, Rodríguez and Luján.
24
25
PRINTING AND PUBLISHING
With respect to sports, in addition to the game
El Gran DT, in 2012 special supplements were
published in the Sports Supplement covering
prominent events, including but not limited to
the Rally Dakar; the Davis Cup, and the London
Olympic Games. The supplement covered all major
sporting events during the year, including hockey,
rugby, golf and swimming, with correspondents
providing quality information to readers. As
usual, soccer has had
its preferential spot.
Special supplements were published covering the
Clausura and Apertura tournaments.
The Sports Supplement also held its usual annual
award ceremony Premios Clarín Deporte. Sergio
Maravilla Martínez received the award to the
best sportsman of the year. The event was also
broadcast by TyC Sports and clarin.com.
In order to continue to add value to its readers,
Diario Clarín constantly keeps up to date and
offers a wide range of editorial products together
with the core product, addressing the need to
satisfy an increasing segmentation among the
diverse demographic groups. It was an intense
year in terms of collectible and optional products,
consolidating Grupo Clarín as one of the major
book editors of Argentina.
The highlights were: Grandes Enigmas de La
Humanidad; Aventuras de Película 2; Batman;
Grandes Fotógrafos National Geographic; El Gran
Libro Clarín de las Tartas y Ensaladas; Gran Atlas
de la Ciencia NG; Salvemos Nuestra Tierra; El
Gran Libro del Tejido 2012; Grandes Pinturas de
la Historia; Grandes Batallas Argentinas; Pastas
y Arroces; El Gran Libro de Los Rolling Stones; El
Gran Libro de la Historia del Automóvil; Batman.
El Caballero de la Noche Asciende; Fábulas de
Mi País; El Gran Libro Clarín del Crochet 2012;
Británica. Enciclopedia Universal Ilustrada; Corín
Tellado; 50 Grandes Restaurantes. Sus Mejores
Recetas; El Gran Diccionario de Inglés; El Diario
de Nat Geo; Plan Verano; Calendario 2013 and
Angry Birds.
to
Clarín’s products continued to set trends, and
brand
the
loyalty activities contributed
consolidation of readers’ strong relationship with
the brand. Further efforts were channeled into
strengthening the bond with advertisers, bringing
together new sectors and identifying their needs.
Clarín organized the new edition of its renowned
Clarín Awards, honoring its strong commitment
to the promotion of Argentina’s best in the
cultural and sports fields. To this effect, the 15th
consecutive “Premio Clarín de Novela” ceremony
was held, where Fernando Monacelli received the
main award for his novel “Sobrevivientes”. The
novel was published by Clarín-Alfaguara and the
author won Ps.150,000.
PRINTING AND PUBLISHING
internet
Clarin.com is a news and opinion portal with
updates in real time and free access on a
365/24/7 basis, which has been online since
1996. In addition to the full version of the printed
newspaper and its archive, Clarin.com features
ongoing updates of news produced and published
by its own journalists. During 2012, Clarin.com
maintained its leadership in the Argentine market
and ranked as the most visited Spanish-speaking
news site in Latin America, with more than
10,800,000 unique users and 163,000,000 page
views, per month (Source: Certifica, Clarín, 2012
January-December average).
To further innovate in its ordinary business,
Clarin.com took a strong step forward as
audiovisual producer, and ventured into the online
live broadcasting of long-lasting HD events on a
broad range of themes. During 2012, the Company
completed 15 productions and live-streams.
The web was not the only way to reach the
audience. Through Clarin.com, 729,000* unique
users were kept informed from their mobile
devices and 750,000** people downloaded
the product application choosing Clarin.com as
preferred brand accompany them at all times.
Clarin.com has also become the news site
that experienced the largest growth in social
networks in Argentina over the last year, thanks
to an innovative approach to news reporting and
interaction with the community. In December,
Clarin.com had 1,900,000 followers on Facebook
and 400,000 on Twitter. Through hard work, it
has become the Spanish-speaking news site with
the largest number of followers on Facebook in
Hispanic Latin America and the second largest
worldwide, following The New York Times.
* Certifica, Clarín, 2012 January-December average.
** Devices: Nokia, iPhone, iPad, Blackberry, Blackberry
Playbook - accumulated downloads as of December 31, 2012.
26
27
PRINTING AND PUBLISHING
Other newspapers
La Razón, the first-ever free distribution newspaper,
is mainly distributed in the public transportation
network of the City of Buenos Aires, including
trains, subways and high-ways. La Razón is also
distributed at certain bars and among a group
of opinion leaders. Building upon the concept
that “La Razón is a travelling companion”, as it
does every summer, the newspaper sent copies
throughout the season to Mar del Plata, Pinamar
and Villa Gesell. During 2012, La Razón continued
to publish Agenda Cultural de la Ciudad de Buenos
Aires (Cultural Agenda of the City of Buenos Aires)
every Thursday and the monthly supplement
Gestión Sustentable (Sustainable Management),
a space to think about and divulge the social and
environmental responsibility actions carried out by
corporations and organizations of civil society.
generation of young readers, offering advertisers
an opportunity to reach a specific market. In
addition to launching promotions and organizing
tournaments and exhibition games, during
2012, Olé published the Guide to the Clausura
Tournament 2012 and the Guide to the Apertura
Tournament 2012. After River Plate’s return to
the first division tournament, Olé published the
magazine “¡Volvimos!”, which covered the soccer
club’s path through the National B category and
its return to the first division. In December, it
published a collectible photographic work entitled
“Los mejores momentos de 2012” (The Best of
2012). In April, the National Basketball League’s
MVP award ceremony was held again, with the
cooperation of the Argentine Association of
Basketball Clubs.
After thirteen years of existence and with an
average daily circulation of 40,000 copies, Olé,
the first and only Argentine sports newspaper,
continues to consolidate its market positioning. It
is the fourth largest newspaper in Buenos Aires
in terms of circulation. Since its inception, it
has revolutionized reading habits and managed
to attract not only sports fans, but also a new
In 2011, Clarín launched MUY, a dynamic, visually
designed and entertaining newspaper, which
features news in addition to regional pages and
sports and show business sections. With a “TV-
format” design, the newspaper summarizes
the most resounding police cases and breaking
news on soccer clubs and celebrities. During
2012, the newspaper MUY has continued to offer
promotions, optional books + music CDs and free
collectibles. Through these actions, the editorial
offering and the free special supplements; the
newspaper reached an average of 20,000 copies
sold per issue.
Magazines
AGEA also continued to build upon the
achievements attained by the cultural magazine
Ñ, reaching average sales of 32,000 copies per
issue. During the year, several initiatives were
carried out, aimed at engaging readers through
the launching of collectible products, the creation
and sponsorship of forums comprising different
cultural issues and involvement in and sponsorship
of major cultural events. “Los mejores cuentos
de la literatura universal”, “Grandes maestros
del blues” and “100 Museos imperdibles de
Argentina” are among the most relevant optional
and collectible products. Seven special editions
were published in 2012.
Revista Pymes has continued to consolidate
its growth. In June, the magazine was fully
redesigned changing its size and paper to meet the
market needs. The first edition of the new format
included a DVD entitled “Outstanding interviews
with outstanding entrepreneurs”. In October,
Revista Pymes launched the optional product
“Empresas familiares” (Family Businesses).
In 2012, the Company continued to publish the
magazine Genios. With children and school in
mind, this magazine was created with the aim
of
integrating content for children, parents,
school and society, combining education with
entertainment. Since it was launched in March
1998, it has led the children’s magazine segment.
Its editorial offering is always updated at the
beginning of each academic year, presenting new
sections, updated school materials and collectible
books prepared by experts. During 2012, Genios
consolidated its web site genios.com.ar, and
launched the magazine “Edición de Oro”, together
with the Back to School supplement. The editorial
product was comprised by Genios magazine,
plus “Guía Escolar” and the collectible product
“Cómo escribir ¡Muy Bien!”. During the year, it
also published other collectibles, such as, “Curso
Multimedia de Inglés de la BBC” and “Juegos de
tablero de Cartoon Network”.
PRINTING AND PUBLISHING
Revista Jardín de Genios is a monthly publication
aimed not only at pre-school children and those
attending the first years of primary school, but also
at parents and teachers and other adults who deal
with children within this age group (3 to 6 years).
The main issues and products launched during the
period include: the “Disney Junior” collection; the
magazine “Edición de Oro”, with a backpack for
kindergarten; and the optional product “Quiero
Saber”. In March, Jardín de Genios also launched
a new product called “Mis Primeros Pasos” -a
book with hands-on and learning activities to help
kids in their first learning steps at school, and to
learn the numbers and how to read, write, cut
and paste. “Mis Primeros Pasos” is a monthly
publication that replaces every other issue of
Jardín de Genios, published every fifteen days.
During 2012, “Tiki Tiki”, a magazine aimed at
children aged 7 through 14, continued to
strengthen its position. During 2012, Tiki Tiki’s
Facebook fan page has become an open channel
to communicate with and promote content
among readers. In addition to special issues that
accompany the magazine, Tiki Tiki also published
Tikipedia, the first soccer encyclopedia, and the
collection Top Siglo XXI “De lo nuevo, lo mejor”.
Revista ELLE -a high-end magazine for women
mostly focused on fashion, beauty and news-
reaffirmed its leadership in the high-end
advertisers segment. In 2012, its circulation
reached a monthly average of 30,000 copies. In
May and October, the company also published the
magazine Elle Decoración.
to strengthen
The bi-monthly magazine Clarín Rural Revista
its position as a
continued
management tool for the productive sector with
all the solutions and technologies aimed at
agricultural businesses. Also in 2012 the company
continued to publish the monthly magazine-
catalogue, Shop & Co, which includes discount
coupons on important brands.
tinta Fresca
Founded in 2004, Tinta Fresca is an Argentine
publishing company focused on textbook
publishing for all stages of the Argentine
education system. Tinta Fresca seeks to place
books at the heart of the teaching and learning
processes and have teachers and students use
them as an effective and updated learning tool.
The company has been growing in many aspects
over these years. In the editorial area, as a result
of leveraging lessons learned, it has managed to
expand its exclusive and original focus on
textbooks to a considerably diverse editorial
offering.
With more than 290 titles, in addition to several
textbook series for all school stages, including
elementary and secondary education, its editorial
offering is currently comprised by a variety of
activity books for all levels. Said offering has
been enriched with sourcebooks (dictionaries,
encyclopedias and grammar books) and an
interesting catalogue of children and youth
literature.
In 2012, Tinta Fresca continued to improve its
market position. Among many other value-added
projects, it strengthened its editorial offering
through the launch of the series “Dame la Palabra
1, 2 y 3”; “Atrapaletras”; “Matemática en todas
partes 4, 5 y 6” and “Saberes en red de Ciencias
Sociales, Ciencias Naturales y Prácticas del
Lenguaje 4, 5 y 6”. The nine books that comprise
this series have several special sections that
include computer activities. Tinta Fresca continued
to produce books series by launching “El gran libro
de la práctica docente” and “Más actividades”,
seeking to offer additional class-room material
for teachers. In terms of lexicography, our
encyclopedia base was enlarged during 2010 with
the publication of “Enciclopedia Mundo Actual”, a
book of 2,520 pages and 18 volumes that Diario
Clarín has been publishing since 2011.
As an outstanding and special contribution to
society, the Company made available at Clarin.com
a digital and free version of “Diccionario integral
del español de la Argentina”, released in April
2011. Users may easily check the full educational
and cultural quality content of the dictionary. As a
result of the production of collectible materials,
newsstands and supermarkets have again been
intensively used as sales channels for dictionaries
and literature. This substantially contributes to
product and content access.
28
29
PRINTING AND PUBLISHING
chain Cúspide. The bookstore features a broad
and assorted catalogue and an advanced search
engine. The site offers several payment methods
and payment against delivery.
UNIR S.A. (“Unir”) is a company engaged
in wholesale mail reception, classification,
transportation, distribution and delivery services.
As from August 25, 2008, AGEA holds a 93.41%
direct controlling interest in Unir. During 2012,
Unir's total sales increased by 29%, with revenues
of Ps.78.01 million as of year-end. In December
2012, AGEA had its Quality Management System
recertified under ISO 9001.
CiMeCO
CIMECO was organized in 1997 with the aim of
acquiring equity interests in Argentine and
foreign newspapers, seeking to preserve the
regional journalism industry, blending experience,
synergy and economies of scale, without altering
its editorial principles. CIMECO holds a majority
interest in two of the three largest regional
newspapers in Argentina: La Voz del Interior
(Córdoba) and Los Andes (Mendoza).
Los Andes newspaper has been reporting
Mendoza’s news since 1882. In that year,
the Calle family founded one of the oldest
journalistic companies in the country. Los Andes
is a benchmark brand in the market. In 2012, the
newspaper received the Mercurio award granted
by the Argentine Marketing Association, in
recognition for its commitment to building loyalty
among readers. All the newspaper's actions
were focused on driving the growth of the online
version, positioning its loyalty program Los Andes
Pass, and boosting the sale of optional products.
Los Andes newspaper actively participated in
all major provincial events and has renewed its
agreement with Mendoza’s Sports Alliance to be
the region's sports news provider. The program
Medios en la educación (The Media and Education)
reached its 25th anniversary working with the
newspaper at school, and closed the year with
the contest "The Dearest Teacher". In addition,
Los Andes has maintained its strong commitment
to the improvement of internal control processes
and guidelines, while introducing improvements
to products and services for customers.
La Voz del Interior S.A. has again maintained its
leadership position in the printed press and its
position as an information and entertainment
artes gráficas Rioplantense
AGR meets certain special printing needs of Clarín
and Olé (magazines, optional and collectible
products, among others), and also publishes large
volumes of graphic material for third parties.
It is the leading printing services company in
Argentina.
In 2012, AGR retained its leading position in the
sector with net sales of Ps.233 million and more
than 12.5 million units sold in the local and foreign
market. The company continued to exploit one of
its main strengths: its participation in the entire
value chain of the printing industry, which enables
it to offer comprehensive customer service,
including drafting, prepress, variable printing,
offset printing, finishing and distribution.
In addition to the progress made in improvement
and control management of its production
processes and in order to take care of the
environment, AGR installed a new catalytic
post-burner for the treatment of gas effluents
derived from the rotary press furnaces. During
this period, AGR successfully completed the
implementation of ISO 14000, an internationally
accepted standard that sets forth how to establish
an effective Environmental Management System
(EMS) to achieve a balance between maintaining
profitability and reducing the environmental
impact. In addition, AGR installed a vacuum
system to remove dust from the trim size system
ducts and reduce air-suspended particles.
In May 2000, AGR entered into an agreement with
the Techint Group, acquiring 50% of Impripost
Tecnologías S.A. (“Impripost”). Impripost is mainly
engaged in the overall production and printing of
invoices, advertising brochures, forms, labels and
cards. It also provides envelope-stuffing services
for mass mailing.
In 2011, the Company acquired an interest in
the capital stock of Cúspide Libros S.A. through
AGR. Through this acquisition, it launched
Librocity.com, the online bookstore of Grupo
Clarín, in partnership with the retail bookstore
Ferias y exposiciones argentinas
Since 2007, Ferias y Exposiciones Argentinas
has been mainly engaged in the organization of
Caminos y Sabores, an exhibition intended to
foster Argentina’s gastronomy and handicrafts and
promoting the region’s major tourist destinations.
During 2012, Ferias y Exposiciones Argentinas
held exclusive events for users and owners of
agricultural machinery in Caminos y Sabores, as
well as in Admite.
Throughout its eight editions, Caminos y Sabores
has become one of the fastest growing fairs,
while boosting the development of all of its key
participants: typical food producers, craftsmen
and representatives of tourist destinations. In
2012, the exhibition was held from July 6-9 and
attracted over one million visitors who enjoyed
walking through the market, and attending
cooking demonstrations, speeches and art shows.
Admite was held in 4 editions -Arroz (Rice),
Gestión (Management), Agrícola (Agriculture) and
Forrajero (Fodder)- with several courses led by
prestigious instructors from the agricultural sector
and training on technology and machinery.
In 2007, AGEA entered into an agreement with
S.A. La Nación for the organization of Expoagro,
a new agro-industrial fair, improving the results
that had been obtained until then by Feriagro,
and achieving a record-high number of exhibitors.
In 2012, the exhibition was held in March in the
city of Junín, province of Buenos Aires. It was a
success and received more than 100,000 visitors.
digital benchmark in the central region of the
country. Its two printed newspapers, La Voz del
Interior and Día a Día, have continued to maintain
a 59.4% market share in the province of Córdoba.
In addition to this, the sectional directories and
the sustained growth in the distribution of third
party's and in-house editorial products have
contributed to gain more contracts with clients.
In terms of advertising, La Voz del Interior S.A.’s
products capture 39.7% of the investment in large
media, based on the multiple options offered by
its print and electronic media. In this last regard,
its web sites position the newspaper as a leader
in unique visits and page views in the provinces of
Argentina.
Papel Prensa
Papel Prensa is the first producer of newsprint
that is wholly owned by Argentine capital. It
began its operations in 1978 and is currently the
largest Argentine producer of newsprint, with
an annual production capacity of approximately
170,000 tons. As of December 31, 2011, the
shareholders of Papel Prensa were AGEA (37%),
CIMECO (12%), S.A. La Nación (22.5%), the
Argentine federal government (27.5%), and other
minor investors (1%).
Papel Prensa has implemented production policies
based on the procurement of strategic inputs
without contributing to the depletion of natural
resources. To this end, the paper mill recovers
raw materials from the recycling of returned
newspapers, instead of using virgin fiber.
30
31
BROADCASTING
AND PROGRAmmING
3 BROADCASTING AND PROGRAMMING
Grupo Clarín is also the leading company in
the audiovisual broadcasting and programming
segment. Through Artear, it holds the license
to broadcast El Trece, one of the two largest
broadcast television channels in Argentina, and
segment leader in terms of advertising share and
prime-time audience share. It also has a presence
in broadcast television stations in Córdoba
(Telecor), Bahía Blanca (Telba), Bariloche (Bariloche
TV), and Río Negro (Radio Televisión Río Negro).
Grupo Clarín also produces and sells some of the
most popular cable television signals.
Its audiovisual broadcasting and programming
array includes agreements and equity interests
in the main television and film producers, such as
Pol-Ka Producciones, Ideas del Sur and Patagonik
Film Group. Grupo Clarín also owns prominent
radio stations, such as Mitre AM 790, La 100 (FM
99.9), both in Buenos Aires, and, more recently,
Mitre AM 810 in the province of Córdoba.
Grupo Clarín also has a strong stake in sports
commercialization and broadcasting rights, mainly
soccer and motor racing, directly and through joint
ventures.
Out of Grupo Clarín’s total sales in 2012,
the broadcasting and programming segment
accounted for Ps.1,449 million, taking into account
intersegment sales.
net sales
(In millions of Ps.)
adjusted ebitda
(In millions of Ps.)
1,500
1,400
1,300
1,200
1,100
1,000
900
800
700
600
500
400
300
200
100
0
YoY
1,449.0
1,268.7
260
234
208
182
156
130
104
78
52
26
0
252.7
136.1
i
g
n
m
m
a
r
g
o
r
P
&
g
n
i
t
s
a
c
d
a
o
r
B
i
g
n
m
m
a
r
g
o
r
P
&
g
n
i
t
s
a
c
d
a
o
r
B
2011
2012
2011
2012
14.2%
YoY
(46.2%)
32
33
BROADCASTING AND PROGRAMMING
aRteaR
Amidst a scenario marked by industry challenges
and strong competition, Artear was able to achieve
its goals in 2012. Its share of the traditional
advertising market of broadcast television reached
29.4%. 2012 has had the highest audience
concentration in recent years for the leading signals,
with Telefe and El Trece achieving a combined 64%.
El Trece ranked second in the broadcast TV audience
rating with 9.5 points from 12 pm to 12 am, Mondays
through Sundays. Its professionalism, artistic
quality, innovative proposals and technological
developments continue to distinguish it as one of
the most prominent signals in the market.
In terms of programming, El Trece combined
fiction, news and entertainment embracing a
varied offering. “Show Match”, “Soñando por
cantar”, “Los Únicos”, “Tiempos Compulsivos” and
“Condicionados” led audience ratings. “Periodismo
para Todos” -a program hosted by Jorge Lanata- is a
highlight in terms of journalistic and news programs.
Furthermore, “Arriba Argentinos” continued to
consolidate its morning audience rating. El Trece’s
news programs -“Noticiero Trece”, “Telenoche”
and “En Síntesis”- further validated their already
existing recognition and credibility with audience
ratings that led their respective time slots.
With respect to cable television channels, TN
achieved the highest audience share throughout the
year across all time slots. On several occasions, it
outperformed broadcast stations. Several programs
particularly stood out, such as “El Juego Limpio”,
“Palabras más, Palabras menos”, “Código Político”,
“Desde el Llano”, “Argentina para Armar”, “Otro
tema”, “A Dos Voces” and “TN Central”.
Artear further strengthened its TV slots, seeking
to offer diverse options in terms of information
and entertainment. The Spanish language music
channel “Quiero Música en mi Idioma” was quick
to lead audience ratings in the music genre.
”Volver” continued to offer the best of classic and
vintage Argentine films and television shows and
reaffirmed its role as a 100% national channel that
preserves our history with the highest technology.
Magazine and Metro, general interest cable
channels, continued to develop their programming
criteria through thematic modules and standardized
broadcasting. Magazine was the signal with the
highest audience in the variety category. El Trece
Satelital, the Buenos Aires signal of El Trece,
continued to focus on local productions and on
including a significant number of in-house national
productions in its programming.
Operating statistics - bROadCasting and PROgRaMMing
advertising share %(1)
audience share %(2)
Prime Time
Total Time
2012
36.6%
35.9%
29.4%
2011
36.6%
42.2%
33.0%
YoY
0.1%
(15.1%)
(10.9%)
(1) Company estimate, over ad spend in Ps. In broadcast TV for AMBA region.
(2) Share of broadcast TV audience according to IBOPE for AMBA. PrimeTime is defined as Monday through Friday from 8 pm to 12 am.
Total Time is defined as Monday through Sunday from 12 pm to 12 am.
34
35
BROADCASTING AND PROGRAMMING
During 2012, more investments were made in
the development of Artear’s web sites. Hours
of information, network entertainment, favorite
programs and instant news. “tn.com.ar” ranked
among the four top online news sites and as a
leader in social networks. “eltrecetv.com” has
become Argentina’s most visited broadcast TV
web site featuring the most outstanding programs,
exclusive coverage, back-stage, contests and live
interviews. During the year, it had more than 1.7
million users, in addition to 400,000 followers on
Facebook and over 535,000 followers on Twitter.
Artear has also reinforced the development of
exclusive applications and content for the most
widely used mobile devices.
Additionally in the production section, the most
prominent show business and general interest
events were broadcast, such as the concerts of
Madonna, Lady Gaga, Mamma Mía, Liza Minelli,
Luis Miguel, Axel, Hugh Laurie, Carlos Baute and
Reik, as well as other shows and events, such as,
Cirque du Soleil, Batman Live, Piñón Fijo es mi
nombre, La cabra, Quilmes Rock, Pepsi Music and
Personal Fest; and a new edition of the traditional
UNICEF fund-raising event “Un Sol para los
chicos” at the Luna Park stadium.
During 2012, Artear sought to strengthen its
position as technological market leader, after the
successful launch of the signals El Trece HD and
TN HD in 2011, when it became the first broadcast
signal to produce all of its content in high definition.
This success is the result of intensive investment
in equipment and professional training. El Trece
was the first signal to test a high-definition system
on September 25, 1998 and has continued to use it
uninterruptedly from 2000 through 2009.
During the period, investments were made to
strengthen the implemented workflow processes,
as well as to move forward with pending issues.
Additionally, a building project was carried out
to increase the newsroom size, which became a
“spectacular newsroom”, as evidenced every day
by the images of the news programs broadcast by
El Trece and TN. The archive capacity enlargement
for the digital system implemented the previous
year is one of the most significant acquisitions.
Artear continued to produce fictional content for
TV series and motion pictures through Pol-Ka,
Ideas del Sur and Patagonik Film Group.
In the case of Pol-Ka, “Lobo” and “Los únicos,
segunda temporada” - the two series scheduled
for the beginning of the year - failed to deliver
the expected results. In September, Artear started
again to broadcast programs in "series" format
with “Sos mi hombre”, which achieved a high
audience rating. “Condicionados” and “Tiempos
compulsivos”, both of them in the Company’s
hallmark category of “single” programs, were
broadcast during the year with considerably good
acceptance from the public and the critics.
Also during 2012, Artear completed the production
of “Violetta” for Disney and, by the end of the
year, started to produce the second season. The
program has become very popular among children
and youth, with high audience levels both in cable
and broadcast TV in Argentina and abroad. Even
though 2012 was a challenging year, the 2013
outlook is quite promising since “Sos mi hombre”
will continue to be broadcast on El Trece, and
“Solamente vos” has a large audience, in spite
of the typically low audience shares registered in
summer.
As for Ideas del Sur, during 2012, the company
exceeded the number of production hours and
increased advertising sales compared to the
previous year. In addition, all of its products
achieved good audience levels.
The Company also made significant efforts
towards developing activities related to the
commercialization, organization and broadcast of
sports events through TyC Sports, mainly football
and motor racing.
radio mitre
In 2012, AM Mitre 790 reaffirmed its track record
and consolidated its second place in the ranking of
audience share during the entire year, reaching an
audience share of 23 points.
The radio talk show “Primera Mañana”, hosted
by Nelson Castro with a group of prestigious
columnists, stood out among Radio Mitre’s
programming. “Hola Chiche”, hosted by Chiche
Gelblung, continued to renew the morning slot
with a lineup that combines journalism, general
news coverage and enjoyable and smart humor.
In the afternoon slot, Radio Mitre consolidated its
strong journalistic offering with the incorporation
of a new program. In February 2012, Radio Mitre
launched “Lanata sin filtro”, a program hosted by
Jorge Lanata with the participation of Luciana
Geuna, Osvaldo Bazán, Nicolas Wiñazki and
Adriana Verón that set the agenda with high-
impact research and journalistic views. “El Club
de la tarde”, hosted by Ernesto Tenembaum, “La
Otra Pata”, hosted by Marcelo Zlotogwiazda, and
“Lo que queda del día”, hosted by Horacio Caride
were also part of the programming.
La 100 consolidates its leadership in the FM
radio segment, with an entertaining, smart and
innovative proposal based on programs led by
famous artists and good music. By year-end, La
100 again led the audience share with growth in
almost all of its programs. In 2012, the shows “El
Show de la Noticia”, hosted by Roberto Pettinato
in his ninth season, and “Lalo por hecho”, hosted
by Lalo Mir and Maju Lozano, stood out once
again. In the afternoon slot, La 100 managed to
consolidate its position with “Sarasa”, hosted by
Ronnie Arias, and “Atardecer de Un Día Agitado”,
hosted by Sergio Lapegüe. “Ranking Yenny”
hosted by Guillermo López leads the audience
segment on Saturday mornings.
To further deepen its bond with listeners, La
100 continued to organize acoustic concerts
and on-location broadcasts from its mobile
studio, featuring highly-acclaimed national and
international artists.
Finally, of remarkable note is the growth
experienced by Cienradios.com.ar, a site that was
conceived as an extension of the Radio Mitre
brands to the web, but that now stands on its own.
It entails the development of an infinite concept of
the dial and is unique in Latin America. Users may
choose among a wide offering of broadcast radio
stations and other stations, specially designed
for the Internet with segmentations of singers,
bands, music from different decades, the music
presented by the FM radio station hosts, folklore,
tango, romantic music and other rhythms.
During 2012, the presence of Mitre AM 810
was also consolidated in the province of
Córdoba as the second radio with the highest
audience share. With a permanent staff in the
city and its own news service, Mitre AM 810
developed comprehensive coverage of news
comprising Córdoba, Argentina and the world.
Its programming includes prestigious hosts, such
as, Rafael Martínez, Rebeca Bortoletto and Juan
Alberto Mateyko.
36
37
digital content
and others
4 DIGITAL CONTENT AND OTHERS
Revenues in this segment are derived from the
sale of advertising on some Internet web sites
and portals and the provision of administrative
and corporate services by Grupo Clarín and its
subsidiary GC Gestión Compartida S.A. (“GCGC”)
to third parties and other subsidiaries. They
also include digital content production through
Contenidos de Medios Digitales S.A. (“CMD”).
Out of Grupo Clarín’s total sales in 2012, this
segment accounted for Ps.364 million, taking into
consideration intersegment sales.
digital Content
Grupo Clarín is the leading producer of digital
content. Through CMD, the Company developed
the broadest network of portals and digital content
in Argentina, covering news, entertainment,
sports, classified advertisements, direct marketing,
e-commerce, digital photography, video, blogs,
chat rooms, music, mobile content (ringtones, SMS
and games) and a browser. This network seeks to
replicate on the Internet the presence and relevance
of Grupo Clarín’s several offline media.
net sales
(In millions of Ps.)
adjusted ebitda
(In millions of Ps.)
2011
2012
363.8
283.0
400
375
350
325
300
275
250
225
200
175
150
125
100
75
50
25
0
s
r
e
h
t
o
&
t
n
e
t
n
o
c
l
a
t
i
g
d
i
0
(0.1)
(0.2)
(0.3)
(0.4)
(0.5)
(0.6)
(0.7)
(0.2)
s
r
e
h
t
o
&
t
n
e
t
n
o
c
l
a
t
i
g
d
i
(0.6)
2011
2012
YoY
28.6%
YoY
64.7%
38
39
DIGITAL CONTENT AND OTHERS
Given the fact that, in line with the corporate
strategy, the exploitation of Clarín and Olé websites
that were previously operated by Grupo Clarín
was transferred to another company of the same
economic group, goals have been redefined in order
to strengthen the positioning of other sites, such as,
Todo Noticias, Cienradios, Ciudad and EltreceTV in
terms of traffic and revenues.
In addition, the Company continued to sell contextual
advertising under the brand iAvisos and completed
the first year of operation in the Adnetwork business.
The website of Todo Noticias developed by CMD
registered amazing audience share growth at year-
end. By year-end, TN had 5.6 million unique users,
that is, a 47% increase compared to the same
month in 2011 and 36.4 million page views, which
represents a 40% increase relative to the same
month the previous year. Ciudad.com remained
the most visited show web site in Argentina, with
5.3 million unique users in December 2012.
operating statistics - digital Content and otHers
Page Views (1)
Unique Visitors(1)
2012
625.3
27.9
2011
613.9
25.9
YoY
1.9%
7.6%
(1) In millions. Average. Source IAB and Company Estimates.
40
41
34
35
DIGITAL CONTENT AND OTHERS
CMD S.A. has maintained its 80% equity interest
in Interpatagonia S.A., and its 51% interest in
Clawi S.A. During the year 2012, Tecnología
Digital (TECDIA) S.A. was created, a company in
which CMD has a 95% equity interest.
Club Cupón, the online discount site that had
completed the first month of the year with 23,000
coupons sold, in December exceeded 36,000
coupons. Also in 2012, the Company managed to
enter the Brazilian market through Clawi S.A., by
means of a strategic alliance with Grupo Abril’s
Recreio magazine. Thus, with the launch of a
version in a different language, Mundo Gaturro
became the first online entertainment world in
Hispanic Latin America. During the period, Mundo
Gaturro reached 6,500,000 registered users and
approximately 100,000 access passes sold per
month. During 2012, the Company also executed
an agreement with UNICEF for the development of
educational games.
Also during the period, CMD completed its second year
of operations in the direct marketing segment through
its brand Mr. Sale, achieving sustained growth.
Through its brand Yuisy, CMD launched Token
Dancer, a thrilling eye-hand coordination game
which, by the end of 2012, had registered 370,000
downloads worldwide and is available for iPod,
iPhone and iPad at Apple’s Appstore. Yuisy’s
consolidation in the Latin-American videogame
industry is attributable to the release of third
party’s games. The first title released under this
modality was ZAP First Jump. These releases
are in addition to the popular Rolling Ranch and
Halloween Hunter launched in 2011.
otHer serviCes
Through GCGC, Grupo Clarín renders specialized-
process outsourcing services to medium and
large companies. The services rendered, which
include payroll management and processing and
implementation of related processes, as well
as human resources management, are oriented
to optimize quality and provide innovative
management tools.
During 2012, total sales increased by 36.6%
compared to the previous year. The company
continues to bolster the services offered, increasingly
focusing on a customer-driven approach, as well as
on strengthening improvement processes.
ArgenProp
Buscainmueble
Canal 13
Clasificados
Clarin.com
Cienradios
Ciudad
Clarín Blogs
Clubcupón
Confronte
De Autos
De Motos
Entremujeres
Espectáculos
Genios
Guía de la Industria
Grupo Clarín
iEco
Imagena
Interpatagonia
La Razón
Más Oportunidades
Mundo Gaturro
Nimbuzz
Mublet
Olé
Quieromimúsica
Revista Ñ
Shop1
Tangocity
Tipete
TN
TN y la Gente
Toda Pasión
T&C Sports
Ubbi
Vía Restó
Yuisy
VXV
Welcome Argentina
42
43
corPorate goVernance,
organiZation and
internal control sYsteM
5 CORPORATE GOVERNANCE, ORGANIZATION AND INTERNAL CONTROL SYSTEM
Grupo Clarín’s Board of Directors is responsible
for the Company’s management and approves its
policies and overall strategies. According to the
Company’s By-laws, the Board has ten permanent
members and ten alternate members, appointed
on an annual basis at the Regular Shareholders’
Meeting. The By-laws also provide for the
appointment of four independent directors, two
permanent members and two alternate members,
appointed in accordance with the requirements of
National Securities Commission (“CNV”).
execUtiVe coMMittee
Grupo Clarín also has a Supervisory Committee
comprised of 3 permanent members and 3
alternate members, who are also appointed on
an annual basis at the Regular Shareholders’
Meeting. The Board of Directors, through an Audit
Committee, is in charge of the ongoing oversight of
all matters related to control information systems
and risk management, and issues an annual report
on these topics. The members of the Company’s
Audit Committee may be nominated by any
member of the Board of Directors and a majority
of its members must meet the independence
requirement set forth by the CNV.
Day-to-day business decisions of Grupo Clarín are
made by an Executive Committee formed by three
members of the Board of Directors. Héctor Horacio
Magnetto; José Antonio Aranda and Lucio Rafael
Pagliaro.
aUdit coMMittee
At year-end, the Audit Committee was comprised
as follows:
MeMbers of the board of directors
alberto césar José Menzani
independent director
lorenzo calcagno
independent director
alejandro alberto Urricelqui
director
Grupo Clarín’s Board of Directors is comprised by
the following members, appointed at the Annual
Ordinary Shareholders’ Meeting and Special
Meeting per Class of Shares, held on April 26, 2012:
héctor horacio Magnetto
chairman
José antonio aranda
Vice chairman
lucio rafael Pagliaro
alejandro alberto Urricelqui
director
director
sUPerVisorY coMMittee
Grupo Clarín’s Supervisory Committee is comprised
by the following members, appointed at the Annual
Ordinary Shareholders’ Meeting and Special
Meeting per Class of Shares, held on April 26, 2012:
Jorge carlos rendo
Pablo césar casey
ralph booth ii
luis María blaquier
director
raúl antonio Morán
independent Permanent
director
Member
director
carlos a. P. di candia
independent Permanent
director
Member
lorenzo calcagno
independent director
Pablo san Martín
independent Permanent
alberto césar José Menzani
independent director
Member
hugo ernesto lópez
independent alternate
Member
rubén suárez
independent alternate
Martín guillermo ríos
alternate Member
Member
44
45
CORPORATE GOVERNANCE, ORGANIZATION AND INTERNAL CONTROL SYSTEM
In order to identify opportunities and streamline
structures and systems with the aim of improving
processes and making informed decisions,
Grupo Clarín sets forth several procedures and
policies for the specific purpose of controlling
the Company’s operations. The areas responsible
for the Company’s internal controls, both at the
Company level and at the level of its subsidiaries
and affiliates, contribute to the safeguarding of
shareholders’ equity, the reliability of financial
information and the compliance with laws and
regulations.
Compensation of the members
of the board of directors and
senior management
Compensation of the members of the Board of
Directors is decided at the Shareholders’ Meeting
after the close of each fiscal year, considering the
cap established by Section 261 of Law No. 19,550
and related regulations of the CNV.
Grupo Clarín has compensation arrangements
with all of its officers in executive and managerial
positions, which contemplate a fixed and variable
remuneration scheme. Fixed compensation is
tied to the level of responsibility attached to
each position and prevailing market salaries. The
variable component is tied to performance during
the fiscal year based on the objectives set at the
beginning of the year. Grupo Clarín does not have
any stock option plans in place for its personnel.
As mentioned in Note 13 to the parent company
only Financial Statements, on January 1, 2008
Grupo Clarín began to implement a Long-term
Savings Plan (“PALP”) for certain executives of
Grupo Clarín and its subsidiaries. Executives who
adhere to such plan will contribute regularly a
portion of their salary to a fund that will allow
them to increase their income at the retirement
age. Furthermore, each company matches the sum
contributed by such executives. This matching
contribution will be added to the fund raised by the
employees. Under certain conditions, employees
may access such fund upon retirement or upon
termination of their jobs with Grupo Clarín.
Grupo Clarín organizes its activities under an
executive structure comprising: External Relations
Department; Corporate Finance Department;
Corporate Control Department; Corporate Strategy
Department; Audiovisual Content Department;
Corporate Human Resources Department; Corporate
Affairs Department and Digital Content Department.
The overall criteria used to appoint managers are
based on the background and experience in the
position and the industry, companies they have
worked for, age, professional and moral aptitude,
etc. The professional experience and background
of the main managers are disclosed to the general
public upon their appointment.
annual shareholders' meeting
Grupo Clarín held
its Annual Ordinary
Shareholders’ Meeting on April 26, 2012. On
this occasion, the shareholders reviewed and
approved the accounting records for fiscal year
No. 13 ended on December 31, 2011 and the
performance and compensation of the members of
the Board of Directors, the Supervisory Committee
and the Audit Committee. Among other things,
they reelected the permanent members and
alternate members of the Board of Directors and
said committees for the year 2012. The Company
distributed dividends for an aggregate amount of
Ps.135 million, representing 46.97% of its nominal
capital and Ps.0.4697 per share.
dividend Policy
Grupo Clarín does not have a formal dividend
policy governing the amount and payment of
dividends or other distributions. According to its
By-laws and the Argentine Corporate Law, Grupo
Clarín may lawfully pay and make declarations of
dividends only out of the retained earnings stated
in the Company’s annual Financial Statements
prepared in accordance with Argentine GAAP
and CNV regulations and approved at the Annual
Ordinary Shareholders’ Meeting. In such case,
dividends must be paid on a pro rata basis to
all holders of shares of common stock as of the
relevant record date.
Code of Corporate governance
to
the aforementioned and
in
In addition
conformity with the CNV’s decisions concerning
the filing of the report on compliance with the
Code of Corporate Governance (Resolution No.
606/12), Grupo Clarín prepared the report for
the year under analysis, which is available in the
Company’s Website.
stoCk information
and sHareHolder struCture
Grupo Clarín is listed in the Buenos Aires Stock Exchange where it
trades its shares, and in the London Stock Exchanges, where it trades
its shares in the form of GDS.
london stock exchange (lse) - ticker:
bolsa de comercio de buenos aires (bcba) - ticker:
GCLA (BCBA) Price per share, december 31, 2012
GCLA (LsE) Price per gds, december 31, 2012
total shares
total gds
equity PartiCiPation at iPo1
%
GCLA
GCLA
Ps.8.50
Us$2.50
287,418,584
143,709,292
20.3%
free float
70.9%
controlling
shareholders2
8.8%
gs Unidos,
llc (rb)3
sHareHolder struCture - Number of Shares4
controlling shareholders
gs Unidos, llc (rb)
free float
international
local
total
204,030,227
25,156,869
58,231,488
(46%) 27,045,754
(54%) 31,185,734
287,418,584
1 Since the IPO, our shareholders and management acquired approximately 7.8 MM
shares (13.7% of the free float).
2 Controlling Shareholders: Ernestina H. de Noble, Héctor H. Magnetto,
José Antonio Aranda and Lucio Rafael Pagliaro.
3 GS Unidos, LLC, a company under the indirect control of Mr. Ralph Booth (Director).
4 As of March 8, 2013.
46
47
grUPo clarÍn and
its corPorate
social resPonsibilitY
6 GRUPO CLARÍN AND ITS CORPORATE SOCIAL RESPONSIBILITY
our Commitment
Since its foundation, Grupo Clarín has been aware
of its social responsibility as a company and as a
member of the media, and has strived to assume
such responsibility abiding by the laws, honoring
its active and sustained social and community
involvement and, especially, fulfilling its duty to
inform with honesty and accuracy.
Commitment to society is an inherent and
essential part of Grupo Clarín’s vision and
mission statement. The Company attaches
special importance to the relationship with its
different audiences, which acknowledge and
validate its activities each day and, over time,
have established multiple communication and
interaction channels with Clarín’s stakeholders.
From the standpoint of its audiences, readers
and society in general, Grupo Clarín’s media and
journalists work day after day towards respecting
and consolidating the people’s right to information;
combining high credibility with a comprehensive
journalistic and entertainment offering based on a
deep knowledge of the audience.
transparency,
standards and guidelines
Grupo Clarín seeks to intensify the values and
principles that guide the Company’s daily work,
particularly those concerning labor, sustainable
development, and human rights.
The Company’s observance to those principles is
also outlined in the Corporate Code of Ethics and
also in the “Guía para la Acción”, a document which
proposes models for management, organization
and roles, while outlining Grupo Clarín’s general
policies and procedures concerning labor, the
environment and human rights.
During 2012, the Company developed its Corporate
Social Responsibility and Sustainability Policy,
aiming to extend best practices and establish
common goals within the organization and its
subsidiaries. It also encompasses and promotes
the adoption of specific industry related standards
among its subsidiaries.
Also in this period, the Company started to prepare
International
its Financial Statements under
Financial Reporting Standard (IFRS) changing the
manner in which some figures are presented. This,
added to an internal materiality assessment on
sustainability issues performed in 2012, resulted
in the deconsolidation of some subsidiaries in
which the Company holds a minority stake such as
Trisa, Impripost, Papel Prensa and Ideas del Sur.
Therefore, comparative analysis of some figures in
this section with those from previous years cannot
be properly stated.
Since 2004, the Company commits to the Global
Compact proposed by the United Nations, seeking
to systematically embody the 10 principles
that serve as a guideline for a sustainable
management.
Grupo Clarín also participates in several groups
and organizations, which gather other Argentine,
Latin-American and global media players and
stakeholders to share experiences, identify best
practices, and foster cooperation on the specific
issues that media companies address as part of
their social responsibility strategies. During
2012, through the Noble Foundation, it renewed
its presence in the “Grupo de Fundaciones y
Empresas”, a space to share knowledge and set
standards in the field of strategic social investment.
During the period of 2009-2012, Grupo Clarín
committed its participation and contributed to
the multi-stakeholder development of the Media
Sector Supplement for the Global Reporting
Initiative. The GRI guidelines published in
may 2012 act as a reference for an extensive
process, currently underway at the Company, to
further consolidate, identify and report relevant
information regarding environmental and social
impacts, while establishing new goals to
strengthen its related initiatives and strategy.
48
49
independence
and transparency
independence
from the government
Freedom of expression and transparency are
indispensable values to the Company and its
professionals. Both principles are particularly
relevant in areas linked to news services. At Grupo
Clarín, each company commits to the quality, rigor
and transparency of its information and content.
News coverage and programs aim to be plural and
fair, reflecting the journalists’ efforts to inform
on facts and events in a balanced manner, while
allowing opinion regarding the parties involved.
Style guides, ethics manuals, news coverage
guidelines -including some for kidnapping and
hostage situations- and several other self-regulations
and commitments guide the different activities of
news and entertainment oriented companies. This
does not mean that every issue, especially regarding
content and editorial view, is addressed as expected.
For that reason Grupo Clarín’s media companies are
continuously designing new means to engage with
its readers and audiences.
As the previous years, 2012 proved to be a specially
challenging year for the press and freedom of
expression in Argentina. The Company supported
numerous initiatives to create awareness on
the subject and demonstrated
its sustained
commitment to defending and promoting it.
Independence is a value. For journalists and the
media, independence is the solid foundation of
their work, which enables them to search for the
truth, without any conditioning.
Independence is at the core of Grupo Clarín’s
business, as a guarantee of freedom for its media to
fulfill their journalistic role in Argentine democracy.
It is at the same time an assumed responsibility,
a way of exercising and guaranteeing rights, an
outlook on sustainability from the company, a
daily commitment.
Independence requires transparency. That is why
the information about Grupo Clarín, its media,
shareholders, activities, revenues and investments
is public and is readily available in its website,
in the Argentine Securities Commission and in
multiple and several communication channels
with the public, audiences and readers. This is not
the case with the majority of the other Argentine
media, which does not make available to the
public their financial statements, the sources of
their income, and many times even fail to reveal
who their owners are.
One of the media’s sources of income is advertising.
Presently, most media in Argentina are either state-
owned or a significant portion of their income directly
depends on the increasing government advertising
expenditure. Those are adverse conditions that can
often pose a threat for journalistic independence,
freedom of speech, access to information and
plurality of voices, all vital conditions for a
sustainable and democratic society.
Grupo Clarín receives virtually no funds for official
advertising from the National Government and
very little from Provincial Governments. So much
so, that in 2012 official advertising from all
jurisdictions accounted for only 1% of its revenues.
Historically, given the scale and diversity of Grupo
Clarín’s revenues, the weight of those funds has
always been kept at very low figures, in order to
guarantee the freedom of its media and journalists
to report without any conditioning.
business independence
Grupo Clarín pays special attention to guaranteeing
its economic
independence by pursuing a
sustainable business model with diversified
sources of income, where advertising is only one
of the ways of sustaining its businesses. Among
its activities, it also publishes and sells editorial
products, produces and sells programming and
PeoPle’s voiCes
Media sustainability depends profoundly on readers
and audiences aware of their rights and ready to
demand quality journalistic and entertainment
contents, and also on media ready to listen to them.
Grupo Clarín's media promote interaction with their
publics and audiences, creating spaces and tools
aimed at listening and fostering communication.
Opinions, critics, tastes, suggestions and comments
are received through multiple open spaces for
contents created by people for the free expression
of society, embracing its diversity and plurality.
At a Corporate level, amidst the challenging
environment created by the ongoing harassment
by the government since 2008, Grupo Clarín
also offers multiple and specific communication
channels, such as web based tools and social
networks, to share the latest updates with
accuracy and transparency.
The proliferation of new media, Internet based
networks and the web 2.0 phenomenon, started
a revolution in journalism and in terms of how
people consume news and other types of content.
This requires a serious assessment on how to
face the challenges of the digital era, adapting
the Company’s business models to satisfy
Grupo Clarín’s audiences, and at the same time
addressing sustainability while maintaining the
Company’s leadership position.
Grupo Clarín’s media companies have a long history
of audiences’ and readers’ engagement. The ability
to anticipate trends together with a profound
knowledge of media consumers and the ability
to interpret their needs and meet their demands,
explain the Company’s sustained leadership and
favored place amongst consumers’ preferences.
Clarín’s newspaper segments such as “El juicio
final”, “Cartas al país” and daily readers’ surveys,
all traditional means of engaging readers, are
complemented by more recent initiatives to
accompany peoples’ needs to participate in the
news process, such as the introduction of readers
comments and social media strategies within the
online news platforms.
Over the last few years, the Company has launched
a growing number of new blogs, and generated
greater interaction not only with journalists, but
also between our users. Interactivity opens space
for informative content deriving from readers,
listeners and web users. ‘TN y la gente’ is a web-
based tool developed by the Company’s news
channel, where audiences send photos or video
footage captured from personal and mobile
cameras, as another way of introducing citizen
journalism and increasing end-user participation
in our media.
The Company also pays special attention to giving
voice to small or underserved communities and
providing for the development of local content
at a regional level. Cablevisión and Artear are
working together to gradually renew local TV
channels and newscasts in several cities in
Argentina. The program takes into consideration
access to local information and culture, while
providing them with state-of-the–art technology
and training.
On the other hand, for almost 30 years now
Grupo Clarín, through the Noble Foundation, has
been offering free media literacy tools aimed
at promoting a critical view on journalism and
empowering at the same time people in their role
of consumers and also creators of contents.
50
51
cable television and Internet services. Additionally,
it makes available to the public information about
its revenue structure on a quarterly basis.
With respect to its advertisers, the Group’s media
have business policies that promote diversity and
multiplicity of advertising investment sources.
Therefore, none of the advertisers that advertise
their products in Grupo Clarín’s media accounts,
individually, for more than 1% of the Group’s
revenues, another way of guaranteeing its
independence and freedom to report.
Media independence also needs responsible
relations between journalism and the company’s
own business interests. Grupo Clarín’s media have
policies aimed at separating business functions
from editorial functions. Particular emphasis is
placed on the fact that journalists must not be in
charge of or related to advertising sales, in order
to allow for the free exercise of their profession,
free from any risk and conditioning. Also in each
of its media a clear distinction is made between
advertising spaces and editorial spaces.
As mentioned previously, the Company also has
a Code of Ethics applicable to its subsidiaries and
employees. It establishes standards of conduct
which regulate and prevent situations that may
affect the free fulfillment of their duties and
transparency of their activities.
GRUPO CLARÍN AND ITS CORPORATE SOCIAL RESPONSIBILITY
social and sustainability
Coverage
To better assess the influence the media can have
on different audiences, Grupo Clarín establishes
goals to ensure the quality and pluralism of its
content. Grupo Clarín’s newspapers and television
newscasts have a long and highly praised record in
investigative reporting, and provide comprehensive
news coverage and insightful pieces on relevant
social and environmental issues. Reflecting the
diversity of society through its news coverage and
entertainment content lies in the core of its unique
capacity to engage with audiences and readers.
Special supplements, expert and academic
voices and editorials, onsite coverage and
skilled journalists and infographics complete
an extensive offering on topics that vary from
health, consumption and development to science,
education and conservation. Weekly TV Programs
such as ‘TN Ecología’ and ‘TN Ciencia’, in Todo
Noticias, Grupo Clarín’s 24 hour news channel
and the leading cable channel in Argentina, have
become leaders in their fields.
During 2012, the Company’s media paid special
attention to issues related to climate change and
the environment.
Radio Mitre, its main broadcasting radio station,
combined 24 hour coverage of these issues and
continued to air “Planeta Mitre, Compromiso Verde” a
series of daily brief radio programs by an environment
specialized journalist aimed at raising awareness on
environmental issues, recycling and what each of us
can do to make the world a better place.
Since 2011, the newspaper La Razón has been
publishing
the monthly supplement Gestión
Sustentable (Sustainable Management) to make
readers think about the most prominent issues of
the sustainable development global agenda and to
report on social and environmental responsibility
actions carried out by companies and organizations
of the civil society. During the year, the supplement
received the prestigious award Gota en el Mar, in
the category Environment and Sustainability.
Among the most significant initiatives, the Company,
in association with Vida Silvestre, Farn, Greenpeace
and other 7 environmental organizations from
Argentina or with active presence in the country
launched a collectible named Salvemos Nuestra
Tierra (Let’s save our planet) published together
with Diario Clarín in March, April and May of 2012.
The product, pioneer in its field, sought to raise
awareness on major environmental issues and their
potential solutions, while offering a guide to learn
how to help the planet and activities to work at
school or at home.
The Company also continued to draw attention
to weblogs that create social awareness within
Clarin.com. An example of this is “El Otro, el
Mismo”, a blog developed in association with
Universidad Católica Argentina and social
organizations engaged in fostering the inclusion
of people with disabilities. Moreover, the
“Calendario del Compromiso con la Comunidad”
(Calendar of Commitment to the Community)
continued to be published in Revista Viva for the
seventh consecutive year.
Recognizing the importance of reflecting diversity,
promoting social justice, protecting youth,
encouraging minority recognition and preventing
racial and gender discrimination is key in
responsible content creation in the media. During
the last few years, third party, academic and the
company’s own monitoring processes have all
registered a gradual, yet sustained increase in
social topics coverage.
In 2011, the NGO Periodismo Social and Austral
University produced an independent report on
television news coverage regarding childhood
in Argentina. Telenoche, the Company’s main
newscast and leader in terms of audience, was
identified as the one that allocated more space to
news and information regarding children and youth,
reaching 32.4% of their total coverage. Also, the
report concluded that more than 54% of the sources
referred were children and their families.
In 2012, the second edition of the report showed
that the percentage related to children as sources
increased to 60% and that violence as a subject
decreased noticeably (16%) from 2011 to 29% of
the total coverage, giving the newscast the best
score among private channels. Also, the report
emphasized that 41% of the coverage related to
children was specifically devoted to girls, while
another 47% was dedicated to boys and girls
alike, reaffirming the newscast commitment to
portraying gender issues.
This relates to an initiative that the Company
launched in 2009 by which is breaking new ground
in Argentina: an ambitious training program
oriented to audiovisual journalists, that seeks to
achieve excellence and raise awareness of the
particular features of the main social topics in
order to promote responsible coverage in the news.
In its initial stages, the project involved training
for journalists who work on newscasts related to
Cablevisión and Artear, mainly in the interior of the
country and reaching most coverage areas.
During 2012, the Company, along with
communication experts and academics from the
mentioned institutions, organized 6 in-house
workshops for journalists, editors, cameramen
and producers working in all the newscasts
produced by Artear (TN and Canal Trece) in order
to provide them with content-creation-related-
tools and to discuss the main challenges of the
different aspects of television coverage of social
issues and the editorial values that guide everyday
decisions. The experience was very enriching for
the professionals participating in the program
as well as for the University and Organization
representatives.
GRUPO CLARÍN AND ITS CORPORATE SOCIAL RESPONSIBILITY
Promoting involvement
Still, there is much to be done. In this regard,
Grupo Clarín aims to continuously enhance its role
in promoting public debate, encouraging individual
involvement by better and further portraying the
challenges of society under social, economic and
environmental aspects with a plural view.
Grupo Clarín’s different media companies also
endorse several initiatives promoting people’s
involvement in democracy and responsible citizen
control of their representatives’ acts and decisions.
Aware of the need to advocate for a wider respect
for the principles of democracy and fundamental
human and civil rights, during 2012, the Company
continued to promote and create awareness, for
example, on the importance of every citizen’s right
in the matter of access to information, and of the
significance of freedom of expression.
Also the Company set out once more to promote
values such as solidarity and community
involvement. Through Artear, it launched yet
another edition of “Abanderados de la Argentina
Solidaria”, an award that recognizes the otherwise
silent labor of social entrepreneurs and community
leaders, by divulging valuable and replicable
initiatives that advance social transformation. The
initiative is supported by Ashoka and a remarkable
panel comprised by outstanding people from the
social, academic and cultural sectors. In 2012, the
award was granted to Javier Ureta, president of
Cascos Verdes, an organization dedicated to the
inclusion of people with disabilities in the province
and the city of Buenos Aires.
In May, Genios magazine launched “Misión Positiva”,
its second institutional campaign that sought to
promote values such as friendship, fellowship,
tolerance, peace, solidarity and environmental care.
The initiative included publishing a teachers’ guide
with games, and activities for the classroom to
encourage children’s involvement.
During the period, The Company renewed its
partnership with Missing Children and Red Solidaria
to publish photographs of missing children in La
Razón newspaper and raise awareness about the
role of the community in dealing with this problem.
The Company also helped to broadcast the events
held to remember and create awareness in relation
to the anniversary of the terrorist bombing of the
AMIA and of Israel Embassy.
In order to promote other campaigns and collection
efforts and raise awareness about the country's
main social topics Grupo Clarín has donated
advertising space to several NGOs. Among the
most remarkable efforts in this regard were
the Colecta Más por Menos, the annual Caritas
collection organized by the Argentine Episcopal
Conference and the annual collection of the Food
Bank Network.
Grupo Clarín also provided renewed support
to the traditional campaign “Un sol para los
chicos”, together with Artear and UNICEF. The
campaign reached in 2012 its 21st edition, and
raised Ps.14,309,929 for education and other
social programs for children and the youth. It is
one of the key sources of income for UNICEF in
the country, and it also promotes the increase of
individual donations which is still noticeably lower
52
53
in Argentina and Latin America compared to the
US and Europe .
In order to deal strategically with this issue and
seeking to bolster the impact of its investment in
terms of solidarity campaigns on its media, during
2012 Grupo Clarín decided to conduct research
on the limited level of individual contributions to
organizations of the civil society. In partnership
with AEDROS, an entity specifically engaged in
fundraising in the country and with the support of
a top consulting company, a nationwide research
was conducted that revealed the status and the
reasons for the lack of a sustained commitment
with a cause in terms of individual money
donations. The research findings were published in
Diario Clarín and were a significant contribution to
the civil society, which is dealing with increasing
challenges to its sustainability as a whole.
In addition, with the support of Rapp Argentina, a
campaign was designed to deal with this problem
that was broadly promoted in audiovisual and
electronic media, as well as in newspapers and
magazines. The campaign sought to foster civic
involvement through a sustained and ongoing
economic commitment, as the most effective way
to make profound changes in the lives of many
people in need. The Company plans to measure
the impact of this initiative and set goals for the
continuity of this project in 2013.
Community engagement
and social advertising
Grupo Clarín’s
impact and relation with
communities and individuals exceed those of
its editorial coverage. Support for vulnerable
communities, mentoring education projects,
campaigning for disaster affected regions and
different types of donations and expertise are only
some examples of the many initiatives organized
and fostered jointly or separately by Grupo Clarín’s
different media companies.
In response to civil society organizations growing
communication needs and demands, Grupo
Clarín launched a multiple approach program that
combines spreading and raising active awareness of
public and social interest topics through advertising,
design and communication services for NGOs and
the development of web based blogs and sites.
In terms of social advertising, during 2011,
through the Noble Foundation and several of its
media companies, Grupo Clarín contributed with
advertising time and space to promote social,
civic and environment related causes, through its
own programs or within strategic alliances with
renowned NGOs.
During 2012 the Company strived to further
contribute to the improvement of social
advertising and communication skills in civil
society organizations. One of the ways to engage
this issue involved increasing the scale and
impact of “Segundos para Todos”, an advertising
contest for NGOs organized by Cablevisión, which
combined broadcasting spots with coaching
sessions in Buenos Aires, Córdoba, Santa Fe,
Salta and Neuquén. During 2012, the company
continued to invest in the TV program “Segundos
para todos TV”, that reflected their outreach to the
community and focused on public interest topics.
An additional issue in which Grupo Clarín has a
sustained and strategic commitment is in reducing
the digital divide and promoting digital inclusion.
This is addressed by raising awareness through
news coverage and TV programs in different media
outlets. Also during 2012, Cablevisión extended
its free cable TV and Internet access connections
program to a growing number of schools, hospitals
and other institutions, reaching 20,362 by the end
of the year. This represents an annual contribution
of approximately Ps.42.2 million, and is completed
with specific programs such as a “social fee” for
low income neighborhoods.
The impact of the mentioned donation of
advertising space and connectivity services can
be added to the Ps.2.9 million budget by the Noble
Foundation for the 2012 period, and the amount
dedicated to other social investment programs in
several subsidiaries reaching Ps.6.8 million, all
of which collectively represents an investment
of Ps.89.4 million. Nevertheless, a detailed total
figure cannot be yet estimated in full at a corporate
level since information collection systems are being
set in place to be able to provide the community
investment related to the smaller companies.
As well as contributing with its own funding,
knowhow and expertise, Grupo Clarín aims to
leverage support from others by seeking matching
funding and regular donations from individuals
and partner organizations for supported initiatives.
advertising space donated in 2012
radio
broadcast and cable television
412.8 thousand seconds
601.5 thousand seconds
Pages in newspapers and Magazines
88.4 pages
Ps.36.9 million donated in advertising space in 2012
fostering education
and Culture
As part of the Company’s initiatives to support
education, Grupo Clarín used its cross-segment
position and ability to communicate with society
to raise awareness of education’s importance as a
right and as a critical driver of social development
in Argentina’s future. In this sense, the Company
tried to foster equal opportunities in education
through the generation of updated, affordable
and quality educational materials for students,
teachers and schools throughout the country,
through its publishing company Tinta Fresca.
For the ninth consecutive year the Company
successfully organized “Digamos Presente”, an
initiative focused on equal access to education
and rural education, in partnership with APAER,
Red Solidaria, Cimientos Foundation, and with the
support of Arcor and Telecom.
The Company has also renewed its support to the
3rd Educational Quality Forum, a massive event
organized by Educar 2050. In this same regard,
Grupo Clarín and Cablevisión have renewed their
support to the prestigious annual and nationwide
research carried out by the Observatorio de
la Deuda Social Argentina (Observatory of
the Argentine Social Debt) of the Pontificia
Universidad Católica Argentina.
Among the main alliances are specific initiatives
such as the program “Potenciar Comunidades
Rurales” (Empowering Rural Communities) carried
out with the support of several companies to support
local development projects in certain communities
with the leadership of Emprendimientos Rurales
Los Grobo.
One of the most important initiatives generated
from a collective effort is the “Premio Clarín-
Zurich a la Educación” (Education Award). The
fourth edition recognized the best projects aimed
at improving the quality of maths teaching. For the
next period it will select the best project in the
field of Information Technologies.
During this period, through the Noble Foundation,
the Company continued to offer donations of
bibliographical material, and renewed its long
time support of several schools which carry the
name of the Clarín’s founder, Roberto Noble
(‘Escuelas Roberto Noble’).
Again this year, the Company sponsored the
annual Maratón de Lectura (Reading Marathon)
initiative, organized by Fundación Leer with the
participation of 4,000,000 children from 13,051
different schools. The event received the donation
of books published by Clarín and the initiative
was promoted through a wide range advertising
campaign.
Grupo Clarín and its subsidiaries have also
renewed their commitment to culture through
several sponsorships to important events and
entities, such as, Feria del Libro (Book Fair),
PROA Foundation, Faena Art Center, Arte BA, the
Meraviglie dalle Marche exhibition, 600 years of
Italian art at the National Museum of Decorative
Arts, Teatro Colón, Ushuaia's Festival of classical
music and the 22nd season of Vamos a la Música
which this year introduced “El Cascanueces y las
princesas encantadas” at Centro Cultural Konex.
The Company also supported the presentations
of Iñaki Urlezaga and Trío Argentino, as well as
the launch of Teatro Maipo's season presenting
“El último tour” by Eleonora Casano and the play
“Master Class” with Norma Aleandro as leading
actress, and the films “Dos más dos” with the
performance of Adrián Suar, Julieta Díaz, Carla
Peterson and Juan Minujín and “La suerte en tus
manos” featuring Valeria Bertuccelli and Jorge
Drexler under the direction of Daniel Burman.
As it does traditionally, in 2012 Clarín held the
annual award “Premio Clarín de Novela” and
supported the exhibition “María Elena Walsh en
casa de doña Disparate” at Victoria Ocampo's
residence in San Isidro.
Through its cable and broadcasting channels, the
Company also makes significant efforts to promote
the most important cultural, cinema and sports
events, and makes an increasing contribution in
the field of cultural diversity and local identity.
Noteworthy are initiatives such as “Volver”, a cable
channel that preserves the most complete Argentine
programming archive, or the “Word Archive” at
Radio Mitre, which offers an online record of some
of the country’s most valuable audio heritage.
noble foundations’ educational donations
2012
2011
2010
48,900
53,406
63,542
6,660
500
6,625
4,160
260
550
books
Magazines
booklets
54
55
GRUPO CLARÍN AND ITS CORPORATE SOCIAL RESPONSIBILITY
Media Literacy and Protection
of Young Audiences
Media has an increasing role in society and
especially in the lives of young people. Through
several programs, the Company encourages them
to develop tools to access media through critical
analysis and to take advantage of opportunities
presented by media to explore their identities,
creatively express their thoughts and opinions,
and amplify their voices.
Media Literacy is generally defined as the
ability to access, analyze, critically respond and
benefit from the different type of media. Grupo
Clarín’s main tool for fostering media literacy is
“Los medios de comunicación y la educación”
(‘Education and Media’), a leading and recognized
program that has been in place for nearly 30 years.
One of the main activities of the Noble Foundation
in 2011 was that of renewing the program, which
consists of workshops and booklets for teachers
and students to promote a critical approach to
the media and to utilize them as complementary
resources in education.
These programs are supplemented through
other initiatives regarding the promotion of
responsible content consumption. Through the
Noble Foundation, Grupo Clarín renewed the
presence and coordination of the media section
at the “Museo de los Niños” (Children’s Museum),
and continued to promote visits to its printing
facilities. During 2012, 14,438 people (mainly
students) and 234 institutions had the opportunity
to see firsthand what goes on behind the news
production and distribution process.
Within its Cable TV and Internet access segment, the
Company contributes with the protection of young
vulnerable audiences, providing tools for parents
to keep children from accessing sensitive or age
inappropriate programming. This includes several
parental control options in Cable TV service and
equipment, in addition to guidance tips, awareness
campaigns and tools for web access restrictions.
On the other side of the screen, children artistic
participation in television and films also requires
a responsible approach. The Company complies
with all regulations and self-imposed guidelines
by setting limited time schedules and engaging
with parents and tutors.
Excellence in Journalism
Reaffirming its commitment to journalistic
excellence, the Noble Foundation also carried
out activities to consolidate the training and
“Education and the Media” Program
Teachers’ workshops
Students’ workshops
2012
125
534
2011
2010
100
525
169
581
excellence of current and future communicators.
Among them is the support provided to the Masters
Degree in Journalism, an international graduate
course with the highest academic level, organized
by Grupo Clarín and the University of San Andrés,
with the participation of the School of Journalism
at Columbia University and the University of
Bologna, and led by renowned national and
international journalists and academics.
In this sense, the Company sponsored the
achievements (both at the institutional level and
through journalistic content) of the Graduate
Course in Scientific, Medical and Environmental
Communication. This program is organized by the
University Pompeu Fabra in Barcelona, together
with the Leloir Institute and the cable station Todo
Noticias (TN). Another highlight in this area was
the launch during 2011 and renewal in 2012 of the
Graduate Program in Digital Journalism organized
by the University Pompeu Fabra and TN.com.ar.
OUR PEOPLE
Grupo Clarín's success and leadership is mostly
the result of the efforts, talent, professionalism
and creativity of its people.
It is no coincidence that Grupo Clarín’s media
companies are amongst the most preferred
working places by communication professionals.
The Company strives to offer better opportunities,
incentives and tools to sustain and strengthen the
firm commitment of the professionals that believe
in Grupo Clarín’s project.
totAL EMPLoYEEs
18,240
16,720
15,200
13,680
12,160
10,640
9,120
7,600
6,080
4,560
3,040
1,520
0
17,200
16,277
15,156*
2010
2011
2012
*Note: 2012 figures reflect variations in the scope of Companies included
in this annual report. Therefore, comparative analysis with previous years
cannot be properly shown. Refer to section “Transparency, Standards and
Guidelines” for further detail.
56
57
Distribution of Company
Employees by Category
Management
Middle management
Junior management,
administration and commercial
Qualified technical personnel
Journalists
Others
2012
209*
2,220*
4,905*
5,955*
1,187*
680*
2011
248
2,403
2,513
6,988
1,357
3,691
2010
280
2,132
3,706
6,782
N/A*
3,377
*Note: 2012 figures reflect variations in the scope of Companies included in this annual report. Therefore, comparative analysis with previous years
cannot be properly shown. Refer to section “Transparency, Standards and Guidelines” for further detail.
The Company possesses a special make-up in
terms of age and gender diversity among its
employees. When it comes to gender, the higher
proportion of male employees is significantly
explained by the large number of technical
personnel, which in Argentina is predominantly
male, working in the printing facilities and in the
Cable TV and Internet access segment. The gender
composition in other companies of the Group is
balanced, especially regarding content related
activities, such as journalism and audiovisual
production, where the workforce is diverse.
Employees by sex
2012
2011
2010
Men
11,654*
13,375
12,698
Women
3,502*
3,825
3,579
Employees by groups of age
<30
31-50
>51
2012
2011
2010
3,850*
4,875
4,875
9,466*
9,464
9,464
1,840*
1,938
1,938
*Note: 2012 figures reflect variations in the scope of Companies included in this annual report. Therefore, comparative analysis with previous years
cannot be properly shown. Refer to section “Transparency, Standards and Guidelines” for further detail.
In addition to strictly abiding by the laws, the
Company sets higher than standard conditions for
its employees. Of Grupo Clarín’s total workforce,
more than 76% of employees are covered by
collective agreements. For those who are not, the
Company’s corporate policy is to apply conditions
established by the best existing agreement.
Taking care of the work environment and
conditions, health and job safety and offering
training to improve employees’ professional skills
and techniques are some of the actions aimed
at consolidating the sense of integration and
achievement of organizational goals.
One of the key ways of obtaining feedback on
the Company’s performance is via the global staff
survey, carried out every two years. During 2012,
the survey was carried out in all of the Company’s
subsidiaries, reaching a record level of response
of 92%, in comparison with 88% registered
in 2010 and 81% in 2008. Amidst the complex
environment for the company and its employees
related to the harassment by the Government, it
is worth noting that figures for climate remained
strong and that those related to commitment
reached average levels of almost 70%. The same
happened with leadership indicators, which
maintained their levels with high scores.
In 2012, the Company continued to develop the in-
house Volunteer Program of Grupo Clarín and its
subsidiaries. Named “Vos también” (You Too), the
program included the design and implementation
of several actions to engage volunteers with the
community. The program was implemented in 9
business units, including the corporate area, with
impact on 12 provinces in Argentina and in two
countries (Paraguay and Uruguay). According to
its main indicators, volunteers dedicated 6,901
hours of work (5,629 during working hours), with
a global engagement rate of 6.94%, representing
1,180 volunteers with a satisfaction rate of 97.6%.
Work was done in association with over one
hundred social organizations that have partnered
the several initiatives which helped 7,543 people.
concerning the daily development of activities.
Through these initiatives, volunteers had the
chance to make contributions in several areas,
such as training on the use of online platforms,
radio workshops (such as, “Voces solidarias”,
a program sponsored by Radio Mitre to help the
Argentine library for the blind), toy-collecting
efforts, job placement support and advice, blood
donation efforts, social inclusion recreational
events, articulations between formal education
and the workforce, professional support to Social
Organizations, and volunteer social project
management, among others. The program had a
high satisfaction level among participants: 99.25%
of the participants found it rewarding or very
rewarding and a similar percentage stated that
they would participate again.
Grupo Clarín has paid special attention to the
multiple internal communication tools, such as the
magazine Nuestro Medio, the Corporate Intranet
with participation spaces and forums, the digital
newsletter Nuestro Resumen, and the digital
newsletters of the Corporate Training Program and
the Company Climate Management Program, as
well as internal communication spaces and notice
boards. Year after year, Grupo Clarín increases
its efforts to
implement and streamline the
information channels on benefit programs, policies
and relevant organizational changes, and news
Benefits and career development
Although most benefits are common to the whole
Company, each business unit integrates additional
benefits that vary in nature according to tasks.
Since the last quarter of 2007, the Company,
together with its subsidiaries, began to implement
a Long-Term Savings Plan for directors and
managers, which became effective in 2008.
During 2012, corporate and business units’
human resources departments have continued to
implement different programs to identify internal
talent for career development. Also, Grupo Clarín’s
and Cablevisión’s Young Professionals Program was
renewed, creating opportunities for professionals
that are taking their first steps in their career paths.
In order to develop new skills and build up
existing strengths, people need encouragement
and support. In addition to increasing the number
and variety of training options, during 2012, the
Company continued efforts to extend and enhance
the employee performance appraisal program in
different categories.
Grupo Clarín’s employees and professionals can
update and expand their knowledge and skills
through several training programs, ranging from
seminars and courses to graduate degrees and
MBAs. Human Resources departments are in the
process of consolidating individual training records
and training hour’s information
One of the main initiatives in this respect is the
‘Corporate Training Program’ which includes a
wide variety of courses. A relevant aspect among
current training options is that the Company pays
special attention to training on new tools and
technology developments, in order to properly
prepare its workforce for the challenges the media
sector is facing.
In addition, throughout the business units, there
have been seminars and programs on quitting
smoking, diseases, and other relevant topics,
as well as special action campaigns regarding
health and medical check-ups, with special focus
on the preemptive measures against seasonal
diseases. Also, the Group carries our several
different activities designed to prevent job related
accidents.
Grupo Clarín continued to explore alternatives of
interaction or joint approach to common interest
issues at the various levels of its value chain. Grupo
Clarín focused on the implementation of systems
and procedures aimed at the application of best
practices for purchases, hiring, and contracting
with suppliers, within a framework of supervision
and transparency.
“Vos también” Volunteer Program in 2012
Volunteers
Social Organizations involved
Direct Beneficiaries
Working hours
Non-working hours
Employee involvement
2012
1,180*
100
7,543
5,629
1,272
6.94%*
2011
1,466
35
6,594
3,354
2,019
13.35%
*In 2012, one of Grupo Clarín`s main Companies in terms of workforce, could not participate in one of the
programs activities due to an illegal breaking into its facilities, impacting in the final involvement figure.
58
59
ENVIRONMENT
It is widely recognized that the media industry
has a lower impact than most other industrial
processes. Within the framework of an
environmental management policy aimed at
improving eco-efficiency, the Company and its
subsidiaries primarily consume energy, newsprint,
cable and water and generate waste.
During 2012, the Company continued to take
steps towards the measurement, planning and
improvement of manufacturing processes to
optimize results and address possible impacts.
Progress was made in achieving the period's goals
by introducing sustainable methods to obtain
and use resources; implementing policies for
investment in equipment and raising awareness
for the adequate use of technology.
It is worth mentioning that AGEA, the company
that manages the largest printing plant, developed
during the period an Environmental Policy and
invested in the first stages towards obtaining the
ISO 14001 certification.
The United Nations Global Compact, signed by
Grupo Clarín in 2004, also sets principles regarding
environmental protection. Businesses are asked to:
(Principle 7) support a precautionary approach
to environmental challenges;
(Principle 8) undertake initiatives to promote
greater environmental responsibility;
(Principle 9) and encourages the development
and diffusion of environmentally friendly technologies.
The present report reflects the global impact of
the different subsidiaries where the Group has
controlling stakes, while indicating some specific
effects with regards to the nature of the different
business activities. Based on a materiality
assessment and changes in the manner in which
information is consolidated starting in 2012, the
usual comparative analysis is not available.
GRUPO CLARÍN AND ITS CORPORATE SOCIAL RESPONSIBILITY / Environment
Consumption.
Newsprint and Energy
At the printing plants, the Company followed
established guidelines to ensure the provision
of materials at quality levels compatible with
international standards for paper, inks and other
specific inputs. Most of the newsprint supply
comes from Papel Prensa.
In addition to the FSC certification obtained by
AGR in 2010, during the last period, the Company
engaged in planning significant environmental
investments and put in place the initial stage
towards obtaining the ISO 14001 certification at
AGEA’s printing plant.
In terms of types of inks used, although different
printed products require different resources,
as an example, the main printing plant usage
of vegetable oil based coldset ink reaches
almost 60%. Vegetable oil based coldset is
environmentally friendlier than other types of ink
and allows reducing ink usage by approximately
10/15%. This can also be achieved by printing
techniques; at the Company’s printing sites the
stochastic printing style
in 2008
continues to be applied as a way of optimizing ink
usage.
introduced
Company qualified teams continuously strive
to reduce consumption by identifying and
adopting increasingly eco-efficient processes. The
introduction of adjustments on the dimensions of
newspapers made in previous years continues to
shows its benefits in the use of paper and other
materials.
The percentage of polybagging in the Company’s
newspapers and magazines continues to be
of minor significance, although the use of
polypropylene in some parts of the dispatching
process is regularly assessed.
The primary resource used by Grupo Clarín and its
subsidiaries is energy. Grupo Clarín’s consumption
comes from both direct and indirect sources; the
indirect consumption comes from electricity taken
from the grid.
Paper
Ink
Aluminum plates
2012
85,202 tn
1,269 tn
244 tn
2011
2010
112,290 Tn
111,656 Tn
2,735 Tn
236 Tn
2,412 Tn
272 Tn
Direct and Indirect energy consumption by primary source:
Electricity
Natural Gas
Gasoline
Gasoil
LP Gas
2012
216,991 MWh*
31,891 m3*
11,823 GJ*
44,111 GJ*
492 GJ*
2011
2010
431,326 MWh
419,563 MWh
25,825,636 m3
29,898,426 m3
29,399 GJ
24,676 GJ
64,509 GJ
76,043 GJ
2,449 GJ
2,563 GJ
*Note: 2012 figures reflect variations in the scope of Companies included in this annual report. Therefore,
comparative analysis with previous years cannot be properly shown. Refer to section “Transparency, Standards
and Guidelines” for further detail.
60
61
GRUPO CLARÍN AND ITS CORPORATE SOCIAL RESPONSIBILITY / Environment
Energy consumption is significant in the printing
activities and, to a lesser extent, in the business
units which operate with technology, such as cable
television and Internet services, broadcasting, etc.
In this area, some initiatives developed by Artear
include the introduction of cold lighting in all new
and renovated television studios, in order to reduce
5 times or more the regular energy consumption.
In addition to the 2011 goal of replacing all of Artear’s
live unit news vehicles for low consumption vehicles,
during 2012, building improvements were carried out
in underground facilities to take advantage of natural
light. This, together with the installation of energy
efficient cladding resulted in a 2,820 GJ saving.
During this period, the company focused on a multiple
stage scheme to replace other lighting materials
and continued to invest in equipment -manufactured
within environmentally friendly parameters- in order
to meet the needs of the generation and distribution
of content in High Definition.
Through Papel Prensa, a subsidiary in which the
Company owns a minority stake and that provides
newsprint for over 95% of Argentine Newspapers,
Grupo Clarín participates in the production of
newsprint, which is then used as a raw material
by some of its other subsidiaries. This allows a
comprehensive view of product's life cycles.
Papel Prensa has implemented production policies
based on the procurement of strategic inputs
without contributing to the depletion of natural
resources. To this end, the paper mill recovers
raw materials from the recycling of returned
newspapers, to generate more newsprint, thus
reducing the use of virgin fiber. The type of fiber
source (Poplar, and Willow) depends upon the
availability of materials, as well as economic
considerations such as the minimization of transport
distances and costs, which is a relevant economic
and environmental consideration. Nevertheless,
it is important to mention that fresh fiber comes
entirely from sustainable plantations. This means
that no native forests are involved or endangered.
This is combined with continuing research on
Salicaceae, related to their genetic improvement
and also to ecologic and silvicultural aspects, done
by means of agreements made with universities,
research centers and experts, with the objective of
increasing productivity, reducing costs and assuring
the sustainability of the ecosystem.
Papel Prensa’s forestry division undertakes its
activities with a sustainability strategy that involves
the protection of biodiversity. Protected forestry
areas and the banning of hunting activities have
led to a sustained increase in bird fauna. These
conditions allow for the development of several R&D
programs, also in collaboration with universities,
which include the introduction, protection and
reproduction of certain endangered deer species for
their proper and secure development.
Emissions and discharges
Most of the Company activities are undertaken in
urban areas with no relation to natural areas, and
complying with urban planning standards in force.
In terms of emissions, the main contributors to the
Company’s carbon footprint are print sites.
The Company is constantly exploring alternatives
to improve processes and efficiency in these
areas, and to continue to enhance the analysis
and inventory of CO2 emissions generated by
Grupo Clarín’s activities. The primary strategies
available to reduce greenhouse gas emissions are
reducing the consumption or changing the energy
sources, for example, by increasing the use of
renewable forms of fuel and bioenergy.
Each one of Grupo Clarín`s subsidiaries identifies
and manages waste production and disposal. As
part of the treatment of industrial waste from
the printing process, the Company collects and
separates other waste materials (ink, oils, greases
and solvents), which are shipped to certified third
parties for recycling and reuse. Aluminum plates
used in printing can be 100% reused.
Hazardous waste is carefully handled and handed over
to authorized waste management companies. The
Company continues to carry out strategies to reduce
the amount of this type of waste, with significant
success. In 2011 the reduction reached 21%.
Special care is also maintained regarding the
handling of liquid effluents resulting from
development processes, subjecting them to rigorous
treatments and measurements before disposal.
In sites such as La Voz del Interior and AGEA the
water is treated and then reused in irrigation or as
part of the production process. During this period,
the Company reached the goal of generating zero
discharges at AGEA’s printing plant, also reducing
water usage.
Besides printing plants, the Company`s office
buildings and other facilities only produce
discharge of domestic sewage.
Water usage, recycling and discharges are
significant in the paper mill. As stated in Papel
Prensa’s website, since the beginning of its
activity, changes have been introduced into
water circuits, and new equipment has been
added in order to make it possible for water to
be used again, so that the more than 100 cubic
metres of fresh water per ton of paper required
in the past, have at present been reduced to less
than 30 cubic metres, which means a condition
comparable to the leading world industries of
the same type. The water which is made use of
is taken from the Baradero River into which also
flow the outcoming effluents. These undergo a
first mechanic sedimentation treatment, and then
a second treatment consisting of airing ponds
where effluents are deprived of their organic
matter down to the limited values allowed by the
present legal regulations.
In addition, Grupo Clarín continued to increase
the contribution to the Garrahan Foundation
through an office paper recycling program. This
was combined with programs for reducing the
use of paper in Company offices while seeking
to optimize printing techniques, and renewed
efforts to raise employee awareness regarding
sustainability issues.
The Company continued to support projects
related to the care and protection of green areas
by sponsoring and contributing to the preservation
of the parks Plazoleta Dr. Roberto Noble and
Parque de la Ribera located in San Isidro. Through
preservation works in both parks, the Company
also sought to promote responsibility in the care of
public areas by the community and constructively
contribute to the defense of the environment.
2012*-total direct and indirect greenhouse
gas emissions by weight
Direct Emissions
Indirect Emission
2012
5,764 tn
27,569 tn
*Note: 2012 figures reflect variations in the scope of Companies included in this annual
report. Therefore, comparative analysis with previous years cannot be properly shown.
Refer to section “Transparency, Standards and Guidelines” for further detail.
2012*-total weight of waste by type
Urban or Non-Hazardous Waste
Hazardous Waste
2012
4,264 tn*
437.4 tn*
*Note: 2012 figures reflect variations in the scope of Companies included in this annual
report. Therefore, comparative analysis with previous years cannot be properly shown.
Refer to section “Transparency, Standards and Guidelines” for further detail.
Total Water Discharge in Printing Facilities
2012
1,560 m3
62
63
RIsK FACtoRs
As an Argentine multimedia company, Grupo Clarín
is exposed to a wide range of risks, related to the
country and also to its operations. Nevertheless,
one of the Company’s strengths lies in its strategic
asset diversification to help spread possible risks.
The Company relies on a strong internal control
system. The identification of risk and its assessment
is part of each unit’s business plans, and is also
addressed by a corporate based control department
and by the Board on a regular basis.
Argentina’s economic
environment
Substantially all of our operations are conducted in
Argentina, and are therefore affected by changes
in Argentina’s economic environment.
The Argentine economy has experienced significant
volatility in recent decades, with periods of low
or negative growth, high inflation and currency
devaluation. After six years of sustained economic
growth, the Argentine economy slowed down
in the second half of 2008 and throughout 2009,
affected by the international crisis as well as
internal political developments. Although the
trend was later reversed, with real GDP growth
reaching 9.2% in 2010 and 8.9% in 2011, real GDP
growth declined again in 2012 to 1.9% (all figures
according to information published by the National
Institute of Statistics and Census -INDEC-).
Sustainable economic growth depends on a
variety of factors, including international demand
for Argentine export commodities and their
prevailing prices, stability and competitiveness of
the Peso against foreign currencies, confidence of
consumers and local and foreign investors and a
low rate of inflation.
The Argentine economy might be adversely
affected by the following factors:
•
Increase in current inflation affecting competitiveness
and economic growth;
•
Insufficient levels of investment;
•
Exchange rate volatility;
•
•
Poor development of the Argentine credit market
and limited ability to obtain financing from
international markets;
A reduction of the payment capacity of the
Argentine public sector and the possibilities of
procuring international financing;
•
Increase in current public expenditure affecting
fiscal accounts;
•
Possible reduction or reversal in the trade balance
due to significant decrease in agricultural prices in
general and soy in particular or adverse climatic
conditions affecting the production of agricultural
commodities;
•
Recession, low economic growth or economic
uncertainties affecting Argentina’s main trading
partners;
•
Government imposed restrictions on imports or
exports;
•
Wage and price controls;
•
Political and social tensions;
•
Continued instability of the financial systems of
the main developed economies;
•
Abrupt changes in the monetary and fiscal policies
of the main economies worldwide; and
•
Reversal of capital flows due to domestic and
international uncertainty.
A downturn in economic activity is likely to result
in increased subscriber churn and bad debt,
subscriber losses as well as decreased advertising
revenues. We seek to address the cycles affecting
the Argentine economy by diversifying the scope
of our business and managing our foreign currency
liabilities.
Political and Economic
Uncertainties
Our financial condition and results of operations
depend to a significant extent on macroeconomic
and political conditions prevailing in Argentina.
The Argentine government’s actions impacting
the economy, including those in connection with
inflation, interest rates, price control, exchange
control and taxes, have affected and could
continue to affect Argentine companies like ours.
Inflation for 2012 stood at 10.8% according to
information published by the INDEC and may
continue to rise. Private estimates of inflation
rates largely exceed those published by the INDEC.
According to figures published by members of
Congress from opposition parties, the average
private inflation estimate was 25.6% for 2012.
In the past, inflation has materially undermined
the Argentine economy and Argentina’s ability
to create conditions that would permit growth.
High inflation may also (i) undermine Argentina’s
competitiveness abroad producing, inter alia,
an increase in unemployment levels and (ii)
negatively impact the country’s long-term credit
markets. There can be no assurance that inflation
rates will not continue to escalate in the future
or that the measures adopted or that may be
adopted by the Argentine government to control
inflation will be effective or successful. Inflation
remains a challenge for Argentina. Significant
inflation could have a material adverse effect on
Argentina’s economy and in turn could increase
our costs of operation, in particular labor costs,
and may negatively impact our financial condition
and results of operations.
During the second half of 2011 and in 2012, the
Argentine government
increased controls on
the incurrence of foreign currency-denominated
indebtedness, the sale of foreign currency and the
acquisition of foreign assets by local residents.
New regulations issued in 2012 subject foreign
exchange transactions to prior approval by
Argentine tax authorities. Since the enhancement
of exchange controls in November 2011, and the
introduction of measures that have practically
closed the foreign exchange market to retail
transactions, it is widely reported that the peso/
U.S. dollar exchange rate in the unofficial market
and in neighboring markets where the peso is
traded differs substantially from the official
foreign exchange. Additional controls could
have a negative effect on the economy and on
private sector companies, including our business.
Furthermore, in such event, the imposition of
future restrictions on the transfers of funds abroad
may impede the transfer of foreign currency on
account of dividends to GDS holders.
The lack of access to financial markets could
have a material adverse effect on the country’s
economy, and consequently, our business,
financial condition and results of operations.
In 2012, the Argentine government introduced a
procedure pursuant to which local authorities must
pre-approve the import of products and services
to Argentina as a pre-condition to permit such
import and the consequent access to the foreign
exchange market for the payment of the imported
products or services. Repeated complaints from
various countries against
import restrictions
implemented by Argentina, suspension of export
preferences or retaliations by trading partners
may have an adverse effect on Argentine exports,
affect the trade balance and, consequently,
adversely impact Argentina’s economy.
Additionally, increased government control over
foreign trade has resulted in a shortage of inputs
and spare parts and in production disruptions. The
continuation of these shortages may affect the
growth of the economy and, consequently, could
affect our business, financial condition and results
of operations.
Expropriations, interventions and other direct
involvement by the Argentine government in the
economy have had an adverse impact on the level
of foreign investment in Argentina, the access
of Argentine companies to the international
capital markets and Argentina’s commercial and
diplomatic relations with other countries. The
level of government intervention in the economy
may continue or increase, which may adversely
affect Argentina’s economy in the medium and
long-term and, in turn, our business, results of
operations and financial condition.
Litigation, as well as claims filed Argentine
sovereign debt bondholders and foreign investors
with the International Centre for Settlement
of Investment Disputes (ICSID) and United
Nations Commission on International Trade Law
(UNCITRAL) against the Argentine government,
have resulted in material judgments and may
result in new material judgments against the
government, and could result in attachments
of or injunctions relating to assets of Argentina
that the government intended for other uses. As
a result, the Argentine government may not have
all the necessary financial resources to honor its
obligations, implement reforms and foster growth.
During the first quarter of 2011, a team from
the International Monetary Fund (the “IMF”)
started to work in conjunction with the INDEC.
Notwithstanding the foregoing, reports published
by the IMF state that their staff has called on
Argentina to adopt remedial measures to address
the quality of official data. In a meeting held on
February 1, 2013, the Executive Board of the IMF
found that Argentina’s progress in implementing
remedial measures has not been sufficient and, as
a result, the IMF issued a declaration of censure
against Argentina and called on Argentina to adopt
remedial measures to address the inaccuracy of
inflation and GDP data without further delay, and
in any event, no later than September 29, 2013. If
Argentina were not to comply with the remedial
measures required by the IMF, the IMF could
increase its sanctions towards Argentina. The
effects of these measures could derive in further
financial and economic hazards for Argentina,
including lack of IMF financing.
During the last few years, the Argentine
government has substantially increased public
expenditure. For 2012, the government reported
the first fiscal deficit since 2009. The Argentine
government has sourced part of its funding
requirements from the Central Bank and to
the ANSES. We cannot assure you that the
government will not seek to finance its deficit
by gaining access to the liquidity available in the
local financial institutions.
On March 22, 2012, the Argentine Congress passed
Law No. 26,739, which amended the charter of
the Central Bank and Law No. 23,298. Law No.
26,739 amends the objectives of the Central Bank
(established in its charter) and removes certain
provisions previously in force. As amended, the
Central Bank Charter provides that reserves may
be made available to the government for the
repayment of debt or to finance public expenses.
This use of Central Bank reserves for expanded
purposes may render Argentina more vulnerable
to external shocks, affecting
the country’s
capacity to overcome the effects of an external
crisis, and fuel inflation as the amount of pesos in
circulation increases while reserves decrease. In
addition, Law No. 26,739 amends the criteria for
compliance with the minimum cash requirement
for banks. This amendment could affect financial
institutions by forcing them to increase liquidity,
with a potential adverse impact on credit supply,
and therefore on the growth of the Argentine
economy and on our business.
Legislation and Regulation
of the Media Industry
In Argentina, the legal system, including the
Constitution, shields journalistic activities from
regulation to protect the independence of the free
press. As a media company, we are vigilant as to
the menaces that might arise in this respect and
widely cooperate with journalistic associations
and other NGOs that advocate for the protection
of fundamental constitutional rights such as
freedom of speech and freedom of the press.
However, during 2012 private media in general
and Grupo Clarín in particular continued to face an
escalating level of harassment, executed through
the official and para-official apparatus with the
clear intention of damaging the media’s reputation
and directly and indirectly limiting its journalistic
activities.
In October 2009, the Argentine Congress passed
a new Audiovisual Communication Services Law
that is intended to replace the general legal
framework under which the audiovisual media
industry operated in Argentina for approximately
three decades. We and others challenged the
new Audiovisual Communication Services Law on
several grounds, including its encroachment upon
constitutional rights, the broad and discretionary
powers over media and content granted to the
Executive Branch, for favoring state-owned and
sponsored media and affecting the sustainability
of privately-owned media, promoting the
elimination of independent signals and enabling
a pervasive and questionable censorship system
anchored upon the discretionary power to grant
licenses and the application of penalties, among
other controversial aspects.
64
65
Since its enactment in October 2009, several
courts enjoined the application of the statute
in its entirety in certain cases, or of certain of
its provisions, in other cases. Some of these
rulings have been reversed by the Supreme
Court of Argentina and a court of appeals, but
injunctions that suspend specific sections of
the law are still in effect. On April 17, 2013, the
Federal Court of Appeals on Civil and Commercial
Matters rendered a decision on the merits
regarding the constitutionality of the Audiovisual
Communication Services Law, declaring that
certain sections of the law are constitutional, but
that certain restrictions to ownership of multiple
broadcast, cable television licenses and signals
are contrary to the Argentine Constitution. Both
the National Government and the Company
have filed extraordinary appeals against the
court of appeal’s decision, which should now be
considered by the Supreme Court.
Faced with the possibility of an adverse decision,
the National government has embarked on a fierce
and unprecedented attack against the Judicial
Branch, particularly in connection with the cases
relating to the Audiovisual Communication
Services Law. The several activities, pressures
and strategies
implemented by the national
government to interfere with the decisions of the
Judicial Branch include, but are not limited to:
several attempted appointments of judges that are
in favor of the Broadcasting Law; pressures on and
changes in majorities at the Council of the Judiciary
(the body responsible for the appointment and
removal of judges; multiple recusations of judges
sitting in procedures involving the Audiovisual
Communication Services Law; pressures on and
criminal charges against judges and advisors to
remove them or cause them to resign; actions
that resulted in the virtual fragmentation of the
Courts on Civil and Commercial Matters; changes
in the substitution system, and pressures on the
Supreme Court up to and including customizing
the government’s request for special appeal (per
saltum) that would allow the government to by-
pass the regular process, among many other
actions against the republican system of checks
and balances.
If ultimately upheld by the judiciary, the application
of the new legal and regulatory environment to
our cable television, telecommunications and
Internet and digital content operations may be
disadvantageous to us, and will affect the manner
in which we operate our business. Failure or delay
in renewing our licenses or obtaining regulatory
approvals may also influence the availability of
our services to our customers.
•
Abuse of bureaucratic controls or controls by
public agencies in the form of administrative
persecutions, groundless arbitrary resolutions,
disproportionate tax controls and recurring audits;
•
Banning private companies from including their
advertising slots in independent media;
•
Blockades to printing facilities to prevent the
distribution of certain newspapers and magazines;
Since 2009, among other measures, the Argentine
government has sought to revoke the authorization
granted unanimously by the National Antitrust
Commission in 2007 to the transaction whereby
the Company
indirectly acquired 60% of
Cablevisión and Cablevisión acquired all or part of
the equity interests of certain of our subsidiaries.
•
The Argentine government has also taken
measures to revoke the license under which
Cablevisión renders internet services, and to set
the price of its pay-television service according to
a pricing formula. Such measures, which we have
challenged in court, if upheld would materially
adversely affect our business. We have obtained
preliminary injunctions that have enjoined
the government’s action, and will continue to
make every effort to defend ourselves by taking
all actions necessary to safeguard our rights.
However, we cannot assure that such efforts
ultimately will prove successful.
Other government of para-official actions against
the Company and media in general include:
•
•
An exponential increase and discriminatory
allocation of official advertising used to create
and sustain pro-government media, as well as the
use of such advertising to condition the press;
The use of public funds and media on a
discretionary basis to generate content and shows
that display political propaganda, while creating
hurdles and discriminating against certain media
in the access to public information;
•
An aggressive campaign to destroy non-partisan
media by compromising their economic
sustainability and credibility;
Government interference and regulation of the
newsprint industry, including a series of temporary
clauses, specifically and exclusively addressed to
our affiliate Papel Prensa, whereby Papel Prensa
is forced to make investments to meet the total
national newsprint demand -excluding from this
requirement the other existing company that
operates in the country with installed capacity to
produce newsprint.
We cannot assure that government action against
independent media and against the Company in
particular will not continue or intensify. Increased
government action against the Company could
materially affect our business, results of
operations and financial condition.
sector Development
and Competition
The Company devotes significant resources
to analyzing emerging trends and has vast
experience and a solid track record in reading
consumer demands and successfully developing
new products and services, adapting its business
model in time.
However, the media industry and certain maturing
markets to which our services are catered, are
dynamic and constantly undergo significant
developments at a pace that may differ from
our current expectations affecting our growth.
Increased competition through new technological
developments may adversely affect our business
if our analysis of industry trends is not accurate or
if we are not able to adapt readily our operations.
Programming and Personnel
We may not be able to renew our rights to certain
programming and our results of operations
may be adversely affected by the loss of key
personnel. In addition, under the new Audiovisual
Communication Services Law we may be forced to
divest or cease to broadcast certain signals.
The production of content is part of our strategy
and we dedicate significant resources to the
identification of market trends and new figures
and matters of public interest, to preserve the
position of leadership we have acquired in the
market.
Liquidity and Funding
We have financial debt outstanding, a significant
portion of which is denominated in foreign
currency. Financial markets remain practically
closed for Argentine companies, and we must rely
primarily on our cash flow generation to service
our debt.
We have engaged in an active liability
management policy, and improved our debt to
free cashflow ratio to limit our need to access the
market as a means of repayment of our financial
obligations.
Certain of our costs, including a significant portion
of our financial expenses, are dollar denominated.
Currency fluctuations, such as a considerable
devaluation of the Peso against the U.S. dollar are
likely to affect adversely the Argentine economy
and will
impact negatively on our financial
condition.
BUsINEss PRoJECtIoNs
AND PLANNING
In the forthcoming years and as part of Argentina’s
challenge to achieve sustainable growth,
Grupo Clarín seeks to maintain and consolidate
its presence in the local market, both in the
production and in the distribution of content.
Grupo Clarín’s business units, along with the
development of its core activities, will continue
to work in order to seize opportunities, seeking
to reinforce, improve and expand the range of
products and services offered; increase market
share; reach new audiences and promote
permanent innovations.
Grupo Clarín will continue to focus on further
optimizing the productivity and efficiency levels in
all of its areas and companies, seeking to develop
and apply the best practices related to each of
these processes.
At a corporate level, it will continue to focus on the
main processes that allow sustainable, healthy
and efficient growth from different perspectives:
financial structure, management control, business
strategy, human resources, innovation and
corporate social responsibility. Grupo Clarín will
continue to analyze alternative new ventures
related to its mission and strategic objectives both
in Argentina and abroad, as long as they add value
to shareholders and are feasible and viable under
the prevailing economic environment.
Grupo Clarín will continue to strengthen its
consolidated commitment to traditional media,
with a growing focus on the area of digital media
and connectivity. To such end, the Company
will leverage its strong presence in distribution
networks, brand strength and, fundamentally, its
broad experience in the production of content,
recognized by the Spanish-speaking market for its
quality, credibility and prestige.
In the hostile environment created by the current
government towards the media, Grupo Clarín
ratifies its determination to bring the necessary
legal and administrative actions to safeguard
its rights and those of its shareholders, while
reinforcing once again its commitment towards
its readers, audiences and the country. In its daily
work, Grupo Clarín undertakes to assume with
strength and responsibility the role the media are
called to play through independent journalism and
through the defense and promotion of universal
and fundamental rights, such as freedom of
speech, since these are pillars that extol the
quality of democracy and the welfare of the
Argentine society as a whole.
66
67
FINANcIAL STATEMENTS
AS OF DEcEMBER 31, 2012
7 Glossary of Selected Terms
70
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Statement of Comprehensive Income
Consolidated Balance Sheet
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
71
72
73
74
76
78
SUPPLEMENTARY FINANCIAL INFORMATION 157
REPORT OF INDEPENDENT ACCOUNTANTS
162
PARENT COMPANY ONLY FINANCIAL STATEMENTS
Parent Company only Statement of Comprehensive Income
Parent Company only Balance Sheet
Parent Company only Statement of Changes in Equity
Parent Company only Statements of Cash Flows
Notes to the Parent Company only Financial Statements
Additional Information to the Notes to the Financial
Statements -Section No. 68 of the Regulations issued
by the Buenos Aires Stock Exchange
165
166
167
168
170
172
222
REPORT OF INDEPENDENT ACCOUNTANTS
224
SUPERVISORY COMMITTEE’S REPORT
226
68
69
Glossary of
Selected Terms
Consolidated Financial
Statements as of
December 31, 2012
Presented on a
comparative basis
AFA Asociación del Fútbol Argentino (Argentine Football
Association)
AFIP Administración Federal de Ingresos Públicos
(Argentine Federal Revenue Service)
AFSCA Autoridad Federal de Servicios de Comunicación
Audiovisual (Audiovisual Communication Services Law
Federal Enforcement Authority)
AGEA Arte Gráfico Editorial Argentino S.A.
AGL Artes Gráficas del Litoral S.A
AGR Artes Gráficas Rioplatense S.A.
ANA Administración Nacional de Aduanas (National
Customs Administration)
APE Acuerdo preventivo extrajudicial (pre-packaged
insolvency plan)
ARTEAR Arte Radiotelevisivo Argentino S.A.
Auto Sports Auto Sports S.A.
Bariloche TV Bariloche TV S.A.
BCBA Bolsa de Comercio de Buenos Aires (Buenos Aires
Stock Exchange)
Cablevisión Cablevisión S.A.
Canal Rural Canal Rural Satelital S.A.
CER Coeficiente de Estabilización de Referencia
(Reference Stabilization Coefficient, a consumer price
inflation coefficient)
CIMECO Compañía Inversora en Medios de
Comunicación (CIMECO) S.A.
Clarín Global Clarín Global S.A.
CLC Compañía Latinoamericana de Cable S.A.
CMD Compañía de Medios Digitales S.A. (former
PRIMA Internacional)
CMI Comercializadora de Medios del Interior S.A.
CNDC Comisión Nacional de Defensa de la
Competencia (National Antitrust Commission)
CNV Comisión Nacional de Valores (Argentine
Securities Commission)
CPCECABA Consejo Profesional de Ciencias
Económicas de la Ciudad Autónoma de Buenos Aires
(Professional Council in Economic Sciences of the City
of Buenos Aires)
COMFER Comité Federal de Radiodifusión (Federal
Broadcasting Committee)
CUSPIDE Cúspide Libros S.A.
CVB CV B Holding S.A.
Dinero Mail Dinero Mail LLC
Adjusted EBITDA Revenues less cost of sales
and selling and administrative expenses (excluding
depreciation and amortization)
Editorial Atlántida Editorial Atlántida S.A.
FACPCE Federación Argentina de Consejos Profesionales
de Ciencias Económicas (Argentine Federation of
Professional Councils in Economic Sciences)
FADRA Fundación de Automovilismo Deportivo de la
República Argentina (Argentine Motor Racing
Foundation)
Fintech Fintech Advisory, Inc. together with its affiliates
GCGC GC Gestión Compartida S.A.
GCSA Investments GCSA Investments, LLC
GC Minor GC Minor S.A.
GC Services Grupo Clarín Services, LLC
GDS Global Depositary Shares
Grupo Carburando Carburando S.A.P.I.C.A.F.I., Mundo
Show S.A. and Mundo Show TV S.A.
Grupo Clarín, or the Company Grupo Clarín S.A.
Grupo Radio Noticias Grupo Radio Noticias S.R.L.
Holding Teledigital Holding Teledigital Cable S.A.
IASB International Accounting Standards Board
Ideas del Sur Ideas del Sur S.A.
IESA Inversora de Eventos S.A.
IFRIC International Financial Reporting Interpretations
Committee
IFRS International Financial Reporting Standards
IGJ Inspección General de Justicia (Argentine
Superintendency of Legal Entities)
Impripost Impripost Tecnologías S.A.
VAT Value Added Tax
JPM JP Morgan Chase Bank, N.A.
La Razón Editorial La Razón S.A.
La Capital Cable La Capital Cable S.A.
Antitrust Law Law No. 25,156, as amended
Broadcasting Law Law No. 22,285 and its regulations
Audiovisual Communication Services Law Law No.
26,522 and its regulations
LSE London Stock Exchange
Multicanal Multicanal S.A.
IAS International Accounting Standards
NCP ARG Argentine Professional Accounting Standards,
except for Technical Resolutions No. 26 and 29 which
adopt IFRS.
OSA Oportunidades S.A.
PALP Plan de Ahorro a Largo Plazo (Long-Term Savings
Plan)
Papel Prensa Papel Prensa S.A.I.C.F. y de M.
Patagonik Patagonik Film Group S.A.
Pol-Ka Pol-Ka Producciones S.A.
PRIMA Primera Red Interactiva de Medios Argentinos
(PRIMA) S.A.
PRIMA Internacional Primera Red Interactiva de Medios
Americanos (PRIMA) Internacional S.A. (now CMD)
Radio Mitre Radio Mitre S.A.
Raven Raven Media Investments, LLC
Ríos de Tinta Ríos de Tinta S.A.
SCI or SECI Secretaría de Comercio Interior (Secretariat
of Domestic Trade)
SECOM Secretaría de Comunicaciones (Secretariat of
Communications)
SHOSA Southtel Holdings S.A.
SMC Secretaría de Medios de Comunicación (Media
Secretariat)
Supercanal Supercanal Holding S.A.
TATC Tres Arroyos Televisora Color S.A.
Telba Teledifusora Bahiense S.A.
Telecor Telecor S.A.C.I.
Teledigital Teledigital Cable S.A.
TFN Tribunal Fiscal de la Nación (National Tax Court)
Tinta Fresca Tinta Fresca Ediciones S.A.
TPO Televisora Privada del Oeste S.A.
TRISA Tele Red Imagen S.A.
TSC Televisión Satelital Codificada S.A.
TSMA Teledifusora San Miguel Arcángel S.A.
UNIR Unir S.A.
Vistone Vistone S.A.
VLG VLG Argentina, LLC
Grupo Clarín S.A.
Consolidated Financial Statements
as of December 31, 2012
Presented on a comparative basis
In Argentine Pesos (Ps.) - Notes 2.1 and 2.12
to the consolidated financial statements and
Notes 2.1 and 2.8 to the parent company only
financial statements.
English translation of the Financial Statements
and Reports originally issued in Spanish
Registered office:
Piedras 1743,
Buenos Aires, Argentina
Main corporate business:
Investing and financing
Date of incorporation:
July 16, 1999
Date of registration with the
Public Registry of Commerce:
- Of the by-laws: August 30, 1999
- Of the latest amendment: October 10, 2007
Registration number with the IGJ:
1,669,733
Expiration of articles of incorporation:
August 29, 2098
Information on Parent company:
Name: GC Dominio S.A.
Registered office:
Piedras 1743, Buenos Aires, Argentina
Information on the subsidiaries in Note 2.4
to the consolidated financial statements
and Note 4.3 to the parent company only
financial statements.
Capital structure
Type
Class “A” Common shares, Ps.1 par value
Class “B” Common shares, Ps.1 par value
Class “C” Common shares, Ps.1 par value
Total as of December 31, 2012
Total as of December 31, 2011
Number of votes
Subscribed, registered
per share
and paid-in capital
5
1
1
75,980,304
186,281,411
25,156,869
287,418,584
287,418,584
Signed for identification purposes
with the report dated March 08, 2013
Price Waterhouse & Co. S.R.L.
C.P.C.E.C.A.B.A. VOL. 1- FOL. 17
Carlos Alberto Pedro Di Candia
Chairman of the Supervisory Committee
Dr. Carlos A. Pace (Partner)
Certified Public Accountant (U.B.A.)
C.P.C.E.C.A.B.A. VOL. 150 - FOL. 106
Héctor Horacio Magnetto
Chairman
70
71
Consolidated
Statement of
Comprehensive
Income
For the years ended
December 31, 2012 and 2011
In Argentine Pesos (Ps.)
Continuing Operations
Revenues
Cost of Sales (1)
Subtotal - Gross Profit
Selling Expenses (1)
Administrative Expenses (1)
Financial Income
Financial Costs
Other Income and Expense, net
Equity in Earnings from Affiliates and Subsidiaries
Income before Income Tax and Tax on Assets
Income Tax and Tax on Assets
Income for the Year from Continuing Operations
Discontinued Operations
Net Income from Discontinued Operations (2)
6.1
6.2
6.3
6.3
6.4
6.5
6.6
5.4
7
December 31, 2012
December 31, 2011
11,318,906,093
(6,508,186,503)
4,810,719,590
(1,387,819,339)
(1,522,578,855)
162,251,896
(1,078,405,434)
639,370
13,682,715
998,489,943
(524,876,069)
473,613,874
9,325,238,616
(5,374,316,188)
3,950,922,428
(1,094,247,032)
(1,146,535,581)
102,687,565
(684,773,400)
1,507,210
33,653,927
1,163,215,117
(425,031,671)
738,183,446
498,717,214
47,426,493
Net Income for the Year
972,331,088
785,609,939
Other Comprehensive Income
Variation in Translation Differences of Foreign Operations
from Continuing Operations
182,068,772
79,305,275
Variation in Translation Differences of Foreign Operations
from Discontinued Operations
Other Comprehensive Income for the Year
(1,899,698)
180,169,074
1,848,769
81,154,044
Comprehensive Income for the year
1,152,500,162
866,763,983
Profit Attributable to:
Shareholders of the Parent Company
Non-Controlling Interests
Total Comprehensive Income Attributable to:
Shareholders of the Parent Company
Non-Controlling Interests
Basic and Diluted Earnings per Share from
Continuing Operations
Basic and Diluted Earnings per Share from
Discontinued Operations
Basic and Diluted Earnings per Share - Total
(1) Includes amortization of intangible assets and film library,
and depreciation of property, plant and equipment in the amount
of Ps. 872,356,212 and Ps. 765,478,746 for the years ended
December 31, 2012 and 2011, respectively.
(2) As of December 31, 2012, it includes approximately Ps. 444
million in connection with the sale of the interests described
in Note 12.g.
The notes are an integral part of these consolidated financial statements.
482,310,720
490,020,368
567,296,198
585,203,964
0.96
0.72
1.68
514,753,208
270,856,731
552,746,145
314,017,838
1.72
0.07
1.79
Signed for identification purposes
with the report dated March 08, 2013
Price Waterhouse & Co. S.R.L.
C.P.C.E.C.A.B.A. VOL. 1- FOL. 17
Carlos Alberto Pedro Di Candia
Chairman of the Supervisory Committee
Dr. Carlos A. Pace (Partner)
Certified Public Accountant (U.B.A.)
C.P.C.E.C.A.B.A. VOL. 150 - FOL. 106
Héctor Horacio Magnetto
Chairman
Consolidated
Balance Sheet
As of December 31, 2012,
December 31, 2011
and January 1, 2011
In Argentine Pesos (Ps.) -
Assets
Non-Current Assets
Property, Plant and Equipment
Intangible Assets
Goodwill
Deferred Tax Assets
Investment in Affiliates and Subsidiaries
Other Investments
Inventories
Other Assets
Other Receivables
Trade Receivables
Total Non-Current Assets
Current Assets
Inventories
Other Assets
Other Receivables
Trade Receivables
Other Investments
Cash and Banks
Total Current Assets
Total Assets
December 31,
December 31,
January 1,
Notes
2012
2011
2011
5.1
5.2
5.3
7
5.4
5.5
5.6
5.7
5.8
5.9
5.6
5.7
5.8
5.9
5.5
5.10
4,137,741,603
3,665,276,048
2,822,810,673
554,781,161
622,168,215
715,133,399
2,797,020,692
2,739,655,126
2,700,177,279
55,403,579
389,212,589
99,597,125
13,929,652
1,896,642
128,770,432
125,285,473
34,471,919
387,673,671
109,855
13,139,000
1,546,764
205,230,179
122,595,188
27,151,922
345,840,683
177,403
21,340,016
2,204,616
95,888,460
1,102,833
8,303,638,948
7,791,865,965
6,731,827,284
342,773,949
7,362,757
402,265,693
371,180,023
11,467,311
372,396,801
1,638,550,031
1,224,589,935
685,632,591
623,395,314
247,188,625
629,155,403
252,092,555
78,594,494
280,160,389
954,007,800
264,964,642
332,257,837
3,699,980,335
2,855,978,098
2,162,077,717
12,003,619,283
10,647,844,063
8,893,905,001
Equity (as per the corresponding statement)
Attributable to Shareholders of the Parent Company
4,090,030,112
3,634,142,107
3,203,295,205
Attributable to Non-Controlling Interests
Total Shareholders' Equity
1,374,568,933
1,063,645,779
936,398,963
5,464,599,045
4,697,787,886
4,139,694,168
Liabilities
Non-Current Liabilities
Accruals and Other
Long-Term Debt
Sellers Financing
Deferred Tax Liabilities
Taxes Payable
Other Liabilities
Trade Payables and Other
Total Non-Current Liabilities
Current Liabilities
Long-Term Debt
Sellers Financing
Taxes Payable
Other Liabilities
Trade Payables and Other
Total Current Liabilities
Total Liabilities
5.11
5.12
5.13
7
5.14
5.15
5.16
5.12
5.13
5.14
5.15
5.16
254,838,954
193,039,012
159,947,261
2,683,294,222
2,749,309,434
2,117,587,216
325,330
261,847,892
74,910,041
97,588,589
5,888,626
816,853
182,336,02
79,195,842
104,354,485
10,198,755
1,127,017
219,731,774
83,639,832
89,429,579
12,450,978
3,378,693,654
3,319,250,402
2,683,913,657
504,084,669
1,103,888
411,769,236
214,245,125
442,432,030
8,178,434
299,925,923
148,728,234
260,618,199
3,796,354
472,091,432
127,596,292
2,029,123,666
1,731,541,154
1,206,194,899
3,160,326,584
2,630,805,775
2,070,297,176
6,539,020,238
5,950,056,177
4,754,210,833
Total Equity and Liabilities
12,003,619,283
10,647,844,063
8,893,905,001
The notes are an integral part of these consolidated financial statements.
Signed for identification purposes
with the report dated March 08, 2013
Price Waterhouse & Co. S.R.L.
C.P.C.E.C.A.B.A. VOL. 1- FOL. 17
Carlos Alberto Pedro Di Candia
Chairman of the Supervisory Committee
Dr. Carlos A. Pace (Partner)
Certified Public Accountant (U.B.A.)
C.P.C.E.C.A.B.A. VOL. 150 - FOL. 106
Héctor Horacio Magnetto
Chairman
72
73
Consolidated
Statement
of Changes in Equity
For the years ended
December 31, 2012 and 2011
In Argentine Pesos (Ps.)
Shareholders' Contributions
Inflation
Adjustment on
Additional
Capital Stock
Capital Stock
Paid-in Capital
Subtotal
Balances as of January 1, 2011
287,418,584
309,885,253
1,413,334,666
2,010,638,503
Set-up of Legal Reserve
Dividend Distribution
Dividends and Other Movements
of Non-Controlling Interest
Changes in Reserves for Acquisition
of Minority Interests
Net Income for the Year
Other Comprehensive Income:
Variation in Translation Differences
of Foreign Operations
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Balances as of December 31, 2011
287,418,584
309,885,253
1,413,334,666
2,010,638,503
Set-up of Reserves (Note 14)
Dividend Distribution (Note 14)
Dividends and Other Movements
of Non-Controlling Interest
Changes in Reserves for Acquisition
of Minority Interests
Net Income for the Year
Other Comprehensive Income:
Variation in Translation Differences
of Foreign Operations
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Balances as of December 31, 2012
287,418,584
309,885,253
1,413,334,666
2,010,638,503
(1) Broken down as follows: (i) Optional reserve for future dividends
of Ps. 300,000,000; (ii) Judicial reserve for future dividend distribution
of Ps. 387,028,756 and (iii) Optional reserve for illiquidity of results
of Ps. 694,371,899.
The notes are an integral part of these consolidated financial statements.
2
2
-
-
-
-
-
-
-
-
-
-
-
-
(
2
-
-
-
-
-
-
-
-
-
--
3
8
--
5
(
(
-
-
-
-
-
-
-
(
D
D
Translation
of Foreign
Operations
-
-
-
-
-
-
37,992,937
37,992,937
-
-
-
-
-
84,985,478
Other items
Other
Reserves
(16,485,290)
-
-
-
(1,899,243)
-
-
Legal
Reserve
38,054,509
26,685,724
-
-
-
-
-
(18,384,533)
64,740,233
Equity attributable to Shareholders of the Parent Company
Retained Earnings
Total Equity
(1) Optional
reserves
Accumulated
of Controlling
Non-Controlling
Results
Interests
Interests
Total Equity
-
-
-
-
-
-
-
-
1,171,087,483
3,203,295,205
936,398,963
4,139,694,168
(26,685,724)
(120,000,000)
-
(120,000,000)
-
-
-
(120,000,000)
--
-
514,753,208
(185,768,664)
(185,768,664)
(1,899,243)
514,753,208
(1,002,358)
270,856,731
(2,901,601)
785,609,939
-
37,992,937
43,161,107
81,154,044
1,539,154,967
3,634,142,107
1,063,645,779
4,697,787,886
23,912,434
1,381,400,655
(1,405,313,089)
-
(135,000,000)
(135,000,000)
-
-
-
(135,000,000)
-
-
-
23,591,807
-
-
-
-
-
-
-
-
-
-
-
-
-
-
482,310,720
-
(290,063,721)
(290,063,721)
23,591,807
482,310,720
15,782,911
490,020,368
39,374,718
972,331,088
-
84,985,478
95,183,596
180,169,074
122,978,415
5,207,274
88,652,667
1,381,400,655
481,152,598
4,090,030,112
1,374,568,933
5,464,599,045
Signed for identification purposes
with the report dated March 08, 2013
Price Waterhouse & Co. S.R.L.
C.P.C.E.C.A.B.A. VOL. 1- FOL. 17
Carlos Alberto Pedro Di Candia
Chairman of the Supervisory Committee
Dr. Carlos A. Pace (Partner)
Certified Public Accountant (U.B.A.)
C.P.C.E.C.A.B.A. VOL. 150 - FOL. 106
Héctor Horacio Magnetto
Chairman
74
75
Consolidated
Statement
of Cash Flows
Cash provided by operating activities
Net Income for the Year
For the years ended
December 31, 2012 and 2011
In Argentine Pesos (Ps.)
Income Tax and Tax on Assets
Accrued Interest, net
December 31, 2012
December 31, 2011
972,331,088
785,609,939
524,876,069
265,004,506
425,031,671
265,343,618
Adjustments to reconcile net income for the year
to cash provided by operating activities:
- Depreciation of Property, Plant and Equipment
- Amortization of Intangible Assets and Film Library
- Net of allowances
- Financial Income, except interest
- Impairment of Goodwill
- Equity in Earnings from Affiliates and Subsidiaries
- Other Income and Expense
- Income/Loss from Discontinued Operations
Changes in Assets and Liabilities:
- Trade Receivables
- Other Receivables
- Inventories
- Other Assets
- Trade Payables and Other
- Taxes Payable
- Other Liabilities
- Provisions
Income Tax and Tax on Assets Payments
726,074,731
146,281,481
108,858,093
462,345,935
-
(13,682,715)
(3,063,467)
(399,258,357)
(475,493,666)
138,937,891
27,062,977
2,376,684
278,599,757
(125,281,919)
46,750,050
(30,747,737)
(360,027,710)
613,264,887
152,213,859
100,050,589
206,158,381
12,053,573
(33,653,927)
(57,874,035)
34,644,754
(408,049,432)
(177,458,098)
(98,517,084)
(2,437,218)
467,607,043
(55,643,520)
(10,480,719)
(23,360,349)
(617,284,673)
Net Cash Flows Provided by Operating Activities
2,291,943,691
1,577,219,259
Signed for identification purposes
with the report dated March 08, 2013
Price Waterhouse & Co. S.R.L.
C.P.C.E.C.A.B.A. VOL. 1- FOL. 17
Dr. Carlos A. Pace (Partner)
Certified Public Accountant (U.B.A.)
C.P.C.E.C.A.B.A. VOL. 150 - FOL. 106
Cash provided by investment activities
- Acquisition of Property, Plant and Equipment, net
(1,382,972,222)
(1,478,115,464)
December 31, 2012
December 31, 2011
- Acquisition of Intangible Assets
- Acquisition of Subsidiaries, Net of Cash Acquired
- Proceeds from Sale of Property, Plant and Equipment
- Dividends collected
- Collection from Sale of Permanent Establishment
of Foreign Companies
- Proceeds from Disposal of Long-Term Investments
- Certificates of Deposit
- Collections of Certificates of Deposit
Net Cash Flows used in Investment Activities
Cash provided by Financing Activities
- Loans
- Repayment of Loans and Issue Expenses
- Payment of Interest
- Acquisition of investment for the purchase of Notes
from Subsidiaries
- (Settlement) Collections on Derivatives
- Payment of Sellers Financing
- Dividends Paid
- (Setup) Transfer of Reserve Account / Escrow Funds
- Payments to Non-Controlling Interests, net
(73,781,197)
(15,829,527)
4,049,536
3,415,980
738,299,692
-
(108,489,054)
15,419,781
(819,887,011)
158,849,820
(388,699,658)
(293,133,497)
(195,525,800)
(6,177,500)
(6,642,392)
(135,000,000)
(13,409,252)
(230,279,010)
Net Cash Flows (used in) provided by Financing Activities
(1,110,017,289)
Financing results generated
by cash and cash equivalents
Net Increase in Cash Flow
Cash and Cash Equivalents at the Beginning of the Year
Cash and Cash Equivalents at Year-end
77,116,220
439,155,611
865,580,054
1,304,735,665
The notes are an integral part of these consolidated financial statements.
(57,018,157)
(20,320,921)
16,081,665
7,591,703
-
14,470,615
(10,000,000)
-
(1,527,310,559)
861,143,588
(208,488,413)
(206,425,022)
-
41,790,297
(748,725)
(120,000,000)
5,652,799
(185,291,562)
187,632,962
42,090,041
279,631,703
585,948,351
865,580,054
Signed for identification purposes
with the report dated March 08, 2013
Price Waterhouse & Co. S.R.L.
C.P.C.E.C.A.B.A. VOL. 1- FOL. 17
Carlos Alberto Pedro Di Candia
Chairman of the Supervisory Committee
Dr. Carlos A. Pace (Partner)
Certified Public Accountant (U.B.A.)
C.P.C.E.C.A.B.A. VOL. 150 - FOL. 106
Héctor Horacio Magnetto
Chairman
76
77
Notes to the
Consolidated
Financial Statements
For the years ended
December 31, 2012
Presented on a comparative basis.
In Argentine Pesos (Ps.)
Note 1
General Information
Grupo Clarín is a holding company that
operates in the Media industry. Its operating
income and cash flows derive from the
operations of its subsidiaries in which it
participates directly or indirectly.
Its operations include cable television and
Internet access services, newspaper and other
printing, publishing and advertising activities,
broadcast television, radio operations and
television content production, on-line and new
media services, and other media related
activities. A substantial portion of its revenues
is generated in Argentina. Through its
subsidiaries, it is engaged primarily in the
following business segments:
- Cable Television and Internet Access,
consisting of the largest cable network in Latin
America in terms of subscribers, operated by
its subsidiary Cablevisión (surviving company
after its merger with Multicanal and Teledigital),
with operations in Argentina and neighboring
countries. This company also provides high-
speed Internet access under the brands Fibertel
and Flash.
- Printing and Publishing, consisting of
national and regional newspapers, a sports daily,
magazine publishing, editing and distribution,
and commercial printing. Diario Clarín, the
flagship national newspaper, is the newspaper
with the second largest circulation in the
Spanish-speaking world. The sports daily Olé is
the only newspaper of its kind in the Argentine
market. The newspaper La Razón is the first
ever free newspaper in Argentina. The children's
magazine Genios is the children's magazine with
the highest circulation in Argentina. AGR is its
printing company.
- Broadcasting and Programming, consisting
of Canal 13, one of the two broadcast television
stations with the highest audience share in
Argentina, AM (Amplitude Modulation) /FM
(Frequency Modulation) radio broadcast
stations (Radio Mitre and La 100), and the
production of television, film and radio
programming content, including cable television
signals and organization and broadcasting of
sporting events; and
- Digital Content and Other, consisting mainly
of digital and Internet content, online classified
ads and horizontal portals as well as its
subsidiary GCGC, its shared service center.
Note 2
Basis for the preparation and presentation of
the consolidated financial statements
2.1 Basis for the preparation and transition
to IFRS
Pursuant to General Resolution No. 562 issued
on December 29, 2009 entitled “Adoption of
International Financial Reporting Standards”
and General Resolution No. 576/10, the CNV
provided for the application of Technical
Resolutions No. 26 and 29 issued by the
Argentine Federation of Professional Councils
of Economic Sciences (FACPCE, for its Spanish
acronym). Since the Company is subject to the
public offering regime governed by Law No.
17,811, it is required to apply such standards
as from the year beginning January 1, 2012.
The FACPCE issues Adoption Communications
for the enforcement of IASB resolutions in
Argentina.
Accordingly, the Company has started to apply
such standards to these consolidated financial
statements, being January 1, 2011 the date
of transition to IFRS, as established by IFRS 1
“First-time Adoption of IFRS”. These
consolidated financial statements are the first
annual consolidated financial statements
presented under IFRS.
These consolidated financial statements of
Grupo Clarín for the year ended December 31,
2012, presented on a comparative basis, have
been prepared under IFRS 1 “First-time
Adoption of IFRS”.
The Company's consolidated financial
statements were previously prepared
in accordance with Argentine Professional
Accounting Standards ("NCP ARG"), except
for Technical Resolutions No. 26 and 29
which adopt IFRS. NCP ARG differ from the
IFRS in some areas. For the preparation of
these consolidated financial statements, the
Company has changed certain valuation and
disclosure accounting policies previously
applied under NCP ARG in order to comply
with the IFRS. The main accounting policies
are described in the following notes.
Accumulated translation differences related
to foreign operations were considered null at
the IFRS transition date.
The Company has not used the other
exemptions available under IFRS 1.
Mandatory Exceptions to IFRS
The mandatory exceptions to IFRS 1 applicable
to the Company are detailed below:
1. Estimates: The estimates made by the
Company under IFRS at the IFRS transition
date are consistent with the estimates made
at the same date under NCP ARG.
2. The other mandatory exceptions provided by
IFRS 1 that have not been considered since
they are not applicable to Grupo Clarín are the
following:
• Derecognition of financial assets and
liabilities.
• Hedge accounting.
• Embedded derivatives.
2.2.1 Mandatory Reconciliations
Pursuant to FACPCE Technical Resolutions
No. 26 and No. 29 and IFRS 1, the following is
a detail of the reconciliation of comprehensive
income for the year ended December 31, 2011
and the reconciliation of equity as of December
31, 2011 and January 1, 2011 reported under
NCP ARG to that reported under IFRS.
The Company has changed the figures
disclosed for comparative purposes and those
corresponding to the transition date
(January 1, 2011) to reflect these adjustments.
The mandatory reconciliations are presented
in Note 2.2.1.
These consolidated financial statements have
been prepared based on historical cost except
for the valuation of financial instruments
(see Note 2.21). In general, the historical cost is
based on the fair value of the consideration
granted in exchange for the assets.
The attached consolidated information,
approved by the Board of Directors in the
meeting held on March 8, 2013, is presented
in Argentine Pesos (Ps.), the Argentine legal
tender, and arises from accounting records
kept by Grupo Clarín S.A. and its subsidiaries.
2.2 Application of IFRS 1
In preparing the consolidated financial
statements as of the transition date under
IFRS, the Company has applied the
mandatory exceptions and certain optional
exemptions in order to fully comply with
the IFRS in accordance with IFRS 1.
The optional exemptions applied by the
Company are the following:
a) Deemed Cost of Property, Plant and
Equipment:
The cost of property, plant and equipment,
adjusted for inflation in accordance with
effective accounting standards, has been
considered as the deemed cost at the IFRS
transition date, since it is similar to the cost or
depreciated cost under IFRS, adjusted to
reflect the changes of a general or specific
price index.
b) Business Combinations:
The Company has elected not to apply IFRS
3 “Business combinations” on a retrospective
basis for business combinations that occurred
prior to the IFRS transition date.
c) Accumulated Translation Differences of
Foreign Operations:
78
79
2.2.1.1 Reconciliation of net income for the year ended December 31, 2011
Net income for the year under NCP ARG (Income)
Effect of transition to IFRS:
Addition of the item Minority interest under NCP ARG
to Comprehensive income for the year
Addition of the variation of Cumulative translation adjustment under
NCP ARG to Comprehensive income for the year
Subtotal
Adjustment to inventories valuation [1]
Adjustment for derecognition of pre-operating expenses [2]
Derecognition of the adjustment for inflation to intangible assets [4]
Recording of put options held by non-controlling interests [5]
Adjustment for deferral of installation revenues [6]
Effect of consolidation of special purpose entities and other companies [7]
Derecognition of the adjustment for inflation of certain subsidiaries [9]
Tax effect of adjustments under IFRS [10]
Adjustment to the valuation of unconsolidated affiliates [11]
Other minor adjustments
Total comprehensive income for the year under IFRS
Comprehensive income for the year under IFRS
attributable to the shareholders of the parent company
Comprehensive income for the year under IFRS
attributable to non-controlling interests
December 31, 2011
522,279,377
267,152,452
86,654,781
876,086,610
(2,288,887)
209,745
338,918
(960,000)
(24,568,039)
24,344,769
(16,755,564)
9,413,234
1,190,974
(247,777)
866,763,983
552,746,145
314,017,838
2.2.1.2 Reconciliation of equity as of December 31, 2011 and January 1, 2011
December 31, 2011
January 1, 2011
Shareholders' equity under NCP ARG
3,735,204,430
3,284,857,240
Effect of transition to IFRS:
Addition of the item Minority interest under
NCP ARG to Shareholders' equity
Subtotal
Adjustment to inventories valuation [1]
Adjustment for derecognition of pre-operating expenses [2]
Derecognition of exchange differences capitalization [3]
Derecognition of the adjustment for inflation
to intangible assets [4]
Recording of put options held by non-controlling interests [5]
Adjustment for deferral of installation revenues [6]
Effect of special purpose entities consolidation [7]
Recognition of minority interest acquisition [8]
Derecognition of the adjustment for inflation
of certain subsidiaries [9]
Tax effect of adjustments under IFRS [10]
Adjustment to the valuation of unconsolidated affiliates [11]
Other minor adjustments
Total Shareholders' Equity under IFRS
Equity under IFRS attributable to the
shareholders of the parent company
Equity under IFRS attributable to non-controlling interests
2.2.1.3 Explanation of reconciling items
[1] Pursuant to NCP ARG, the valuation
criterion applicable to inventories is replacement
cost. In accordance with IFRS, inventories are
valued at the lower of historical cost or net
realizable value. In the income statement, this
adjustment has an impact on the item Cost
of sales and on Financial income.
[2] Pursuant to NCP ARG, the Company and
its subsidiaries maintained the capitalization
under Intangible assets of certain items not
accepted by IFRS. Under IFRS, and since such
items do not meet the requirements established
by those standards for their capitalization, the
Company has reversed the residual value against
Accumulated Results in the financial statements
prepared under IFRS at the transition date.
The impact in the Consolidated Statement of
Comprehensive Income is disclosed as decreased
amortization of such assets due to the reversal
in the first financial statements prepared
under IFRS.
[3] Under NCP ARG certain exchange
80
81
1,037,401,294
4,772,605,724
(9,558,846)
(446,476)
(22,904,194)
(1,518,634)
(18,054,721)
(114,740,203)
73,886,214
(7,007,606)
(16,755,564)
44,266,017
(627,693)
(1,356,132)
4,697,787,886
918,479,254
4,203,336,494
(7,269,959)
(656,221)
(22,904,194)
(1,857,552)
(22,249,442)
(90,172,164)
49,541,445
-
-
34,852,783
(1,818,667)
(1,108,355)
4,139,694,168
3,634,142,107
1,063,645,779
3,203,295,205
936,398,963
differences arising from the exit from the
convertibility regime and subsequent
devaluation of the Argentine Peso had been
capitalized. Exchange differences cannot
be capitalized at the cost of acquisition
of non-financial assets under IFRS. Therefore,
the residual value of exchange differences
included in such assets has been reversed against
Accumulated Results in the financial statements
prepared under IFRS at the transition date.
The foregoing does not have an impact on
the Consolidated Statement of Comprehensive
Income since they are non-financial assets
which are not subject to amortization.
[4] Under NCP ARG the financial statements
of all the subsidiaries were adjusted for inflation
in periods during which the accounting
profession deemed that an inflationary process
distorted the figures in the financial statements.
The last period in which figures were adjusted
for inflation in Argentina was January 2002 to
February 2003. Under the criteria set forth by
IAS 29, such period should not be considered as
hyperinflationary and, therefore, the adjustment
for inflation would not be applicable to the
financial statements under IFRS. The intangible
assets for which there is not an active market
do not fall within the optional exemption
provided by IFRS 1 described in Note 2.2.a),
which was adopted by the Company. Therefore,
the residual value of the adjustment for inflation
recorded in such period, contained in the
balance of intangible assets, has been reversed
against Accumulated Results in the financial
statements prepared under IFRS at the
transition date. The impact on the Consolidated
Statement of Comprehensive Income is
disclosed as decreased amortization of such
intangible assets.
[5] There are put options held by non-controlling
shareholders that may force certain subsidiaries to
acquire a portion or all of such equity interests.
Under IFRS the Company has to recognize the
liability arising from the present value of the best
estimate of the amount payable should the non-
controlling shareholder exercise the put option.
The offsetting entry of such liability is recorded
against non-controlling interest based on the
percentage of the net assets underlying the
option, while the difference between both values
is recorded under equity. Such liability had not
been recorded in the financial statements in
accordance with NCP ARG.
[6] In accordance with NCP ARG the
Company adopted as accounting practice for
the recognition of revenues from cable TV and
Internet installation services the deferral of the
amount of these revenues that exceeds the
direct expenses incurred to obtain new
subscribers in the same period. Under IFRS the
Company defers all of the above-mentioned
revenues, which are amortized over the average
term during which subscribers maintain their
subscription to the service, thus generating
higher net liabilities from deferred revenues,
disclosed under Other current and non-current
liabilities. The effect is reflected in the
Consolidated Statement of Comprehensive
Income, in the sales revenues item.
[7] NCP ARG requires the consolidation of
subsidiaries based on the effective or potential
equity interests that grant the Company the
majority of votes at corporate or shareholders'
meetings, including those cases in which
control is obtained through agreements executed
with other shareholders. IFRS requires the
consolidation of special purpose entities in
which control is exerted through other means.
One of the Company's indirect subsidiaries has
executed certain agreements of this kind with
other companies in which it does not hold
an equity interest, for the purposes of rendering
certain services on behalf of and by order
of such companies. The net effect of the assets,
liabilities and net income balances consolidated
by these entities is disclosed, in accordance with
IFRS, under non-controlling interest in Equity
and Net Income.
[8] Under NCP ARG the amount in excess
of the cost paid during the year 2011 for the
acquisition of non-controlling interests in
subsidiaries has been recognized as goodwill.
Under IFRS, and as established by IAS 27, such
amount in excess has been charged to Equity.
[9] In accordance with NCP ARG the balances
disclosed in the financial statements of
Cablevisión's subsidiaries in Uruguay and
Paraguay were adjusted for inflation until the
date of transition to IFRS (January 1, 2011)
taking into consideration the inflationary
context of such countries. IAS 29 requires the
adjustment for inflation of financial statements
in countries with hyperinflationary economies.
Under the criteria set forth by IAS 29, Uruguay
and Paraguay's economies should not be
considered as hyperinflationary and, therefore,
the adjustment for inflation is not applicable to
the financial statements under IFRS.
The Company has elected to adopt the optional
exemption mentioned in Note 2.2.a) above.
Therefore, as from the date of transition to IFRS
the adjustment for inflation is no longer applied
to such subsidiaries' financial statements. The
related items included in the reconciliation
of consolidated income arise from the reversal of
the adjustment for inflation of these subsidiaries
recorded under NCP ARG in each year.
[10] This reconciliation includes the tax effect
of the adjustments made in the application
of IFRS. The effect of these adjustments
is reflected in the Consolidated Statement of
Comprehensive Income under income tax.
[11] Generated by the effect of the disclosures
made in [1] and [10] above on the affiliates.
In addition to the differences explained above,
in the Consolidated Balance Sheet and the
Consolidated Statement of Comprehensive
Income under IFRS the assets, liabilities and net
income of those companies in which common
control is exercised, which were consolidated
under the method provided by NCP ARG,
are not consolidated under the proportional
method because in accordance with IFRS they
are disclosed in one item under Investment
in Unconsolidated Affiliates of the Consolidated
Balance Sheet and under Equity in earnings
from affiliates and subsidiaries of the
Consolidated Statement of Comprehensive
Income (Equity method).
In addition to the breakdown of certain specific
items required by IFRS, certain assets and
liabilities balances have been reclassified to meet
IFRS' disclosure criteria. The most significant
reclassifications as of December 31, 2011 and
January 1, 2011 are the advances to suppliers
for acquisition of property, plant and equipment
(in the amount of Ps. 88.8 million and Ps. 33.9
million, respectively) and inventories (in the
amount of Ps. 46.4 million and Ps. 27.4 million,
respectively), which under NCP ARG, were
included in the corresponding balance sheet
items, are disclosed, in these financial statements
prepared under IFRS, under Other receivables.
2.2.1.4 Reconciliation of cash flows arising
from the consolidated financial statements as
of December 31, 2011
No other significant differences have been
identified in the Consolidated Statement
of Cash Flows or in the definition of Cash and
cash equivalents between NCP ARG and IFRS,
except for the impact of the deconsolidation
of subsidiaries in which common control
is exerted, which in accordance with IFRS have
not been consolidated under the proportional
method but disclosed as net in one item,
and except for the information mentioned in
[7] of Note 2.2.1.3 above.
2.3 Standards and Interpretations issued but
not adopted to date
The Company has not adopted IFRS or
revisions of IFRS issued as per the detail below,
since their application is not required for the
year ended December 31, 2012:
- IAS 19 Employee Benefits: Since the
Company has not established to date defined
benefit plans for its employees and officers,
this standard will not have an impact on the
Company's financial statements.
82
83
- Certain improvements to IFRS issued in
May 2012 by IASB which clarify some of the
international accounting standards (IFRS 1
First-time adoption of the International
Financial Reporting Standards, IAS 1
Presentation of financial statements, IAS 16
Property, Plant and Equipment, IAS 32
Financial Instruments: Presentation and IAS
34 Interim financial reporting).
- IFRS 9 Financial Instruments: Issued in
November 2009 and amended in October
2010, IFRS 9 establishes new requirements for
the classification and measurement of financial
assets and liabilities and for their derecognition.
IFRS 9 is applicable to the years beginning on
or after January 1, 2015, and allows for its early
application. The changes may not significantly
affect the amounts disclosed regarding
the Company's financial assets and liabilities.
- IFRS 10 Consolidated Financial Statements:
Defines the concept of control and establishes
control as the basis for determining which
entities are to be consolidated in the
consolidated financial statements. The Board
of Directors informs that IFRS 10 will be
adopted in the Company's financial statements
for the annual period beginning on January 1,
2013. The changes may not significantly affect
the disclosed amounts that relate to the
Company's assets and liabilities.
- IFRS 11 Joint Arrangements: Classifies
joint arrangements either as joint operations
(combining the existing concepts of assets
under common control and operations under
common control) or as joint ventures
(equivalent to the existing concepts of entities
under common control). IFRS 11 requires
the use of the equity method for joint ventures
and it also eliminates the proportional
consolidation method for this type of
businesses. The Board of Directors informs
that IFRS 11 will be adopted in the Company's
financial statements for the annual period
beginning on January 1, 2013. The changes will
probably not significantly affect the amounts
of assets and liabilities and the disclosures in
the Company's financial statements.
- IFRS 12 Disclosure of interests in other
entities: Applies to entities with an interest in
subsidiaries, joint arrangements, associates
or unconsolidated structured entities. IFRS 12
establishes disclosure objectives, as well as the
minimum disclosures to be presented. The
Board of Directors informs that IFRS 12 will be
adopted in the Company's financial statements
for the annual period beginning on January 1,
2013. The Company is analyzing the potential
impact of this standard.
- IFRS 13 Fair Value Measurement: Establishes
a structure for the measurement at fair value
when required by other standards and the
disclosure requirements for measurement at fair
value. This IFRS is applicable to both financial
and non-financial items measured at fair value.
The Board of Directors informs that IFRS
13 will be adopted in the Company's financial
statements for the annual period beginning on
January 1, 2013. The Company is analyzing
the potential impact of this standard.
- Amendments to IAS 1 Presentation of financial
statements. The main amendment to IAS 1
requires that items of other comprehensive
income be grouped into those that may and may
not be subsequently reclassified to profit or loss.
The amendments to IAS 1 do not specify which
items are to be disclosed in other comprehensive
income. This amendment will be effective for
annual periods beginning as from July 1, 2012.
The Company is analyzing the potential impact
of this standard.
- Amendments to IFRS 7 and IAS 32. The
IASB has amended the application guidance to
IAS 32 Financial Instruments: Presentation to
clarify some of the requirements to offset
financial assets and liabilities in the balance
sheet. The IASB has also issued an amendment
to IAS 7, Financial Instruments: Disclosures
to enhance offsetting disclosures These
amendments will be effective for annual periods
beginning as from January 1, 2013. The
Company is analyzing the potential impact of
this standard.
2.4 Basis for Consolidation
These consolidated financial statements
incorporate the financial statements of the
Company and its subsidiaries and the joint
ventures in which it holds an interest
(see Note 2.7). The Company exerts control
when it has the power to decide on the financial
and operating policies of an entity for the
purposes of obtaining benefits from its activities,
generally coupled with a participation of more
than 50% of the voting rights. Additionally,
these consolidated financial statements
incorporate the companies mentioned in 2.4.1.
For consolidation purposes, the intercompany
transactions and the balances between the
Company and the consolidated companies have
been eliminated. Unrealized income has also
been eliminated.
Below is a detail of the most relevant
consolidated subsidiaries, together with the
interest percentages held directly or indirectly
in each subsidiary's capital stock and votes,
as of each date indicated below:
Companies
Cablevisión (1)
PRIMA
AGEA
AGR
CIMECO
ARTEAR (2)
Pol-Ka
IESA
Radio Mitre
GCGC
CMD
GC Services
GCSA Investments
Direct or Indirect Interest in the Capital Stock and Votes (%)
December 31, 2012
December 31, 2011
January 1, 2011
59.9%
59.9%
100.0%
100.0%
100.0%
99.2%
54.6%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
59.9%
59.9%
100.0%
100.0%
100.0%
99.2%
54.6%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
59.9%
59.9%
100.0%
100.0%
100.0%
99.2%
54.6%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
(1) Includes Multicanal and Teledigital, which were
merged into Cablevisión effective as of October 1, 2008.
(2) Interest in votes amounts to 99.7%.
The subsidiaries' financial statements used for
consolidation purposes bear the same closing
date as these consolidated financial statements,
comprise the same periods and have been
prepared under exactly the same accounting
policies as those used by the Company,
which are described in the notes to the
consolidated financial statements or, as the
case may be, adjusted as applicable.
2.4.1 Consolidation of Special Purpose Entities
The Company, through one of its subsidiaries,
has executed certain agreements with other
companies, for the purposes of rendering
on behalf of and by order of such companies
certain selling and installation services,
collections, administration of subscribers,
marketing and technical assistance, financial
and general business advising, with respect
to cable television and Internet access services
in Uruguay. In accordance with SIC-12
“Consolidation of Special Purpose Entities”,
these consolidated financial statements include
the assets, liabilities and results of these
companies. Since the Company does not hold
an interest in these companies, the offsetting
entry of the net effect of the consolidation
of the assets, liabilities and results of these
companies is disclosed in the items "Equity
attributable to non-controlling interests"
and "Net Income attributable to non-
controlling interests", as required by IFRS.
2.4.2 Changes in the Company's Interests
in Existing Subsidiaries
The changes in the Company's interests in
subsidiaries which do not generate a loss
of control are recorded under equity. The book
value of the Company's interests and non-
controlling interests is adjusted to reflect the
changes in the relative interest in the subsidiary.
Any difference between the amount for which
non-controlling interests were adjusted and the
fair value of the consideration paid or received
is directly recognized in equity and attributed
to the shareholders of the parent company.
In case of loss of control, any residual interest
in the issuing company is measured at its fair
value at the date on which control was lost,
allocating the change in the recorded value
with an impact on net income. The fair value
is the initial amount recognized for such
investments for the purposes of its subsequent
valuation for the interest retained as associate,
84
85
joint venture or financial instrument.
Additionally any amount previously recognized
in Other Comprehensive Income regarding
such investments is recognized as if Grupo
Clarín had disposed of the related assets and
liabilities. Consequently, the amounts previously
recognized in Other Comprehensive Income
may be reclassified to net income.
2.5 Business Combinations
The Company applies the acquisition method
to account for business combinations. The
consideration for each acquisition is measured
at fair value (on the date of exchange) of
the assets acquired, the liabilities incurred or
assumed and the equity instruments issued
by the Company in exchange for the control
of the company acquired. The costs related
to the acquisition are expensed as incurred.
The consideration for the acquisition, if any,
includes any asset or liability arising from
a contingent consideration arrangement,
measured at fair value at the acquisition date.
Subsequent changes to such fair value, verified
within the measurement period, are adjusted
against the acquisition cost.
The measurement period is the actual period
that begins on the acquisition date and
ends as soon as the Company receives all the
information it was seeking about facts and
circumstances that existed as of the acquisition
date. The measurement period cannot exceed
one year from the acquisition date. All other
changes in the fair value of the contingent
consideration classified as assets or liabilities,
outside the measurement period, are recognized
in net income. Changes in the fair value
of the contingent consideration classified as
equity are not recognized.
In the case of business combinations achieved
in stages, the Company's equity interest in
the company acquired is remeasured at fair
value at the acquisition date (i.e., the date on
which the Company acquired control) and
the resulting gain or loss, if any, is recognized
as income/expense or in other comprehensive
income, depending on the origin of the
variation. In the periods preceding the reporting
periods, the Company may have recognized in
other comprehensive income the changes in
the value of the interest in the capital stock of
the acquired company. In that case, the amount
recognized in other comprehensive income
is recognized on the same basis that would have
been required if the Company had directly
disposed of the previously-held equity interest.
The identifiable assets, liabilities and contingent
liabilities of the acquired company that meet the
conditions for recognition under IFRS 3 (2008)
are recognized at fair value at the acquisition
date, except for certain particular cases provided
by such standard.
Any excess of the acquisition cost (including
the interest previously held, if any, and the non-
controlling interest) over the net fair value of
the subsidiary's or associate's identifiable assets,
liabilities and contingent liabilities measured
at the acquisition date is recognized as goodwill.
Any excess of the net fair value of the
identifiable assets, liabilities and contingent
liabilities over the acquisition cost is
immediately recognized in net income.
The acquisition cost comprises the
consideration transferred, the amount of any
non-controlling interest and the acquisition-
date fair value of the acquirer's previously-held
equity interest in the acquiree, if any.
investor's share in the comprehensive income
for the year or in other comprehensive income
obtained by the associate, after the acquisition
date. The distributions received from the associate
will reduce the book value of the investment.
Any excess of the acquisition cost over the
Company's share in the net fair value of
the associate's identifiable assets, liabilities and
contingent liabilities measured at the acquisition
date is recognized as goodwill. Goodwill is
included in the book value of the investment
and tested for impairment as part of the
investment. Any excess of the Company's share
in the net fair value of the identifiable assets,
liabilities and contingent liabilities over the
acquisition cost, after its measurement at fair
value, is immediately recognized in net income.
Unrealized gains or losses on transactions
between the Company (and subsidiaries) and
the associates are eliminated considering
the Company's interest in the associates.
Adjustments were made, where necessary, to
the associates' financial statements so that their
accounting policies are in line with those
used by the Company.
The Company initially recognizes any non-
controlling interest as per its share in the
amounts recognized for the net identifiable
assets of the acquiree.
Investments in companies in which the
company does not have control or significant
influence have been valued at cost, as
established by IAS 39.
2.6 Investment in Associates
An associate is an entity over which the
Company has significant influence and that
is neither a subsidiary nor an interest in a joint
venture. Significant influence is the power
to participate in the financial and operating
policy decisions of the associate, generally
accompanied by a 20%-50% holding of the
voting power, but does not entail control
or joint control over those policies.
The associates' net income and the assets and
liabilities are disclosed in the consolidated
financial statements using the equity method,
except when the investment is classified as held
for sale, in which case it is accounted for under
IFRS 5 “Non-Current Assets Held for Sale and
Discontinued Operations”. Under the equity
method, the investment in an associate is to
be initially recorded at cost and the book value
will be increased or decreased to recognize the
In the cases where non-controlling shareholders
hold put options whereby they may force the
Company to acquire shares of subsidiaries, and
the Company reasonably estimates that such put
options will be duly exercised, the Company
discloses the present value of the corresponding
future payments under Other Liabilities.
2.7 Interests in Joint Ventures
A joint venture is a contractual arrangement
whereby the Company and other parties
undertake an economic activity that is subject
to joint control, i.e., when the financial strategy
and the operating decisions related to the
company's activities require the unanimous
consent of the parties sharing control.
Joint venture arrangements that entail the
establishment of an independent entity in
which each company holds an interest are called
jointly controlled entities. The Company, in
accordance with IAS 31 "Interests in Joint
Ventures”, has applied the equity method
to measure its holding in the jointly controlled
entity and discloses its holdings in such entities
under Investment in unconsolidated affiliates.
In the cases of joint business arrangements
executed through Uniones Transitorias
de Empresas ("UTE"), or jointly controlled
operations according to IAS 31, the Company
recognizes in its financial statements on
a line-by-line basis the assets, liabilities and net
income subject to joint control in proportion
to its share in such arrangements.
These consolidated financial statements
include the balances of the UTEs, among them,
Ertach S.A. - Prima S.A. Unión Transitoria de
Empresas, FEASA - S.A. La Nación Unión
Transitoria de Empresas and AGEA S.A. - S.A.
La Nación - UTE, in which the Company
and/or its subsidiaries hold an interest.
2.8 Goodwill
Goodwill arises from the acquisition of
subsidiaries and refers to the excess of the cost
of acquisition over the net fair value at the
date of acquisition of the identifiable assets
acquired and liabilities assumed. The Company
initially recognizes any non-controlling interest
as per its interest percentage in the amounts
recognized for the net identifiable assets of the
acquired company.
If, upon measurement at fair value, the
Company's share in the fair value of net
identifiable assets of the acquired company
exceeds the amount of the consideration
transferred, the amount of any non-controlling
interest in such company and the fair value
of the acquirer's previous non-controlling
interest in the acquiree (if any), such excess is
immediately recognized in the statement of
comprehensive income as a gain arising from
a very advantageous acquisition.
Goodwill is not amortized, but tested for
impairment on an annual basis. For the purposes
of impairment testing, goodwill is allocated
to each of the Company's cash-generating units
expected to render benefits from the synergies
of the respective business combination. Those
cash-generating units to which goodwill is
allocated are tested for impairment on an annual
basis, or more frequently, when there is any
86
87
indication of impairment. If the recoverable
value of the cash-generating unit, i.e. the higher
of the value in use or the fair value net of selling
expenses, is lower than the value of the net assets
allocated to that unit, including goodwill,
the impairment loss is first allocated to reduce
the goodwill allocated to the unit and then to
the other assets of the unit, on a pro rata basis,
based on the valuation of each asset in the unit.
The impairment loss recognized against the
valuation of goodwill is not reversed under any
circumstance.
In case of a loss of control in the subsidiary, the
amount attributable to goodwill is included in
the calculation of the corresponding gain or loss.
As mentioned in Note 9, the recoverability of
certain goodwill could be affected by the final
outcome of the circumstances described in
such note.
2.9 Revenue Recognition
Revenues are recognized when the amount of
revenues may be reliably estimated, when future
economic benefits are likely to be obtained by
the Company, and when specific criteria are met
for each of Grupo Clarín's activities, as
described below.
Revenues for each of the main business segments
identified by the Company are recognized
when the following conditions are met.
- Cable Television and Internet Access
Sales of cable or Internet services subscriptions
are recognized as revenues for the period in
which the services are rendered. Revenues from
the installation of these services are accrued
over the average term during which clients
maintain their subscription to the service.
Advertising sales revenues are recognized in
the period in which advertising is published or
broadcast.
Revenues from transactions that include more
than one item have been recognized separately
to the extent they have commercial substance
on their own. The amount of revenues allocated
to each item is based on its fair value, which is
assessed or estimated at market value.
Revenues from the sale of assets are recognized
only when the risks and benefits arising
from the use of the disposed assets have been
transferred, the amount of revenues may be
fairly estimated, and the Company is likely to
obtain economic benefits (see Note 19).
Installment sales are recognized at the value
of future income discounted at a market rate
assessed at the beginning of the transaction.
- Printing and Publishing
Advertising sales are determined by the prices
achieved per single column centimeter and
the number of advertising centimeters sold in
the relevant period. Circulation sales include
the price received from the sale of newspapers,
magazines and other publications. Printing
services sales consist mainly of fees received
from the printing of magazines, books,
brochures and related products.
Advertising sales from newspapers and
magazines are recognized when advertising is
published. Revenues from the sale of newspaper
and magazines are recognized upon passing
control to the buyer. The Company records the
estimated impact of returns, calculated based on
historical trends, as a deduction from revenues.
Revenues from printing services are recognized
upon completion of the services, delivery of the
related products and customer acceptance.
- Broadcasting and Programming
TV and radio advertising sales revenues are
recognized when advertising is broadcast.
Revenues from programming and distribution
of television content are recognized when the
programming services are provided.
2.10 Barter Transactions
The Company, through its subsidiaries, sells a
small portion of its advertising spaces in exchange
for goods or services received. Revenues are
recorded when the advertisement is made, valued
at the fair value of the goods or services received,
in the case of goods and other services advertising
barter transactions, or delivered, in the case of
advertising-for-advertising barter transactions.
Goods or services are recorded at the time goods
are received or services are rendered. The goods
or services to be received in consideration for the
advertisements made are recorded as Trade
Receivables. The advertisements to be made in
exchange for the goods and services received are
recorded as Trade Payables and Other.
2.11 Leases
Leases are classified as financial leases when
the terms of the lease transfer to the lessee
substantially all the risks and benefits inherent
to the property. All other leases are classified
as operating leases.
The assets held under financial leases are
recognized at the lower of the fair value of the
Company's leased assets at the beginning of the
lease term, or the present value of the minimum
lease payments. The liability held with the lessor
is included in the balance sheet as an obligation
under financial leases recorded under Debt.
Lease payments are apportioned between the
finance charge and the reduction of the liabilities
under the lease so as to achieve a constant interest
rate on the outstanding balance. The finance
charge is expensed over the lease term.
The assets held under financial leases are
depreciated over the shorter of the useful life of
the assets or the lease term.
Rentals under operating leases are charged to
income on a straight line basis over the
corresponding lease term.
2.12 Foreign Currency and Functional Currency
The financial statements of each of the entities
consolidated by the Company are prepared in the
currency of the primary economic environment
in which the entity operates (its functional
currency). For the purposes of the consolidated
financial statements, the net income and the
financial position of each entity are stated in
Argentine Pesos (Argentina's legal tender for all
companies domiciled in Argentina), which is the
Company's functional currency, and the
reporting currency of the consolidated financial
statements. The functional currency of the
indirectly controlled Uruguayan, Paraguayan and
Brazilian companies, are the Uruguayan Peso, the
Guarani and the Real, respectively.
In preparing the financial statements of the
individual entities, the transactions in currencies
other than the entity's functional currency
(foreign currency) are recorded at the exchange
rates prevailing on the dates on which
transactions are carried out. At the end of each
reporting year, the monetary items denominated
in foreign currency are retranslated at the
exchange rates prevailing on such date.
Exchange differences are charged to net income
as incurred.
In preparing the Company's consolidated
financial statements, the assets and liabilities
balances of the entities which functional
currencies is not the Argentine Peso, stated in
their own functional currency (Uruguayan Peso,
Guarani and Real) are translated to Argentine
pesos at the exchange rate prevailing at the end
of the year, while the net income is translated at
the exchange rate prevailing on the transaction
date. Translation differences are recognized
in other comprehensive income as “Variation in
Translation Differences of Foreign Operations”.
2.13 Financial Costs
Financial costs directly attributable to the
acquisition, construction or production
of assets that require a substantial period of time
to prepare for their intended use or sale
(“qualifying assets”), are capitalized until they
are ready for their intended use or sale.
The income, if any, on the temporary
investment of the specific borrowings incurred
to finance qualifying assets is deducted from
the financial costs to be capitalized.
All other financial costs are charged to net
income as incurred.
2.14 Taxes
The income tax charge reflects the sum of
current income tax and deferred income tax.
2.14.1 Current and Deferred Income Tax for
the year
Current and deferred taxes are recognized as
expense or income for the year, except when they
are related to entries debited or credited to other
comprehensive income or equity, in which cases
taxes are also recognized in other comprehensive
income or directly in equity, respectively. In
the case of a business combination, the tax effect
is taken into consideration in the calculation
of goodwill or in the determination of the excess
of acquirer's interest in the net fair value of
the acquiree's identifiable assets, liabilities and
contingent liabilities over the cost of the business
combination.
and net income reported in the consolidated
statement of comprehensive income differ due to
revenue or expense items that are taxable or
deductible in other fiscal years and items that are
never taxable or deductible. The current tax
liability is calculated using the tax rate in effect
as of the date of these consolidated financial
statements. Current tax charge is calculated
based on the tax rules effective in the countries
in which the consolidated entities operate.
2.14.3 Deferred Tax
Deferred tax is recognized on temporary
differences between the book value of the assets
and liabilities included in these financial
statements and the corresponding tax basis
used to determine taxable income. Deferred tax
liabilities are generally recognized for all
temporary fiscal differences. Deferred tax assets
are recognized for all deductible temporary
differences to the extent that it is likely that
future taxable income will be available against
which those deductible temporary differences can
be charged. These assets and liabilities are not
recognized if the temporary differences arise from
goodwill or from the initial recognition (other
than in a business combination) of other assets
and liabilities in a transaction that affects neither
the taxable income nor the accounting income.
The book value of a deferred tax asset is reviewed
at each reporting year and reduced to the extent
that it is no longer likely that sufficient taxable
income will be available in the future to allow for
the recovery of all or part of the asset.
Deferred tax is recognized on temporary
differences arising from investments in foreign
subsidiaries.
Deferred tax assets and liabilities are measured
at the tax rates that are expected to be applicable
in the year in which the asset is realized or the
liability is settled, based on the tax rates (and
tax laws) that have been enacted or substantively
enacted by the end of the period. The
measurement of deferred tax liabilities and assets
reflects the tax consequences that would follow
from the manner in which the entity expects,
at the end of the reporting year, to recover or
settle the book value of its assets and liabilities.
2.14.2 Current Tax
Current tax payable is based on the taxable
income recorded during the year. Taxable income
Deferred tax assets are offset against deferred
tax liabilities if effective regulations allow to
offset, before the tax authorities, the amounts
88
89
recognized in those items; and if the deferred
tax assets and liabilities arise from income taxes
levied by the same tax authority and the
Company intends to settle its assets and liabilities
on a net basis.
Under the IFRS, deferred tax assets and
liabilities are classified as non-current assets and
liabilities, respectively.
2.14.4 Tax on Assets
In Argentina, the tax on assets (impuesto a la
ganancia mínima presunta) is supplementary
to income tax. The Company assesses this tax
at the effective rate of 1% on the taxable assets
at year-end. The Company's tax liability for
each year will be equal to the higher of the tax
on assets assessment or the income tax liability
assessed at the legally effective rate on the
estimated taxable income for the year. However,
if the tax on assets exceeds the income tax
liability in any given fiscal year, the excess may
be creditable against any excess of income
tax liability over the tax on assets in any of the
following ten fiscal years.
The tax on assets balance has been capitalized
in these consolidated financial statements
for the amount estimated to be recoverable
within the statute of limitations, based on
the subsidiaries' current business plans.
2.15 Property, Plant and Equipment
Property, plant and equipment held for use in
the production or supply of goods and services,
or for administrative purposes, are recorded
at cost less accumulated depreciation and any
accumulated impairment loss.
Depreciation of property, plant and equipment
in use is recognized on a straight-line basis
over its estimated useful life.
The estimated useful life, residual value and
depreciation method are reviewed at each
year-end, with the effect of any changes in
estimates accounted for on a prospective
basis. Land is not depreciated.
Works in process are recorded at cost less any
recognized impairment loss. The cost includes
professional fees and, in the case of qualifying
assets, capitalized financial costs in accordance
with the Company's accounting policy (Note
2.13). Depreciation of these assets, as well as in
the case of other property, plant and equipment,
begins when the assets are ready for their use.
Assets held under financial leases are
depreciated over the shorter of their estimated
useful life equal to the rest of the other similar
assets or over the lease term.
Repair and maintenance expenses are expensed
as incurred.
The gain or loss arising from the retirement
or disposal of an item of property, plant
and equipment is calculated as the difference
between income from the sale of the asset
and the asset's book value, and recognized
under “Other Income and Expense, net” in
the statement of comprehensive income.
The residual value of an asset is written down
to its recoverable value, if the asset's residual
value exceeds its estimated recoverable value
(see Note 2.17).
2.16 Intangible Assets
Intangible assets include trademarks and
patents, exclusivity agreements, licenses,
software and other rights, the purchase value of
the subscriber portfolio, projects in-progress
(mainly related to software development) and
other intangible assets. The accounting policies
regarding the recognition and measurement
of such intangible assets are described below.
2.16.1 Intangible Assets Acquired Separately
Intangible assets acquired separately are valued
at cost, net of the corresponding accumulated
amortization and impairment losses.
Amortization is calculated on a straight line basis
over the estimated useful life of the intangible
assets. The Company reviews the useful lives
applied, the residual value and the amortization
method are reviewed at each year-end, and
accounts the effect of any changes in estimates
on a prospective basis.
Assets held under financial leases are depreciated
over the shorter of their estimated useful life,
which is equal to the rest of the other similar
assets, or over the lease term.
2.16.2 Intangible Assets Acquired in a Business
Combination
Intangible assets acquired in a business
combination are identified and recognized
separately regarding goodwill when they meet the
definition of intangible assets and their fair value
can be measured reliably. Such intangible assets
are recognized at fair value at acquisition date.
After the initial recognition, intangible assets
acquired in a business combination are valued
at cost net of accumulated amortization
and impairment losses, with the same basis as
intangible assets acquired separately.
2.16.3 Internally Generated Intangible Assets
Internally generated intangible assets arising
from the development phase of an internal
project are recognized if certain conditions are
met, among them, technical feasibility to
complete the development of the intangible
asset and the intent to complete such
development.
The amount initially recognized for internally
generated intangible assets comprises all the
expenses incurred as from the moment all
the intangible assets meet the above-mentioned
recognition criteria. Where it is not possible to
recognize an internally generated intangible
asset, the development expenses are recognized
in the statement of comprehensive income in
the year in which they are incurred.
After the initial recognition, internally
developed intangible assets are valued at cost
net of accumulated amortization and
impairment losses, with the same basis as
intangible assets acquired separately.
Such assets are included under software and
projects in-progress.
2.17 Impairment of Non-Financial Assets,
Except Goodwill
At the end of each financial statement, the
Company reviews the book value of its
non-financial assets with definite useful life to
determine the existence of any evidence
indicating that these assets could be impaired.
If there is any indication of impairment, the
recoverable value of these assets is estimated
for the purposes of determining the amount of
the impairment loss (in case the recoverable
value is lower than the book value). Where it
is not possible to estimate the recoverable value
of an individual asset, the Company estimates
the recoverable value of the cash-generating unit
("CGU") to which such asset belongs. Where
a consistent and reasonable allocation base can
be identified, corporate assets are also allocated
90
91
to an individual cash-generating unit
or, otherwise, to the smallest group of cash-
generating units for which a consistent
allocation base can be identified.
The recoverable value of an asset is the higher
of the fair value less selling expenses or its value
in use. In measuring value in use, estimated
future cash flows are discounted at their present
value using a pre-tax discount rate, which
reflects the current market assessments of the
time value of money and, if any, the risks
specific to the asset for which estimated future
cash flows have not been adjusted.
Assets with an indefinite useful life (for
example, non-financial assets unavailable for
use) are not amortized, but are tested for
impairment on an annual basis.
Non-financial assets, except for goodwill,
for which an impairment loss was recorded, are
reviewed at each closing date for a possible
reversal of the impairment loss.
2.18 Inventories
Inventories are valued at the lower of acquisition
cost and/or production cost or the net
realizable value. The cost is determined under
the weighted average price method.
The production cost is determined under
the cost absorption method, which comprises
raw materials, labor and other costs directly
related to the production of goods. The net
realizable value represents the estimated selling
price in the ordinary course of business less the
estimated costs necessary to make such sale.
The criterion followed to expense each of these
inventory items is as follows:
- Film Rights (series, soap operas and films)
and programs purchased:
The cost of series, soap operas and programs
purchased to be shown on broadcast television
is mainly expensed against the cost of sales
on the exhibition date or upon expiration of
exhibition rights. Rights related to these
programs acquired in perpetuity, if any, are
amortized over their estimated useful life (eight
years, with a grace period of three years and
are subsequently amortized on a straight-line
basis over the next five years).
Films are expensed against the cost of sales on
a decreasing basis, based on the number of
showings granted by the respective rights or
upon expiration of exhibition rights.
Film rights acquired in perpetuity for
broadcasting by the Volver channel are amortized
over their estimated useful life (seven years,
with a grace period of four years. They are
subsequently amortized on a decreasing basis
over the next three years).
- In-house production programs and
co-productions:
The cost of in-house production programs
and co-productions is mainly expensed against
the cost of sales after broadcasting of the
chapter or program. Rights related to in-house
production programs and co-productions
acquired in perpetuity, if any, are amortized over
their estimated useful life (eight years, with a
grace period of three years and are subsequently
amortized on a straight-line basis over the next
five years).
- Events:
The cost of events is fully expensed against the
cost of sales at the time of broadcasting.
The allowance for impairment is calculated
based on the recoverability analysis conducted
at the closing of each year. The values thus
obtained do not exceed their respective
recoverable values estimated at the closing of
each year.
2.19 Other Assets
The assets included in this item have been
valued at acquisition cost.
Investments denominated in foreign currency
subject to restrictions on disposition under
financial covenants have been valued at face
value plus interest accrued as of each year-end.
2.20 Accruals and Other
Accruals and the provision for asset retirement
are recognized when the Company has a
present obligation (be it legal or constructive) as
a result of a past event, when it is likely that an
outflow of resources will be required to settle
the obligation and when the amount of the
obligation can be reliably estimated.
The amount recognized as a provision is
the best estimate of the expenditure required
to settle the present obligation at the end
of the reporting year, taking into consideration
the corresponding risks and uncertainties.
Where a provision is measured using the
estimated cash flow to settle the present
obligation, its book value represents the present
value of such cash flow.
In estimating its obligations, the Company
has taken into consideration the opinion of its
legal advisors, if any.
2.21 Financial Instruments
2.21.1 Financial Assets
Purchases and sales of financial assets are
recognized at the transaction date when the
Company undertakes to purchase or sell
the asset, and is initially measured at fair value,
plus transaction costs, except for those financial
assets classified at fair value with changes
in the statement of income, which are initially
measured at fair value.
2.21.1.1 Classification of Financial Assets
Financial assets are classified within the
following specific categories: “financial assets at
fair value with changes in net income”, “held-
to-maturity investments” and “loans and
receivables”. The classification depends on the
nature and purpose of the financial assets
and is determined on initial recognition.
2.21.1.2 Recognition and Measurement of
Financial Assets
2.21.1.2.1 Financial Assets at Fair Value with
Changes in Net Income
Financial assets at fair value with changes in net
income are recorded at fair value, recognizing
any gain or loss arising from the measurement
in the consolidated statement of comprehensive
income. The net gain or loss recognized in net
income includes any gain or loss generated
by the financial asset and is included in the item
financial income and cost in the consolidated
statement of comprehensive income.
The assets designated in this category are
classified as current assets if they are expected
to be traded within 12 months; otherwise,
they are classified as non-current assets.
The fair value of these assets is calculated based
on the current quoted market price of these
instruments.
2.21.1.2.2 Held-to-maturity Investments
Held-to-maturity investments are measured at
amortized cost using the effective interest rate
method less any impairment, if any.
The effective interest rate method calculates
the amortized cost of a financial asset or liability
and the allocation of financial income or cost
over the whole corresponding period. The
effective interest rate is the rate that exactly
discounts estimated future cash payments
or receipts over the expected life of the financial
instrument to the net book value of the
financial asset or liability on its initial
recognition.
Balances in foreign currency were translated
at the exchange rate prevailing at the closing of
year for the settlement of these transactions.
Foreign exchange differences were charged to
net income for each year.
2.21.1.2.3 Loans and Receivables
Loans and trade receivables with fixed or
determinable payments not traded in an active
market are classified as “trade receivables and
other”. Trade receivables and other are initially
measured at fair value, and subsequently
measured at amortized cost using the effective
interest rate method, less any impairment, if
any. Interest income is recognized using the
effective interest rate method, except for short-
term balances for which the recognition of
interest is not significant.
Loans and receivables are classified as current
assets, except for the maturities exceeding 12
months from the closing date.
Loans in foreign currency have been valued as
mentioned above, at the exchange rates prevailing
as of each year-end. Foreign exchange differences
were charged to net income for each year.
2.21.1.3 Impairment of Financial Assets
The Company tests financial assets or a group
of assets for impairment at each closing date
to assess if there is any objective evidence
of impairment. The value of a financial asset or
92
93
a group of assets is impaired, and an
impairment loss is recognized, where there is
objective evidence of the impairment as a
result of one or more events that occurred after
the initial recognition of the asset (a “loss
event”) and that loss event or events have an
impact on the estimated future cash flows of the
financial asset or a group of assets, which may
be reliably measured.
The objective evidence of impairment may
include, among others, significant financial
difficulties of the issuer or obligor; or breach
of contractual terms, such as default or
delinquency in interest or principal payments.
For certain categories of financial assets, such
as accounts receivable and other receivables,
the assets that are not impaired on an
individual basis are tested for impairment on a
collective basis. The objective evidence of
impairment of a receivables portfolio includes
the Company's past collection experience, an
increase in the number of delinquent payments
in the receivables portfolio, as well as observable
changes in the local economic situation
affecting the recoverability of receivables.
Where there is objective evidence of an
impairment loss in the value of loans granted,
receivables or held-to-maturity investments
recorded at amortized cost, the loss amount is
measured as the difference between the book
value and the present value of estimated future
cash flows (without including future non-
incurred losses), discounted at the original
effective interest rate of the financial asset.
The asset's book value is written down under
a contra asset account. The loss amount is
recognized in net income for the year.
If, in subsequent periods, the impairment loss
amount decreases and such decrease can be
objectively related to an event occurring after
the impairment has been recognized (such as an
improvement in the debtor's credit rating),
the previously recognized impairment loss is
reversed. A loss reversal can only be recorded to
the extent the financial asset's book value does
not exceed the amortized cost that would have
been determined if the impairment loss had not
been recorded at the reversal date. The reversal
amount is recognized in net income for the year.
2.21.1.4 Derecognition of Financial Assets
The Company derecognizes a financial asset
when the contractual rights to the cash flows
of such assets expire or when it transfers
the financial asset and, therefore, all the risks
and benefits inherent to the ownership of
the financial asset are transferred to another
entity. If the Company retains substantially
all the risks and benefits inherent to the
ownership of the transferred asset, it will
continue to recognize it and will recognize a
liability for the amounts received.
2.21.2 Financial Liabilities
Financial liabilities, except for derivatives, are
valued at amortized cost using the effective
interest rate method.
2.21.2.1 Debt
Debt is initially valued at fair value net of the
transaction costs incurred, and subsequently
valued at amortized cost using the effective
interest rate method. Any difference between
the initial value net of the transaction costs
and the settlement value is recognized in the
income statement over the term of the loan
using the effective interest rate method. Interest
expense has been allocated to “Financial Costs”
in the consolidated statement of comprehensive
income, except for the portion allocated to
the cost of works under construction recorded
under “Property, Plant and Equipment”.
Debt maturing within the 12 months preceding
the closing date is classified as current and
those maturing within the 12 months following
the closing date are classified as non-current.
Loans in foreign currency have been valued as
mentioned above, at the exchange rates prevailing
as of each year-end. Foreign exchange differences
were charged to net income for each year.
2.21.2.2 Trade Payables and Other
Trade payables with fixed or determinable
payments not traded in an active market are
classified as “Trade Payables and Other”.
Trade Payables and Other are initially measured
at fair value, and subsequently measured at
amortized cost using the effective interest rate
method. Interest expense is recognized using
the effective interest rate method, except for
short-term balances for which the recognition
of interest is not significant.
Trade Payables and Other are classified as
current, except for the maturities exceeding 12
months from the closing date.
Trade payables in foreign currency have been
valued as mentioned above, at the exchange
rates prevailing as of each year end. Foreign
exchange differences were charged to net
income for each year.
2.21.2.3 Derecognition of Financial Liabilities
An entity shall derecognize a financial liability
(or part of it) when it has been extinguished,
i.e., when the obligation specified in
the corresponding agreement is discharged,
cancelled or expires
2.21.3 Derivatives and Hedge Accounting
The Company executes certain financial
instruments to manage its exposure to interest
rate and exchange risks, including foreign
currency hedges, interest rate swaps and
currency swaps.
Derivatives are initially recognized at fair value
at the date of execution of the related contract
and subsequently measured at fair value at
the end of the reporting year. The resulting gain
or loss is immediately recognized in net income
unless the derivate is designated as a hedging
instrument, in which case the timing for its
recognition will depend on the nature of the
hedging relationship. The Company uses certain
derivatives to hedge the fair value of its
recognized liabilities (fair value hedge).
The Company documents at the beginning of
the transaction the existing relationship between
the hedging instruments and the hedged items,
as well as its objectives to manage risk and
the strategy to carry out hedge transactions.
The Company also documents its assessment,
both at the beginning and on an ongoing
basis, of the high effectiveness of its hedging
transactions to offset the changes in the fair
value of the hedged items.
The fair value of hedging derivatives is fully
classified as a non-current asset or liability
if the hedged item matures in more than 12
months, and as a current asset or liability
if the hedged item matures within 12 months.
2.22 Other Liabilities
Advances from customers involving obligations
to deliver assets that have not yet been produced
have been valued at the higher of the amounts
received or the share in the estimated value
of the related assets.
The other liabilities have been valued
at nominal value, which does not differ
significantly from its discounted value.
2.23 Assets and liabilities held for sale
Non-current assets and liabilities (or disposal
groups) are classified as assets and liabilities
held for sale where their value will be mostly
recovered through the sale thereof, to the extent
such sale is highly likely to occur. These assets
and liabilities are valued at the lower of book
value and fair value less cost of sales.
2.24 Statement of Cash Flows
For the purposes of preparing the statement
of cash flows, the item “Cash and Cash
Equivalents” includes cash and bank balances,
high liquidity short-term investments (with
original maturities shorter than 90 days),
and bank overdrafts payable on demand, if any,
are deducted to the extent they are part of
the Company's cash management.
Bank overdrafts are classified as “Debt” in the
consolidated balance sheet.
Cash and cash equivalents at each year-end, as
disclosed in the consolidated statement of
cash flows, may be reconciled against the items
related to the balance sheet as follows:
December 31, 2012
December 31, 2011
623,395,314
629,155,403
291,086,164
80,951
390,173,236
1,304,735,665
176,821,592
4,680,000
54,923,059
865,580,054
Fair Value Hedge
Changes in the fair value of derivatives
designated and classified as fair value hedges
are charged to net income, together with any
change in the fair value of a hedged liability
attributable to the hedged risk. The Company
only applies fair value hedge accounting to
cover the exchange rate fluctuations of the
liabilities it holds in foreign currency. The gain
or loss relating to the effective portion of foreign
currency forward contracts is charged to net
income under Financial Costs. The loss or gain
related to the ineffective portion, if any, is
charged to net income under Other Income
and Expense, net. Changes in the fair value of
the Company's hedged liabilities denominated
in foreign currency, attributable to the risk
detailed above, are charged to net income under
Financial Costs.
2.21.4 Refinancing of Indebtedness
Liabilities arising from the restructuring of
financial debts have been initially valued
at fair value and will be subsequently measured
at amortized cost using the effective interest
rate method.
Cash and Banks
Investments:
- Financial Instruments
- Securities
- Mutual Funds
Cash and Cash Equivalents
94
95
In the years ended December 31, 2012 and
2011, the following significant transactions were
carried out, which did not have an impact on
cash and cash equivalents:
Dividends collected through debt settlement
Debt settlement through reserve account
Interest settlement through reserve account
2.25 Distribution of Dividends
The distribution of dividends to the Company's
shareholders is recognized as a liability in the
financial statements for the year in which
the distribution of dividends is approved by
the Shareholders' Meeting.
Note 3
Accounting estimates and judgments
In applying the accounting policies described
in Note 2, the Company has to make
judgments and prepare accounting estimates of
the value of the assets and liabilities which may
not be otherwise obtained. The estimates and
related assumptions are based on historical
experience and other pertinent factors. Actual
results may differ from these estimates.
The underlying estimates and assumptions
are continually reviewed. The effects of the
reviews of accounting estimates are recognized
for the year in which estimates are reviewed.
These estimates basically refer to:
Allowance for Bad Debts
The Company calculates the allowance for
bad debts for debt instruments that are
not valued at fair value, taking into account the
uncollectibility history, the opinion of its
legal advisors, if any, and other circumstances
known at the time of calculation.
Impairment of Goodwill
The Company assesses goodwill for impairment
on an annual basis. In determining if there
is impairment of goodwill, the Company
calculates the value in use of the cash generating
units to which it has been allocated. The
calculation of the value in use requires the
December 31, 2012
December 31, 2011
14,473,092
-
13,255,633
295,708
60,459,379
8,041,871
determination by the entity of the future cash
flows that should arise from the cash generating
units and an appropriate discount rate to
calculate the present value.
During this year, no impairment losses have
been recorded for goodwill.
Recognition and Measurement of Deferred
Tax Items
Deferred tax assets are only recognized for
temporary differences to the extent that it is
likely that each entity, on an individual basis,
will have enough future taxable income against
which the deferred tax assets can be used.
Tax loss carryforwards from prior years are only
recognized when it is likely that each entity
will have enough future taxable income against
which they can be used.
Pursuant to effective regulations, the use of the
subsidiaries' tax credits is based on a projection
analysis of future income.
The Company examines the recoverable value of
deferred tax assets based on its business plans
and books a valuation allowance, if appropriate,
so that the net position of the deferred tax asset
will reflect the probable recoverable value.
Determination of the Useful Lives of Property,
Plant and Equipment and Intangible Assets
The Company reviews the estimated useful life
of property, plant and equipment and intangible
assets at each year-end.
Measurement of the fair value of certain
financial instruments
The fair value of a financial instrument is the
amount at which the instrument could
be purchased or sold between knowledgeable,
willing parties in an arm's length transaction. If
there is a quoted market price available for an
instrument in an active market, the fair value
is calculated based on that price.
If there is no quoted market price available for
a financial instrument, its fair value is estimated
based on the price established in recent
transactions involving the same or similar
instruments and, otherwise, based on valuation
techniques regularly used in financial markets.
The Company uses its judgment to select
a variety of methods and makes assumptions
based on market conditions at closing.
Impairment losses of certain assets other
than accounts receivable (including property,
plant and equipment and intangible assets)
Certain assets, including property, plant and
equipment and intangible assets are subject to
impairment testing. The Company records
impairment losses when it estimates that there
is objective evidence of such losses or when the
cost of such losses will not be recovered through
future cash flows. The evaluation of what
constitutes impairment is a matter of significant
judgment. The impairment of non-financial
assets is dealt with in more depth in Note 2.17.
Additionally, as mentioned in Note 9, these
estimates could be affected by the final outcome
of the circumstances described in such note.
Note 4
Segment information
The Company is mainly engaged in media
and entertainment activities, which are carried
out through the companies in which it holds
a participating interest. Based on the nature,
clients, and risks involved, the following
business segments have been identified, which
are directly related to the way in which the
Company assesses its business performance:
- Cable Television & Internet Access: mainly
comprises the operations of its subsidiary
Cablevisión and its subsidiaries, notably PRIMA.
- Printing & Publishing: mainly comprises the
operations of its subsidiary AGEA and its
subsidiaries AGR, Cúspide, Tinta Fresca,
CIMECO and their respective subsidiaries.
- Broadcasting and Programming: mainly
comprises the operations of its subsidiaries
ARTEAR, IESA and Radio Mitre, and their
96
97
respective subsidiaries, including Telecor, Telba,
Pol-Ka, Auto Sports (1), Grupo Carburando.
- Digital Content and Other: mainly comprises
the operations of its controlled companies
CMD and subsidiaries, OSA and AGEA S.A. -
S.A. La Nación - UTE. Additionally, this
segment includes the Company's own operations
(typical of a holding company) and those carried
out by its controlled company GCGC.
(1) During the year ended December 31, 2010,
Automóviles Deportivos 2000 S.A. changed
its corporate name to Auto Sports S.A.
The Company has adopted IFRS 8 - Segment
Information, which defines operating segments
as those identified based on internal reports
with respect to the components of the company
regularly reviewed by the Board of Directors,
the main operating decisions maker, to allocate
resources and assess their performance. The
Company uses adjusted EBITDA to measure
its performance. The Company believes that
adjusted EBITDA is a significant performance
measure of its businesses, since it is commonly
used in the industry to analyze and compare
media companies based on operating
performance, indebtedness and liquidity.
However, adjusted EBITDA does not measure
net income or cash flows generated by
operations and should not be considered as an
alternative to net income, an indication of
the Company's financial performance, an
alternative to cash flows generated by operating
activities or a measure of liquidity. Since
adjusted EBITDA is not defined by IFRS,
it is possible that other companies may calculate
it differently. Therefore, the adjusted EBITDA
reported by other companies may not
be comparable to the Company's reported
adjusted EBITDA.
The following tables include the information
as of December 31, 2012 and 2011, prepared
on the basis of IFRS, for the business segments
identified by the Company. The information
as of December 31, 2011 is presented in
accordance with IFRS for comparative purposes
with the information as of December 31, 2012,
used by the Company's Board of Directors for
decision making.
Note 1 to these consolidated financial
statements includes additional information
about the Company's businesses.
Cable Television and
Internet Access
Printing and Publishing
7,751,364,335
16,136,265
7,767,500,600
(3,175,358,106)
4,592,142,494
2,228,647,910
157,022,771
2,385,670,681
(1,383,507,738)
1,002,162,943
(931,203,580)
(1,018,161,169)
(401,925,540)
(370,327,233)
2,642,777,745
229,910,170
1,292,701,983
46,866,931
513,881,902
479,054,769
24,615,910
18,132,143
-
4,193,587
Information arising from consolidated income statements
as of December 31, 2012
Net Sales to Third Parties (3)
Intersegment Sales
Net Sales
Cost of sales (excluding depreciation and amortization)
Subtotal
Expenses - excluding depreciation and amortization
- Selling Expenses
- Administrative Expenses
Adjusted EBITDA
Depreciation of Property, Plant and Equipment
Amortization of Intangible Assets and Film Library (4)
Financial Income
Financial Costs
Equity in Earnings from Affiliates and Subsidiaries
Other Income and Expense, net
Income Tax and Tax on Assets
Income for the Year from Continuing Operations
Income/Loss from Discontinued Operations
Net Income for the Year
Additional consolidated information as of December 31, 2012
Acquisition of Property, Plant and Equipment
Acquisition of Intangible Assets
Ordinary Income from Foreign Operations
Non-Current Assets Held Abroad
(1) Deletions are related to Grupo Clarín's intercompany
balances and operations.
(2) Recognition of revenues from cable TV and Internet
installation services and transactions including separate items
and the non-consolidation of special purpose entities and
income/loss from discontinued operations.
(3) Includes also sales to unconsolidated companies.
(4) Amortization of film rights acquired in perpetuity,
mentioned in Note 2.18.
Broadcasting and
Programming
Digital Content and Other
(1) Deletions
(2) Adjustments
Consolidated
(165,886,972)
-
(165,886,972)
(135,662,805)
(301,549,777)
11,318,906,093
-
11,318,906,093
(5,712,998,951)
5,605,907,142
16,059,292
49,628,526
(1,340,158,720)
(1,493,070,814)
(235,861,959)
2,772,677,608
(726,074,731)
(146,281,481)
162,251,896
(1,078,405,434)
13,682,715
639,370
(524,876,069)
473,613,874
498,717,214
972,331,088
1,382,972,222
73,781,197
279,866,507
483,271,175
-
-
(234,015,395)
-
N
1,332,201,543
116,801,283
1,449,002,826
(1,025,066,804)
423,936,022
(93,812,427)
(194,071,863)
172,579,277
191,220,223
363,799,500
(166,204,284)
197,595,216
(65,031,750)
(132,763,546)
-
(481,180,542)
(481,180,542)
172,800,786
(308,379,756)
135,755,285
172,624,471
136,051,732
(200,080)
51,840,730
388,595
-
22,819
13,813,599
8,393,528
-
-
-
-
-
-
-
98
99
Cable Television and
Internet Access
Printing and Publishing
6,116,084,891
8,853,952
6,124,938,843
(2,568,208,135)
3,556,730,708
1,971,129,853
118,037,571
2,089,167,424
(1,178,170,612)
910,996,812
(705,853,333)
(770,611,073)
(354,132,757)
(297,210,749)
2,080,266,302
259,653,306
1,366,879,166
42,690,395
422,627,529
356,269,268
271,600,000
31,710,933
7,921,085
-
3,299,650
2,212,858
Information arising from consolidated income statements
as of December 31, 2011
Net Sales to Third Parties (3)
Intersegment Sales
Net Sales
Cost of sales (excluding depreciation and amortization)
Subtotal
Expenses - excluding depreciation and amortization
- Selling Expenses
- Administrative Expenses
Adjusted EBITDA
Depreciation of Property, Plant and Equipment
Amortization of Intangible Assets and Film Library (4)
Financial Income
Financial Costs
Equity in Earnings from Affiliates and Subsidiaries
Other Income and Expense, net
Income Tax and Tax on Assets
Income for the Year from Continuing Operations
Income/Loss from Discontinued Operations
Net Income for the Year
Additional consolidated information as of December 31, 2011
Acquisition of Property, Plant and Equipment
Acquisition of Intangible Assets
Ordinary Income from Foreign Operations
Non-Current Assets Held Abroad
Additional consolidated information as of January 1, 2011
Non-Current Assets Held Abroad
(1) Deletions are related to Grupo Clarín's intercompany
balances and operations.
(2) Recognition of revenues from cable TV and Internet
installation services and transactions including separate items
and the non-consolidation of special purpose entities and
income/loss from discontinued operations.
(3) Includes also sales to unconsolidated companies.
(4) Amortization of film rights acquired in perpetuity,
mentioned in Note 2.18.
Broadcasting and
Programming
Digital Content and Other
(1) Deletions
(2) Adjustments
Consolidated
N
1,159,896,142
108,813,451
1,268,709,593
(792,149,237)
476,560,356
(85,486,201)
(138,368,981)
105,749,161
177,210,276
282,959,437
(124,970,514)
157,988,923
(55,587,497)
(102,968,300)
-
(412,915,250)
(412,915,250)
134,122,397
(278,792,853)
135,135,571
143,657,282
252,705,174
(566,874)
73,289,674
73,175
-
22,819
22,819
6,235,691
6,333,502
-
-
-
-
-
-
-
-
-
100
101
(27,621,431)
-
(27,621,431)
(156,158,305)
(183,779,736)
9,325,238,616
-
9,325,238,616
(4,685,534,406)
4,639,704,210
20,567,031
46,773,358
(1,045,357,186)
(1,118,728,463)
(116,439,347)
2,475,618,561
(613,264,887)
(152,213,859)
102,687,565
(684,773,400)
33,653,927
1,507,210
(425,031,671)
738,183,446
47,426,493
785,609,939
1,478,115,464
57,018,157
184,858,795
359,591,737
273,835,677
-
-
(237,768,734)
-
-
Note 5
Breakdown of the main items of the Balance Sheet
5.1. Property, Plant and Equipment
Main Account
Real Property
Furniture and Fixtures
Telecommunication, Audio and Video Equipment
External Network and Broadcasting Equipment
Computer Equipment
Technical Equipment
Workshop Machinery
Tools
Spare Parts
Installations
Vehicles
Plots
Materials in Warehouse
Works-In-Progress
Leasehold Improvements
Allowance for Impairment of Property, Plant and Equipment
and Obsolescence of Materials
Total as of December 31, 2012
Main Account
Real Property
Furniture and Fixtures
Telecommunication, Audio and Video Equipment
External Network and Broadcasting Equipment
Computer Equipment
Technical Equipment
Workshop Machinery
Tools
Spare Parts
Installations
Vehicles
Plots
Materials in Warehouse
Works-In-Progress
Leasehold Improvements
Allowance for Impairment of Property, Plant and Equipment
and Obsolescence of Materials
Total as of December 31, 2012
(1) Includes Ps. 24.6 million from discontinued operations.
Balance at the Beginning
Translation Adjustment
Cumulative
560,661,368
94,576,763
207,702,279
3,124,430,025
448,586,820
82,231,104
576,501,207
51,691,676
38,294,224
410,056,024
169,813,640
17,308,504
475,181,484
492,241,898
30,683,673
(15,889,991)
6,764,070,698
2,237,767
5,686,293
(1,257,467)
94,355,326
(20,629,023)
10,750
(19,321,179)
1,187,979
(140,016)
24,264,007
2,857,943
(1,091,139)
(220,489)
7,277,047
1,136,462
(1,232,159)
95,122,102
Balance at the Beginning
Acquisitions of Businesses
233,026,534
76,655,149
172,175,870
1,133,612,422
370,075,023
56,207,633
515,981,059
39,001,843
31,276,424
315,853,110
114,297,624
14,370,726
3,756,661
-
22,762,084
(257,512)
3,098,794,650
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1
Additions
Acquisitions of Businesses
Retirements
Transfers
December 31, 2012
Historical value
Balances as of
7,454,055
6,066,393
9,543,257
481,903,365
58,504,139
14,954,738
24,820,439
1,262,875
6,088,435
6,690,610
11,967,892
559,659
716,503,557
194,879,040
64,928
-
1,541,263,382
Cumulative
-
-
-
-
-
-
-
-
-
-
2,028,250
-
-
-
-
-
2,028,250
(16,176,711)
(5,586,803)
(10,089)
(571,419,736)
(3,574,677)
-
(6,385)
(1,159,121)
-
(19,202)
(7,868,292)
-
(159,616,414)
(7,168,856)
(13,915)
-
(772,620,201)
6,368,006
459,568
6,858,628
654,520,104
12,237,972
7,286,695
-
14,451,163
-
(1,510,534)
28,760
-
(452,093,442)
(253,500,088)
4,893,168
-
-
560,544,485
101,202,214
222,836,608
3,783,789,084
495,125,231
104,483,287
581,994,082
67,434,572
44,242,643
439,480,905
178,828,193
16,777,024
579,754,696
433,729,041
36,764,316
(17,122,150)
7,629,864,231
Accumulated Depreciation
Balances as of
Net Book Value as of
Translation Adjustment
Retirements
(1) For the year
December 31, 2012
December 31, 2012
443,947
3,622,745
(238,810)
92,287,026
3,757,738
1,518,561
3,144,055
1,099,549
(27,187)
17,651,871
2,509,886
823,450
(1,817,868)
114,383
1,205,208
-
126,094,554
(6,584,161)
(3,669,919)
(3,084)
(463,950,539)
(2,192,342)
-
-
(795,759)
-
(20,533)
(6,237,189)
-
-
-
-
-
(483,453,526)
11,125,302
4,365,530
12,403,331
591,536,657
50,844,075
7,809,296
9,073,882
13,490,878
3,695,782
21,159,395
18,694,168
278,283
-
-
6,210,371
-
750,686,950
102
103
238,011,622
80,973,505
184,337,307
1,353,485,566
422,484,494
65,535,490
528,198,996
52,796,511
34,945,019
354,643,843
129,264,489
15,472,459
1,938,793
114,383
30,177,663
(257,512)
3,492,122,628
322,532,863
20,228,709
38,499,301
2,430,303,518
72,640,737
38,947,797
53,795,086
14,638,061
9,297,624
84,837,062
49,563,704
1,304,565
577,815,903
433,614,658
6,586,653
(16,864,638)
4,137,741,603
Main Account
Real Property
Furniture and Fixtures
Telecommunication, Audio and Video Equipment
External Network and Broadcasting Equipment
Computer Equipment
Technical Equipment
Workshop Machinery
Tools
Spare Parts
Installations
Vehicles
Plots
Materials in Warehouse
Works-In-Progress
Leasehold Improvements
Allowance for Impairment of Property, Plant and Equipment
and Obsolescence of Materials
Total as of December 31, 2011
Main Account
Real Property
Furniture and Fixtures
Telecommunication, Audio and Video Equipment
External Network and Broadcasting Equipment
Computer Equipment
Technical Equipment
Workshop Machinery
Tools
Spare Parts
Installations
Vehicles
Plots
Materials in Warehouse
Works-In-Progress
Leasehold Improvements
Allowance for Impairment of Property, Plant and Equipment
and Obsolescence of Materials
Total as of December 31, 2011
(1) Includes Ps. 21.1 million from discontinued operations.
Balance at the Beginning
Translation Adjustment
Cumulative
550,239,665
86,854,029
181,796,149
2,360,138,148
403,596,252
76,878,683
556,803,249
38,731,286
33,995,586
401,899,963
130,662,151
15,212,403
468,918,319
163,354,444
27,678,047
(15,889,991)
5,480,868,383
2,642,092
2,362,532
-
61,459,306
1,330,398
-
-
382,671
-
(549,939)
1,447,310
-
6,107,668
(458,734)
(1,131,923)
-
73,591,381
Balance at the Beginning
Acquisitions of Businesses
219,359,814
69,575,055
157,723,085
895,854,722
317,705,844
50,845,316
507,661,741
27,469,299
28,402,478
247,420,554
101,804,421
13,378,472
1,125,400
-
19,987,351
(255,842)
2,658,057,710
389,319
1,384,352
-
-
-
-
-
-
-
2,017,124
41,535
-
-
-
-
-
3,832,330
-
-
-
-
4
Additions
Acquisitions of Businesses
Retirements
Transfers
December 31, 2011
Historical value
Balances as of
7,043,303
3,817,498
25,992,740
393,656,318
38,982,412
2,447,301
5,084,473
560,955
4,298,638
4,865,691
39,197,915
1,774,019
822,437,615
231,422,683
716,736
-
1,582,298,297
Cumulative
389,319
1,459,461
-
-
-
-
-
-
-
2,654,585
62,114
-
-
-
-
-
(7,544,159)
(424,337)
(86,610)
(240,705,793)
(93,892)
-
(2,404,135)
(562,623)
(1,555,850)
-
(122,448,308)
(1,427,135)
-
-
4,565,479
(377,252,842)
7,891,148
507,580
-
549,882,046
4,771,650
2,905,120
17,017,620
12,016,764
-
1,748,347
-
322,082
(699,833,810)
99,350,640
3,420,813
-
-
560,661,368
94,576,763
207,702,279
3,124,430,025
448,586,820
82,231,104
576,501,207
51,691,676
38,294,224
410,056,024
169,813,640
17,308,504
475,181,484
492,241,898
30,683,673
(15,889,991)
6,764,070,698
Accumulated Depreciation
Balances as of
Net Book Value as of
Translation Adjustment
Retirements
(1) For the year
December 31, 2011
December 31, 2011
233,026,534
76,655,149
172,175,870
1,133,612,422
370,075,023
56,207,633
515,981,059
39,001,843
31,276,424
315,853,110
114,297,624
14,370,726
3,756,661
-
22,762,084
(257,512)
3,098,794,650
327,634,834
17,921,614
35,526,409
1,990,817,603
78,511,797
26,023,471
60,520,148
12,689,833
7,017,800
94,202,914
55,516,016
2,937,778
471,424,823
492,241,898
7,921,589
(15,632,479)
3,665,276,048
1,355,406
1,684,925
-
41,451,879
1,226,735
-
-
191,419
-
(621,227)
1,065,032
-
233,417
-
(714,067)
-
45,873,519
(1,637,649)
(1,824)
(4,431)
(238,424,972)
(240,434)
-
(1,122,005)
-
-
(301,481)
(1,545,662)
-
-
-
-
-
(243,278,458)
13,559,644
4,012,641
14,457,216
434,730,793
51,382,878
5,362,317
9,441,323
11,341,125
2,873,946
67,338,140
12,932,298
992,254
2,397,844
-
3,488,800
(1,670)
634,309,549
104
105
The following table details the average years
of useful life of the items comprising Property,
Plant and Equipment:
Item
Real Property
Furniture and Fixtures
Telecommunication, Audio and Video Equipment
External Network and Broadcasting Equipment
Computer Equipment
Technical Equipment
Workshop Machinery
Tools
Spare Parts
Installations
Vehicles
Plots
Leasehold Improvements
5.2. Intangible Assets
Main Account
Exploitation Rights and Licenses
Exclusivity Agreements
Other Rights
Subscriber Portfolio
Acquired
Software
Trademarks and Patents
Projects in-Progress
Other
Total as of December 31, 2012
Main Account
Exploitation Rights and Licenses
Exclusivity Agreements
Other Rights
Subscriber Portfolio Acquired
Software
Trademarks and Patents
Projects in-Progress
Other
Total as of December 31, 2012
(1) Includes Ps. 2.1 million from discontinued operations.
Average Useful Life
(in years)
50
10
between 3 and 4
between 3 and 20
3
between 4 and 10
10
5
5
between 3 and 10
5
5
between 3 and 10
Balance at
Cumulative
the Beginning
Translation Adjustment
30,925,198
15,091,041
10,232,330
1,073,157,424
44,386,515
4,708,704
64,126,242
92,282,003
1,334,909,457
(5,321,989)
-
4,733,893
853,750
1,357,349
39,440
-
(4,113,285)
(2,450,842)
Balance at
the Beginning
25,174,499
7,572,521
8,584,087
589,349,285
14,129,660
3,615,679
-
64,315,511
712,741,242
Acquisition of
Businesses
-
2,000,000
-
-
-
-
-
-
Additions
3,805,868
-
490,032
-
11,549,930
926,074
41,733,081
15,276,254
73,781,239
Cumulative
Retirements
Transfers
December 31, 2012
Historical value
Balances as of
(1,617,047)
-
-
-
-
-
-
-
-
-
-
-
105,855,476
3,847
(105,859,323)
-
-
27,792,030
17,091,041
15,456,255
1,074,011,174
163,149,270
5,678,065
-
103,444,972
1,406,622,807
Accumulated Amortization
Balances as of
Net Book Value
2,000,000
(1,617,047)
O
Translation Adjustment
Retirements
(1) For the year
December 31, 2012
as of December 31, 2012
(6,033,789)
-
1,521,086
725,688
725,936
39,440
-
(1,083,429)
(4,105,068)
(1,617,047)
-
-
-
-
-
-
-
(1,617,047)
5,162,954
1,478,489
1,800,314
108,907,211
21,771,223
307,120
-
5,395,208
144,822,519
106
107
22,686,617
9,051,010
11,905,487
698,982,184
36,626,819
3,962,239
-
68,627,290
851,841,646
5,105,413
8,040,031
3,550,768
375,028,990
126,522,451
1,715,826
-
34,817,682
554,781,161
Main Account
Exploitation Rights and Licenses
Exclusivity Agreements
Other Rights
Subscriber Portfolio Acquired
Software
Trademarks and Patents
Projects in-Progress
Other
Balance
at the
Beginning
Cumulative
Translation
Adjustment
Historical value
Balances as of
December 31,
Additions
2011
2,174,561
2,747,540
26,003,097
15,091,041
10,232,330
1,073,157,424
29,212,128
3,962,143
32,338,944
81,228,476
-
-
-
-
-
-
4,782,685
6,957,246
-
-
-
15,174,387
746,561
31,787,298
6,270,842
30,925,198
15,091,041
10,232,330
1,073,157,424
44,386,515
4,708,704
64,126,242
92,282,003
Total as of December 31, 2011
1,271,225,583
56,726,628
1,334,909,457
Balance
at the
Beginning
Cumulative
Translation
Adjustment
Accumulated Amortization
Balances as of
Net Book
Value as of
December 31,
December 31,
(1) For the year
2011
2011
20,933,603
6,047,419
7,192,963
480,963,481
5,123,864
3,091,403
-
2,226,208
-
-
-
-
-
-
2,014,688
1,525,102
1,391,124
25,174,499
7,572,521
8,584,087
5,750,699
7,518,520
1,648,243
108,385,804
589,349,285
483,808,139
9,005,796
524,276
-
14,129,660
3,615,679
-
30,256,855
1,093,025
64,126,242
27,966,492
32,739,451
4,781,666
26,794,394
64,315,511
Main Account
Exploitation Rights
and Licenses
Exclusivity Agreements
Other Rights
Subscriber Portfolio
Acquired
Software
Trademarks and Patents
Projects in-Progress
Other
Total as of
December 31, 2011
556,092,184
7,007,874
149,641,184
712,741,242
622,168,215
(1) Includes Ps. 0.2 million from discontinued operations.
5.3 Goodwill
Company assesses the recoverability of goodwill
considering each company for which it records
goodwill as a different cash generating unit
(“CGU”).
The recoverable amount of each CGU has
been determined as per its value in use,
calculated based on operating cash flows
estimated in the financial budgets approved
by Management, which comprise a period
ranging from one to three years. Cash flows
not included in those periods are projected
using a growth rate, assessed based on statistical
data and historical indicators of Argentina,
which does not exceed the long-term average
growth of each business.
The gross margin used in each case for the
calculation of the value in use allocated to each
CGU arises from budgets prepared by each
business for the period under consideration,
which are in line with the historical data and
the expectations regarding market development
and evolution of the respective businesses.
The discount rate used in each case for the
calculation of the value in use allocated to each
CGU takes into account the risk-free rate,
the country risk premium and the premium
for risks specific to each business, and the
indebtedness structure of each CGU. In
particular, the annual discount rate applied to
the projections of Cablevisión's cash flows
is of approximately 12%.
Net Book
Allowance
as of
as of
as of
Value before
for Goodwill
December 31,
December 31,
January 1,
Net balances
Net balances
Net balances
Main Account
Impairment
impairment
2012
2011
2011
Cablevisión and
subsidiaries (1)
PRIMA
CIMECO and related
companies
Cúspide and subsidiaries
Telecor
Grupo Carburando
Pol-Ka
Telba
Bariloche TV
Other
Total
3,113,063,902
(594,075,234)
2,518,988,668
2,468,927,313
2,439,579,895
2,272,319
-
2,272,319
2,272,319
2,272,319
235,982,248
(54,637,313)
181,344,935
181,344,935
180,286,033
19,059,775
39,173,062
12,053,573
16,130,769
3,774,071
1,844,621
21,816,329
-
-
(12,053,573)
(6,850,727)
-
-
19,059,775
39,173,062
-
9,280,042
3,774,071
1,844,621
20,658,344
39,173,062
-
9,280,042
3,774,071
1,844,621
-
39,173,062
12,053,573
9,280,042
3,774,071
1,844,621
(533,130)
21,283,199
12,380,419
11,913,663
3,465,170,669
(668,149,977)
2,797,020,692
2,739,655,126
2,700,177,279
(1) Includes goodwill of Multicanal and Teledigital,
merged into Cablevisión (see Note 8.1.d).
5.4 Investment in Unconsolidated Affiliates
December 31,
December 31,
January 1,
Interest (%)
2012
2011
2011
Papel Prensa
Ver TV S.A.
TPO
TATC
Ríos de Tinta
La Capital Cable
TSMA
AGL
Ideas del Sur
Patagonik
Canal Rural
TSC
TRISA
Impripost
Other Investments
Equity in Earnings from Affiliates and Subsidiaries
TRISA
Papel Prensa
La Capital Cable
AGL
Canal Rural
Ríos de Tinta
Impripost
VLG
Other Companies
108
109
49.00%
49.00%
47.00%
49.99%
50.00%
49.00%
49.10%
50.00%
30.00%
33.33%
24.99%
50.00%
50.00%
50.00%
186,458,231
192,758,928
183,478,623
15,656,650
10,822,223
6,797,511
4,193,587
10,972,032
10,060,515
12,893,886
17,410,671
11,943,978
3,638,207
5,132,164
64,646,211
11,552,623
17,034,100
15,656,650
10,822,223
6,722,931
3,299,650
14,984,238
10,060,515
12,248,866
17,035,581
11,275,049
3,804,125
5,172,979
56,459,568
10,208,824
17,163,544
15,656,650
10,822,223
5,847,539
2,212,858
6,218,710
10,060,515
10,557,366
17,038,283
11,006,235
3,308,642
4,988,625
48,267,997
10,021,155
6,355,262
389,212,589
387,673,671
345,840,683
December 31, 2012
December 31, 2011
8,186,642
(5,477,205)
10,255,856
466,521
1,088,911
70,55
2,401,324
(6,307,465)
2,997,579
13,682,715
14,236,069
8,108,820
8,765,532
1,199,222
1,495,467
1,284,187
1,650,086
(4,561,061)
1,475,605
33,653,927
The financial information related to unconsolidated
companies (without considering those valued at cost)
is summarized below (in millions of Argentine pesos):
Total Assets
Total Liabilities
Net Assets
Total Income for the year
Net Income for the year
5.5 Other Investments
Non-Current
Financial Instruments
Securities
Current
Financial Instruments
Securities
Mutual Funds
Other
5.6 Inventories
Non-Current
Film Products and Rights
Current
Raw Materials and Supplies
Products-in-Process
Finished Goods
Film Products and Rights
Other
Subtotal
Less: Allowance for Impairment
of Inventories
5.7 Other Assets
Non-Current
Works of Art
Other
Current
Reserve Account
Other
December 31, 2012
December 31, 2011
1,138
471
667
1,476
92
1,195
493
702
1,213
96
December 31, 2012
December 31, 2011
January 1, 2011
99,597,125
-
99,597,125
291,086,164
4,373,191
390,173,236
-
685,632,591
-
109,855
109,855
187,585,566
4,680,000
54,923,059
-
247,188,625
-
177,403
177,403
70,304,156
-
183,712,486
10,948,000
264,964,642
December 31, 2012
December 31, 2011
January 1, 2011
13,929,652
13,929,652
235,229,897
1,951,575
28,553,958
83,078,087
71,801
348,885,318
(6,111,369)
342,773,949
13,139,000
13,139,000
246,420,485
973,397
37,578,897
89,184,383
199,126
374,356,288
(3,176,265)
371,180,023
21,340,016
21,340,016
182,787,800
2,161,336
16,258,546
50,408,628
987,735
252,604,045
(511,490)
252,092,555
December 31, 2012
December 31, 2011
January 1, 2011
533,010
1,363,632
1,896,642
-
7,362,757
7,362,757
533,010
1,013,754
1,546,764
-
11,467,311
11,467,311
533,010
1,671,606
2,204,616
71,436,282
7,158,212
78,594,494
5.8 Other Receivables
Non-Current
Tax Credits
Guarantee Deposits
Prepaid Expenses
Advances
Related Parties (Note 16)
Other
Current
Tax Credits
Court-ordered and
Guarantee Deposits
Prepaid Expenses
Advances
Derivatives
Related Parties (Note 16)
Sundry Receivables
Other
Allowance for Other Bad Debts
5.9 Trade Receivables
Non-Current
Trade Receivables
Current
Trade Receivables
Related Parties (Note 16)
Allowance for Bad Debts
5.10 Cash and Banks
Cash and Imprest Funds
Cash at Banks
5.11 Accruals and Other
Non-Current
Provisions for Lawsuits
and Contingencies
Accrual for Retirement of Assets
December 31, 2012
December 31, 2011
January 1, 2011
29,071,847
2,393,139
32,049,057
46,706,040
17,312,664
1,237,685
128,770,432
28,146,558
1,155,599
64,974,448
83,676,404
15,238,424
12,038,746
205,230,179
21,600,642
883,017
11,296,558
33,307,668
13,744,482
15,056,093
95,888,460
98,979,763
129,996,025
54,576,609
12,958,195
108,944,242
68,271,431
-
20,091,695
20,997,255
72,735,694
(712,582)
402,265,693
11,595,055
75,569,941
91,800,802
-
4,685,406
19,391,074
40,085,710
(727,212)
372,396,801
9,522,069
52,613,247
69,431,355
37,348,003
15,638,455
11,665,045
30,034,629
(669,023)
280,160,389
December 31, 2012
December 31, 2011
January 1, 2011
125,285,473
125,285,473
1,720,125,393
42,893,260
(124,468,622)
1,638,550,031
122,595,188
122,595,188
1,298,234,683
39,453,675
(113,098,423)
1,224,589,935
1,102,833
1,102,833
1,031,842,249
34,261,001
(112,095,450)
954,007,800
December 31, 2012
December 31, 2011
January 1, 2011
13,891,570
609,503,744
623,395,314
14,991,530
614,163,873
629,155,403
9,834,327
322,423,510
332,257,837
December 31, 2012
December 31, 2011
January 1, 2011
244,711,114
10,127,840
254,838,954
184,197,422
8,841,590
193,039,012
151,347,261
8,600,000
159,947,261
110
111
December 31, 2012
December 31, 2011
January 1, 2011
5.12 Loans
Non-Current
Financial Loans
Notes
Acquisition of equipment
Related Parties (Note 16)
Interest and Restatement
Measurement at Fair Value
Current
Bank Overdraft
Financial Loans
Notes
Acquisition of equipment
Related Parties (Note 16)
Interest and Restatement
Measurement at Fair Value
24,532,325
2,576,671,000
131,042,046
5,775,689
-
(54,726,838)
2,683,294,222
25,938,501
130,633,167
165,200,000
70,085,470
13,316,320
95,037,331
3,873,880
504,084,669
The following table details the changes in loans
and indebtedness for the year ended December 31,
2012 and the prior year:
Balances as of January 1st
New Loans and Indebtedness (1)
Accrued Interest
Other Financial Effects
Acquisition of investment for the purchase of Notes from
Subsidiaries (Note 23)
Payment of Interest
Payment of Principal
Repurchase / Financial Debt Refinancing Result (2)
Balances as of December 31
(1) Mostly loans for the purchase of capital assets and
inventories.
(2) As of December 31, 2012 it belongs to the
repurchase of Notes, issued by Cablevisión, carried
out on June 12, 2012 and September 21, 2012,
charged to financial income in the Consolidated
Statement of Comprehensive Income. As of December
31, 2011 it belongs to the refinancing of Notes,
issued by Cablevisión, carried out on February 11,
2011, charged to financial income in the Consolidated
Statement of Comprehensive Income.
127,765,988
2,583,977,500
90,419,726
5,717,866
37,900
(58,609,546)
2,749,309,434
51,328,110
118,613,980
129,000,000
40,266,383
13,264,292
86,023,776
3,935,489
442,432,030
2012
3,191,741,464
160,647,673
304,446,963
437,066,953
(195,525,800)
(304,037,904)
(402,949,658)
(4,010,800)
3,187,378,891
111,642,658
1,964,840,968
31,452,148
5,083,272
75,800
4,492,370
2,117,587,216
9,979,032
41,614,044
133,904,847
33,555,473
5,093,485
33,137,578
3,333,740
260,618,199
2011
2,378,205,415
861,143,588
253,298,050
214,434,150
-
(205,370,104)
(268,947,792)
(41,021,843)
3,191,741,464
The following table summarizes the maturities
of consolidated loans (undiscounted values):
Non-Current Debt
years
years
years
years
years
Non-Current
From 1 to 2
From 2 to 3
From 3 to 4
From 4 to 5
More than 5
Total
To fall due
Financial Loans
Notes
Acquisition of equipment
Related Parties
Total as of
10,891,571
666,112,000
65,540,353
5,775,689
8,373,669
432,960,000
53,477,556
-
3,075,805
828,159,000
12,024,137
-
2,191,280
-
24,532,325
432,960,000
216,480,000
2,576,671,000
-
-
-
-
131,042,046
5,775,689
December 31, 2012
748,319,613
494,811,225
843,258,942
435,151,280
216,480,000
2,738,021,060
Up to 3
months
22,017,092
42,333,760
41,300,000
12,489,066
5,416,324
93,046,994
From 3 to 6
From 6 to 9
From 9 months
months
months
to 1 year
Total Current
To fall due
3,921,409
73,659,254
41,300,000
17,470,365
7,899,996
1,990,337
-
11,829,767
41,300,000
24,434,749
-
-
-
2,810,386
41,300,000
15,691,290
-
-
25,938,501
130,633,167
165,200,000
70,085,470
13,316,320
95,037,331
Current Loans
Bank Overdraft
Financial Loans
Notes
Acquisition of equipment
Related Parties
Interest and Restatement
Total as of
December 31, 2012
216,603,236
146,241,361
77,564,516
59,801,676
500,210,789
Consolidated loans mainly include the following:
5.12.1 Cablevisión
The most significant bank and financial loans
borrowed by Cablevisión and its subsidiaries are
the following:
Date Issued
Borrower
Balances as of
Balances as of
Principal
December 31,
December 31,
Amount
2012
2011
In millions of USD
Final Maturity
Interest Rate
February 2011
February 2011
February 2011
February 2011
May 2011
May 2011
December 2003
(1) Cablevisión
(1) Cablevisión
(1) Cablevisión
(2) Cablevisión
(2) Cablevisión
(2) Prima
Multicanal
88.2
71.3
223.3
17.2
50.0
70.0
80.3
87.4
70.6
221.0
17.1
37.5
12.5
80.3
88.2
71.3
February 2018
February 2018
223.3
February 2018
17.2
50.0
70.0
80.3
February 2018
May 2014
May 2014
July 2016
(3) 8.75%
(3) 9.375%
(3) 9.625%
(3) 9.375%
Libor + 7.5%
Libor + 7.5%
(3) 3.5% to 4.5%
(1) Use of funds: Refinancing of Notes.
(2) Use of funds: Acquisition of non-financial assets
and financing of imports (Note 23).
(3) Fixed rate.
112
113
As a result of the Notes issued, Cablevisión
has undertaken certain covenants, including:
(i) limitation on the issuance of guarantees
by subsidiaries; (ii) mergers, consolidations,
and sale of assets under certain conditions,
(iii) limitation on incurring debt above certain
approved ratios, (iv) limitation on capital
expenditure exceeding certain amount,
(v) limitation on transactions with shareholders
and affiliates under certain conditions, (vi)
limitation on the issuance and sale of significant
subsidiaries' shares with certain exceptions.
As a result of the issue of its variable-rate
Notes, PRIMA has undertaken certain
covenants, including the limitation to carry out
transactions with shareholders and affiliates
under certain conditions. Cablevisión is
the guarantor of the issue and the obligor for
the payment of PRIMA's Notes for up to
USD 35,000,000.
5.12.2 AGEA
On January 28, 2004, the subsidiary AGEA
issued USD30.6 million aggregate principal
amount Series C Notes due 2014, which accrue
interest at an incremental fixed rate (2% from
December 17, 2003 to January 28, 2008;
3% from January 29, 2008 to January 28, 2012;
and 4% from January 29, 2012 to maturity),
payable semiannually. Principal will be repaid
in a lump sum on January 28, 2014.
On January 26, 2006, AGEA issued Ps. 300
million aggregate principal amount Series
D Notes due 2014, which accrued interest at
a variable rate equal to the CER variation
for the period, plus a 4.25% margin, payable
semiannually commencing on June 15, 2006.
Principal was repaid in 8 equal and consecutive
semiannual installments beginning on
June 15, 2008.
As of December 31, 2011 AGEA had repaid
in full principal under Series D Notes, plus
interest accrued thereon.
The Series C Notes due 2014 include certain
covenants and restrictions, including but not
limited to, restrictions on borrowings, creation
of encumbrances, mergers, disposition of
significant assets, transactions with affiliates
(including the Company) and payment of
dividends or other payments to shareholders
(including the payment of management fees
to the Company), if certain ratios are not met
or if certain amounts are exceeded.
Additionally, on July 15, 2011, AGEA executed
a syndicated loan agreement in the amount
of Ps. 45 million with Standard Bank Argentina
S.A. and Banco Itaú Argentina S.A., which
accrues interest at a fixed annual rate of 18.45%
payable on a quarterly basis as from October
18, 2011. Principal will be repaid in five
consecutive quarterly installments beginning on
July 18, 2012.
5.12.3 GCGC
As of December 31, 2012 GCGC was the
borrower under a loan with Banco de la Ciudad
de Buenos Aires executed to finance the repair,
recycling and improvement of the building
for a principal amount of up to Ps. 30 million.
Such loan will be repaid in 60 months, as from
October 2012, with a 24-month grace period,
i.e. in 36 monthly consecutive installments,
accruing interest at the average Badlar rate
for Private Banks plus 100 basic points. The
aggregate amount of the loan will be advanced
to the company in several stages, after having
obtained the required professional certifications.
As of December 31, 2012 expenditures amount
to Ps. 1.9 million.
GCGC was the borrower under a loan
agreement with Standard Bank Argentina for a
principal amount of Ps. 7.5 million to finance
the repair, recycling and improvement of the
building. The loan will be repaid in 36 months,
as from October 2012, with a 18-month grace
period. The principal amount will be repaid
in 7 quarterly decreasing installments as from
the 18th month. Such loan accrues interest
at a 15% fixed nominal annual rate.
5.12.4 GCSA Investments
As of December 31, 2012 GCSA Investments
was the borrower under a loan with JP Morgan
Chase Bank for a principal amount of USD 10
million, due on June 30, 2013. Interest under
the loan accrues at a variable rate and is payable
semiannually. The loan agreement sets forth
certain covenants and restrictions, including
mainly restrictions on borrowings, creation of
encumbrances, winding-up, liquidation and
effective changes of control.
5.12.5 ARTEAR
As of December 31, 2012 ARTEAR was the
borrower under a commercial loan with a local
bank for a principal amount of Ps. 15 million.
Principal on the loan is payable in three
equal installments due in January, April and
July 2013. Interest accrues at a fixed rate
and is payable on a quarterly basis, starting in
October 2011 until the final maturity.
5.12.6 CMD
As of December 31, 2012 CMD was the
borrower under a loan with Banco de la Ciudad
de Buenos Aires for a prinicpal amount of
Ps. 9.7 million. Proceeds were used to finance
partially the acquisition and renovation of
the building. Such loan will be repaid in
60 months, with a 24-month grace period, i.e.
in 36 monthly consecutive installments,
accruing interest at the average Badlar rate for
Private Banks plus 100 basic points. The first
installment was due on June 27, 2010.
5.13 Sellers Financing
The following table summarizes the
consolidated debt maturities in connection
with the acquisition of companies:
Non-Current Sellers Financing
years
2012
2011
2010
To fall due
Total as of
Total as of
Total as of
From 1 to 2
December 31,
December 31,
December 31,
Principal
325,330
325,330
816,853
1,127,017
Current
Sellers
Financing
Without any
established
term
Up to 3
months
From 3 to 6
From 6 to 9
From 9 months
December 31,
December 31,
December 31,
months
months
to 1 year
2012
2011
2010
To fall due
Total as of
Total as of
Total as of
Principal
778,558
-
325,330
-
-
1,103,888
8,178,434
3,796,354
5.14 Taxes Payable
Non-Current
Taxes Payable on a National Level
Taxes Payable on a Municipal Level
Current
Taxes Payable on a National Level
Taxes Payable on a Provincial Level
Taxes Payable on a Municipal Level
December 31, 2012
December 31, 2011
January 1, 2011
74,910,041
-
74,910,041
386,657,664
6,548,977
18,562,595
411,769,236
79,195,842
-
79,195,842
283,531,658
3,045,438
13,348,827
299,925,923
83,156,561
483,271
83,639,832
454,930,998
6,484,639
10,675,795
472,091,432
114
115
5.15 Other Liabilities
Non-Current
Related Parties (Note 16)
Guarantee Deposits
Unearned Revenue
Call Options (Note 10)
Derivatives
Investment in Affiliates
and Subsidiaries
Other
Current
Advances from Customers
Dividends Payable
Related Parties (Note 16)
Call Options (Note 10)
Unearned Revenue
Derivatives
Other
5.16 Trade Payables and Other
Non-Current
Suppliers and Trade Provisions
Employer's Contributions
Current
Suppliers and Trade Provisions
Related Parties (Note 16)
Employer's Contributions
December 31, 2012
December 31, 2011
January 1, 2011
-
2,599
81,047,345
5,154,721
-
6,269,973
5,113,951
97,588,589
62,049,186
2,459,472
30,336
14,760,000
84,925,814
4,010,000
46,010,317
214,245,125
-
14,376
75,181,695
18,054,721
3,900,000
4,530,531
2,673,162
104,354,485
48,292,565
3,765,361
496,819
-
47,599,975
4,353,000
44,220,514
148,728,234
438,783
1,975,322
59,824,566
17,094,721
-
4,164,093
5,932,094
89,429,579
44,662,304
2,008,066
467,331
5,154,721
38,479,483
-
36,824,387
127,596,292
December 31, 2012
December 31, 2011
January 1, 2011
5,774,324
114,302
5,888,626
1,262,496,139
86,717,499
679,910,028
2,029,123,666
8,448,050
1,750,705
10,198,755
1,105,728,114
119,465,629
506,347,411
1,731,541,154
12,450,978
-
12,450,978
747,063,100
77,240,030
381,891,769
1,206,194,899
Note 6
Breakdown of the main items of the statement of comprehensive income
6.1. Revenues
Sales of Cable TV Subscriptions
Advertising Sales
Sales of Internet Subscriptions
Circulation Sales
Printing Services Sales
TV Signals Sales
Other Sales
Total (1)
(1) Includes sales executed through barter transactions
as of December 31, 2012 and 2011 in the amount of Ps. 91.6
million and Ps. 91.2 million, respectively.
December 31, 2012
December 31, 2011
5,704,777,503
2,295,676,706
1,588,414,701
879,516,792
125,569,566
174,492,718
550,458,107
11,318,906,093
4,428,956,203
2,103,470,240
1,353,185,580
645,355,965
150,616,463
133,095,885
510,558,280
9,325,238,616
6.2. Cost of Sales
Inventories at the beginning of the year
Purchases for the year
Production and Services Expenses (Note 6.3.)
Less: Inventories at year-end
Cost of Sales
December 31, 2012
December 31, 2011
387,495,288
734,628,930
5,748,877,255
(362,814,970)
6,508,186,503
273,944,061
838,665,547
4,649,201,868
(387,495,288)
5,374,316,188
6.3. Production and Services, Selling and Administrative Expenses
Production
and Services
Selling
Administrative
December 31,
December 31,
Total as of
Total as of
Item
Expenses
Expenses
Expenses
2012
2011
Fees for Services
Salaries, Social
Security and Benefits
to Personnel
Advertising and
Promotion Expenses
Taxes, Duties and
Contributions
Doubtful Accounts
Travel Expenses
Maintenance Expenses
Distribution Expenses
Communication
Expenses
Contingencies
Stationery and
Office Supplies
Commissions
Productions and
Co-Productions
Printing Expenses
Rights
Services and Satellites
Severance Payments
Non-Computable VAT
Rentals
Amortization of
Intangible Assets
Amortization of
Film Library
Depreciation of
Property, Plant
and Equipment
Impairment of
Inventories and
Obsolescence
of Materials
Other Expenses
Total as of
224,478,084
52,220,726
395,535,038
672,233,848
501,219,589
2,274,235,418
432,092,466
614,270,446
3,320,598,330
2,493,064,405
-
340,657,473
1,035,567
341,693,040
279,351,149
165,623,054
298,957,843
32,139,351
496,720,248
376,615,207
-
51,502,288
337,403,480
30,987,497
42,811,874
29,837,238
27,966,380
39,045,753
-
10,731,068
117,599,006
-
42,811,874
92,070,594
482,968,866
70,033,250
42,467,310
77,411,654
397,379,233
55,439,745
6,715,959
40,666,127
2,213,820
-
6,546,507
19,042,120
15,476,286
59,708,247
13,005,680
50,676,789
3,837,430
-
3,622,645
21,844,738
20,245,827
193,891,072
27,705,902
215,735,810
23,741,399
164,791,145
165,757,963
114,962,902
1,049,888,005
191,835,730
10,619,233
20,093,188
147,898,880
-
-
-
-
-
-
631,526
4,872,195
-
16,579,993
4,275,922
-
165,757,963
114,962,902
1,049,888,005
209,047,249
19,767,350
20,093,188
148,112,364
130,880,539
896,811,069
168,989,020
29,236,364
18,773,590
6,283,336
25,973,934
180,156,150
126,730,101
130,511,915
6,736,721
5,526,920
142,775,556
149,475,245
3,505,925
-
-
3,505,925
2,738,614
661,169,712
40,923,898
23,981,121
726,074,731
613,264,887
6,337,972
110,846,493
-
37,100,707
-
35,204,963
6,337,972
183,152,163
6,906,490
122,902,893
December 31, 2012
5,748,877,255
1,387,819,339
1,522,578,855
8,659,275,449
Total as of
December 31, 2011
4,649,201,868
1,094,247,032
1,146,535,581
6,889,984,481
116
117
6.4. Financial Income
Interest
Exchange Differences
Income from Changes in the Fair Value of Financial Instruments
Repurchase / Financial Debt Refinancing Result
Total
6.5. Financial Costs
Interest
Other Taxes and Expenses
Exchange Differences
Financial Discounts on Assets and Liabilities
CER Restatement
Income from Changes in the Fair Value of Financial Instruments
Total
6.6. Other Income and Expense
Income from Sale of Property, Plant and Equipment
Income from Disposal of Investments
Goodwill Impairment
Other
Total
December 31, 2012
December 31, 2011
66,957,393
91,283,703
-
4,010,800
162,251,896
22,972,677
36,392,994
2,300,051
41,021,843
102,687,565
December 31, 2012
December 31, 2011
(331,961,899)
(203,360,750)
(508,447,786)
(27,572,137)
(5,119,362)
(1,943,500)
(1,078,405,434)
(288,316,295)
(145,508,778)
(222,052,329)
(17,678,855)
(2,973,143)
(8,244,000)
(684,773,400)
December 31, 2012
December 31, 2011
3,213,458
-
-
(2,574,088)
639,370
10,194,877
6,657,315
(12,053,573)
(3,291,409)
1,507,210
Note 7
Income tax
The following table shows the reconciliation
between the consolidated income tax charged to
net income for the years ended December 31,
2012 and 2011 and the income tax liability
that would result from applying the current tax
rate on consolidated income before income
tax and tax on assets and the income tax liability
assessed for each year (amounts stated in
thousands of Argentine Pesos):
Income before Income Tax
Current Rate
Income Tax Assessed at the Current Tax Rate on Income
before Income Tax
Permanent Differences:
Equity in Earnings from Affiliates and Subsidiaries
Non-Taxable Income
Other
Subtotal
Valuation Allowance for Net Deferred Tax Assets Charged
to Income
Total Income Tax
Deferred Tax
Current Tax
Income Tax Assessed for the Year
Tax on assets
Total
December 31, 2012
December 31, 2011
998,490
35%
(349,472)
4,789
(149,759)
(10,207)
(504,649)
(14,524)
(519,173)
(58,580)
(460,593)
(519,173)
(5,703)
(524,876)
1,163,215
35%
(407,125)
11,779
(11,242)
(7,252)
(413,840)
(8,819)
(422,659)
44,716
(467,375)
(422,659)
(2,373)
(425,032)
118
119
Breakdown of Consolidated Deferred Tax (in thousands of Argentine pesos):
December 31,
December 31,
January 1,
Changes Year
Changes Year
2012
2011
2011
2012
2011
Deferred Assets
Tax Loss Carryforwards
Specific Tax Loss
Carryforward
Inventories
Other Investments
Accruals and Other
Trade Payables
and Other
Deferred Tax Liabilities
Property, Plant and
Equipment
Intangible Assets
Trade Receivables
Other Assets
Other Liabilities
Long-Term Debt
Subtotal
Valuation Allowance on
Tax Loss Carryforwards
Total Net Deferred
Tax Liabilities
95,065
1,008
7,095
7,463
66,428
19,913
196,972
(109,901)
(119,272)
(25,884)
(1,912)
(88,756)
(17,799)
(363,524)
73,349
477
5,078
7,646
47,417
16,066
150,033
(107,236)
(136,622)
(21,193)
(4,651)
20,794
(17,920)
(266,828)
34,085
5,768
3,514
7,828
37,184
2,863
91,242
(102,428)
(211,369)
42,898
(3,900)
14,992
2,739
(257,068)
21,716
531
2,017
(183)
19,011
3,847
46,939
(2,665)
17,350
(4,691)
2,739
(109,550)
121
(96,696)
(39,892)
(403,416)
(31,069)
(297,897)
(26,754)
(283,822)
(8,823)
(105,519)
39,264
(5,291)
1,564
(182)
10,233
13,203
58,791
(4,808)
74,747
(64,091)
(751)
5,802
(20,659)
(9,760)
(4,315)
(14,075)
(1) (206,444)
(147,864)
(192,580)
(58,580)
44,716
(1) Comprises Deferred Tax Assets in the amount of
Ps. 55,403,579 and Deferred Tax Liabilities in the amount
of Ps. 261,847,892 as of December 31, 2012, disclosed
in the Consolidated Balance Sheet.
As of December 31, 2012, the Company's and
its subsidiaries' accumulated consolidated tax
loss carryforwards amounted to approximately
Ps. 274,491 thousand, which calculated at
the current tax rate, represent deferred tax assets
in the amount of approximately Ps. 96,073
thousand. The following table shows the
expiration date of the accumulated tax loss
carryforwards pursuant to statutes of limitations
(amounts stated in thousands of Argentine
Pesos):
Expiration year
Amount of Tax
Loss Carryforward
2013
2014
2015
2016
2017
19,202
29,851
36,684
106,130
82,624
274,491
The Company estimates that the tax loss
carryforwards are recoverable for the
net amounts disclosed.
Note 8
Provisions and other contingencies
8.1 Regulatory Framework
a. SCI Resolution No. 50/10 approved certain
rules for the sale of pay television services.
These rules provide that cable television
operators must apply a formula to estimate their
monthly subscription prices. The price arising
from the application of the formula was to
be informed to the Office of Business Loyalty
(Dirección de Lealtad Comercial) between
March 8 and March 22, 2010. Cable television
operators must adjust such amount semi-
annually and inform the result of such
adjustment to said Office.
Even though as of the date of these financial
statements the subsidiary Cablevisión cannot
assure the actual impact of the application
of this formula, given the vagueness of the
variables provided by the Resolution to calculate
the monthly subscription prices, Cablevisión
believes that Resolution No. 50/10 is arbitrary
and bluntly disregards its freedom to contract,
which is part of the right to freedom of industry
and trade. Therefore, it has filed the pertinent
administrative claims and has brought the
necessary legal actions requesting the suspension
of the Resolution's effects and ultimately
requesting its nullification.
Even though Cablevisión, like other companies
in the industry, has strong constitutional
arguments to support its position, it cannot
be assured that the final outcome of this issue
will be favorable. Therefore, Cablevisión
may be forced to modify the price of its pay
television subscription, a situation that could
significantly affect the revenues of its core
business. This creates a general framework
of uncertainty over Cablevisión's business that
could significantly affect the recoverability
of its relevant assets reported in these
consolidated financial statements and Grupo
Clarín S.A.'s assets related to its investment in
Cablevisión. Notwithstanding the foregoing,
as of the date of these financial statements,
in accordance with the decision rendered on
August 1, 2011 in re "LA CAPITAL CABLE
S.A. v/ Ministry of Economy-Secretary of
Domestic Trade", the Federal Court of Appeals
of Mar del Plata has ordered the SCI to suspend
the application of Resolution No. 50/10 with
respect to all cable television licensees
120
121
represented by the Argentine Cable Television
Association ("ATVC", for its Spanish acronym).
Upon being served on the SCI and the Ministry
of Economy on September 12, 2011, such
decision became fully effective and may not be
disregarded by the SCI.
On June 1, 2010, the SCI imposed a Ps. 5
million fine on Cablevisión alleging that it had
failed to comply with the information regime
set forth by Resolution No. 50/10, and invoking
the Antitrust Law to impose such penalty. The
fine was appealed and submitted to the Federal
Administrative Court of Appeals, Chamber V,
which decided to reduce the fine to Ps.
300,000. Cablevisión appealed this decision by
filing an extraordinary appeal with the Supreme
Court of Argentina.
On March 10, 2011 SCI Resolution No. 36/11
was published in the Official Gazette. This
Resolution falls within the framework of SCI
Resolution No. 50/10. Resolution No. 36/11
sets forth the parameters to be applied to
the services rendered by Cablevisión to its
subscribers from January through April 2011.
These parameters are as follows: 1) the monthly
basic subscription price shall be Ps. 109 for that
period; 2) the price of other services rendered by
Cablevisión should remain unchanged as of the
date of publication of the resolution; and 3) the
promotional benefits, existing rebates and/or
discounts already granted as of that same date
shall be maintained. The resolution also
provides that Cablevisión shall reimburse users
for any amount collected above the price set for
that period.
Cablevisión believes that Resolution No. 36/10
is illegal and arbitrary, since it is grounded
on Resolution No. 50/2010, which is absolutely
null and void. Since the application of
Resolution No. 50/10 has been suspended,
the application of Resolution No. 36/2011,
which falls within the framework of the former,
is also suspended.
The claim filed by Cablevisión seeking
the nullification of Resolution No. 50/2010
is currently pending before the Federal
Administrative Court of First Instance
No. 7 of the City of Buenos Aires.
Subsequently, the SCI issued Resolutions Nos.
65/11, 92/11, 123/11, 141/11, 10/11, 25/12,
97/12 and 161/12 pursuant to which the
SCI extended the effectiveness of Resolution
No. 36/11 up to and including March 2013,
and adjusted the cable television subscription
price to Ps.130. Cablevisión believes, however,
that given the terms under which the Federal
Court of the City of Mar del Plata granted
the preliminary injunction, that is, ordering the
SCI to suspend the application of Resolution
No. 50/97 with respect to all cable television
licensees (among them, Cablevisión and
its subsidiaries) represented by ATVC, and also
given the fact that Resolutions No. 36/11,
65/11, 92/11, 123/11, 141/11, 25/12, 97/12
and 161/12 merely extend the effectiveness
of Resolution No. 50/10, Cablevisión continues
to be protected by said preliminary injunction,
and, therefore, its ordinary course of business
will not be affected.
On January 13, 2012, the Secretariat of
Domestic Trade issued Resolution No. 2/2012
granting Cablevisión 24 hours to resume service
to those subscribers who had duly paid their
subscription fee in the amount established by
the National Government. In its sixth section,
the Resolution provides that if the company
does not comply with its obligations thereunder,
penalties may be imposed as provided by Law
20,680. On February 10, 2012, Cablevisión
received a fine of Ps. 1 million for alleged non-
compliance with such Resolution. Such fine has
been appealed but no decision has been
rendered on the matter yet.
After the Federal Court of Mar del Plata
issued its injunction, several Municipal Offices
of Consumer Information (“OMIC”, for its
Spanish acronym) and several individuals filed
claims requesting that Cablevisión comply
with Resolution No. 50/10 and the subsequent
resolutions that extended its effectiveness. In
some cases, preliminary injunctions were
granted. In every case, Cablevisión appealed
such preliminary injunctions alleging that
Resolution No. 50/10, as amended, and/or the
subsequent resolutions that extended its
effectiveness, had been suspended with respect
to Cablevisión, its branches and subsidiaries
prior to the issuance of such preliminary
injunctions.
b. On August 19, 2010 the Media Secretariat
issued Resolution No. 100/2010, whereby
it revoked the license that had been granted to
Fibertel. Cablevisión believes that this resolution
is an absolutely null and void administrative act.
Its language contradicts express provisions of
the National Constitution, of Law No. 19,550
(Argentine Business Associations Law), Decrees
Nos. 1,185/90 and 764/00 and Law No.
19,549 of Administrative Procedures, among
others. The Resolution disregards the several
filings made by Cablevisión with the Media
Secretariat requesting such agency to issue an
administrative act evidencing that Cablevisión,
pursuant to section 82 of the Argentine
Business Associations Law, is the successor of
Fibertel and, therefore, the holder of the
exclusive telecommunication service license and
of the registrations that had been previously
granted to Fibertel. More than eight years after
that request, in spite of the existence of a draft
of a favorable decision in the case file, with
a completely arbitrary attitude that contradicts
other precedents of the same agency, and
without prior notice that would have allowed
Cablevisión to exercise its defense right, the
SECOM ordered that the license be revoked
and that the users migrate within 90 days of the
resolution's notification. On August 26, 2010
Cablevisión filed an appeal requesting the
reversal of the resolutions, and if such appeal
is rejected, a subsidiary appeal against that
Resolution before the highest administrative
authority. The appeal was dismissed pursuant
to SECOM Resolution No. 132/2010 dated
October 7, 2010. However, since Cablevisión
had filed a subsidiary appeal to have the case
heard by the highest administrative authority;
the file was submitted to the Ministry of Federal
Planning, Public Investment and Utilities.
As of the date of these financial statements, this
appeal is pending resolution.
On February 24, 2011, Chamber No. 3 of
the Federal Court of Appeals on Civil
and Commercial Matters of the City of Buenos
Aires, in re “ANTITRUST ASSOCIATION V.
NATIONAL GOVERNMENT MEDIA
SECRETARIAT ON COMPLAINT FOR
THE PROTECTION OF
CONSTITUTIONAL RIGHTS” confirmed
the decision rendered in the first instance,
stating that the National Government, Media
Secretariat, shall refrain from disrupting or
limiting in any way the Internet access services
offered by Cablevisión. It also partially amended
the above decision by broadening its effects,
ordering the National Government to refrain
from enforcing Resolution No. 100/10, thus
allowing new customers to subscribe to the
Internet access services offered by Cablevisión.
Cablevisión has strong grounds that support
its position, it cannot be assured that the final
outcome of this issue will be favorable.
On December 16, 2011, Federal Civil and
Commercial Court No. 3, Clerk's
Office No. 5 issued a related injunction in
re “CABLEVISION S.A. v. NATIONAL
GOVERNMENT ON COMPLAINT
FOR THE PROTECTION OF
CONSTITUTIONAL RIGHTS”, ordering
the suspension of the effects of SECOM
Resolution No. 100/10 and also guaranteeing
new subscribers the possibility to subscribe
to the Internet Access service offered by
Cablevisión.
On December 20, 2011, at the request of
Cablevisión, a new preliminary injunction
was issued in re “CABLEVISION S.A. v.
National Government - Argentine Secretariat
of Communications on COMPLAINT
FOR THE PROTECTION OF
CONSTITUTIONAL RIGHTS”. On the
basis of the above-mentioned precedent, and on
the existing connection between the subject
matters of both cases, as alleged by Cablevisión,
the injunction ordered the suspension of the
effects of SECOM Resolution No. 100/10.
The National Government filed an appeal
with Chamber No. 3 of the Federal Court of
Appeals on Civil and Commercial Matters
which is still pending as of the date of these
financial statements.
Due to the imminent possibility that
the application of Law No. 26,522 will affect
the assets used to provide Internet access
services, within the framework of this same file
Cablevisión requested the extension of the
scope of the effective injunction, which was
granted on December 6, 2012. Such extension
entailed notifying AFSCA of the injunction
which prevents it from affecting in any way the
Internet access services offered by Cablevisión.
Based on the above-mentioned preliminary
injunctions, Cablevisión is authorized to
continue to render the telecommunication
services granted to Fibertel.
Cablevisión will resort to all available
administrative and judicial remedies in order
to have SECOM Resolution No. 100/2010
declared null and void. Even though
122
123
On September 10, 2010, the National
Administration of Domestic Trade notified
Cablevisión that a Ps. 5 million fine had
been imposed for promoting the Fibertel
service without being the holder of the license
(Section 7 of Law No. 24,240), for the
impossibility of honoring the promotion
offered to undetermined potential consumers
(Section 7 of Law No. 24,240), for providing
wrong information to the customers (Section
4 of Law No. 24,240), and for the impossibility
of honoring promotions because Cablevisión
was not the holder of the Fibertel license
(Section 19 of Law No. 24,240). Cablevisión
appealed such decision in due course, since
it believes it has sufficient arguments in its
favor. The file was assigned No. 1,276
and is pending before Chamber No. 2 of the
Court of Appeals on Administrative Matters.
On April 17, 2012 the appeal was partially
granted, reducing the fine to Ps. 380,000.
Notwithstanding the foregoing, Cablevisión
filed an appeal with the Supreme Court
of Argentina in due time and form against
such decision. On July 12, 2012, Chamber
No. 2 of the Federal Court of Appeals on
Administrative Matters decided to dismiss the
appeals filed by both parties.
Cablevisión filed an appeal against the above-
mentioned dismissal since it believes it has
sufficient grounds to have the fine revoked.
However, Cablevisión cannot assure that the
outcome of the appeal will be favorable.
Since the appeal does not have staying effects,
on October 18, 2012 the National
Administration of Domestic Trade ordered
Cablevisión to pay within ten (10) business
days the fine reduced by Chamber No. 2.
On October 29, 2012 Cablevisión settled the
fine in the amount of Ps. 380,000 and the
compliance was recorded in the file.
c. Pursuant to the Antitrust Law and to
Broadcasting Law No. 22,285, the transactions
carried out on September 26, 2006 that
resulted in an increase in the indirect interest
the Company held in Cablevisión to 60%,
Cablevisión's acquisition of 98.5% of
Multicanal and 100% of Holding Teledigital,
and Multicanal's acquisition of PRIMA (from
PRIMA Internacional (now CMD)), required
the authorization of the CNDC (validated
by the SCI), and the COMFER. On October 4,
2006, the Company, Vistone, Fintech, VLG
and Cablevisión, as purchasers, and AMI CV
Holdings LLC, AMI Cable Holdings Ltd. and
HMTF-LA Teledigital Cable Partners LP, as
sellers, filed for the approval of the acquisition.
After several requests for information, the SCI
issued Resolution No. 257/07, with a prior
opinion of the CNDC in favor of the approval
of the above-mentioned transactions and after
consulting the COMFER and the SECOM,
which did not raise any objections. The
Company was served notice in this respect
on December 7, 2007. Such Resolution was
appealed by five entities. As of the date of
these financial statements, the CNDC has
dismissed the five appeals filed against the
above-mentioned resolution. Four of the entities
filed direct appeals before the judicial branch.
Three of those appeals were dismissed and one
is still pending resolution.
Cablevisión believes that if the CNDC acts
as it did in the case of the three dismissed direct
appeals, the fourth appeal is unlikely to be
admitted.
On June 11, 2008, Cablevisión was served
with a decision of the Federal Court of Appeals
on Civil and Commercial Matters revoking a
decision rendered by the CNDC on September
13, 2007, whereby such agency had dismissed
a claim filed by Gigacable S.A. prior to the
December 7, 2007 decision referred to above.
The Court of Appeals revoked CNDC's
decision only with respect to matters relating to
the conduct of Cablevisión and Multicanal prior
to CNDC's authorization of the transactions on
December 7, 2007, and ordered an investigation
to determine whether a fine should be imposed
on Cablevisión and Multicanal due to such
conduct. As of the date of these financial
statements, Cablevisión has filed its response,
which is pending analysis by such agency.
d. On December 15, 2008, the shareholders
of Cablevisión approved the merger of
Multicanal, Delta Cable S.A., Holding
Teledigital, Teledigital, Televisora La Plata
Sociedad Anónima, Pampa TV S.A., Construred
S.A. and Cablepost S.A. into Cablevisión,
whereby, effective as of October 1, 2008,
Cablevisión, as surviving company, became
the universal successor to all of the assets, rights
and obligations of the merged companies.
The merger commitment was executed on
February 12, 2009 and was filed with the
CNV pursuant to applicable regulations that
require administrative approval. As of the date
of these financial statements, such merger is
pending administrative approval by the CNV
and registration with the IGJ.
On September 3, 2009, the COMFER issued
Resolution No. 577/09 whereby it withheld
approval of Cablevisión's merger with
Multicanal S.A.
On September 8, 2009, Multicanal was served
with CNDC Resolution No. 106/09, dated
September 4, 2009, whereby the CNDC
ordered an audit to articulate and harmonize the
several aspects of Resolution No. 577/09 issued
by the COMFER with Resolution No. 257/07
issued by the Secretariat of Domestic Trade.
Resolution No. 106/09 also sets forth that the
notifying companies shall not, from the
enactment thereof and until the end of the audit
and / or resolution of the CNDC, be able to
remove or replace physical or legal assets.
On September 17, 2009 Judge Dr. Esteban
Furnari of the National Court on Federal
Administrative Matters No. 2, in re “Multicanal
and Other v. Conadeco- Decree 527/05 and
other on Proceeding leading to a declaratory
judgment”, ordered the suspension of the effects
of COMFER Resolution No. 577/09, of
CNDC Resolution No. 106/09, and any other
act resulting therefrom, until a final decision
was rendered in the case.
On October 23, 2009, the court decision
that had suspended the effects of COMFER
Resolution No. 577/09 and CNDC Resolution
No. 106/09 was revoked by Chamber
No. 3 of the Court of Appeals on Federal
Administrative Matters, in re “Multicanal and
Other v. Conadeco- Decree 527/05 and other
on Proceeding leading to a declaratory
judgment”. Therefore, the calculation of the
suspended terms was automatically resumed.
On that basis, on December 1, 2009,
Cablevisión ratified the filing it had made with
the COMFER at the time of the merger, and
specified the licenses to which it had decided
to maintain title. On December 16, 2009,
the Chamber No. 3 of the Court of Appeals
on Federal Administrative Matters, in
re "Multicanal and other v. CONADECO
Decree 527/05 and other on Proceeding leading
to a declaratory judgment" File No. 14,024/08,
granted the extraordinary appeal filed
by Multicanal and Grupo Clarín against the
decision rendered by that same court on
October 23, 2009. With the granting of that
appeal, Cablevisión's preliminary injunction
regained full force and effect. Accordingly,
on January 8, 2010 Cablevisión notified such
circumstance to the COMFER.
Subsequently, on March 9, 2011, the Supreme
Court of Argentina in re “MULTICANAL
and Other v./ CONADECO - Decree 527/05
and other on/Proceeding leading to a
declaratory judgment”, granted the appeal by
right and the extraordinary appeal filed by the
National Government and revoked the decision
rendered by Chamber No. 3 of the Court
of Appeals on Federal Administrative Matters,
which had confirmed the preliminary injunction
requested by Cablevisión in the first instance.
Notwithstanding the foregoing, Cablevisión
believes that this matter does not have a
material impact on the substantive issues.
Notwithstanding the required filings made by
Cablevisión and its shareholders to prove that
they were complying with the commitment
agreed with the CNDC on December 7, 2007
(date on which the SCI granted authorization),
on September 23, 2009, the SCI issued
Resolution No. 641, whereby it ordered the
CNDC to verify compliance with the
parties' proposed commitment by visiting the
parties' premises, requesting reports, reviewing
documents and information and carrying
out hearings, among other things.
On December 11, 2009, Cablevisión notified
the CNDC of the completion and
corresponding verification of the fulfillment
of the voluntary undertakings made by
Cablevisión at the time of the enactment of SCI
Resolution No. 257/07. On December 15,
2009, Chamber No. 2 of the Federal Court of
Appeals on Civil and Commercial Matters
issued a preliminary injunction in re “Grupo
Clarín S.A. v. Secretariat of Domestic Trade and
other on preliminary injunctions” (case
124
125
10,506/09), partially acknowledging the
preliminary injunction requested by Grupo
Clarín, and instructing the CNDC and the SCI
to notify Grupo Clarín whenever their own
verification of Cablevisión's fulfillment of
its undertakings had been concluded, regardless
of the result. Should such agencies have any
observations, they should notify Grupo Clarín
within a term of 10 days. On the same date,
the CNDC issued Resolution No. 1,011/09
whereby it deemed Cablevisión's voluntary
undertakings unfulfilled and declared the
rescission of the authorization granted under
Resolution No. 257/07.
On December 17, 2009, the Federal Court of
Appeals on Commercial-Criminal Matters,
Chamber A, decided to suspend the term to
appeal Resolution No. 1,011/09 until the main
case was transferred back to the CNDC,
considering it had been in such court since
December 16, 2009.
On December 17, 2009, the CNDC notified
Cablevisión of the initiation of the motion
for execution of Resolution No. 1,011/09. On
December 18, 2009, Chamber No. 2 of the
Federal Court of Appeals on Civil and
Commercial Matters issued an injunction in
re “Grupo Clarín S.A. v. Secretariat of Domestic
Trade and other on preliminary injunctions”,
which suspended the effects of Resolution
No. 1,011/09 until the notice set forth in the
injunction of December 15, 2009 was served.
Accordingly, the CNDC served notice to
Cablevisión by means of Resolution No. 1,101/09.
On December 30, 2009, the Federal
Commercial and Civil Court of Appeals,
Chamber No. 2, issued a preliminary injunction
in re “Grupo Clarín S.A. v. Secretariat of
Domestic Trade and other on preliminary
injunctions”, partially acknowledging Grupo
Clarín's request and suspending the term
for Grupo Clarín to respond to Resolution
No. 1,101/09 until Grupo Clarín is granted
access to the administrative proceedings related
to the charges brought by the CNDC in
its Opinion No. 770/09 (on which Resolution
No. 1,011/09 was based).
On February 19, 2010, Cablevisión requested
the nullification of the notice, and as a default
argument, submitted the response requested
under Resolution No. 1,101/09. On February
26, 2010, the Federal Court of Appeals on
Commercial-Criminal Matters approved
the recusation filed by Cablevisión and excluded
the Secretary of Domestic Trade from the
proceedings.
On March 3, 2010, the Argentine Ministry
of Economy and Public Finance issued
Resolution No. 113 (subscribed by the Minister
of Economy, Dr Amado Boudou) rejecting
the request for the nullification of Resolution
No. 1,011/09, the requests for abstention and
excusation of certain officials, and all the
evidence produced in connection with such
request for nullification. The voluntary
undertakings made by Cablevisión under
Resolution No. 257/07 were deemed unfulfilled,
thus declaring the rescission of the authorization
granted under such resolution. The parties
involved were ordered to take all necessary
actions to comply with such rescission within a
term of six months, and to inform the CNDC
about the progress made in that respect on a
monthly basis. Such resolution was appealed in
due time and form. The appeal was granted
without staying the execution of judgment.
The appeal is currently pending before
Chamber No. 2 of the Federal Court of Appeals
on Civil and Commercial Matters in re “AMI
CABLE HOLDING and other on/ Appeal of
the National Antitrust Commission Resolution”
(File No. 2,054/2010).
On March 3, 2010, the Company brought a
claim seeking to nullify of COMFER
Resolution No. 577/09. Upon being served with
this claim, the COMFER filed an exception,
which was responded by Cablevisión. On
September 4, 2012 the Judge decided to dismiss
the exception filed by the COMFER, which
shall bear the legal costs incurred. On December
13, 2012 the order to notify about such
decision was submitted and it was issued by the
Court on December 26, 2012. In that same act,
a request was submitted to set the preliminary
hearing (before the discovery proceedings).
On April 20, 2010, Chamber 2 of the Federal
Court of Appeals on Civil and Commercial
Matters granted the appeal filed by Grupo
Clarín S.A. in re “Grupo Clarín on delay in the
appeal of the proceedings”, and decided that
the appeal granted by the CNDC to Grupo
Clarín S.A. against Resolution No. 113/10 had
the effect of staying such resolution.
The National Government filed an appeal
asking that the Court of Appeals revoke its own
decision with respect to the effect granted
to the April 20 decision, and that it decline its
jurisdiction. It also filed an extraordinary
appeal. Both appeals were dismissed. Chamber
No. 2 requested the administrative file and the
Court's decision is pending. Cablevisión
considers that it has strong grounds to have the
effects of the above Resolution suspended and
therefore has brought the relevant legal actions.
However, it cannot assure that the outcome
will be favorable.
Decisions made on the basis of these financial
statements should consider the eventual impact
that the above-mentioned resolutions might
have on Cablevisión and its subsidiaries, and
these financial statements should be read
in light of such uncertainty.
e. Under Proceeding File No. 21,788/08
dated November 17, 2008, Cablevisión informed
the COMFER about the corporate business
reorganization process effective as of October 1,
2008. In that same act, Cablevisión informed
the COMFER about: i) all the licenses to which
it became universal successor under the corporate
business reorganization process; ii) the exercise
of an option for one of the licenses in each
of the locations where it held multiple licenses,
and iii) the relinquishment of original licenses
and extensions so as to eliminate the multiple
licenses accumulated in each of the locations
where it held multiple licenses. As a result
of such corporate business reorganization process,
Cablevisión became the universal successor
of 158 licenses to exploit Supplementary Services
in several locations (pursuant to section 44,
subsection b) of Law 22,285. To avoid having
multiple licenses, Cablevisión informed the
COMFER about its irrevocable intention to
relinquish a total of 78 licenses (including
original licenses and extensions) so as to eliminate
all the supplementary service licenses that
exceeded the limit set for supplementary services
in each location (which was one license per
designated area). Notwithstanding the foregoing,
through Resolution No. 577/COMFER/09,
the COMFER illegitimately decided to withhold
approval of the merger requested by
Cablevisión, requesting Cablevisión to submit
a divestiture plan on the grounds that the license
relinquishments spontaneously communicated
by that company were not sufficient.
(See Note 8.1.d).
f. On May 23, 2011, Supercanal S.A. filed a
claim for the protection of constitutional rights
(acción de amparo) before the Federal Court
of Mendoza against Cablevisión, Grupo Clarín
and other co-defendants, requesting that they
refrain from exercising alleged anti-competitive
practices and that the assets, liabilities and
businesses that used to belong to Multicanal
and that were subsequently merged into
Cablevisión (see Note 8.1.d.) be separated from
the other assets, liabilities and businesses of
Cablevisión and transferred to third parties.
Together with the claim for the protection of
constitutional rights, Supercanal S.A. requested
a preliminary injunction - for the same
purposes - which was granted on December 16,
2011. The injunction ordered the separation
of the assets, liabilities and businesses that used
to belong to Multicanal and that were
subsequently merged into Cablevisión within
a term of 60 days. The court also appointed
a supervisor (interventor) and co-administrator
for a term of twelve months, who shall
enforce the injunction, order the changes to
such company's management required for the
effective enforcement of the duties to be
fulfilled by the Board of Directors, and also
report on a monthly basis to the court about
his/her performance. Such court-appointed
supervisor (interventor) and co-administrator
shall have the obligation to perform the
necessary functions aimed at fulfilling the
actions ordered pursuant to the injunction.
Cablevisión filed an appeal against such
injunction and presented the grounds for its
defense in due time and form. Cablevisión
also requested the replacement of such
injunction with another less burdensome, one
that could largely cover the risks alleged by
Supercanal in its claim.
On April 26, 2012, the Federal Court of
Appeals of Mendoza, Chamber A, dismissed
the appeal filed by Cablevisión against the
decision of December 16, 2011, but extended
the term to divest the assets, liabilities and
businesses of Multicanal that had been merged
into Cablevisión to 120 days. The court also
dismissed the request to replace the injunction.
Cablevisión believes it has strong grounds to
defend its position. Therefore, it has already
informed the Court that it shall proceed to file
an appeal with the Supreme Court of Argentina
126
127
against such decisions. Notwithstanding
the foregoing, Cablevisión cannot assure the
outcome of this appeal.
On August 14, 2012, Cablevisión was served
notice of a decision rendered by Chamber
No. 2 of the Federal Court of Appeals on Civil
and Commercial Matters of the City of Buenos
Aires (“the Court of Appeals”) on August 13,
2012 whereby it declared the existence
of a connection between the case brought by
Supercanal S.A. in the Province of Mendoza
and the appeal of MECON Resolution No.
113/10 (“Ami Cable Holding LTD and other
on/ Appeal of the National Antitrust
Commission Resolution). The Court of Appeals
stated that the hearing of the case in the
Province of Mendoza gives rise to an atypical
jurisdictional issue that affects the correct
rendering of justice in the case and the powers
of said Court of Appeals. The Court of Appeals
therefore ordered Federal Court No. 2 of
Mendoza to send the file so that the case could
continue under the jurisdiction of the Federal
Courts on Civil and Commercial Matters of the
City of Buenos Aires. The Federal Court No. 2
of Mendoza and the Federal Court of Appeals
of Mendoza were served notice of said order on
the same date and both of them rejected it,
giving rise to a jurisdictional conflict between
Chamber No. 2 of the Court of Appeals and
Federal Court No. 2 of Mendoza.
Pursuant to Section 24, subsection 7 of
Decree/Law No. 1285/58, if a jurisdictional
conflict arises between a federal judge of a given
jurisdiction and a Federal Court of Appeals
of a different jurisdiction, said conflict must be
resolved by the Argentine Supreme Court.
After having been served notice of the decision
of Chamber No. 2 of the Court of Appeals,
on August 17, 2012, Judge Walter Bento of
the Federal Court Nº 2 of Mendoza issued an
order to notify Cablevisión of an extension
of the scope of the injunction issued in re
“Supercanal S.A. v. Cablevisión S.A. and other
on Claim for the protection of constitutional
rights (acción de amparo)”. Under this
injunction, the judge ordered the removal of
the Board of Directors of Cablevisión and
its replacement with a court-appointed
administrator (interventor) whose role was to
fulfill court orders. However, in response to
the claim brought by Cablevisión on August 21,
2012 with the Argentine Supreme Court in
connection with the abovementioned
jurisdictional conflict, the Supreme Court
ordered the immediate suspension of
the proceedings until a decision is rendered
on the jurisdictional conflict.
Notwithstanding this, Cablevisión and its legal
advisors believe that the order issued on August
17 is irregular and that it may not be deemed
a valid notice, because it should have been
issued within the framework of the proceedings
pending with the Federal Court on Civil and
Commercial Matters rather than being served
at a domicile established in the city of Mendoza.
At present, all these proceedings are suspended
and were sent to the Argentine Supreme Court
for it to render a decision on the jurisdictional
conflict.
g. On October 21, 2010, the National
Administration of Domestic Trade served notice
to Cablevisión of (i) a fine of Ps. 5 million
for failing to comply with the duty to inform
(Section 4 of Law 24,240) concerning one
of its promotions and (ii) a fine of Ps. 500,000
for infringing Section 2, subsection c) of
Decree 1153/95 of the regulations to Section
10 of Law 22,802. Cablevisión appealed the
fine because it believes it has strong arguments
in its favor. The file was assigned No. 1281
and is pending before Chamber No. 2 of the
Court of Appeals on Federal-Administrative
Matters. On October 4, 2011, the Court of
Appeals partially affirmed Resolution 739/10
and reduced the fine to Ps. 2.2 million,
imposing 75% of the legal costs on Cablevisión.
On October 13, 2011 Cablevisión filed a
Federal Ordinary appeal with the Supreme
Court of Argentina and on October 20, 2011
it filed a federal extraordinary appeal with
that same court in the event that the ordinary
appeal may be dismissed.
On October 21, 2011, Chamber No. 2 of
the Federal Court of Appeals on Administrative
Matters granted the ordinary appeal and the
legal brief was submitted in due time and form.
On August 7, 2012 the Supreme Court of
Argentina decided that the Ordinary Appeal had
been wrongly granted.
On December 13, 2012 the Chamber dismissed
the appeal filed by Cablevisión, which shall
bear the costs incurred.
On December 20, 2012 Cablevisión filed an
appeal against the above-mentioned dismissal
since it believes it has sufficient grounds to
have the fine revoked. However, Cablevisión
cannot assure that the outcome of the appeal
will be favorable.
h. On May 31, 2012, Cablevisión was served
notice of Resolution No. 16,819 dated
May 23, 2012 whereby the Argentine Securities
Commission (CNV, for its Spanish acronym)
ordered the initiation of summary proceedings
against Cablevisión and its directors, members
of the Supervisory Committee and the Head
of Market Relations for an alleged failure
to comply with the duty to inform. The CNV
considers that Cablevisión failed to comply
with its duty to inform because the investor
community was deprived of its right to become
fully aware of the grounds of a decision
rendered by the Federal Court of Mendoza and
the scope of the powers granted by that
court to the co-administrator appointed in
re “Supercanal S.A. v. Cablevisión S.A. on
protection of constitutional rights”, in addition
to the fact that other self-regulated authorities
were allegedly not notified of the information
furnished by Cablevisión. On June 25, 2012,
Cablevisión filed a response petitioning that its
defenses be sustained and all charges dismissed.
Cablevisión and its legal advisors believe that
the company has strong arguments in its favor.
Nevertheless, Cablevisión cannot assure that
the outcome of the said summary proceedings
will be favorable.
i. Pursuant to CNV Resolution No. 16,834
dated June 14, 2012 notified to the Company
on June 27, 2012, the CNV ordered the
initiation of summary proceedings against
the Company and the members of its Board
of Directors, Supervisory Committee and
Audit Committee in office at the time of the
occurrence of certain events under review
(September 19, 2008) for alleged failure to
comply with the duty to inform. Under said
Resolution, the CNV argues that the Company
allegedly failed to comply with the duty to
disclose the filing of a claim against it entitled
“Consumidores Financieros Asociación Civil
para su defensa and other v. Grupo Clarín
on/Ordinary”, which the CNV considers
relevant. On July 25, 2012, Cablevisión filed a
response petitioning that its defenses be
sustained and that all charges against it be
dismissed. The Company and its legal advisors
believe that the company has strong arguments
in its favor. Nevertheless, Cablevisión cannot
assure the outcome of said summary proceedings.
Notwithstanding the foregoing, Cablevisión
cannot assure that the appeals will be resolved
in its favor.
j. The Executive Branch of Uruguay issued
Decree No. 73/012, published in the Official
Gazette on March 16, 2012, whereby it
expressly repealed Decree No. 231/011, which
had revoked certain signals' broadcast
frequencies. However, the new decree ratified
and repeated - virtually in identical terms -
the decree that was being repealed, and added
certain provisions that caused further detriment
to two companies with which a subsidiary
of Cablevisión has contractual arrangements
in place. Consequently, on March 23, 2012
the two affected companies filed an appeal
requesting that Decree No. 73/012 be revoked.
The appeal is still pending resolution.
In May 2012, the aforesaid companies
brought a legal action with the Court
in Administrative Litigation Matters requesting
the nullification of the resolution and the
suspension of its execution.
Those appeals have progressed through the
corresponding instances and are pending
resolution as of the date of these consolidated
financial statements. Notwithstanding the
foregoing, said companies cannot assure the
outcome of these actions.
In the preparation of these consolidated
financial statements, the Company has
considered the effects that could be derived,
and that may be projected to date within
a foreseeable period as a result of the effects,
if any, from these regulatory changes.
k. On June 4, 2012, the Federal Court of
Appeals of Rosario partially confirmed
SCI Resolution No. 219/2010, whereby the
Secretary of Domestic Trade found that
Cablevisión and Multicanal had engaged in
market sharing practices in connection
with the paid-television service in the City of
Santa Fe and reduced the fine imposed on
each of the companies involved from Ps. 2.5
million to Ps. 2 million. However, this decision
is not yet final, because Cablevisión and
Multicanal and the Ministry of Economy filed
appeals with the Argentine Supreme Court,
which are still pending.
128
129
l. On March 1, 2011, the SCI served notice to
Multicanal and Cablevisión of Resolution No.
19/11 whereby the Secretary of Domestic
Trade found that both companies had engaged
in market sharing practices in connection
with the paid-television service in the City of
Paraná and imposed a fine of Ps. 2.5 million on
each of them. Cablevisión filed an appeal in
due time and form. This appeal was dismissed
by the Federal Court of Appeals of Paraná.
Therefore, Cablevisión filed an appeal with the
Argentine Supreme Court. On November 4,
2011, the appeal of SCI Resolution No. 19/11
filed by Cablevisión with the Supreme Court
was partially granted by the Federal Court of
Appeals of Paraná.
On August 30, 2012, the Argentine Supreme
Court dismissed the appeal filed by Cablevisión;
therefore, Resolution No. 19/11 became final.
The case is currently pending with the Court
of Appeals of Paraná, which shall order its
referral to the SCI. The SCI, in turn, shall serve
notice to the companies involved in order for
them to pay the fine.
m. Cablevisión, by itself and as successor of
Multicanal's operations after the merger,
is a party to several administrative proceedings
under the Antitrust Law, facing charges of
anticompetitive conduct, including territorial
division of markets, price discrimination, abuse
of dominant position, refusal to deal and
predatory pricing, as well as a proceeding filed
by the Cámara de Cableoperadores
Independientes (Chamber of Independent
Cable Operators), challenging the transactions
consummated on September 26, 2006.
While Cablevisión believes that its conduct
and that of Multicanal have always been within
the bounds of the Argentine Antitrust Law
and regulations and that their positions in each
of these proceedings are reasonably grounded,
it can give no assurance that any of these cases
will be resolved in its favor.
n. On January 22, 2010, Cablevisión was
served with CNDC Resolution No. 8/10 issued
within the framework of file No. 0021390/2010
entitled “Official Investigation of Cable
Television Subscriptions (C1321)”. Pursuant to
such Resolution, Cablevisión, among other
companies, was ordered to refrain from
conducting collusive practices and, particularly,
from increasing the price of cable television
subscriptions for a term of 60 days, counted as
from the date all required notices are certified
as completed. According to said Resolution,
companies which have already increased the price
of the subscriptions shall return to the price
applicable in November 2009 and maintain such
price for the abovementioned term.
On February 2, 2010, by means of Resolution
No. 13/10, the CNDC ordered Cablevisión
to credit its subscribers the amount of any price
increase made after the date of CNDC
Resolution No. 8/10 on its March invoices.
Cablevisión appealed both resolutions in due
time and form and their effects were suspended
by an injunction issued by Chamber No. 2
of the Federal Court of Appeals on Civil and
Commercial Matters at the request of
Cablevisión.
Finally, on October 4, 2011, the same
Chamber granted the appeal, declaring that the
claim based on CNDC Resolution No. 8/10
was moot and nullifying CNDC Resolution
No. 13/10.
The National Government appealed such
decision before the Supreme Court of
Argentina, which shall grant or dismiss the
appeal.
o. On August 5, 2010, Cablevisión was served
with CNC Resolution No. 2,936/2010
within the framework of Administrative
Proceeding File No. 2,940/2010, pursuant to
which Cablevisión and/or any other individual
or entity through which the services relating
to the licenses and registrations granted to
FIBERTEL S.A. ("Fibertel") may be rendered
shall refrain from adding new subscribers and
from altering the conditions under which the
services are currently rendered.
To decide as it did, the Argentine
Communications Commission disregarded the
corporate reorganization that was completed
and registered before the IGJ, whereby Fibertel
merged into Cablevisión effective as of April 1,
2003. By virtue of that merger process,
Cablevisión became the universal successor to
all of the assets, rights and obligations of
Fibertel as the merged company, among them,
the Exclusive License awarded through SECOM
Resolutions No. 100/96, 2375/97, 168/02 and
83/03. Therefore, Fibertel did not transfer or
divest of its rights and obligations to third
parties - among them, those derived from the
above-mentioned Exclusive License. Fibertel
continued to carry out its activities through
Cablevisión as surviving company. In order to
implement the above-mentioned corporate
business reorganization, on March 5, 2003,
the Argentine Communications Commission
and the SECOM were notified of the corporate
business reorganization for its acknowledgement.
The technical and legal areas of the Argentine
Communications Commission issued a
favorable resolution with respect to the
compliance with the requirements of current
regulations to register Fibertel's license under
the name of Cablevisión. SECOM had a term
of 60 days to decide on the corporate business
reorganization. However, such agency failed
to render a decision as required by the
applicable regulations. Not until August 19,
2010 did SECOM issue Resolution No.
100/2010, revoking Fibertel's license.
Cablevisión believes that the Resolution
is arbitrary and that it flagrantly violates due
process and its defense right. Therefore,
Cablevisión has appealed such resolution. No
decision has been rendered on the matter yet.
p. On October 28, 2010, Cablevisión was
served notice of the National Administration of
Domestic Trade's resolutions imposing two fines
of Ps. 5 million each, for allegedly failing to
observe the typographic character requirements
under applicable regulations (Resolution
906/98) when informing its subscribers of the
increase in the price of their cable television
subscriptions. Cablevisión appealed the fines on
November 12, 2010 because it believes it has
strong grounds in its favor. However, it cannot
assure that the outcome will be favorable. One
of the files was assigned No. 1280 and is
pending before Chamber No. 1 of the Federal
Administrative Court of Appeals, and the other
one was assigned No. 1,278 and is pending
before Chamber No. 5 of the Federal
Administrative Court of Appeals.
q. The litigation brought before the Civil,
Commercial, Mining and Labor Court of the
City of Concarán, Province of San Luis, in
early 2007 in re “Grupo Radio Noticias SRL v.
Cablevisión and others”, is still pending
before the Federal Court in Administrative
Litigation Matters No. 2.
The purpose of that claim was to challenge the
share transfers mentioned in Note 8.1.c.
and to request the revocation of Cablevisión's
broadcasting licenses. Cablevisión has responded
to such claim and believes it is very unlikely
that it will be admitted.
r. The Government of the City of Mar del
Plata enacted Ordinance No. 9163, governing
the installation of cable television networks.
Such ordinance was amended and restated by
Ordinance No. 15,981 dated February 26,
2004, giving cable companies until December
31, 2007 to adapt their cable networks to the
new municipal requirements. The ordinance sets
forth that in those areas where street lighting
has underground wiring, cable television
networks are to be placed underground. In this
sense, the Executive Department of the
Municipality of General Pueyrredón has
submitted to the Municipal Council a proposed
ordinance extending the term provided until
December 31, 2015. Such ordinance is ready
for discussion by legislators. Even though
the ordinance provides for certain penalties that
may be imposed, the City has not imposed
such penalties to cable systems that are not in
compliance with such ordinance.
s. On November 27, 2012 the National
Administration of Domestic Trade served
Cablevisión with Resolution No. 308/2012,
whereby it imposed a Ps. 5 million fine on that
company alleging that it had failed to comply
with Section No. 4 of the Antitrust Law
(increase in the subscription price of cable tv
services/wrongful information provided by
Customer Service, informed by mail that SCI
Resolution No. 50/10 and the supplementing
resolutions are suspended on grounds of
unconstitutionality, when in fact they have
been suspended by an injunction). On
December 11, 2012 Cablevisión appealed
Resolution No. 308/2012. The administrative
file No. S01:0312056/2011 is currently pending
before the National Administration of Domestic
Trade and must be submitted to the Federal
Court of Appeals on Administrative Matters for
it to determine, by lottery, the first instance
court that will hear the case.
130
131
Cablevisión and its legal advisors believe that
the company has strong arguments in its favor.
Nevertheless, Cablevisión cannot assure
that the revocation of the fine will be resolved
in its favor.
8.2 Claims and Disputes with Governmental
Agencies
a. The Argentine Federal Revenue Service
(“AFIP”) served the subsidiary CIMECO with
a notice challenging its income tax assessment
for the fiscal periods 2000, 2001 and 2002.
In such notice, the AFIP challenged mainly the
deduction of interest and exchange differences
in the tax returns filed for those years. If
AFIP's position prevails, CIMECO's maximum
contingency as of December 31, 2012 would
amount to approximately Ps. 12 million
principal amount and Ps. 24.9 million interest.
CIMECO filed a response, which was dismissed
by the tax authorities. The tax authorities
issued their own official assessment and
imposed penalties. CIMECO appealed the tax
authorities' resolution before the National
Tax Court on August 15, 2007.
During the year ended December 31, 2010,
CIMECO received a pro forma income tax
assessment from the AFIP for fiscal periods
2003 through 2007, as a consequence of AFIP's
challenge to CIMECO's income tax assessments
for the periods 2000 through 2002 mentioned
above. CIMECO filed a response before
AFIP, rejecting such assessment and requesting
the suspension of administrative proceedings
until the Federal Tax Court renders its decision
on the merits.
During 2011, the AFIP served CIMECO with
a notice stating the income tax charges assessed
for the periods 2003 through 2007 and
ordering the initiation of summary proceedings.
The AFIP's assessment shows a difference in
the Income Tax liability for the above indicated
periods in its favor for an amount in excess of
the amount that had been estimated originally,
as a result of the method used to calculate
certain deductions. CIMECO responded to the
assessment rejecting all of the adjustments and
requesting that the proceedings be rendered
without effect and filed, with no further actions
to be taken.
On April 26, 2012, the AFIP issued a new
official assessment comprising the fiscal periods
2003 through 2007 in which it applied the same
method for the calculation than that used
for the administrative settlement, claiming a total
liability of Ps. 120 million. On May 21, 2012,
an appeal was filed with the Federal Tax Court.
CIMECO and its legal and tax advisors believe
CIMECO has strong grounds to defend the
criteria adopted in their tax returns and
that AFIP's challenges will not be admitted by
the Federal Tax Court. Accordingly, CIMECO
has not booked an allowance in connection
with the effects such challenges may have.
b. Since 2005, the ANA has brought several
claims against the holders of broadcasting and
cable TV licenses for the payment of
customs duties applicable to the import of
films documented between 2000 and 2005.
According to the ANA, holders of TV licenses
are liable to pay customs duties, VAT and
income tax not only on the customs value of
the physical supports, but also on the
reproduction rights agreed upon in the related
contracts. ARTEAR filed objections against
these claims on the basis of international
agreements, doctrine and case law on
the subject. As a consequence of the criteria
followed by ARTEAR, during the period
covered by the claim, it paid other taxes that
would not have been payable if ANA's
interpretation had been applied. As of the date
of these financial statements, ARTEAR had
to pay the differences claimed by ANA in a
few isolated cases because the appeals filed with
the Federal Court of Appeals against the
National Tax Court's decisions do not have
staying effects. In the first unfavorable decision
rendered by Chamber No. 4 of the Federal
Court of Appeals, which was appealed by
ARTEAR, the Argentine Supreme Court
refrained from rendering judgment on the
merits of the case. Over the last months, all
other Chambers of the Federal Court of Appeals
have rendered decisions against ARTEAR's
position. Therefore, as of the date of these
financial statements, ARTEAR has set up an
allowance to account for the estimated losses
that may result from such claims,
notwithstanding the fact that ARTEAR still
considers that its interpretation of the customs
law is based on reasonable legal grounds.
c. On September 10, 2010, the AFIP served
TRISA with a notice with objections to its
income tax assessment, with respect to the
application of the withholding regime set forth
under the section following section 69 of the
Income Tax law, for fiscal periods 2004, 2005
and 2006. If AFIP's position prevails, TRISA's
contingency would amount to approximately
Ps. 28.9 million, out of which Ps. 9.3 million
corresponds to taxes on dividend payments
made during those years, Ps. 6.5 million to a
70% fine on the omitted tax, and Ps. 13.1
million to late-payment interest.
TRISA filed a response, which was dismissed
by the tax authorities. On December 20, the tax
authorities issued their own official assessment
and imposed penalties. TRISA appealed the tax
authorities' resolution before the National
Tax Court on February 8, 2011.
TRISA and its legal and tax advisors believe
that TRISA has strong grounds to defend its
position and that AFIP's challenges will not be
admitted by the Federal Tax Court. Accordingly,
TRISA has not booked a provision in connection
with the effects such challenges may have.
d. On August 13, 2012, the parent company
GC Dominio S.A. was served notice of a claim
brought by the Argentine Superintendency
of Legal Entities (IGJ) whereby it seeks to annul
the registration with the Public Registry of
Commerce of the appointment of GC Dominio
S.A.'s authorities, approved at the Shareholders'
Meeting held on May 17, 2011. which is
pending before the Federal Court of First
Instance on Commercial Matters No. 25,
Clerk's Office No. 49 (“Inspección General de
Justicia v. Dominio S.A. on/Ordinary”, File
No. 58652). The claim brought by the IGJ
seeks to annul the registration with IGJ of the
appointment of GC Dominio S.A.'s authorities,
approved at the Annual Ordinary General
Shareholders' Meeting of GC Dominio held
on May 17, 2011. The appointment was
registered with the IGJ on April 23, 2012 under
No. 7147, Book No. 59 of Share Companies.
According to the IGJ and as the case file is
said to show, GC Dominio has allegedly failed
to comply with certain regulations applicable
to foreign shareholders upon registration of the
appointment of authorities. Also within the
framework of this claim, the Court ordered
the filing of a lis pendens by the IGJ.
GC Dominio S.A.'s legal advisors have strong
grounds to sustain that the resolution of
IGJ's claim seeking the de-registration of the
appointment of authorities has serious defects
and infringes the guarantees of reasonableness
and due process; a principle that derives f
rom the constitutional guarantee of defense in
court, which entails the right to be heard
and to produce evidence to the contrary. GC
Dominio S.A. has appealed such injunction
because it considers that the IGJ has not shown
that its legal arguments are, at least, plausible.
e. As a result of a report on suspicious activities
reported by the Argentine Federal Revenue
Service (“AFIP”) concerning transactions
carried out between the Company and some
subsidiaries, the Financial Information Unit
(“FIU”) pressed criminal charges for alleged
money laundering. The action is now pending
before Federal Court No. 9, under Dr. Luis
Rodriguez. The FIU has pressed charges against
the Company and its directors for alleged
money laundering activities related to the
trading of shares between the Company and
some of its subsidiaries. The Company has
appointed defense attorneys and has requested
a copy of the file to understand the details
of the charges. As of the date of these
consolidated financial statements, the FIU
has not yet produced all the evidence requested
by prosecutor Miguel Angel Osorio.
The Company and its legal advisors consider
that there are strong arguments in the
Company's favor having gathered evidence that
supports their lack of involvement in any such
maneuvers. However, they cannot assure that
the outcome of this action will be favorable.
f. By means of Resolution 16,364/2010, dated
and notified to AGEA as of July 15, 2010,
the CNV's Board of Directors decided to
initiate summary proceedings against AGEA
and certain current and past members of its
board of directors and supervisory commission,
for alleged infringement of the Argentine
Business Associations Law, Decree No. 677/01
and Law No, 22,315. AGEA, as well as the
current and past members of the board
of directors and supervisory commission who
are subject to the summary proceedings,
duly filed their respective responses.
132
133
g. AGEA received several inspections from the
AFIP aimed at verifying compliance with the
so-called competitiveness plans implemented by
the National Executive Branch. As a result of
such inspections, after several reports issued
by the AFIP and the corresponding Resolutions
issued by the Ministry of Economy, such bodies
allege that certain acts performed by AGEA
during 2002 lead to the nullity of some of the
benefits granted under said plans for an
estimated amount of Ps. 33.4 million. AGEA
and its legal counsel believe that there are
sufficient grounds in favor of AGEA and,
accordingly, no provision has been recorded.
An ordinary appeal has been filed by AGEA
against such Resolutions. As of the date of these
financial statements, such appeal is pending
resolution. However, AGEA cannot assure that
the appeal will be resolved in its favor.
8.3 Other Claims and Disputes
a. On December 12, 2001, Supercanal filed
a claim against Multicanal for damages as
a result of the enforcement of a preliminary
injunction brought by Multicanal against
Supercanal. Multicanal responded to such claim
denying any liability. Based on de jure and de
facto precedents of the case, Cablevisión, as
successor of Multicanal's operations, believes
that the claim filed should be rejected in its
entirety, and that the legal costs should be borne
by the plaintiff. As of the date of these financial
statements, the proceeding was at the discovery
stage. The court of first instance dismissed
Supercanal's request that it be allowed to sue
without paying court fees or costs. This decision
has been ratified by the Federal Court of Appeals.
b. On June 22, 2007 TRISA and TSC executed
several documents with AFA, applicable from
the 2007/2008 until the 2013/2014 soccer
seasons, governing the broadcasting by TRISA
of all of the National “B” soccer tournament
matches and by TSC of ten of the Argentine
soccer first division official tournament matches
played each week. Out of those ten matches,
TRISA broadcast five through TyC Sports.
Those agreements set the price to be paid by
TRISA for these products and clearly stated its
right to sell such products and, additionally,
had AFA's express consent.
On August 12, 2009 AFA notified TSC of
its decision to terminate unilaterally the above-
mentioned agreement. TSC has challenged
AFA's unilateral termination of the agreement
and, in order to safeguard its rights, on June 15,
2010 it brought a legal action against AFA for
contractual breach and damages.
On July 27, 2011, AFA unilaterally terminated
the agreement that bound AFA and TRISA
until the 2013/2014 soccer season for the
broadcasting of all Argentine National “B”
soccer tournament matches. AFA's decision
was totally arbitrary and illegitimate, since
TRISA has not breached any provision of the
agreement, which does not expressly allow
voluntary unilateral termination by either party.
Therefore, TRISA has challenged AFA's
unilateral termination of the agreement.
In light of the events and until the situation is
remedied, TRISA will not be able to broadcast
the five weekly matches of the first division
tournament or any of the National “B” soccer
tournament matches that it used to broadcast
on its signal TyC Sports.
The broadcasting rights for the matches of
Metropolitan First B category are not governed
by the above-mentioned agreements, but by
an agreement that is in full force and effect as
of the date of these financial statements.
The situation described above had a significant
impact on TRISA's revenues and costs.
Therefore, it had to adjust its signal to these
new circumstances.
In light of the circumstances described in the
above paragraphs, as from August 2009, TRISA
has recorded a portion of its revenues based
on the progress of negotiations with each client
and the new content of the signal.
During this year, TRISA has completed those
negotiations. As a result, no significant
differences arose between the actual results
and the original estimates.
c. On January 31, 2012, FADRA informed
Grupo Carburando's subsidiary Mundo Show
S.A. the unilateral rescission of the agreement
executed in 2006 whereby FADRA assigned to
that company the rights comprising image,
sound and static advertising of motor racing at
the road racing events Turismo Carretera and
TC Pista until December 31, 2015. Mundo
Show S.A. has challenged and rejected FADRA's
unilateral rescission of the agreement and is
analyzing the legal actions it will bring to
safeguard its rights. In light of the events and
until the situation is remedied, Mundo Show
S.A. will not be able to sell or export the
audiovisual and static advertising rights of the
above-mentioned motor racing events.
Therefore, an allowance has been set up for
impairment of goodwill and other assets related
to such agreement in the amount of
approximately Ps. 17 million.
d. Pursuant to a notarial certificate issued on
September 19, 2008, AGEA and the Company
were served with a legal action brought by
an entity representing consumers and alleged
financial victims (and by six other individuals).
Claimants are Multicanal noteholders who
claim to be allegedly affected by Multicanal's
APE. The claim is grounded on a Consumer
Defense Law which, in general terms, provides
for an ambiguous procedure that is very strict
against the defendant.
The Company, AGEA and certain directors
and members of the supervisory committee and
shareholders have been served with the claim.
After rejecting certain preliminary defenses
presented by the defendants, such as the
application of statutes of limitation and the
failure to comply with prior mediation
procedures, the claim followed ordinary
procedure and the above-mentioned persons
duly filed their respective responses.
e. On September 16, 2010 the Company was
served with a claim brought against it by
Consumidores Financieros Asociación Civil para
su Defensa. The plaintiff claims a reimbursement
of the difference between the value of the shares
of the Company purchased at their initial ‘public
offering and the value of the shares at the time a
decision is rendered in the case. The Company has
duly responded to the claim and the intervening
Court has deemed the claim responded.
8.4 Matters concerning Papel Prensa:
I. Papel Prensa has several disputes pending
before the Commercial Court of Appeals of the
City of Buenos Aires as a consequence of
CNV Resolution No. 16,222. Pursuant to said
Resolution, the CNV declared that certain
decisions of Papel Prensa's Board of Directors
were irregular and with no effect for
administrative purposes. The Resolution
challenged the Board's fulfillment of
the formalities required in the preparation,
transcription and execution of meeting
minutes on the relevant corporate books. On
June 24, 2010, in File No. 75,479/09, the
Commercial Court of Appeals of the City of
Buenos Aires, Chamber C, decided to
nullify CNV Resolution No. 16,222. On the
basis of Resolution No. 16,222, the CNV
has questioned subsequent decisions of Papel
Prensa's Board and of its Shareholders. In
response, Papel Prensa has brought several
administrative claims against the CNV,
questioning its position. All of such claims
were decided in Papel Prensa's favor by the
Commercial Court of Appeals of the City of
Buenos Aires. Consequently, the CNV's
decisions were nullified. Furthermore, the
Commercial Court of Appeals, Chamber C,
dismissed the appeals filed by the CNV before
the Supreme Court of Argentina against the
Court of Appeals' decisions. The CNV filed a
direct appeal before the Supreme Court.
As a consequence of the above, Papel Prensa
has continued with the criminal proceedings
brought against certain public officials.
On February 1 and 4, 2010 the Secretary
of Domestic Trade, Mario G. Moreno, and
the CNV, respectively, requested the judicial
intervention of Papel Prensa before the
commercial justice. Such claims were pending
before the Federal Commercial Court of
First Instance No. 2, Clerk's Office No. 4,
temporarily under judge Dr. Eduardo Malde,
who, on March 8, 2010, issued an injunction
whereby he suspended certain decisions
adopted at meetings of the Board of Directors
and at Shareholders Meetings held on or after
November 4, 2009. Judge Malde also appointed
a co-administrator without removing the
members of the previous corporate bodies.
Papel Prensa filed an appeal, which the
Commercial Court of Appeals, Chamber C,
resolved in Papel Prensa's favor, by revoking
the injunction on August 31, 2010. On
December 7, 2010 the same Chamber C
dismissed the appeals filed by the CNV and the
National Government before the Supreme
Court of Argentina against the Court of
Appeals' decision. Both the CNV and
the National Government filed direct appeals
against such decision.
None of the claims mentioned in the above
paragraphs had a material effect on AGEA's
134
135
financial and economic condition as of
December 31, 2012.
II. On January 6, 2010, the SCI issued
Resolution 1/2010 whereby certain business
practices were imposed on Papel Prensa. Papel
Prensa brought a legal action against such
resolution on grounds of unconstitutionality
before the Federal Court on Administrative
Matters and requested an injunction which
was granted by the intervening judge. Pursuant
to the injunction, the effects of such Resolution
were suspended. On May 7, 2010, the Federal
Court on Administrative Matters revoked the
injunction. Papel Prensa appealed such decision,
which was affirmed by the Federal Court
of Appeals on Administrative Matters. Papel
Prensa filed an appeal against the Court of
Appeals' decision. The appeal was denied and
Papel Prensa was served notice of that denial
on September 1, 2010.
III. Papel Prensa suspended its operations with
related parties between March 9 and April 21,
2010 pursuant to an injunction issued on
March 8, 2010 by Judge Malde. In his ruling,
Judge Malde decided to suspend the Board of
Directors' resolution of December 23, 2009,
which had approved the terms and conditions
of transactions with related parties for the year
2010. On April 21, 2010, the Board of
Directors of Papel Prensa, following a proposal
made by the court-appointed supervisor
(interventor) and co-administrator, approved
the resumption of such company's transactions
with related parties under provisional
conditions for as long as the decision rendered
by the Board on December 23, 2009 remained
suspended and/or until Papel Prensa's corporate
bodies established a business practice to follow
with related parties. Such approval involved
suspending the application of volume discounts
in connection with purchases made by related
parties, which could be recognized in their
favor, subject to the court's decision on
the appeal filed by Papel Prensa against Judge
Malde's injunction of March 8, 2010. As from
April 21, 2010, transactions with related parties
were resumed under the provisional conditions
approved by the Board on April 21, 2010.
At a meeting held on December 23, 2010,
Papel Prensa's Board of Directors approved new
conditions that must be fulfilled for the
recognition and payment of volume discounts
that may be applicable to related parties in
connection with purchases of paper made as
from April 21, 2010. These new conditions are
as follows: (i) the lifting of the provisional
suspension of the resolutions adopted by the
Board meeting of December 23, 2009, as
explained in the previous paragraph, and (ii) the
resolution or end, by any means, of any state of
uncertainty that may eventually exist about
the conditions approved by Papel Prensa's Board
in the first item of the agenda of the meeting
held on April 21, 2010, as a consequence of
the claim brought by the National Government
in re “National Government - Secretariat of
Domestic Trade - v./ Papel Prensa S.A.I.C.F. y
de M. on/ Ordinary”, File No. 97,564, currently
pending before Federal Commercial Court
of First Instance No. 26, Clerk's Office
No. 52. Under this proceeding, the National
Government seeks to obtain, among other
things, a declaratory judgment of nullity of the
provisional conditions for the resumption of
transactions with related parties in connection
with the purchase and sale of paper approved
by Papel Prensa's Board in the first item of
the agenda of the above mentioned meeting
held on April 21, 2010.
Furthermore, at this meeting held on December
23, 2010, Papel Prensa's Board decided to
maintain the originally approved sales policy,
but to subject the accrual and enforceability,
and, consequently, the recognition and payment
to the clients, of the eventual volume discounts
that may be applicable to them with respect to
paper purchases made between January 1, 2011
and December 31, 2011, to a final favorable
ruling in the claim brought by Papel Prensa
against the constitutionality of SCI Resolution
No. 1/2010, or to the final nullification of such
Resolution No. 1/2010 in any other way or by
any other legal means, whichever happens first.
In connection with related parties, the Board
approved the same policies and conditions as
those approved for the other clients in general.
In a meeting held on December 27, 2011 Papel
Prensa's Board of Directors decided to maintain
for 2012 the same commercial policies that
had been approved for 2011 - under the same
terms and conditions mentioned in the previous
paragraph - for all of its customers in general
(including related parties).
The commercial policy approved by Papel
Prensa was affected by Law 26,736 -effective
as from January 5, 2012- which declared
a matter of public interest the production, sale
and distribution of wood pulp and newsprint
and set forth the regulatory framework to be
adopted by the producers, sellers, distributors
and buyers of such inputs. Among other things,
the Law set limits and established conditions
applicable to Papel Prensa for the production,
distribution and sale of newsprint (including a
formula to determine the price of paper),
and created the National Registry of Producers,
Distributors and Sellers of Wood Pulp and
Newsprint where all producers, sellers,
distributors and buyers shall be registered as a
mandatory requirement in order to produce,
sell, distribute, and/or purchase newsprint
and wood pulp as from the enactment of the
Law. It also contains a series of temporary
clauses, specifically and exclusively addressed
to Papel Prensa, whereby Papel Prensa is forced
to make investments to meet the total national
demand for newsprint - excluding from this
requirement the other existing company that
operates in the country with installed capacity
to produce this input. The Law also provides
for the capitalization of the funds eventually
contributed by the National Government to
finance these investments for the purposes of
increasing the equity interest and the political
rights of the National Government in Papel
Prensa, contravening public order regulations
contained in Law 19,550 and disregarding
several constitutional rights and guarantees of
Papel Prensa and its private shareholders.
On February 10, 2012 AGEA registered in the
National Registry of Producers, Distributors
and Sellers of Wood Pulp and Newsprint
(Record No. 63 in File No. S01:0052528/12),
clearly stating that the decision to register shall
not be construed as an acknowledgment or
conformity with the legitimacy of Law 26,736,
Resolution No. 9/2012 issued by the Ministry
of Economy and Public Finance and SCI
Resolution No. 4/2012 issued in connection
with such Law and/or any other issued in
the future, since they seriously affect several
rights and guarantees of AGEA which are
recognized and protected by the Argentine
National Constitution.
Shareholders' meeting held on September 27,
2011, as well as on the agenda to be addressed
at the meeting of Papel Prensa's Board of
Directors of October 3, 2011, which had been
the subject matter of Resolution No. 16,691;
and (ii) at the hearing held in April 2012
before the same Commercial Court the
National Government, Papel Prensa, AGEA,
Compañía Inversora en Medios de
Comunicación (CIMECO) S.A. and S.A. La
Nación, with the assistance of the Argentine
Securities Commission, agreed to request the
court to order a shareholders' meeting with an
agenda substantially similar to that of Papel
Prensa's Shareholders' Meeting held on
September 27, 2011. The request was granted
by the intervening judge and the meeting was
scheduled for August 29, 2012. The meeting
began on that date but, as a consequence
of certain disturbances provoked by the
representative of the National Government,
the private shareholders that were present at
the meeting decided to adjourn it for 48 hours
without addressing the agenda. After that,
and notwithstanding the resolution adopted at
the meeting, on August 31, 2012 Judge
O`Reilly decided to order that the adjourned
meeting would resume on September 25, 2012.
However, the meeting was not held because
the Judge subsequently held that the appeals
filed against other points of her decision
resulted in the suspension of every point of the
decision she had rendered, including the new
date scheduled for the meeting, even though all
appellants had consented to that point.
Therefore, the new date of the court-convened
meeting that began on August 29, 2012 may
not be set until the Supreme Court has rendered
its decision about the appeals against Judge
O`Reilly's decision of August 31, 2012. Once
that occurs and the file is sent back to the
original court, Judge O`Reilly shall set a new
date to resume the meeting.
V. AGEA has not recorded any impact in
connection with the foregoing, since its effects
shall depend on the final outcome. Such
effects are not expected to be material to these
financial statements.
IV. On September 12, 2011, the CNV issued
Resolution No. 16,647 whereby it rendered
irregular and with no effect for administrative
purposes the decisions made by Papel Prensa's
Board of Directors at the meetings held on
July 20, 2011 and August 5, 2011. At those
meetings, the Board of Directors had called two
shareholders' meetings, to be held on September
27, 2011 and September 15, 2011, respectively.
Notwithstanding the fact that Resolution
No. 16,647 was appealed by Papel Prensa and
is therefore not final, on September 15, 2011,
Commercial Court No. 5, Clerk's Office No. 9,
issued an injunction with respect to the Board
of Directors' decisions to call the two
shareholders' meetings. The injunction had
been requested by the shareholders Arte Gráfico
Editorial Argentino S.A., Compañía Inversora
en Medios de Comunicación (CIMECO) S.A.,
and S.A. La Nación. Given that the issuance
of the injunction had validated Papel Prensa's
decision to call the two shareholders' meetings,
both were held as originally scheduled.
Nevertheless, and based on the above Resolution
No. 16,647, on October 13, 2011 the CNV
issued Resolution No. 16,671 rendering
irregular and with no effect for administrative
purposes all of the decisions made at Papel
Prensa's Shareholders' Meetings held on
September 15, 2011 and September 27, 2011.
Papel Prensa filed an appeal against Resolution
No. 16,671, which is, therefore, not final.
Also based on Resolution No. 16,647, on
November 16, 2011, the CNV issued
Resolution No. 16,691 whereby the CNV
rendered irregular and with no effect for
administrative purposes the decisions made at
the Board of Directors' Meeting held on
October 3, 2011 and the call for the Board of
Directors' meeting on November 17, 2011.
Such Resolution is not to be deemed final since
Papel Prensa filed an appeal and requested its
nullification. In this sense, of particular note is
that: (i) at the hearing held before Federal
Commercial Court No. 26 of First Instance,
Clerk's Office No. 52, the National
Government, Papel Prensa, AGEA, Compañía
Inversora en Medios de Comunicación
(CIMECO) S.A. and S.A. La Nación agreed,
among other things, on the composition of the
company's corporate bodies, and in particular
on the recognition of the authorities appointed
by the private shareholders at Papel Prensa's
136
137
Note 9
Regulatory framework for audiovisual
communication services
Until the enactment of Audiovisual
Communication Services Law No. 26,522,
the installation, operation and acquisition of
audiovisual communication services in
Argentina were governed by Broadcasting Law
No. 22,285 . Cable TV activities were regulated
and overseen mainly by the COMFER.
Under Law No. 22,285 broadcasting service
companies in Argentina required a non-
exclusive license from the COMFER in order
to operate. Other approvals were also required,
including the authorization from municipal
agencies. Broadcasting licenses were granted for
an initial period of 15 years, allowing for a
one-time extension of 10 years. The extension
of the license was subject to the approval of
the COMFER, which would determine whether
or not the licensee had met the terms and
conditions under which the license had been
granted. Both Cablevisión and its subsidiaries
and other subsidiaries of Grupo Clarín
that render broadcasting services, hold licenses
granted by the COMFER under such Law.
Some of Cablevisión's licenses, including its
original license (with and extended term that
originally expired on March 31, 2006), and the
licenses of other subsidiaries, have already been
extended for the above-mentioned 10-year term.
On May 24, 2005, Decree No. 527/05
provided for a 10-year-suspension of the terms
then effective of broadcasting licenses or
their extensions. Calculation of the terms shall
be automatically resumed upon expiration of
the suspension term, subject to certain
conditions. The Decree required that companies
seeking to benefit from the extension submit
to the COMFER's approval, within two years
from the date of the Decree, programming
proposals that would contribute to the
preservation of the national culture and the
education of the population and a technology
investment project to be implemented during
the suspension term. COMFER's Resolution
No. 214/07 regulated the obligations established
by Decree No. 527/05 in order to benefit from
such suspension. The proposals then submitted
were approved and, accordingly, the terms of
the licenses originally awarded to Cablevisión,
as well as the terms of the licenses to which
Cablevisión became the universal successor,
and the licenses of other subsidiaries, are
currently suspended for ten years.
COMFER Resolution No. 275/09 lifted a
suspension of license grants that had been
ordered by COMFER Resolution No. 726/00
and approved the Rules governing the licensing
of Broadcasting and Supplementary Services by
means of a physical link, and set a term to apply
for licenses under an abbreviated procedure.
Therefore, Cablevisión and certain subsidiaries
purchased bidding forms to apply for new
licenses through this option in such locations
where they had not obtained the suspension of
the term ordered by Decree No. 527/05, since
the terms of those licenses had expired.
Cablevisión has requested the COMFER's
approval of several transactions, including
certain company reorganizations and share
transfers. The request for approval of the merger
of Cablevisión and its subsidiaries (see Note
8.1.d.) is still pending.
The Audiovisual Communication Services Law
(Law No. 26,522) was passed and enacted on
October 10, 2009, subject to strong concerns
over its content and enactment procedure.
Even though the new Law became effective on
October 19, 2009, not all of the implementing
regulations provided by the law have been
enacted. Therefore, Law No. 22,285 still applies
with respect to those matters which to date
have not been regulated, until all terms and
procedures for the regulation of the new law
are defined.
The law provides for the replacement of the
COMFER with the Audiovisual Communication
Services Law Federal Enforcement Authority
(AFSCA, for its Spanish acronym) as a
decentralized and autocratic agency under the
jurisdiction of the Executive Branch, and
vests the new agency with authority to enforce
the law. It may be argued that, as of the date of
these financial statements, AFSCA has not yet
been fully formed and, therefore, its functioning
is still questionable.
The new law, which governs the audiovisual
communication services activities conducted
by the Company through its subsidiaries,
establishes, among other things,:
• A license award and review scheme that grants
wide discretion to the Executive Branch and
to an Enforcement Authority with questionable
composition and powers,
• A 10-year limitation to the terms of licenses,
with a one-time non-renewable extension,
• The non-transferability of authorizations
and licenses,
• A regulatory framework and registration
requirements for signals, production companies
and advertising agencies,
• A multiple license scheme that: i) restricts
to 10 the number of Audiovisual
Communication Service licenses, plus a single
broadcasting signal for radio, broadcast TV and
subscription cable TV services that make use
of the radio spectrum; ii) restricts the licensing
of subscription broadcasting services rendered
by means of a physical link (cable), limiting the
number of licenses to 24; iii) sets forth a further
restriction on these services, which may not
be provided to more than 35% of all inhabitants
or subscribers nationwide; iv) establishes that a
broadcast TV signal and a cable TV signal may
not be simultaneously exploited in the same
location, and v) establishes that broadcast TV
networks may only own one cable TV signal.
The same applies to cable TV networks, which
may only own the so-called “local channel”,
which is mandatory for every license
• Mandatory quotas for certain types of content.
Also controversially, the law sets forth
retroactive effects by requiring holders
of current broadcasting licenses - which were
legitimately acquired rights under Law No.
22,285 as amended - to conform to the new
law within the term of one year counted
as from the time certain mechanisms required
for implementation are set in place.
It is publicly known that several concerns
have been expressed about this law, since it has
defects that render it unconstitutional;
it seriously damages the development of the
audiovisual industry and it restricts fundamental
freedoms. Some of these industry players,
among them Grupo Clarín and its main
subsidiaries, have already made court filings
in this sense. As of the date of these financial
statements, insofar as the Company is
concerned, two preliminary injunctions are
in full force and effect providing for: (i) the
provisional suspension of section 161 of the
Audiovisual Communication Services Law
138
139
with respect to Grupo Clarín, Cablevisión and
other subsidiaries, which has been confirmed
by the Supreme Court of Argentina, and (ii) at
the request of the Consumer Defense
Committee, the suspension of the application of
sections 45, 161 and 62 through 65 of such
Law. Even though this decision has been
partially revoked by the Federal Court of
Appeals of Salta, the Court of Appeals' decision
may be deemed not to be final since the affected
party filed an extraordinary appeal, thereby
restoring the effects of the decision rendered in
the first instance.
Regarding the suspension of Section 161
referred to under point (i) above, it should be
noted that the Supreme Court of Argentina
had confirmed both the injunction and the term
of three years set by Chamber I of the Federal
Court of Appeals on Civil and Commercial
Matters, only changing the date as from which
such term had to be calculated. According to
such decision, the application of Section 161
was suspended for plaintiffs until December 7,
2012, after which date Section 161 of Law
26,522 could be applicable to the Company
and its subsidiaries.
In light of certain delaying maneuvers carried
out by the National Government, aimed at
avoiding a decision on the constitutionality
of such law before the date mentioned above,
on December 6, 2012 the same Court of
Appeals extended the effectiveness of the
injunction then in force until a final judgment
is rendered on the merits of the case. Against
such decision, the National Government filed
an appeal directly before the Supreme Court of
Argentina. The Court dismissed in-limine the
appeal filed by the National Government on
December 10, 2012 on the grounds that there
were no urgent reasons to decide on the matter,
maintaining the effectiveness of the injunction.
The National Government filed a Federal
Extraordinary Appeal, which was granted by the
Court of Appeals on December 19, 2012 and
is currently pending before the Supreme Court
of Argentina.
On December 14, 2012 the Company was
served with the decision rendered by the Court
of First Instance on the merits of the case in re
“Grupo Clarín S.A. and Other v. the Executive
Branch on Declaratory Action” (File 119/10).
The judge recognized the legitimacy of the
plaintiffs to bring an action, considering
them holders of the licenses, but rejected the
unconstitutionality claim with legal costs to
be borne by the claimant. An appeal was filed
against that decision in due time and form and
is now pending before the Court of Appeals.
Subsequently, the Court of Appeals shall order
the parties to provide grounds for the appeal
filed (see Note 25).
On December 17, 2012, the Company,
Cablevisión, Artear and Radio Mitre were
served with AFSCA/12 Resolution No. 2276,
whereby the AFSCA decided to commence
the official transfer procedure, further ordering
the appraisal by the Court of Appraisals of
Argentina of the licenses and the indispensable
assets related to broadcast services and ordering
both companies to respond, within the
framework of that procedure, to a request for
information about the licenses and/or services
directly or indirectly owned by them. Those
companies challenged AFSCA's resolution
because it violates the injunction granted and
extended by Chamber No. 1 of the Federal
Civil and Commercial Court of Appeals.
The Executive Branch has regulated most
sections of Law No. 26,522 by means of Decree
No. 1,225/2010. The most notably arbitrary
provision of this decree is the highly discretional
mandatory divestiture system set forth to
regulate Section 50 of the Audiovisual
Communication Services Law, which has
evident confiscatory effects.
Additionally, AFSCA has issued Resolution
No. 432/2011, whereby it approved new
bidding terms and conditions for the granting
of licenses.
Even though Grupo Clarín's subsidiaries have
challenged the validity or constitutionality of
some regulations imposed by the Enforcement
Authority, they have fully complied with the
required procedures only in the event that such
requirements may be considered valid, for the
purposes of safeguarding their rights.
Cablevisión complied with AFSCA Resolution
No. 296/2010, which provides guidelines for
the organization of the programming grid that
must be followed by the owners of pay TV
audiovisual services. This resolution regulates
section 65, subsections a) and b) of Law No.
26,522. The Resolution supplements the
provisions of the regulations to the same
section of Decree No. 1,225/2010. Cablevisión
believes that both the provisions of Decree
No. 1,225/2010 and AFSCA Resolution No.
296/2010 are regulatory abuses and violate
the right to freedom of press, guaranteed by the
National Constitution.
In spite of Cablevisión's efforts to organize its
programming grids in accordance with the
provisions of section 65 of Law No. 26,522,
AFSCA has disregarded the effectiveness of
several court decisions ordering the suspension
of this law and its regulations and has initiated
multiple summary proceedings in connection
with the cable television licenses of which
Cablevisión is the lawful successor. AFSCA
contends that Cablevisión failed to comply
with the regulations set forth by AFSCA
Resolution No. 296/2010. Cablevisión
submitted the responses set forth under section
1, Exhibit II of AFSCA Resolution No.
224/2010 in connection with such accusations.
A decision has been rendered on some of the
summary proceedings and, as a result, a fine was
imposed on Cablevisión. Cablevisión has
appealed these decisions. Some of the appeals
filed by Cablevisión have been decided against it
and have again been appealed.
To date, two court decisions that order the
inapplicability of Resolution No. 296/2010
are still in effect, to wit: i) the injunction
issued in re “CODELCO v. NATIONAL
GOVERNMENT -EXECUTIVE BRANCH
on PRELIMINARY INJUNCTION” pending
before the Federal Court of Salta, which
suspended, among other things, the application
of section 65 of Law No. 26,522 and its
regulations. Even though such decision was
revoked by the Federal Court of Appeals
of Salta, the Court of Appeals' decision may be
deemed not to be final since the affected party
filed an extraordinary appeal, thereby restoring
the effects of the decision rendered in the
first instance and ii) the injunction ordered
in re “CABLEVISIÓN S.A. v. NATIONAL
GOVERNMENT AND OTHERS ON
COMPLAINT FOR THE PROTECTION
OF CONSTITUTIONAL RIGHTS” by
the Federal Court of Appeals of Mar del Plata,
whereby the decision rendered in the First
Instance was revoked. Such decision rendered
in the First Instance had ordered the dismissal
of Cablevisión's request, ordering AFSCA to
suspend - until a final decision was rendered
on the matter - the application of the penalties
derived from the alleged non-compliance with
section 65 of Law No. 26,522 and Decree
No. 1,225/2010 and the application of section
6 of AFSCA Resolution No. 296/2010 on the
grounds that Cablevisión's alleged serious non-
compliance was not contemplated in the Law or
in the Decree. The National Government filed
an appeal with the Supreme Court against this
decision. Such appeal is still pending resolution.
In re “AFSCA v. CABLEVISION SA Decree
1225/10 - RES. 296/10 on/ Proceeding leading
to a declaratory judgment” currently pending
before the Federal Court of First Instance on
Administrative Matters No. 9, on May 16, 2012
the Court granted an injunction that had been
requested by AFSCA, ordering Cablevisión
and/or the pay television audiovisual services it
exploits to conform to Section 65, paragraph
3 b) of Decree No. 1225/2010 and Sections 1,
2, 3, 4 and 5 of AFSCA Resolution No.
296/2010, until a final judgment is rendered
on the merits of the case. Cablevisión appealed
such injunction.
On August 6, 2012, Cablevisión was served
notice of a decision rendered by the Federal
Court of First Instance on Administrative
Matters No. 9 of the City of Buenos Aires,
whereby it imposed a fine on Cablevisión of
Ps. 20,000 per day for each day of delay
in conforming to the injunction that ordered
Cablevisión to comply with Section 65 of
Decree No. 1225/2010 and AFSCA Resolution
No. 296/2010. Cablevisión appealed such fine.
As of the date of these financial statements,
the appeals filed against the injunction and the
fine referred to above are still pending before
Chamber No. 4 of the Federal Court of Appeals
on Administrative Matters.
Between September and October 2011,
AFSCA brought 46 charges of delegation of
the exploitation of several licenses of which
Cablevisión is currently the legal successor. The
charges were brought within the framework
of COMFER file No. 2,005/08, concerning
the registration of the corporate reorganization
whereby Multicanal and Teledigital, among
other subsidiaries, merged into Cablevisión.
Cablevisión has submitted the appropriate
responses on behalf of the merged licensees
charged as indicated above, which to date have
not been decided upon. Cablevisión believes it
has strong grounds to reverse the charges
140
141
brought by administrative and/or judicial
means. As of the date of these financial
statements, the responses submitted are still
pending resolution.
The Company and its subsidiaries are evaluating
the possible effects on their business of such
questioned Audiovisual Communication
Services Law, its implementing regulations and
the matters mentioned above. Depending on
several aspects, the Company and/or some of
its subsidiaries could be forced to divest of
certain services, which shall in turn depend on
the choices made by the Company and/or its
subsidiaries.
All of the above could result in a reduction of
the services the Company currently renders, the
ownership and rights of which were acquired
in compliance with Law No. 22,285. Therefore,
at present this situation generates uncertainties
about the business of the Company and its
subsidiaries, which could significantly affect the
recoverability of the Company's relevant assets.
In re “Grupo Clarín S.A. and others v. the
Executive Branch on/Declaratory Action” (File
No.119/10), the accounting and economic
experts have submitted their reports where,
among other things related to the claim, have
estimated the potential accounting and
company value losses the Company would
suffer if compelled to make divestitures in the
final term of one year. Based on the experts'
exclusive assumptions, this situation could
result in potential accounting losses ranging
from Ps. 1.5 billion and Ps. 3.3 billion and a
potential significant impairment of the
company value. However, the experts have
stated that these estimates will depend on
several decisions that have not yet been made
by the plaintiffs and, therefore, the actual
outcome could differ from their estimates.
In this sense, AFSCA's application of other
interpretations of the law and/or its regulation
may allow for taking different actions than those
taken by expert witnesses, which may produce
different results to those originally estimated by
the latter.
However, taking into account the new
developments that have been taking place
regarding AFSCA's interpretations concerning
other companies subject to the Law, there are
uncertainties for the Company as to the
effects that would be derived from the eventual
concrete application of such law, which may
vary if a wide or restrictive interpretation of the
law prevails and, therefore, the corresponding
actions to be taken by the Company. The
Company continues analyzing the economic
impact and the possible consequences that
would be derived from an improbable but
possible unfavorable judgment. For this reason,
the Company cannot accurately quantify the
eventual impact on these financial statements.
However, the recoverability of the Company's
assets could be unaffected if the Company's and
other parties' main arguments were adopted
to create a framework of increased rationality,
either by the amendment, repeal or declaration
of unconstitutionality of the new media law
and/or its implementing regulations.
The Company and its legal advisors consider
that this Audiovisual Communication Services
law and its implementing regulations violate
fundamental constitutional rights, such as, the
property right and freedom of the press, among
others. For this reason, it will bring the legal
actions in each instance to safeguard its rights
and those of its shareholders; as well as to
protect the fundamental principles infringed by
such law.
The decisions to be made based on these
financial statements should contemplate
the eventual impact that these changes in the
regulatory framework may have on the
Company and its subsidiaries. The Company's
financial statements should be read in the light
of this uncertain environment.
Other Matters Related to the COMFER,
now AFSCA.
Cablevisión
As from November 1, 2002 and until
December 31, 2012, the COMFER and
AFSCA initiated summary administrative
proceedings against Cablevisión and Multicanal
(merged into Cablevisión) for infringements
of regulations regarding the content of
programming. Accordingly, a provision has
been set up in this regard.
ARTEAR
As of December 31, 2012, ARTEAR recorded a
provision in the amount of approximately Ps.
7.8 million for fines imposed by the COMFER
and AFSCA, some of which have been appealed
and are pending resolution.
Note 10
Call options
ARTEAR
Pursuant to ARTEAR's acquisition of 85.2%
of its subsidiary Telecor's capital stock in 2000,
Telecor's sellers have an irrevocable put option
of the remaining 755,565 common, registered,
non-endorsable shares, representing 14.8%
of the capital stock and votes of Telecor, for a
16-year term as from March 16, 2010 at a
price of USD3 million and ARTEAR has an
irrevocable call option for such shares for a term
of 26 years as from March 16, 2000 at a price
of approximately USD4.8 million, which
will be adjusted at a 5% nominal annual rate as
from April 16, 2016.Subsequently, under an
addendum to the original agreements, the
beginning of the effectiveness of the irrevocable
put option was changed from March 16, 2010
to March 16, 2013.
CMD
Pursuant to CMD's acquisition of 60.0%
of Interpatagonia S.A.'s capital stock in 2007,
CMD and the sellers granted each other
reciprocal call and put options on all of the
shares owned by each of the parties, effective
from August 1, 2011 to July 31, 2012.
Subsequently, in connection with the
acquisition mentioned in Note 12.e., on August
17, 2011, CMD and the seller executed a
new agreement whereby they granted each new
reciprocal call and put options on all of the
shares owned by each of the parties. The price
of the shares varies depending on who exercises
the option, which is effective from August 1,
2014 to December 31, 2014.
The balances arising from the put options
mentioned above are disclosed in the item
Other Current and Non-Current Liabilities of
the Balance Sheet, with an offsetting entry in
Other Reserves and Non-Controlling Interest
under Equity.
11.1.1 Capital Risk Management
Grupo Clarín manages its capital structure
seeking to ensure its ability to continue
as an ongoing concern, while maximizing the
return to its shareholders through the
optimization of debt and equity balances.
As part of this process, Grupo Clarín monitors
its capital structure through the debt-to-equity
ratio, which is equal to the quotient of its
net debt (Debt less Cash and Banks and Other
Current Investments) divided by its adjusted
EBITDA.
The debt-to-equity ratio for the reporting years
is as follows:
December 31, 2012
December 31, 2011
3,187
(623)
(681)
1,883
2,773
0.68
3,192
(629)
(236)
2,327
2,476
0.94
Note 11
Financial instruments
11.1 - Financial Risks Management (*)
(*) The amounts included in this note are stated
in millions of Argentine pesos.
Grupo Clarín is a party to transactions
involving financial instruments, which entail
exposure to market, currency and interest rate
risks. The management of these risks is based
on the particular analysis of each situation,
taking into account its own estimates and those
made by third parties of the evolution of the
respective factors.
Loans (i)
Less: Cash and Cash Equivalents
- Cash and Banks
- Other Current Investments
Net Debt
Adjusted EBITDA
Debt-to-Equity Ratio
(i) Long-term and short-term loans, including
derivatives and financial guarantee agreements.
The debt-to-equity ratio is reasonable compared
to other industry players and considering
the particular situation of Argentina and of the
companies that make up Grupo Clarín.
142
143
11.1.2 Categories of Financial Instruments
December 31, 2012
December 31, 2011
January 1, 2011
Financial Assets
Loans and Receivables (1)
- Cash and Banks
- Current Investments
- Receivables (2)
At fair value with an impact
on net income
- Current Investments
- Derivatives
Total Financial Assets
Financial Liabilities
At amortized cost
- Debt (3)
- Accounts Payable and
Other Liabilities (4)
At fair value with an impact
on net income
- Derivatives
Total Financial Liabilities
(1) Net of the allowance for doubtful accounts in the
amount of approximately Ps. 126 million, Ps. 114
million and Ps. 113 million, respectively.
(2) Includes receivables with related parties in the
amount of approximately Ps. 80 million, Ps. 59 million
and Ps. 63 million, respectively.
(3) Includes loans with related parties in the amount of
approximately Ps. 19 million as of December 31, 2012
and 2011 and Ps. 10 million as of January 1, 2011.
(4) Includes debt with related parties in the amount of
approximately Ps. 87 million, Ps. 120 million and
Ps. 78 million, respectively.
11.1.3 Objectives of Financial Risk
Management
Grupo Clarín monitors and manages the
financial risks related to its operations; these
risks include market risk (including exchange
risk, interest rate risk and equity price risk),
credit risk and liquidity risk.
Grupo Clarín does not enter into financial
instruments for speculative purposes as common
practice.
11.1.4 Exchange Risk Management
Grupo Clarín enters into certain foreign
currency transactions; therefore, it is exposed
to fluctuations of exchange rates.
623
235
2,171
550
-
3,579
3,187
2,185
4
5,376
629
75
1,723
172
-
2,599
3,192
1,967
8
5,167
332
64
1,311
191
37
1,935
2,378
1,640
-
4,018
Certain subsidiaries of Grupo Clarín have
entered into foreign currency forward
transactions, for the purposes of mitigating the
adverse effects that future exchange rate
fluctuations may eventually have on foreign
currency liabilities and, therefore, on the
Company's financial position. The Company
cannot assure that those operations will protect
its financial position from the eventual negative
effect of exchange rate fluctuations.
The following table shows the monetary assets
and liabilities denominated in US dollars,
the main foreign currency involved in Grupo
Clarín's transactions, at the closing of the years
ended December 31, 2012 and 2011:
Assets
Other Receivables
Trade Receivables
Other Investments
Cash and Banks
Total Assets
Liabilities
Long-Term Debt
Sellers financing
Other Liabilities
Trade Payables and Other
Total Liabilities
The Central Bank of Argentina and the
Argentine Federal Revenue Service issued
certain resolutions related to the exchange
market, establishing regulations on the
requirements for accessing such market. These
financial statements have been prepared based
on the assumption that the Company will be able
to access such market in order to purchase the
foreign currency needed to meet its obligations.
11.1.4.1 Foreign Exchange Sensitivity Analysis
Grupo Clarín is exposed to exchange risk, mainly
with respect to the US dollar.
Taking into consideration the balances disclosed
above, Grupo Clarín estimates that the impact
of a 10% favorable/unfavorable fluctuation
of the US dollar exchange rate would generate
an income/loss before taxes of approximately
Ps. 238 million and Ps. 267 million as of
December 31, 2012 and 2011, respectively.
While income from foreign exchange agreements
in case of a 10% favorable/unfavorable
fluctuation of the US dollar exchange rate would
generate income before taxes in the amount of
approximately Ps. 5 million and Ps. 23 million as
of December 31, 2012 and 2011 or a loss before
taxes in the amount of approximately Ps. 5
million and Ps. 21 million as of December 31,
2012 and 2011, respectively.
The sensitivity analysis presented above is
hypothetical since the quantified impact is not
USD (in millions)
USD (in millions)
December 31, 2012
December 31, 2011
11
26
77
61
175
620
-
6
32
658
5
25
27
49
106
678
1
2
47
728
necessarily an indicator of the actual impact,
because exposure levels may vary over time.
Additionally, even though Grupo Clarín
conducts its operations in Argentine pesos, an
eventual devaluation of such currency may
have an indirect impact on its operations,
depending on the ability of the suppliers involved
to adjust their prices to such effect.
11.1.5. Interest Rate Risk Management
Grupo Clarín is exposed to interest rate risk
basically through Cablevisión and its subsidiaries.
This is due to the fact that these companies
have taken loans at fixed and variable interest
rates and have not entered into hedge agreements
to mitigate these risks. If interest rates had
eventually been 100 basic points higher and all
the variables had remained constant, the
additional estimated loss before taxes would have
been of approximately Ps. 6.2 million and
Ps. 3.7 million as of December 31, 2012 and
2011, respectively.
11.1.6. Equity Price Risk Management
Grupo Clarín is exposed to equity price risk
in connection with its holdings of mutual funds,
securities and bonds and foreign exchange
agreements.
Its sensitivity to the variation in the price of these
instruments is detailed below:
December 31, 2012
December 31, 2011
Investments valued at quoted prices at closing
Other debt instruments valued at quoted prices at closing
390
4
60
8
144
145
The estimated impact of an eventual 10%
favorable/unfavorable fluctuation of the quoted
price of mutual funds, assuming that all the
other variables remain constant, would generate
an income/loss before taxes of approximately
Ps. 39 million and Ps. 6 million as of December
31, 2012 and 2011, respectively. While income
from foreign exchange agreements in case of a
10% favorable/unfavorable fluctuation of the
US dollar exchange rate would generate income
before taxes in the amount of approximately
Ps. 5 million and Ps. 23 million as of December
31, 2012 and 2011 or a loss before taxes in
the amount of approximately Ps. 5 million and
Ps. 21 million as of December 31, 2012 and
2011, respectively.
11.1.7 Credit Risk Management
Credit risk is defined as the risk that one of
the parties may breach its contractual
obligations, generating an eventual financial
loss for Grupo Clarín.
Credits involving the Cable Television and
Internet Access Segment
The credit risk affects cash and cash
equivalents, deposits held at banks and financial
institutions, as well as credit exposures with
clients, including other remaining credits and
transactions involved. The companies that
operate in this segment actively monitor the
credit worthiness of their treasury instruments
and the counterparties related to derivatives
in order to minimize credit risk. Upon
expiration of invoices issued, if they are still
outstanding, these companies file several claims
for collection purposes.
Bank deposits are held in renowned institutions.
No significant credit risk concentration is
observed concerning clients, due to the
atomization of the subscriber base.
As of December 31, 2012 and 2011, non-
impaired past due trade receivables amounted
to approximately Ps. 231.3 million and
Ps. 149.6 million, respectively. These receivables
involve subscribers without any recent
insolvency record.
Credits of the Printing and Publishing
Segment
The companies that operate in this segment
conduct an analysis of the clients' financial
position at the beginning of the business
relationship, through a credit risk report
requested from several credit rating agencies.
The credit amount granted to each client is
monitored on a daily basis, with reports being
submitted to the financial management.
The credit risk affects cash and cash equivalents,
deposits held at banks and financial institutions,
as well as credit granted to clients.
The maximum theoretical credit risk exposure
of the companies operating in this segment
is represented by the book value of net financial
assets, disclosed in the consolidated balance
sheet.
For the purposes of conducting an analysis of
the suitability of the allowance for bad debts,
these companies consider each client on a case
by case basis, verifying, among other factors,
if there is any record of delinquency, risk
of bankruptcy, insolvency proceeding or other
judicial proceeding. Trade receivables comprise
a significant number of clients and are internally
classified among the following categories:
Advertising, Official, Distribution, Internet and
Subscriptions, among others.
The companies that operate in this segment
have recorded an allowance for doubtful
accounts accounting for 4% of accounts
receivable as of December 31, 2012 and 2011.
The companies that operate in this segment did
not set up an allowance for bad debts for those
amounts in which no significant change was
recorded in the credit rating, considering such
amounts as recoverable.
The companies that operate in this segment
have a wide range of clients, including
individuals, businesses - medium-and-large-sized
companies - and governmental agencies.
Therefore, these companies' receivables are not
subject to credit risk concentration.
As of the same dates, the allowance for bad
debts amounted to Ps. 79.2 million and Ps. 73.4
million, respectively. This allowance for trade
receivables is sufficient to cover the past due
doubtful receivables.
Credits from the Broadcasting and
Programming Segment
Credit risk represents for the companies that
operate in this segment the risk of incurring in
losses arising from possible breaches of the
contractual obligations assumed by business or
financial counterparties. This risk may be due to
economic or financial factors, or to particular
circumstances of the counterparty, or to other
economic, commercial or administrative factors.
Credit risk affects cash and cash equivalents,
deposits held at banks and financial institutions
in a wide sense, and every form of credit
granted to the companies that operate in this
segment. The maximum exposure to credit
risk is represented by the value of financial assets
considered as a whole, recorded in the
Consolidated Balance Sheet under Cash and
Banks, Other Investments, Trade Receivables
and Other Receivables.
Financial instruments are executed with
creditworthy banks and financial institutions
renowned in the market and for terms not
longer than three months. In this sense,
the companies that operate in this segment
have a policy of diversifying their investments
among different banks and financial
institutions, thus reducing the concentration
risk in only one counterparty.
As to the credit risk related to financial credit,
the companies that operate in this segment
evaluate the credit standing of the different
counterparties to define their investment levels,
based on their equity and credit rating. As to
Trade Receivables, such companies have a
wide range of clients, categorized depending on
the type of business. These categories are:
Advertising, Signals, Programming and other.
Within this classification, clients can also be
classified as advertising agencies, direct
advertisers, distributors of cable TV, broadcast
TV stations and other, each of them of a
Information as of December 31, 2012:
Maturities
Matured
Without any established term
First Quarter 2013
Second Quarter 2013
Third Quarter 2013
Fourth Quarter 2013
More than 1 year
146
147
different magnitude. Due to this diversity of
clients, there is not a significant credit risk
concentration in this respect.
The allowance for bad debts is set up upon
conducting an analysis of the debtor portfolio,
which is recorded as follows:
- In the case of individual risks identified (risks
of bankruptcy, insolvency proceedings or
judicial proceedings pending with the
company), for its total value.
- The rest of the cases is decided based on the
aging of the past due debt, the progress of the
collection procedures, the solvency conditions
and the variations observed in the clients'
settlement periods.
11.1.8. Liquidity Risk Management
Liquidity risk is the risk that Grupo Clarín
may not be able to fulfill its financial
obligations at maturity. Grupo Clarín manages
liquidity risk through the management of its
capital structure and, if possible, the access
to different capital markets. It also manages
liquidity risk through a constant review of the
estimated cash flows to ensure that it will
have enough liquidity to fulfill its obligations.
In February 2011, Cablevisión refinanced part
of the financial debt, extending the maturity
terms with respect to the previous debt.
11.1.8.1 Interest Rate Risk and Liquidity
Risk Table
The following table shows the breakdown
of financial liabilities by relevant groups of
maturities based on the remaining period
as from the date of the balance sheet through
the contractual maturity date. The amounts
disclosed in this table represent undiscounted
cash flows (principal plus contractual interest).
Long-Term Debt
Other Debts
-
1
274
127
201
94
3,266
3,963
508
195
1,202
225
12
10
154
2,306
Information as of December 31, 2011:
Maturities
Matured
Without any established term
First Quarter 2012
Second Quarter 2012
Third Quarter 2012
Fourth Quarter 2012
More than 1 year
11.1.9 Financial Instruments at Fair Value
The following table shows Grupo Clarín's
financial assets and liabilities measured at fair
value at the closing of the reporting year:
Long-Term Debt
Other Debts
-
-
271
79
207
165
3,591
4,313
332
268
1,085
169
19
15
199
2,087
December 31, 2012
Quoted Prices
(Level 1)
Other Significant
Observable Items
(Level 2)
550
4
390
-
160
4
December 31, 2011
Quoted Prices
(Level 1)
Other Significant
Observable Items
(Level 2)
172
8
60
-
112
8
Assets
Current Investments
Liabilities
Financial Instruments
Assets
Current Investments
Liabilities
Financial Instruments
Financial assets and liabilities are valued using
quoted prices for identical assets and liabilities
(Level 1), and the prices of similar instruments
arising from sources of information available
in the market (Level 2). At the closing of
the reporting years, Grupo Clarín did not have
any financial asset or liability for which a
comparison had not been conducted against
observable market data to determine their fair
value (Level 3).
current liabilities is similar to their fair value,
due to the short-term maturities of these
instruments.
The fair value of non-current financial liabilities
accounts for the estimated amount that would
be required to settle the liabilities and is
estimated based on the current rates available
to Grupo Clarín for the liabilities with similar
terms (currency and remaining term).
11.1.10 Fair Value of Financial Instruments
The book value of cash, accounts receivable and
The following table shows the estimated fair
value of non-current financial liabilities:
December 31, 2012
December 31, 2011
Book Value
Fair Value
Book Value
Fair Value
Non-Current Debt
2,683
2,469
2,749
2,576
Note 12
Interests
a. During 2007, AGEA increased its interest in
CIMECO from 33.3% to 50.0%, and executed
call and put options on an additional interest in
CIMECO's capital stock. During 2008, AGEA
partially assigned the rights and obligations
arising from such options to its subsidiary AGR
and to the Company. Subsequently, in 2008,
AGEA, AGR and the Company exercised such
call option, increasing, directly and indirectly,
the Company's equity interest in CIMECO and
Papel Prensa to 100% and 49%, respectively.
On April 10, 2008, the Company and the parties
to the above-mentioned transaction notified
CNDC of such transaction and on May 12,
2008 filed form F-1. After such notice and
as of the date of these financial statements, the
Company submitted additional information
requested by the CNDC. As of the date of these
financial statements, the above transaction is
subject to administrative approvals.
b. On January 11, 2008, IESA acquired the
controlling interest of a group of companies
mainly engaged in sports journalism,
production and commercialization of shows,
and the production of motor racing television
broadcasting. The share purchase agreement
sets forth certain objectives to be met by such
group of companies. In case of breach of
such provision, the sellers shall have to pay an
indemnification. These transactions are subject
to administrative approvals.
c. On September 2, 2008, ARTEAR increased
its equity interest in Pol-Ka and SB Producciones
S.A. to 55% of such companies' capital stock
and votes, thus acquiring a controlling interest
in both companies, in which it previously
exercised common control. These transactions
are subject to administrative approvals.
d. On February 10, 2011, CMD sold to a third
party all of its shares of Dinero Mail, for
approximately USD 4.4 million in cash; part of
the price was withheld as guarantee.
148
149
e. On August 17, 2011, CMD executed a stock
purchase agreement, whereby it increased by
20% its interest in Interpatagonia S.A., where it
now holds 80% of the capital stock. CMD paid
approximately Ps. 4.3 million in consideration
for the shares.
f. On October 3, 2011 the Company's
subsidiary AGR acquired 65.46% of the capital
stock and votes of Cúspide Libros S.A. and
2.40% of the capital stock and votes of Librerías
Fausto S.A.C.E.I. (controlled by Cúspide
Libros S.A.). The transaction amounted to
USD 2.8 million and Ps. 3.8 million.
g. On July 15, 2012, subject to the fulfillment
of certain conditions precedent, each of
Cablevisión's Paraguayan subsidiaries (Cable
Visión Comunicaciones S.A., Televisión Dirigida
S.A., Consorcio Multipunto Multicanal S.A.
and Producciones Unicanal S.A.) entered into
an agreement with a Paraguayan company,
whereby they agreed to assign most of their assets
and operations. Such conditions precedent
were fulfilled on October 1, 2012 and the
agreed-upon assignment was executed for a total
consideration of USD 142.4 million. Out of that
amount, USD 6.7 million was held in escrow.
As a result of that operation, Cablevisión
obtained a net consolidated gain after taxes of
approximately Ps. 444 million, which, taking
into consideration the Company's equity interest
in Cablevisión, accounts for a gain of
approximately Ps. 180 million after taxes.
Cablevisión S.A. had a 70% interest in such
subsidiaries and the remaining 30% was held by
minority shareholders. On October 1, 2012
the minority shareholders transferred their equity
interests to the majority group for a total
consideration of USD 31.5 million.
On October 1, 2012, Cablevisión sold its
equity interest in Teledeportes Paraguay S.A. for
approximately USD 6.8 million. Out of that
amount, USD 0.2 million was held in escrow.
Note 13
Discontinued operations
The results of operations of Cablevisión's
Paraguayan subsidiaries (see Note 12.g)
are disclosed under discontinued operations
in these consolidated financial statements.
Revenues
Cost of Sales
Gross income
Administrative Expenses
Selling Expenses
Financial Income
Financial Costs
Other Income and Expense, net
Income before Income Tax
Income Tax
Income for the year from discontinued operations
For a better understanding of the Consolidated
Statement of Cash Flows, below is a detail
of the total net balances from discontinued
operations (in millions of Ps.):
Cash flows (used in) / generated by operating activities
Cash flows generated by (used in) investing activities
Cash flows generated by (used in) financing activities
Financial results generated by (used in) cash
Total Cash provided for the Year
Note 14
Reserves, retained earnings and dividends
Balances at the beginning of the year:
Legal Reserve
Accumulated Results
Other Reserves
Total
Net Income Attributable to the Parent Company
Dividend Distribution
Changes in Reserves for Acquisition of Minority Interests
Balance at the end of the year
December 31, 2012
December 31, 2011
234,015,395
(105,770,126)
128,245,269
(51,581,016)
(16,117,563)
3,943,864
(4,140,628)
519,586,568
579,936,494
(57,630,783)
522,305,711
237,768,734
(104,538,099)
133,230,635
(49,573,719)
(20,626,307)
4,274,617
(8,165,166)
(890,248)
58,249,812
(10,823,319)
47,426,493
December 31, 2012
December 31, 2011
(168,265,638)
172,946,069
68,719,855
4,024,959
77,425,245
46,336,087
(34,847,951)
(654,758)
(390,136)
10,443,242
December 31, 2012
December 31, 2011
64,740,233
1,539,154,967
(18,384,533)
1,585,510,667
482,310,720
(135,000,000)
23,591,807
1,956,413,194
38,054,509
1,171,087,483
(16,485,290)
1,192,656,702
514,753,208
(120,000,000)
(1,899,243)
1,585,510,667
a. Grupo Clarín
On April 26, 2012, Grupo Clarín's Annual
Regular Shareholders' Meeting decided, among
other things, to appropriate the accumulated
results for the year 2011; which at that time
amounted to Ps. 1,540,313,089 as follows:
(i) Ps. 23,912,434 to the legal reserve,
(ii) Ps. 135,000,000 to dividend distribution,
(iii) Ps. 387,028,756 to the judicial reserve
for future dividend distribution,
(iv) Ps. 300,000,000 to the optional reserve
for future dividends and (v) Ps. 694,371,899
to the optional reserve for illiquidity of results.
b. Cablevisión
On April 23, 2012, Cablevisión's General
Regular and Special Shareholders' Meeting
decided to distribute dividends in the amount
of Ps. 217 million, payable in two equal
installments, the first one on or before May 24,
2012, as determined by the Board of Directors,
and the second one on or before December 31,
2012, as determined by the Board of Directors.
Out of such amount, approximately Ps. 87
million corresponds to the non-controlling
interest in that company. On April 27, 2012,
Cablevisión's Board of Directors, taking into
consideration that the company had enough
earnings to settle the entire amount of the
approved dividends, decided to make available
to shareholders, as from such date, the amount
of Ps. 217 million.
Note 15
Non-controlling interest
December 31, 2012
December 31, 2011
Balances as of January 1st
Equity in the Earnings of Other Companies for the year
Dividends and Other Movements of Non-Controlling Interest
Changes in Reserves for Acquisition of Minority Interests
Variation in Translation Differences of Foreign Operations
Balance at the end of the year
1,063,645,779
490,020,368
(290,063,721)
15,782,911
95,183,596
1,374,568,933
936,398,963
270,856,731
(185,768,664)
(1,002,358)
43,161,107
1,063,645,779
Note 16
Balances and transactions with related parties
The following table contains the outstanding
balances with related parties:
Other Receivables
Non-Current
Under Joint Control
Current
Under Joint Control
Other Related Parties
Trade Receivables
Current
Under Joint Control
Other Related Parties
December 31, 2012
December 31, 2011
January 1, 2011
17,312,664
17,312,664
3,946,590
16,145,105
20,091,695
41,450,950
1,442,310
42,893,260
15,238,424
15,238,424
1,794,441
2,890,965
4,685,406
36,287,958
3,165,717
39,453,675
13,744,482
13,744,482
6,312,258
9,326,197
15,638,455
33,754,882
506,119
34,261,001
150
151
Trade Payables and Other
Current
Under Joint Control
Other Related Parties
Long-Term Debt
Non-Current
Under Joint Control
Current
Other Related Parties
Other Liabilities
Non-Current
Other Related Parties
Current
Under Joint Control
Other Related Parties
December 31, 2012
December 31, 2011
January 1, 2011
67,957,504
18,759,995
86,717,499
5,775,689
5,775,689
13,316,320
13,316,320
-
-
-
30,336
30,336
87,458,426
32,007,203
119,465,629
5,717,866
5,717,866
13,264,292
13,264,292
-
-
-
496,819
496,819
55,397,639
21,842,391
77,240,030
5,083,272
5,083,272
5,093,485
5,093,485
438,783
438,783
1,805
465,526
467,331
The following table shows the operations with
related parties for the years ended December 31,
2012 and 2011:
Item
December 31, 2012
December 31, 2011
Under Joint Control
Advertising Sales
Circulation Sales
Printing Services Sales
Sales of Internet Subscriptions
TV Signals Sales
Other Sales
Interest Income
Productions and Co-Productions
Printing and Distribution Costs
Rights
Advertising and Promotion
Expenses
Interest Expense
Other Related Parties
Advertising Sales
Circulation Sales
TV Signals Sales
Other Sales
Other Income
Rentals
Advertising and Promotion
Expenses
Interest Expense
Other Purchases
50,896,183
10,987
1,172,411
485,598
15,034,057
8,245,768
1,788,085
(29,103,994)
(23,612,708)
(109,539,691)
(5,852,531)
(636,334)
495,571
-
3,386,741
16,248,805
657,543
(159,121)
(1,794,748)
(1,232,274)
(173,333,619)
50,429,641
9,000
-
639,551
32,939,584
7,000,346
2,305,270
(25,888,208)
(11,136,385)
(154,666,517)
(5,214,593)
(1,526,196)
-
135,540
2,626,686
7,900,163
-
(199,357)
(1,244,364)
(744,480)
(163,285,770)
The fees paid to the Board of Directors and
the Upper Management of Grupo Clarín for
the years ended December 31, 2012 and 2011
amounted to approximately Ps. 120 million
and Ps. 100 million, respectively.
Note 17
Earnings per share
The following table shows the net income and
the weighted average of the number of common
shares used in the calculation of basic earnings
per share:
Net Income used in the Calculation of
Basic Earnings per Share (gain):
From Continuing Operations
From Discontinued Operations
Weighted Average of the Number of Common Shares
used in the Calculation of Basic Earnings per Share
Earnings per Share
The weighted average of the number of
outstanding shares was 287,418,584. Since no
debt securities convertible into shares were
recorded, the same weighted average should be
used for the calculation of diluted earnings
per share.
Basic and Diluted Earnings per Share
From Continuing Operations
From Discontinued Operations
Total Earnings per Share
Dividends paid for the year 2012 amounted to
Ps. 135,000,000 (Ps. 0.47 per share).
152
153
December 31, 2012
December 31, 2011
276,210,672
206,100,048
482,310,720
287,418,584
1.68
495,735,174
19,018,034
514,753,208
287,418,584
1.79
December 31, 2012
December 31, 2011
0.96
0.72
1.68
1.72
0.07
1.79
Note 18
Note 19
Covenants, sureties and guarantees provided
a. Note 5.12 sets forth certain restrictions to
which Cablevisión (by itself and as the surviving
company and successor to Multicanal's
operations after the merger), PRIMA and
AGEA are subject under their respective
financial obligations described in such note.
b. IESA is subject to contractual restrictions
on the transfer of its equity interest in TRISA
and Tele Net Image Corp.
c. During the year 2009, AGR purchased a
binding machine on credit. To secure the
transaction, AGR granted the supplier a pledge
over the machine. AGR granted joint and several
guarantees for the loans granted by Banco de
Inversión y Comercio Exterior and Standard Bank
Argentina S.A. to Artes Gráficas del Litoral S.A.
d. In July 2009, the Company executed an
agreement securing payment of GCSA
Investments' obligations under its loan, as
detailed in Note 5.12.4 to these consolidated
financial statements.
e. On May 27, 2010, CMD executed a mortgage
agreement on a building of its property securing
the payment of the obligations under the loan
with Banco de la Ciudad de Buenos Aires
mentioned in Note 5.12.6.
f. In October 2011, the Company executed
agreements securing the payment of certain
financing transactions of one of its subsidiaries
in the amount of USD 2.9 million, effective
from October 2011 to October 2013.
g. On September 25, 2012, GCGC executed a
mortgage agreement on a building of its property
securing the payment of the obligations under
the loan with Banco de la Ciudad de Buenos
Aires mentioned in Note 5.12.3. Grupo Clarín
acts as guarantor of said financing.
h. On October 12, 2012, the Company
executed an agreement securing the payment of
the obligations under a loan taken by GCGC
with Standard Bank Argentina mentioned in
Note 5.12.3.
Award of the BID of the city of Buenos AIres
On June 7, 2011, the Government of the City
of Buenos Aires issued Decree No. 316 whereby
it approved a public bidding process to contract
comprehensive digital services for educational
purposes for elementary school students in the
City of Buenos Aires. Such services include, but
are not limited to, the delivery of one netbook
per student and one notebook per teacher under
a gratuitous bailment agreement, connectivity,
first and second level support, content access
control, replacement in case of theft or damage
and new license, both with certain limitations.
The bid was awarded to PRIMA for a five-year
term, which will start after certain requirements
have been met. As consideration, PRIMA would
receive an amount per student, teacher and school.
As of December 31, 2011 the initial
requirements had been met in order to bring
the agreement into effect and to begin its
billing. The agreement has been in effect during
the year. No inconveniences have arisen and
the Government of the City of Buenos Aires
has been honoring the payments in accordance
with the bidding terms.
Note 20
Long-term savings plan
During the last quarter of 2007, the
Company, together with its subsidiaries, began
to implement a PALP for certain executives
(directors and managers comprising the
“executive payroll”), which became effective in
January 2008. Executives who adhere to such
plan undertake to contribute regularly a portion
of their salary (variable within a certain range,
at the employee's option) to a fund that will
allow them to strengthen their savings capacity.
Each company of the Group where those
executives render services will match the sum
contributed by such executives. This matching
contribution will be added to the fund raised
by the employees. Under certain conditions, the
employees may access such funds upon
termination of their participation in the PALP.
The PALP provides for certain special
conditions for those managers who were in the
“executive payroll” before January 1, 2007.
Such conditions consist of supplementary
contributions made by each company to the
PALP related to the executive's years of service
with the Group. As of December 31, 2012,
such supplementary contributions made by
the Company on a consolidated basis amount
to approximately Ps. 40 million, and the charge
to income is deferred until the retirement of
each executive.
Pursuant to IAS No. 19, the above-mentioned
savings plan qualifies as a Defined Contribution
1 year
Between 1 and 5 years
5 years or more
Plan, which means that the companies'
contributions shall be charged to income on a
monthly basis as from the date the plan
becomes effective.
Note 21
Operating Leases
Lease Agreements
As of December 31, 2012 and 2011, the
Company is a party to non-cancellable
operating leases, which are currently effective
and have different terms and renewal rights.
The total amount of minimum future payments
for non-cancellable operating leases is the
following (in millions of Ps.):
December 31, 2012
December 31, 2011
96
120
7
223
43
60
10
113
Note 22
Derivatives
The following is a detail of the derivatives held by the Company (amounts stated in millions of Argentine pesos):
Foreign Currency Forward
Contracts - Fair Value Hedge
Interest Rate and Exchange
Rate Swap Agreements
Total
Less Non-Current Portion:
Foreign Currency Forward
Contracts - Fair Value Hedge
Total
Current portion
December 31, 2012
December 31, 2011
January 1, 011
Assets
Liabilities
Assets
Liabilities
Assets
Liabilities
-
-
-
-
-
-
4.0
-
4.0
-
-
4.0
-
-
-
-
-
-
8.2
-
8.2
3.9
3.9
4.3
-
37.2
37.2
-
-
37.2
-
-
-
-
-
-
No ineffectiveness has been recorded in connection with fair value hedges.
154
155
Note 23
Note 25
Subsequent events
In re "Grupo Clarín S.A. and Other v. Executive
Branch on Declaratory Action" (File 119/10),
mentioned in Note 9, on January 25, 2013
the Company, the National Government and
AFSCA, which is also a party to this case,
submitted the brief with the grievances caused
by the decision rendered in the First Instance,
expressing the grounds of their appeal pursuant
to applicable law.
The parties were served with those grounds for
them to refute them by February 13, 2013.
As from that date, the file has been pending
before Chamber No. 1 of the Court of Appeals,
which shall render a decision on the appeal.
Note 26
Approval of financial statements
Grupo Clarín's Board of Directors has approved
the consolidated financial statements and
authorized their issue for March 8, 2013.
Cablevisión Comunicaciones S.A.'s investment
On December 19, 2012 Cablevisión
Comunicaciones S.A. (a subsidiary of
Cablevisión) executed a Total Return Swap
for USD 40 million which provides for the
collection, as from the execution of the
agreement, of all principal and interest on the
notes issued by Prima and the effective delivery
of the notes at first request either in the
form of permanent certificates, in book-entry
form or as interest on the notes. Such
transaction is disclosed net of the total notes in
the consolidated financial statements (Note 5.12).
Note 24
Law No. 26,831 Capital markets
On December 28, 2012 Capital Markets
Law No. 26,831 (the "Law"), which was
passed on November 29, 2012 and enacted
on December 27, 2012, was published in
the Official Gazette. The Law provides for a
comprehensive amendment of the public
offering regime, regulated until that date by
Law No. 17,811, enhancing, among others,
the National Government's monitoring powers,
as well as changing the authorization, control
and monitoring mechanisms of all stages of
the public offering process and the role of all
the entities and individuals involved. The
Law became effective on January 28, 2013.
Notwithstanding the foregoing, given that as
of the date of these financial statements the
CNV had not yet regulated the Law, on January
21, 2013 that agency issued Resolution No. 615
whereby it provided that until the respective
regulations are issued, the relevant CNV rules
continue to apply (as amended in 2001).
Signed for identification purposes
with the report dated March 08, 2013
Price Waterhouse & Co. S.R.L.
C.P.C.E.C.A.B.A. VOL. 1- FOL. 17
Carlos Alberto Pedro Di Candia
Chairman of the Supervisory Committee
Dr. Carlos A. Pace (Partner)
Certified Public Accountant (U.B.A.)
C.P.C.E.C.A.B.A. VOL. 150 - FOL. 106
Héctor Horacio Magnetto
Chairman
SUPPLEMENTARY
FINANCIAL INFORMATION
156
157
Supplementary
Financial
Information
As of December 31, 2012
1. Company’s activities
Grupo Clarín is the most prominent and
diversified media group in Argentina and one
of the most important in the Spanish-speaking
world. It has presence in the printed media,
radio, broadcast and cable television, audiovisual
content production, the printing industry
and Internet. Its leadership in the different
media is a competitive advantage that enables
Grupo Clarín to generate significant synergies
and expand into new markets. Its activities
are grouped into four main segments: Cable
television and Internet access, Printing and
publishing, Broadcasting and Programming, and
Digital content and other.
The Company carried out its activities in the
challenging context faced as a consequence
of constant harassment of the media in general
and, specifically, Grupo Clarín. Among the
main activities carried out during the year, the
following were the most significant:
In the Printing and Publishing segment, during
the year, the Company continued to publish
its traditional newspapers and magazines,
focusing on strengthening its editorial offering
through the launch of new collectible and
optional products.
In the Broadcasting and Programming Segment,
El Trece maintained its positioning among
the broadcast stations which the highest
audience share. This leading position is mostly
Non-Current Assets
Current Assets
Total Assets
Equity of the Parent Company
Equity of Non-Controlling Interests
Total Equity
Non-Current Liabilities
Current Liabilities
Total Liabilities
attributable to the performance of its
programming grid both during the Prime Time,
as well as during other times, with good results
for the afternoon and weekend programs,
with programs such as "ShowMatch", "Soñando
por Cantar", "Noticiero 13" and "Telenoche"
in the News Program segment; "Este es el
Show", "Soñando por Bailar", "Sos mi Hombre"
and "Periodismo Para Todos", among others.
In the Cable Television and Internet Access
segment, the Company focused on subscriber
loyalty initiatives and on the expansion of its
Cablevisión HD and broadband Internet access
subscriber base. Fibertel continued to promote
Evolution, a 30 Mbps high-speed connectivity
product launched in fiscal year 2011, the
only one in the market. Progress was also made
in the optimization of the reach of digital
and premium services to cities and towns in the
provinces. On October 1, 2012, Cablevisión
S.A.'s subsidiaries completed the assignment of
their operations in the Republic of Paraguay
(see Note 12.g to these consolidated financial
statements).
2. Consolidated financial structure
Note: the amounts are rounded up and stated
in thousands of Argentine Pesos. The figures
under total amounts may not represent the exact
arithmetic sum of the other figures in the table.
As established by the CNV through Resolutions
No. 562 (amended by Resolution No. 576) and
No. 592, the following table shows the balances
and results for the year, on a comparative basis
with the prior year, both prepared under IFRS.
December 31, 2012
December 31, 2011
8,303,639
3,699,980
12,003,619
4,090,030
1,374,569
5,464,599
3,378,694
3,160,327
6,539,020
7,791,866
2,855,978
10,647,844
3,634,142
1,063,646
4,697,788
3,319,250
2,630,806
5,950,056
Total Equity and Liabilities
12,003,619
10,647,844
3. Consolidated comprehensive income structure
Note: the amounts are rounded up and stated
in thousands of Argentine Pesos. The figures
under total amounts may not represent the exact
arithmetic sum of the other figures in the table.
As established by the CNV through Resolutions
No. 562 (amended by Resolution No. 576) and
No. 592, the following table shows the balances
and results for the year, on a comparative basis
with the prior year, both prepared under IFRS.
Operating Income/Loss from Continuing Operations (1)
Financial Results
Equity in Earnings from Affiliates and Subsidiaries
Other Income and Expense, net
Income/Loss from Continuing Operations before
Income Tax and Tax on Assets
Income Tax and Tax On Assets
Income for the Year from Continuing Operations
Net Income from Discontinued Operations
Net Income for the Year
Other Comprehensive Income for the Year
Total Comprehensive Income for the Year
(1) Defined as net sales less cost of sales and expenses.
4. Cash flow structure
Note: the amounts are rounded up and stated
in thousands of Argentine Pesos. The figures
under total amounts may not represent the exact
arithmetic sum of the other figures in the table.
As established by the CNV through Resolutions
No. 562 (amended by Resolution No. 576) and
No. 592, the following table shows the balances
and results for the year, on a comparative basis
with the prior year, both prepared under IFRS.
December 31, 2012
December 31, 2011
1,900,321
(916,154)
13,683
639
998,490
(524,876)
473,614
498,717
972,331
180,169
1,152,500
1,710,140
(582,086)
33,654
1.507
1,163,215
(425,032)
738,183
47,426
785,610
81,154
866,764
Cash provided by (used in) Operating Activities
Cash provided by (used in) Investment Activities
Cash provided by (used in) Financing Activities
Total Cash provided (used) for the Year
Financial Results Generated By Cash And Cash Equivalents
Total Changes in Cash
December 31, 2012
December 31, 2011
2,291,944
(819,887)
(1,110,017)
362,040
77,116
439,156
1,577,219
(1,527,311)
187,633
237,541
42,090
279,632
158
159
5. Statistical data
Cable TV
subscribers (1) (5)
Cable TV
homes passed (2) (5)
Cable TV churn ratio
Internet access
subscribers (1)
Newspaper circulation (3)
Canal 13 audience share
Prime Time (4)
Total Time (4)
December 31,
December 31,
December 31,
December 31,
December 31,
2012
2011
2010
2009
2008
3,404,698
3,490,320
3,357,853
3,192,950
3,190,570
7,455,898
15.0
1,504,380
311,699
35.9
29.4
7,586,506
15.1
1,351,107
331,238
42.2
33.0
7,485,595
14.3
1,128,171
360,816
42.2
31.0
7,457,043
15.8
988,031
394,796
40.1
29.7
6,753,590
15.3
938,767
431,098
43.3
33.5
(1) Includes companies controlled, directly and
indirectly, by Cablevisión (Argentina, Uruguay and
Paraguay).
(2) Contemplates the elimination of the overlapping
of networks between Cablevisión and subsidiaries
(including Multicanal and Teledigital).
(3) Average quantity of newspapers per day (Diario
Clarín and Olé), pursuant to the Instituto Verificador
de Circulaciones (this figure represents sales in
Argentina and abroad).
(4) Share of prime time audience of broadcast
television stations in the Metropolitan Area of Buenos
Aires, as reported by IBOPE. Prime time is defined as
8:00 PM to 12:00 AM, Monday through Friday. Total
time is defined as 12:00 PM to 12:00 AM, Monday
through Sunday.
(5) As of December 31, 2012 it does not include the
data corresponding to Cablevisión's subsidiaries in
Paraguay (see Note 12.g.).
6. Ratios
Liquidity (current assets / current liabilities)
Solvency (equity / total liabilities)
Capital assets (non-current assets / total assets)
1.17
0.84
0.69
1.09
0.79
0.73
December 31, 2012
December 31, 2011
7. Outlook
Grupo Clarín's corporate strategy is aimed at
consolidating its presence in the local and
regional market, strengthening its presence in
the traditional media, with a growing focus
on digital media and in the production and in
the distribution of content.
Among its initiatives, the Company seeks to
leverage its positioning in the Argentine
industry and its vast knowledge of the media
consumer to strengthen and develop its current
businesses. One of its main objectives is to
boost its cable television and Internet access
services by leveraging its strong presence in
distribution networks, the strength of its brands
and, above all, its vast experience in content
production.
In a framework of continued hostility against
the media, the Company remains committed to
informing with independence, to reaching all
sectors of society and to supporting the quality
and credibility values of its media. It will
assess the implications of the laws related to its
activities; while bringing the pertinent legal
actions to safeguard its rights and those of its
readers, audiences and clients.
Whatever the context, the Company will
continue to assess eventual opportunities for
growth in the local and international market
that may increase value for its shareholders and
conform to its business strategy.
The Company will keep focusing on the core
processes that allow for a sustainable and
efficient growth from different perspectives:
financial structure, management control,
business strategy, human resources, innovation
and corporate social responsibility.
8. Progress made on compliance with the
implementation of the IFRS
On April 29, 2010, the Company's Board
of Directors approved the IFRS implementation
plan. To date, the Company has fulfilled the
aspects established by such plan and has issued
the first annual consolidated financial
statements under IFRS for the year ended
December 31, 2012.
Notes 2.2 to the interim condensed
consolidated financial statements and Note 2.2
to the interim condensed parent company only
financial statements disclose the information
about reconciliation between NCP ARG and
IFRS, which is required by Technical Resolution
No. 26 (amended by Technical Resolution
No. 29) and by IFRS 1.
Signed for identification purposes
with the report dated March 08, 2013
Price Waterhouse & Co. S.R.L.
C.P.C.E.C.A.B.A. VOL. 1- FOL. 17
Carlos Alberto Pedro Di Candia
Chairman of the Supervisory Committee
Dr. Carlos A. Pace (Partner)
Certified Public Accountant (U.B.A.)
C.P.C.E.C.A.B.A. VOL. 150 - FOL. 106
Héctor Horacio Magnetto
Chairman
160
161
Report
of Independent
Accountants
Free translation from
the original
prepared in Spanish
To the Shareholders, President
and Directors of Grupo Clarín S.A.
Legal domicile: Piedras 1743
Autonomous City of Buenos Aires
CUIT No 30-70700173-5
1. We have audited the attached consolidated
financial statements of Grupo Clarín S.A. and its
controlled subsidiaries which comprise the
consolidated balance sheet at December 31, 2012,
the consolidated statements of comprehensive
income , the consolidated statements of changes
in equity and of cash flows for the year then
ended and a summary of significant accounting
policies and other explanatory information.
The balances and other information for the
fiscal year 2011 are an integral part of the above-
mentioned audited financial statements, so
they are to be considered in the light of those
financial statements.
2. The Board of Directors is responsible for
the reasonable preparation and presentation of
these consolidated financial statements
in accordance with International Financial
Reporting Standards adopted by the Argentine
Federation of Professional Councils in
Economic Sciences (FACPCE, for its Spanish
acronym) as professional accounting standards
and incorporated by the Argentine Securities
Commission (CNV, for its Spanish acronym)
to its regulations, as adopted by the International
Accounting Standards Board (IASB). Further,
the Board of Directors is responsible for the
internal control it may deem necessary to enable
preparing consolidated financial statements
free of material misstatements caused by errors
or irregularities. Our responsibility is to express
an opinion on the consolidated financial
statements based on the audit we performed with
the scope detailed in paragraph 3..
3. We conducted our audit in accordance with
auditing standards in effect in Argentina.
Those standards require that we plan and perform
the audit to obtain reasonable assurance about
whether the consolidated financial statements
are free of material misstatements and to form
an opinion on the reasonableness of the relevant
information contained in the consolidated
financial statements. An audit includes examining,
on a selective test basis, evidence supporting
the amounts and disclosures in the consolidated
financial statements. An audit also includes
assessing the accounting standards used and
significant estimates made by the Company, as
well as evaluating the overall presentation of
the consolidated financial statements. We believe
that our audit provides a reasonable basis for
our opinion.
4. On October 10, 2009, Audiovisual
Communication Services Law No. 26,522
(the “Law”) was enacted which repeals
Broadcasting Law No. 22,285 which regulate
the principal activities of the Company and
some of its subsidiaries.
As mentioned in Notes 9 and 25 to the
consolidated financial statements, the Company
and certain subsidiaries are analyzing the possible
consequences that could be derived from the
change of regulatory framework on their business,
and as indicated in the same Notes, is bringing
and will bring all legal actions corresponding
to each instance to safeguard its rights and those
of its shareholders.
Accordingly, there is uncertainty as to the effect
that this change in the regulatory framework
and the outcome of the legal actions being
brought by the Company could have on the
activities of the economic group and, therefore,
on its consolidated financial statements
taken as a whole.
5. As mentioned in Notes 8.1.b., 8.1.c., 8.1.d.
and 8.1.e. to the consolidated financial
statements, since September 2009, the Federal
Broadcasting Committee, the National Antitrust
Commission, the Secretariat of Domestic
Trade (“SCI”, for its Spanish acronym), Argentine
Secretariat of Communications and the Ministry
of Economy and Public Finance have issued
several resolutions on matters related to: (i) several
aspects related to the acquisition of Cablevisión
S.A., Multicanal S.A. and other companies,
and their subsequent merger, and (ii) the
revocation of the license that had been originally
granted to FIBERTEL S.A. In addition, as
indicated in Note 8.1.f. to the consolidated
financial statements, the subsidiary Cablevisión
was served with a preliminary injunction granted
to a third party ordering the separation of the
assets, liabilities and businesses that used to
belong to Multicanal and that were
subsequently merged into Cablevisión and the
appointment of a court-appointed supervisor
(interventor) and co-administrator. As indicated
in the above-mentioned Notes, the subsidiary
Cablevisión has brought legal actions as it
considered appropriate.
Accordingly, there is uncertainty regarding
the effect that the final outcome of these
situations could have on the activities of the
subsidiary Cablevisión S.A. and, therefore,
on the consolidated financial statements of the
company taken as a whole.
6. As mentioned in Note 8.1.a. to the
consolidated financial statements, on March 3,
2010 the Secretariat of Domestic Trade (“SCI”)
issued Resolution 50/10 establishing the formula
for calculation of the monthly subscription
price to be paid by the users of pay-television
services. As indicated in the same Note, on March
10, 2011 SCI Resolution No. 36/11 was
published in the Official Gazette establishing
the parameters to be applied to the services
rendered by Cablevisión, having been extended
on several occasions the effectiveness of
Resolution No. 36/11 until March 2013. As
indicated in this Note, the subsidiary Cablevisión
filed the corresponding administrative claims
and will bring the necessary legal actions
requesting a stay of its effects and ultimately
its nullity.
Accordingly, there is uncertainty regarding the
effect that the final outcome of the situation
could have on the subsidiary Cablevisión and
its subsidiaries' business and, therefore, on
the recoverability of its assets.
7. In our opinion, subject to the possible effect
on the consolidated financial statements of any
potential adjustments and/or reclassifications,
if applicable, that could be required as a result of
the resolution of the uncertainties described in
paragraphs 4, 5, and 6, the consolidated financial
statements mentioned in paragraph 1 present
fairly, in all material respects, the consolidated
financial position of Grupo Clarín S.A. and
its subsidiaries as of December 31, 2012
and their consolidated comprehensive income
and consolidated cash flows for the fiscal year
then ended, in accordance with International
Financial Reporting Standards.
162
163
e.1) 87% on the total fees for services invoiced
to the Company for all concepts in that year;
e.2) 14% on the total fees for audit and related
services invoiced to the Company, its parent
companies, subsidiaries and affiliates in that year;
e.3) 14% on the total fees for services invoiced to
the Company, its parent companies, subsidiaries
and affiliates for all concepts in that year.
f) We have applied the procedures on prevention
of asset laundering and terrorism funding set
forth in the relevant professional rules issued by
the Professional Council for Economic Sciences
of the Autonomous City of Buenos Aires.
Autonomous City of Buenos Aires,
March 8, 2013
8. In accordance with current regulations in
respect to Grupo Clarín S.A., we report that:
a) The consolidated financial statements of
Grupo Clarín S.A. have been transcribed to the
“Inventory and Balance Sheet” book and
comply with the Corporations Law and pertinent
resolutions of the Argentine Securities
Commission, as regards those matters within our
competence;
b) The parent company only financial statements
of Grupo Clarín S.A. arise from accounting
records kept in all formal respects in conformity
with legal provisions which maintain the security
and integrity conditions based on which they
were authorized by the Argentine Securities
Commission;
c) We have read the supplementary financial
information, on which, as regards those matters
that are within our competence, we have no
observations to make other than those already
stated in paragraphs 4., 5. and 6.;
d) At December 31, 2012 the debt accrued in
favor of the (Argentine) Integrated Social Security
System according to the Company's accounting
records and calculations amounted to $1.416.749,
none of which was claimable at that date;
e) In accordance with section 4 of General
Resolution No. 400 issued by the Argentine
Securities Commission, amending section
18 subsection e) of the title III.9.1 of the Rules
of such Commission, we inform that the total
of fees for the audit and related services invoiced
to the Company for the year ended December
31,2012 represents:
Price Waterhouse & Co. S.R.L.
Dr. Carlos A. Pace (Partner)
PARENT COMPANY ONLY
FINANCIAL STATEMENTS
164
165
Parent Company only
Statement of
Comprehensive
Income
For the years ended
December 31, 2012 and 2011
In Argentine Pesos (Ps.)
Notes
December 31, 2012
December 31, 2011
Equity in Earnings from Affiliates and Subsidiaries
Management fees
Administrative Expenses (1)
Financial Income
Financial Costs
Other Income and Expense, net
Income before Income Tax and Tax on Assets
Income Tax and Tax on Assets
4.3
5.1
5.2
5.3
6
511,048,778
95,346,439
(106,242,489)
5,935,496
(11,130,989)
(11,190,319)
483,766,916
549,337,713
77,689,987
(82,962,408)
657,201
(17,263,242)
(11,563,098)
515,896,153
(1,456,196)
(1,142,945)
Net Income for the Year
482,310,720
514,753,208
Other Comprehensive Income
Variation in Translation Differences of Foreign Operations
Other Comprehensive Income for the year net of income tax
84,985,478
84,985,478
37,992,937
37,992,937
Comprehensive Income for thr year
567,296,198
552,746,145
(1) Includes depreciation of property, plant and equipment and
amortization of intangible assets in the amount of
Ps. 544.064 and Ps. 559.055 for the years ended December 31,
2012 and 2011, respectively.
The notes are an integral part of these parent company only
financial statements.
Signed for identification purposes
with the report dated March 08, 2013
Price Waterhouse & Co. S.R.L.
C.P.C.E.C.A.B.A. VOL. 1- FOL. 17
Carlos Alberto Pedro Di Candia
Chairman of the Supervisory Committee
Dr. Carlos A. Pace (Partner)
Certified Public Accountant (U.B.A.)
C.P.C.E.C.A.B.A. VOL. 150 - FOL. 106
Héctor Horacio Magnetto
Chairman
Parent Company only
Balance Sheet
As of December 31, 2012,
December 31, 2011 and
January 1, 2011
In Argentine Pesos (Ps.)
Assets
Non-Current Assets
Property, Plant and Equipment
Intangible Assets
Deferred Tax Assets
Investment in Affiliates and Subsidiaries
Other Receivables
Total Non-Current Assets
Current Assets
Other Receivables
Other Investments
Cash and Banks
Total Current Assets
Total Assets
December 31,
December 31,
January 1,
Notes
2012
2011
2011
4.1
4.2
6
4.3
4.4
4.4
4.5
4.6
1,234,447
140,256
11,162,847
919,419
1,011,711
-
-
10,352,970
9,744,474
4,174,676,650
3,694,851,174
3,288,950,768
30,000
30,000
2,135,600
4,187,244,200
3,706,153,563
3,301,842,553
25,198,828
7,742,929
5,251,306
85,113,690
29,866,561
2,950,680
38,193,063
117,930,931
5,040,993
13,639,242
3,055,959
21,736,194
4,225,437,263
3,824,084,494
3,323,578,747
Equity (as per the corresponding statement)
4,090,030,112
3,634,142,107
3,203,295,205
Liabilities
Non-Current Liabilities
Other Liabilities
Total Non-Current Liabilities
Current Liabilities
Long-Term Debt
Taxes Payable
Other Liabilities
Trade Payables and Other
Total Current Liabilities
4.3
4.7
4.8
4.9
28,624,787
28,624,787
25,706,586
25,706,586
19,155,260
19,155,260
62,084,479
1,623,568
14,437,674
28,636,643
127,730,585
2,609,920
13,555,211
20,340,085
71,242,000
1,463,118
11,719,705
16,703,459
106,782,364
164,235,801
101,128,282
Total Liabilities
135,407,151
189,942,387
120,283,542
Total Equity and Liabilities
4,225,437,263
3,824,084,494
3,323,578,747
The notes are an integral part of these parent company only
financial statements.
Signed for identification purposes
with the report dated March 08, 2013
Price Waterhouse & Co. S.R.L.
C.P.C.E.C.A.B.A. VOL. 1- FOL. 17
Carlos Alberto Pedro Di Candia
Chairman of the Supervisory Committee
Dr. Carlos A. Pace (Partner)
Certified Public Accountant (U.B.A.)
C.P.C.E.C.A.B.A. VOL. 150 - FOL. 106
Héctor Horacio Magnetto
Chairman
166
167
Parent Company only
Statement of
Changes in Equity
For the years ended
December 31, 2012 and 2011
In Argentine Pesos (Ps.)
Balances as of January 1, 2011
Set-up of Legal Reserve (Note 7.a.)
Dividend Distribution (Note 7.a.)
Changes in Reserves for Sellers Financing
Net Income for the Year
Other Comprehensive Income:
Variation in Translation Differences of Foreign Operations
Adjustment on
Additional
Capital Stock
Capital Stock
Paid-in Capital
287,418,584
309,885,253
1,413,334,666
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Balances as of December 31, 2011
287,418,584
309,885,253
1,413,334,666
Set-up of reserves (Note 7.a.)
Dividend Distribution (Note 7.a.)
Changes in Reserves for Sellers Financing
Net Income for the Year
Other Comprehensive Income:
Variation in Translation Differences of Foreign Operations
-
-
-
-
-
-
-
-
-
-
--
Balances as of December 31, 2012
287,418,584
309,885,253
1,413,334,666
(1) Broken down as follows: (i) Optional reserve for future
dividends of Ps. 300,000,000; (ii) Judicial reserve for future
dividend distribution of Ps. 387,028,756 and (iii) Optional
reserve for illiquidity of results of Ps. 694,371,899.
The notes are an integral part of these parent company only
financial statements.
-
-
-
-
-
-
-
-
3
-
-
-
-
-
-
-
-
-
-
-
-
(
2
2
2
-
-
-
-
-
-
5
(
(
2,010,638,503
-
-
-
-
-
2,010,638,503
-
-
-
-
Shareholders'
Contributions
Translation of
Other items
Subtotal
Foreign Operations
Other Reserves
Legal Reserve
-
-
-
-
37,992,937
37,992,937
(16,485,290)
-
-
(1,899,243)
-
-
38,054,509
26,685,724
-
-
-
-
(18,384,533)
64,740,233
(1) Optional
reserves
-
-
-
-
-
-
-
Retained Earnings
Accumulated
Results
Total Equity
1,171,087,483
(26,685,724)
(120,000,000)
-
514,753,208
3,203,295,205
-
(120,000,000)
(1,899,243)
514,753,208
-
1,539,154,967
37,992,937
3,634,142,107
-
-
-
-
-
23,591,807
84,985,478
-
23,912,434
1,381,400,655
(1,405,313,089)
-
-
-
-
-
-
(135,000,000)
-
482,310,720
-
(135,000,000)
23,591,807
482,310,720
-
84,985,478
2,010,638,503
122,978,415
5,207,274
88,652,667
1,381,400,655
481,152,598
4,090,030,112
Signed for identification purposes
with the report dated March 08, 2013
Price Waterhouse & Co. S.R.L.
C.P.C.E.C.A.B.A. VOL. 1- FOL. 17
Carlos Alberto Pedro Di Candia
Chairman of the Supervisory Committee
Dr. Carlos A. Pace (Partner)
Certified Public Accountant (U.B.A.)
C.P.C.E.C.A.B.A. VOL. 150 - FOL. 106
Héctor Horacio Magnetto
Chairman
168
169
Parent Company only
Statements
of Cash Flows
For the years ended
December 31, 2012 and 2011
In Argentine Pesos (Ps.)
Cash provided by Operating Activities
Net Income for the Year
Income Tax and Tax on Assets
Accrued Interest, net
December 31, 2012
December 31, 2011
482,310,720
514,753,208
1,456,196
7,736,987
1,142,945
13,284,640
Adjustments to reconcile net income for the year
to cash used in operating activities:
- Depreciation of Property, Plant and Equipment and
Amortization of Intangible Assets
- Exchange Difference and Other Financial Results
- Equity in Earnings from Affiliates and Subsidiaries
Changes in Assets and Liabilities:
- Other Receivables
- Trade Payables and Other
- Taxes Payable
- Other Liabilities
Income Tax and Tax on Assets Payments
544,064
(5,745,051)
(511,048,778)
(4,310,406)
8,273,433
(2,815,415)
882,463
(1,226,707)
559,055
1,271,397
(549,337,713)
(22,429,789)
3,636,626
1,538,014
1,835,506
(1,229,415)
Net Cash Flows used in Operating Activities
(23,942,494)
(34,975,526)
Cash provided by Investment Activities
Dividends collected
Capital contributions in subsidiaries
Acquisition of Property, Plant and Equipment, net
Acquisition of Intangible Assets
Loans and interest collected
Loans granted
Net Cash Flows provided by Investment Activities
101,180,510
(11,042,000)
(825,716)
(173,632)
-
-
89,139,162
58,378,830
(5,176,800)
(466,763)
-
2,670,041
(3,000,000)
52,405,308
Signed for identification purposes
with the report dated March 08, 2013
Price Waterhouse & Co. S.R.L.
C.P.C.E.C.A.B.A. VOL. 1- FOL. 17
Dr. Carlos A. Pace (Partner)
Certified Public Accountant (U.B.A.)
C.P.C.E.C.A.B.A. VOL. 150 - FOL. 106
Cash provided by Financing Activities
Loans
Payment of Debts
Payment of Interest
Dividends Paid
Net Cash Flows used in Financing Activities
Financing results generated
by Cash and Cash Equivalents
(Decrease) / Increase in cash flow, net
Cash and Cash Equivalents at the Beginning of the Year
December 31, 2012
December 31, 2011
45,771,275
(1,678,162)
-
(135,000,000)
(90,906,887)
5,887,213
(19,823,006)
32,817,241
121,637,672
(3,263,963)
(265,938)
(120,000,000)
(1,892,229)
584,487
16,122,040
16,695,201
Cash and Cash Equivalents at Year-end
12,994,235
32,817,241
The notes are an integral part of these parent company
only financial statements.
Signed for identification purposes
with the report dated March 08, 2013
Price Waterhouse & Co. S.R.L.
C.P.C.E.C.A.B.A. VOL. 1- FOL. 17
Carlos Alberto Pedro Di Candia
Chairman of the Supervisory Committee
Dr. Carlos A. Pace (Partner)
Certified Public Accountant (U.B.A.)
C.P.C.E.C.A.B.A. VOL. 150 - FOL. 106
Héctor Horacio Magnetto
Chairman
170
171
Notes to the Parent
Company only
Financial
Statements
For thr years ended
December 31, 2012
Presented on a comparative basis
In Argentine Pesos (Ps.) -
Note 1
General Information
Grupo Clarín is a holding company that
operates in the Media industry. Its operating
income and cash flows derive from the
operations of its subsidiaries in which it
participates directly or indirectly.
The operations of its subsidiaries include cable
television and Internet access services,
newspaper and other printing, publishing and
advertising activities, broadcast television, radio
operations and television content production,
on-line and new media services, and other
media related activities. A substantial portion
of its revenues is generated in Argentina.
Note 2
Basis for the Preparation and Presentation of the
Parent Company only Financial Statements
2.1 Basis for the preparation and transition to
IFRS
Pursuant to General Resolution No. 562 issued
on December 29, 2009 entitled “Adoption of
International Financial Reporting Standards”
and General Resolution No. 576/10, the
CNV provided for the application of Technical
Resolutions No. 26 (TR 26) and 29 issued
by the Argentine Federation of Professional
Councils of Economic Sciences (FACPCE, for
its Spanish acronym). Since the Company is
subject to the public offering regime governed
by Law No. 17,811, it is required to apply such
standards as from the year beginning January 1,
2012. The FACPCE issues Adoption
Communications for the enforcement of IASB
resolutions in Argentina.
Accordingly, the Company has started to apply
such standards to these parent company only
financial statements, being January 1, 2011 the
date of transition to IFRS, as established by
IFRS 1 “First-time Adoption of IFRS”. These
parent company only financial statements are
the first annual parent company only financial
statements presented under IFRS.
TR 26 establishes that parent company only
financial statements must be prepared
under IFRS approved to date in Argentina by
the “FACPCE”, except for the valuation of
investments in subsidiaries, which are valued
under the equity method.
In preparing these parent company only
financial statements for the year ended
December 31, 2012, presented on a
comparative basis, the Company has followed
the guidelines provided by TR 26, and,
therefore, these financial statements have been
prepared under IFRS 1 “First-time Adoption
of IFRS”, except for the above-mentioned
valuation of investments in subsidiaries.
The Company's parent company only
financial statements were previously prepared
in accordance with NCP ARG. NCP ARG
differ from the IFRS in some areas. For the
preparation of these parent company only
financial statements, the Company has
changed certain valuation and disclosure
accounting policies previously applied under
NCP ARG in order to comply with the IFRS.
The main accounting policies are described
in the following notes.
The Company has changed the figures
disclosed for comparative purposes and those
corresponding to the transition date
(January 1, 2011) to reflect these adjustments.
The mandatory reconciliations are presented
in Note 2.2.1.
The interim condensed parent company only
financial statements have been prepared based
on historical cost, except for the measurement
at fair value of certain non-current assets
and financial instruments. In general, the
historical cost is based on the fair value of the
consideration granted in exchange for the assets.
The attached information, approved by the
Board of Directors in the meeting held on
March 8, 2013, is presented in Argentine Pesos
(Ps.), the Argentine legal tender, and arises from
accounting records kept by Grupo Clarín S.A.
2.2 Application of IFRS 1
In preparing the financial statements as of the
transition date under IFRS, the Company has
applied the mandatory exceptions and certain
optional exemptions in order to fully comply
with the IFRS in accordance with IFRS 1.
The optional exemptions applied by the
Company are the following:
a) Deemed Cost of Property, Plant and
Equipment:
The cost of property, plant and equipment,
adjusted for inflation in accordance with
effective accounting standards, has been
considered as the deemed cost at the IFRS
transition date, since it is similar to the cost
or depreciated cost under IFRS, adjusted
to reflect the changes of a general or specific
price index.
b) Business Combinations:
The Company has elected not to apply IFRS 3
“Business combinations” on a retrospective
basis for business combinations that occurred
prior to the IFRS transition date.
c) Accumulated Translation Differences of
Foreign Operations:
Accumulated translation differences related
to foreign operations were considered null at
the IFRS transition date.
The Company has not used the other
exemptions available under IFRS 1.
Mandatory Exceptions to IFRS
The mandatory exceptions to IFRS 1 applicable
to the Company are detailed below:
1. Estimates: The estimates made by the
Company under IFRS at the IFRS transition
date are consistent with the estimates made
at the same date under NCP ARG.
2. The other mandatory exceptions provided
by IFRS 1 that have not been considered
because they are not applicable to the Company
are the following:
• Derecognition of financial assets and
liabilities.
• Hedge accounting.
• Embedded derivatives.
2.2.1 Mandatory Reconciliations
Pursuant to FACPCE Technical Resolutions
No. 26 and No. 29 and IFRS 1, the following is
a detail of the reconciliation of comprehensive
income for the year ended December 31, 2011
and the reconciliation of equity as of December
31, 2011 and January 1, 2011 reported under
NCP ARG to that reported under IFRS.
2.2.2.1 Reconciliation of net income for the year ended December 31, 2011
Net income for the year under NCP ARG (Income)
Effect of transition to IFRS:
Addition of the variation of Cumulative translation adjustment
under NCP ARG to Comprehensive income for the year
Subtotal
Effect in the variation of the Cumulative translation adjustment
due to adjustments to the valuation of affiliates and subsidiaries [1]
Effect in income from the adjustments to the valuation of affiliates [1]
Total comprehensive income for the year under IFRS
[1] Generated by the effect of the adjustments to equity and net income
of the companies in which the Company holds an equity interest and
the effect of the adjustments to the goodwill of such companies.
The description of the adjustments made to such companies is disclosed
in Note 2.2 to the consolidated financial statements.
December 31, 2011
522,279,377
48,067,813
570,347,190
(10,074,876)
(7,526,169)
552,746,145
172
173
2.2.2.2 Reconciliation of equity as of December 31, 2011 and January 1, 2011
Shareholders' equity under NCP ARG
3,735,204,430
3,284,857,240
December 31, 2011
January 1, 2011
Effect of transition to IFRS:
Adjustment to the valuation of affiliates
and subsidiaries and goodwill [1]
Total Shareholders' Equity under IFRS
[1] Generated by the effect of the adjustments to
equity and net income of the companies in which the
Company holds an equity interest and the effect of
the adjustments to the goodwill of such companies.
The description of the adjustments made to such
companies is disclosed in Note 2.2 to the consolidated
financial statements.
2.2.2.3 Reconciliation of cash flows arising
from the parent company only financial
statements as of December 31, 2011
No significant differences have been identified
in the Parent Company Only Statement of
Cash Flows or in the definition of Cash and
cash equivalents between NCP ARG and IFRS.
2.3. Standards and Interpretations issued but
not adopted to date
The Company has not adopted IFRS or
revisions of IFRS issued as per the detail below,
since their application is not required for the
year ended December 31, 2012:
- IAS 19 Employee Benefits: Since the
Company has not established to date defined
benefit plans for its employees and officers,
this standard will not have an impact on the
Company's financial statements.
- Certain improvements to IFRS issued in
May 2012 by IASB which clarify some of the
international accounting standards (IFRS 1
First-time adoption of the International
Financial Reporting Standards, IAS 1
Presentation of financial statements, IAS 16
Property, Plant and Equipment, IAS 32
Financial Instruments: Presentation and IAS
34 Interim financial reporting).
- IFRS 9 Financial Instruments: Issued in
November 2009 and amended in October
2010, IFRS 9 establishes new requirements
for the classification and measurement
of financial assets and liabilities and for their
(101,062,323)
3,634,142,107
(81,562,035)
3,203,295,205
derecognition. IFRS 9 is applicable to the years
beginning on or after January 1, 2015, and
allows for its early application. The changes may
not significantly affect the disclosed amounts
that relate to the Company's financial assets and
liabilities.
- IFRS 10 Consolidated Financial Statements:
Defines the concept of control and
establishes control as the basis for determining
which entities are to be consolidated in the
consolidated financial statements. The Board
of Directors informs that IFRS 10 will be
adopted in the Company's financial statements
for the annual period beginning on January 1,
2013. The changes will probably not
significantly affect the amounts disclosed
regarding the Company's assets and liabilities.
- IFRS 11 Joint Arrangements: Classifies
joint arrangements either as joint operations
(combining the existing concepts of assets
under common control and operations under
common control) or as joint ventures
(equivalent to the existing concepts of entities
under common control). IFRS 11 requires
the use of the equity method for joint ventures
and it also eliminates the proportional
consolidation method for this type of
businesses. The Board of Directors informs
that IFRS 11 will be adopted in the Company's
financial statements for the annual period
beginning on January 1, 2013. The changes
may not significantly affect the amounts
of assets and liabilities and the disclosures in
the Company's financial statements.
- IFRS 12 Disclosure of interests in other
entities: Applies to entities with an interest in
subsidiaries, joint arrangements, associates or
unconsolidated structured entities. IFRS 12
establishes disclosure objectives, as well as the
minimum disclosures to be presented. The
Board of Directors informs that IFRS 12 will be
adopted in the Company's financial statements
for the annual period beginning on January 1,
2013. The Company is analyzing the potential
impact of this standard.
- IFRS 13 Fair Value Measurement: Establishes
a structure for the measurement at fair value
when required by other standards and the
disclosure requirements for measurement at fair
value. This IFRS is applicable to both financial
and non-financial items measured at fair value.
The Board of Directors informs that IFRS 13
will be adopted in the Company's financial
statements for the annual period beginning on
January 1, 2013. The Company is analyzing
the potential impact of this standard.
- Amendments to IAS 1 Presentation of
financial statements. The main amendment
to IAS 1 requires that items of other
comprehensive income be grouped into those
that may and may not be subsequently
reclassified to profit or loss. The amendments
to IAS 1 do not specify which items are to
be disclosed in other comprehensive income.
This amendment will be effective for annual
periods beginning as from July 1, 2012.
The Company is analyzing the potential
impact of this standard.
- Amendments to IFRS 7 and IAS 32. The
IASB has amended the application guidance
to IAS 32 Financial Instruments: Presentation
to clarify some of the requirements to offset
financial assets and liabilities in the balance
sheet. The IASB has also issued an amendment
to IAS 7, Financial Instruments: Disclosures
to enhance offsetting disclosures These
amendments will be effective for annual periods
beginning as from January 1, 2013. The
Company is analyzing the potential impact of
this standard.
2.4 Equity Interests
The Company records the interest in its
subsidiaries and associates using the equity
method, as established by TR 26.
174
175
A subsidiary is an entity over which the
Company exercises control. The Company
exerts control when it has the power to decide
on the financial and operating policies of
an entity for the purposes of obtaining
benefits from its activities, generally coupled
with a participation of more than 50% of
the voting rights.
An associate is an entity over which the
Company has significant influence and that is
neither a subsidiary nor an interest in a joint
venture. Significant influence is the power
to participate in the financial and operating
policy decisions of the associate, generally
accompanied by a 20%-50% holding of the
voting power, but does not entail control or
joint control over those policies.
The subsidiaries' and associates' net income
and the assets and liabilities are disclosed
in the financial statements using the equity
method, except when the investment is
classified as held for sale, in which case it
is accounted for under IFRS 5 “Non-Current
Assets Held for Sale and Discontinued
Operations”. Under the equity method, the
investment in a subsidiary or associate is to be
initially recorded at cost and the book value
will be increased or decreased to recognize the
investor's share in the comprehensive income
for the year or in other comprehensive income
obtained by the subsidiary or associate, after
the acquisition date. The distributions received
from the subsidiary or associate will reduce
the book value of the investment.
The losses incurred by an associate in excess
of the Company's interest in such company are
recognized to the extent the Company has
undertaken any legal or implicit obligation or
has made payments on behalf of the associate.
Any excess of the acquisition cost over the
Company's share in the net fair value of the
subsidiary's or associate's identifiable assets,
liabilities and contingent liabilities measured at
the acquisition date is recognized as goodwill.
Goodwill is included in the book value of the
investment and tested for impairment as part
of the investment. Any excess of the Company's
share in the net fair value of the identifiable
assets, liabilities and contingent liabilities over
the acquisition cost, after its measurement
at fair value, is immediately recognized in the
statement of income.
Unrealized gains or losses on transactions
between the Company and its subsidiaries and
the associates are eliminated considering
the Company's interest in those companies.
Adjustments were made, where necessary, to
the subsidiaries' and associates' financial
statements so that their accounting policies are
in line with those used by the Company.
2.4.1 Changes in the Company's Interests
in Existing Subsidiaries
The changes in the Company's interests in
subsidiaries which do not generate a loss
of control are recorded under equity. The book
value of the Company's interests is adjusted
to reflect the changes in the relative interest in
the subsidiary. Any difference between the
amount for which an additional investment is
recorded and the fair value of the consideration
paid or received is directly recognized in equity.
In case of loss of control and significant
influence, any residual interest in the issuing
company is measured at its fair value at such
date, allocating the change in the recorded
value with an impact on net income. The fair
value is the initial amount recognized for such
investments for the purposes of its subsequent
valuation for the interest retained as associate,
joint venture or financial instrument.
Additionally any amount previously recognized
in Other Comprehensive Income regarding
such investments is recognized as if the
Company had disposed of the related assets and
liabilities. Consequently, the amounts previously
recognized in Other Comprehensive Income
may be reclassified to net income.
2.5 Business Combinations
The Company applies the acquisition method
to account for business combinations. The
consideration for each acquisition is measured
at fair value (on the date of exchange) of the
assets acquired, the liabilities incurred or
assumed and the equity instruments issued by
the Company in exchange for the control
of the company acquired. The costs related to
the acquisition are expensed as incurred.
The consideration for the acquisition, if
any, includes any asset or liability arising from
a contingent consideration arrangement,
measured at fair value at the acquisition date.
Subsequent changes to such fair value, verified
within the measurement period, are adjusted
against the acquisition cost.
The measurement period is the actual period
that begins on the acquisition date and ends
as soon as the Company receives all the
information it was seeking about facts and
circumstances that existed as of the acquisition
date. The measurement period cannot exceed
one year from the acquisition date. All other
changes in the fair value of the contingent
consideration classified as assets or liabilities,
outside the measurement period, are recognized
in net income. Changes in the fair value of
the contingent consideration classified as equity
are not recognized.
In the case of business combinations achieved
in stages, the Company's equity interest in the
company acquired is remeasured at fair value
at the acquisition date (i.e., the date on which
the Company acquired control) and the
resulting gain or loss, if any, is recognized as
income/expense or in other comprehensive
income, depending on the origin of the
variation. In the periods preceding the reporting
periods, the Company may have recognized
in other comprehensive income the changes in
the value of the interest in the capital stock of
the acquired company. In that case, the amount
recognized in other comprehensive income is
recognized on the same basis that would have
been required if the Company had directly
disposed of the previously-held equity interest.
The identifiable assets, liabilities and contingent
liabilities of the acquired company that meet
the conditions for recognition under IFRS 3
(2008) are recognized at fair value at the
acquisition date, except for certain particular
cases provided by such standard.
Any excess of the acquisition cost (including
the interest previously held, if any, and the
non-controlling interest) over the Company's
share in the net fair value of the subsidiary's or
associate's identifiable assets, liabilities and
contingent liabilities measured at the acquisition
date is recognized as goodwill. Any excess of
the Company's share in the net fair value
of the identifiable assets, liabilities and
contingent liabilities over the acquisition cost,
after its measurement at fair value, is
immediately recognized in net income.
The acquisition cost comprises the
consideration transferred and the acquisition-
date fair value of the acquirer's previously-held
equity interest in the acquiree, if any.
As mentioned in Note 11, the recoverability
of certain goodwill could be affected by the final
outcome of the circumstances described in
such note.
2.6 Goodwill
Goodwill arises from the acquisition
of subsidiaries and associates and refers to
the excess of the sum of the consideration
transferred, the fair value of the acquirer's
previously-held equity interest (if any) in
the acquiree over the interest acquired in the
net amount of the fair value at the date of
acquisition of the identifiable assets acquired
and liabilities assumed.
If, upon measurement at fair value,
the Company's share in the fair value of net
identifiable assets of the acquired company
exceeds the amount of the consideration
transferred, the amount of any non-controlling
interest in such company and the fair value
of the acquirer's previously-held equity interest
in the acquiree (if any), such excess is
immediately recognized in the statement of
comprehensive income as a gain arising from a
very profitable acquisition.
Goodwill is not amortized, but tested for
impairment on an annual basis. For the
purposes of impairment testing, goodwill is
allocated to each of the Company's cash-
generating units expected to render benefits
from the synergies of the respective business
combination. Those cash-generating units
to which goodwill is allocated are tested for
impairment on an annual basis, or more
frequently, when there is any indication of
impairment. If the recoverable value of
the cash-generating unit, i.e. the higher of the
value in use or the fair value net of selling
expenses, is lower than the value of the net
assets allocated to that unit, including goodwill,
the impairment loss is first allocated to reduce
the goodwill allocated to the unit and then
to the other assets of the unit, on a pro rata
basis, based on the valuation of each asset
in the unit. The impairment loss recognized
against the valuation of goodwill is not
reversed under any circumstance.
In case of a loss of control in the subsidiary, the
amount attributable to goodwill is included in
the calculation of the corresponding gain or loss.
176
177
2.7 Revenue recognition
Management fees are recognized when such
services are rendered at the fair value of
the consideration received or to be received.
2.8 Foreign Currency and Functional Currency
The financial statements of each of the
Company's subsidiaries or associates
are prepared in the currency of the primary
economic environment in which the entity
operates (its functional currency). For the
purposes of the Company's parent company
only financial statements, the net income and
the financial position of each entity are stated
in Argentine Pesos (Argentina's legal tender
for all companies domiciled in Argentina),
which is the Company's functional currency.
In preparing the financial statements of the
individual entities, the transactions in currencies
other than the entity's functional currency
(foreign currency) are recorded at the exchange
rates prevailing on the dates on which
transactions are carried out. At the end of each
reporting year, the monetary items denominated
in foreign currency are retranslated at
the exchange rates prevailing on such date.
Exchange differences are charged to net income
as incurred.
In preparing the Company's parent company
only financial statements, in order to measure,
under the equity method, the Company's
interest in the entities which functional
currencies is different from the Argentine Peso,
the assets and liabilities of such companies are
translated to Argentine pesos at the exchange
rate prevailing at the end of the year, while the
net income is translated at the exchange rate
prevailing on the transaction date. Translation
differences are recognized in other
comprehensive income as “Variation in
Translation Differences of Foreign Operations”.
2.9 Taxes
The income tax charge reflects the sum of
current income tax and deferred income tax.
2.9.1 Current and Deferred Income Tax
for the year
Current and deferred taxes are recognized as
expense or income for the year, except when
they are related to entries debited or credited
to other comprehensive income or directly to
equity, in which cases taxes are also recognized
in other comprehensive income or directly
in equity, respectively. In the case of a business
combination, the tax effect is taken into
consideration in the calculation of goodwill
or in the determination of the excess of
acquirer's interest in the net fair value of the
acquiree's identifiable assets, liabilities and
contingent liabilities over the cost of the
business combination.
2.9.2 Current Tax
Current tax payable is based on the taxable
income recorded during the year. Taxable
income and net income reported in the
consolidated statement of comprehensive
income differ due to revenue or expense items
that are taxable or deductible in other fiscal
years and items that are never taxable or
deductible. The current tax liability is calculated
using the tax rate in effect as of the date of these
parent company only financial statements.
2.9.3 Deferred Tax
Deferred tax is recognized on temporary
differences between the book value of the
assets and liabilities included in these financial
statements and the corresponding tax basis
used to determine taxable income. Deferred
tax liabilities are generally recognized for all
temporary fiscal differences. Deferred tax assets
are recognized for all deductible temporary
differences to the extent that it is likely that
future taxable income will be available against
which those deductible temporary differences
can be charged. These assets and liabilities are
not recognized if the temporary differences
arise from goodwill or from the initial
recognition (other than in a business
combination) of other assets and liabilities in a
transaction that affects neither the taxable
income nor the accounting income.
The book value of a deferred tax asset is
reviewed at each reporting year and reduced
to the extent that it is no longer likely that
sufficient taxable income will be available
in the future to allow for the recovery of all or
part of the asset.
Deferred tax assets and liabilities are measured
at the tax rates that are expected to be applicable
in the year in which the asset is realized or the
liability is settled, based on the tax rates (and
tax laws) that have been enacted or substantively
enacted by the end of the period. The
measurement of deferred tax liabilities and assets
reflects the tax consequences that would follow
from the manner in which the entity expects, at
the end of the reporting year, to recover or settle
the book value of its assets and liabilities.
Deferred tax assets are offset against deferred
tax liabilities if effective regulations allow to
offset, before the tax authorities, the amounts
recognized in those items; and if the deferred
tax assets and liabilities arise from income
taxes levied by the same tax authority and the
Company intends to settle its assets and
liabilities on a net basis.
Under the IFRS, deferred tax assets and
liabilities are classified as non-current assets
and liabilities, respectively.
2.9.4 Tax on Assets
In Argentina, the tax on assets (impuesto a la
ganancia mínima presunta) is supplementary
to income tax. The Company assesses this tax at
the effective rate of 1% on the taxable assets
at year-end. The Company's tax liability for
each year will be equal to the higher of the tax
on assets assessment or the income tax liability
assessed at the legally effective rate on the
estimated taxable income for the year. However,
if the tax on assets exceeds the income tax
liability in any given fiscal year, the excess may
be creditable against any excess of income
tax liability over the tax on assets in any of the
following ten fiscal years.
The tax on assets balance has been capitalized
in the parent company only financial
statements, net of a valuation allowance, based
on the Company's current business plans.
2.10 Property, Plant and Equipment and
Intangible Assets
Property, plant and equipment held for use in the
supply of services, or for administrative purposes,
are recorded at cost less accumulated depreciation
and any accumulated impairment loss.
Depreciation of property, plant and equipment
is recognized on a straight-line basis over its
estimated useful life. The estimated useful life,
residual value and depreciation method are
reviewed at each year-end, with the effect
of any changes in estimates accounted for on
a prospective basis.
Repair and maintenance expenses are expensed
as incurred.
The gain or loss arising from the retirement
or disposal of an item of property, plant
and equipment is calculated as the difference
between income from the sale of the asset and
the asset's book value, and recognized under
“Other Income and Expense, net” in the parent
company only statement of comprehensive
income.
The residual value of an asset is written down
to its recoverable value, if the asset's residual
value exceeds its estimated recoverable value
(see Note 2.11).
Intangible assets comprise software and are
valued at cost, net of the corresponding
accumulated amortization and impairment
losses. Amortization is calculated on a straight
line basis over the estimated useful life of
the intangible assets. The Company reviews
the useful lives applied, the residual value and
the amortization method are reviewed at
each year-end, and accounts the effect of any
changes in estimates on a prospective basis.
2.11 Impairment of Non-Financial Assets,
Except Goodwill
At the end of each financial statement, the
Company reviews the book value of its
non-financial assets with definite useful life to
determine the existence of any evidence
indicating that these assets could be impaired.
If there is any indication of impairment, the
recoverable value of these assets is estimated
for the purposes of determining the amount of
the impairment loss (in case the recoverable
value is lower than the book value). Where it is
not possible to estimate the recoverable value
of an individual asset, the Company estimates
the recoverable value of the cash-generating
unit ("CGU") to which such asset belongs.
Where a consistent and reasonable allocation
base can be identified, corporate assets are
also allocated to an individual cash-generating
unit or, otherwise, to the smallest group of
cash-generating units for which a consistent
allocation base can be identified.
The recoverable value of an asset is the higher of
the fair value less selling expenses or its value
178
179
in use. In measuring value in use, estimated
future cash flows are discounted at their present
value using a pre-tax discount rate, which
reflects the current market assessments of the
time value of money and, if any, the risks
specific to the asset for which estimated future
cash flows have not been adjusted.
Assets with an indefinite useful life
(for example, non-financial assets unavailable
for use) are not amortized, but are tested for
impairment on an annual basis.
During this year, no impairment losses have
been recorded for these assets.
2.12 Financial Instruments
2.12.1 Financial Assets
Purchases and sales of financial assets are
recognized at the transaction date when
the Company undertakes to purchase or sell the
asset, and is initially measured at fair value,
plus transaction costs, except for those financial
assets classified at fair value with changes
in the statement of income, which are initially
measured at fair value.
2.12.1.1 Classification of Financial Assets
Financial assets are classified within the
following specific categories: “financial assets at
fair value with changes in net income”,
“held-to-maturity investments” and “loans and
receivables”. The classification depends on
the nature and purpose of the financial assets
and is determined on initial recognition.
2.12.1.2 Recognition and Measurement of
Financial Assets
2.12.1.2.1 Financial Assets at Fair Value with
Changes in Net Income
Financial assets at fair value with changes in net
income are recorded at fair value, recognizing
any gain or loss arising from the measurement
in the statement of comprehensive income.
The net gain or loss recognized in net income
includes any gain or loss generated by the
financial asset and is included in the item
financial income and cost in the parent company
only statement of comprehensive income.
The assets designated in this category are
classified as current assets if they are expected
to be traded within 12 months; otherwise,
they are classified as non-current assets.
The fair value of these assets is calculated based
on the current quoted market price of these
securities.
2.12.1.2.2 Held-to-maturity Investments
Held-to-maturity investments are measured
at amortized cost using the effective interest rate
method less any impairment, if any.
The effective interest rate method calculates
the amortized cost of a financial asset or liability
and the allocation of financial income or cost
over the whole corresponding period. The
effective interest rate is the rate that exactly
discounts estimated future cash payments
or receipts over the expected life of the financial
instrument to the net book value of the
financial asset or liability on its initial
recognition.
Balances in foreign currency were translated
at the exchange rate prevailing at the closing of
year for the settlement of these transactions.
Foreign exchange differences were charged to
net income for each year.
2.12.1.2.3 Loans and Receivables
Loans and trade receivables with fixed or
determinable payments not traded in an active
market are classified as “trade receivables and
other”. Trade receivables and other are initially
measured at fair value, and subsequently
measured at amortized cost using the effective
interest rate method, less any impairment,
if any. Interest income is recognized using the
effective interest rate method, except for short-
term balances for which the recognition of
interest is not significant.
Loans and receivables are classified as current
assets, except for the maturities exceeding
12 months from the closing date.
Loans in foreign currency have been valued as
mentioned above, at the exchange rates prevailing
as of each year-end. Foreign exchange differences
were charged to net income for each year.
2.12.1.3 Impairment of Financial Assets
The Company tests financial assets or a group
of assets for impairment at each closing date to
assess if there is any objective evidence of
impairment. The value of a financial asset or a
group of assets is impaired, and an impairment
loss is recognized, where there is objective
evidence of the impairment as a result of one
or more events that occurred after the initial
recognition of the asset (a “loss event”) and that
loss event or events have an impact on the
estimated future cash flows of the financial asset
or a group of assets, which may be reliably
measured.
The objective evidence of impairment may
include, among others, significant financial
difficulties of the issuer or obligor; or breach
of contractual terms, such as default or
delinquency in interest or principal payments.
The Company tests for impairment financial
assets disclosed under Other Receivables on
a case by case basis.
Where there is objective evidence of an
impairment loss in the value of loans granted,
receivables or held-to-maturity investments
recorded at amortized cost, the loss amount
is measured as the difference between the book
value and the present value of estimated
future cash flows (without including future
non-incurred losses), discounted at the original
effective interest rate of the financial asset.
The asset's book value is written down under
a contra asset account. The loss amount
is recognized in net income for the year.
If, in subsequent periods, the impairment loss
amount decreases and such decrease can be
objectively related to an event occurring after
the impairment has been recognized (such
as an improvement in the debtor's credit rating),
the previously recognized impairment loss is
reversed. A loss reversal can only be recorded to
the extent the financial asset's book value does
not exceed the amortized cost that would have
been determined if the impairment loss had not
been recorded at the reversal date. The reversal
amount is recognized in net income for the year.
2.12.1.4 Derecognition of Financial Assets
The Company derecognizes a financial asset
when the contractual rights to the cash flows
of such assets expire or when it transfers
the financial asset and, therefore, all the risks
and benefits inherent to the ownership of
the financial asset are transferred to another
entity. If the Company retains substantially
all the risks and benefits inherent to the
ownership of the transferred asset, it will
continue to recognize it and will recognize a
liability for the amounts received.
2.12.2 Financial Liabilities
Financial liabilities are valued at amortized cost
using the effective interest rate method.
2.12.2.1 Debts
Debt is initially valued at fair value net of
the transaction costs incurred, and subsequently
valued at amortized cost using the effective
interest rate method. Any difference between
the initial value net of the transaction costs
and the settlement value is recognized in the
income statement over the term of the loan
using the effective interest rate method. Interest
expense has been charged to the parent
company only statement of comprehensive
income under “Financial Costs”.
2.12.2.2 Trade Payables and Other
Trade payables with fixed or determinable
payments not traded in an active market are
classified as “Trade Payables and Other”.
Trade Payables and Other are initially measured
at fair value, and subsequently measured at
amortized cost using the effective interest rate
method. Interest expense is recognized using
the effective interest rate method, except for
short-term balances for which the recognition
of interest is not significant.
Trade Payables and Other are classified as
current, except for the maturities exceeding 12
months from the closing date.
Cash and Banks
Short-Term Investments
Cash and Cash Equivalents
In the years ended December 31, 2012 and 2011, the
following significant transactions were carried out, which
did not have an impact on cash and cash equivalents:
Trade payables in foreign currency have been
valued as mentioned above, at the exchange
rates prevailing as of each year end. Foreign
exchange differences were charged to net
income for each year.
2.12.2.3 Derecognition of Financial Liabilities
An entity shall derecognize a financial liability
(or part of it) when, and only when, it has
been extinguished, i.e., when the obligation
specified in the corresponding agreement is
discharged, cancelled or expires.
2.13 Other Liabilities
The other liabilities have been valued at
nominal value, which does not differ
significantly from its discounted value.
2.14 Statement of Cash Flows
For the purposes of preparing the statement
of cash flows, the item “Cash and Cash
Equivalents” includes cash and bank balances,
high liquidity short-term investments (with
original maturities shorter than 90 days), and
bank overdrafts payable on demand, if any,
are deducted to the extent they are part of the
Company's cash management.
Bank overdrafts are classified as “Debts” in the
balance sheet.
Cash and cash equivalents at each year-end,
as disclosed in the statement of cash flows, may
be reconciled against the items related to the
parent company only balance sheet as follows:
December 31, 2012
December 31, 2011
5,251,306
7,742,929
12,994,235
2,950,680
29,866,561
32,817,241
Dividends collected through debt settlement
Contributions to Subsidiaries
132,640,431
20,261,301
73,755,307
-
December 31, 2012
December 31, 2011
180
181
2.15 Distribution of Dividends
The distribution of dividends to the Company's
shareholders is recognized as a liability in the
financial statements for the year in which
the distribution of dividends is approved by
the Shareholders' Meeting.
Note 3
Accounting Estimates and Judgments
In applying the accounting policies described
in Note 2, the Company has to make
judgments and prepare accounting estimates of
the value of the assets and liabilities which
may not be otherwise obtained. The estimates
and related assumptions are based on historical
experience and other pertinent factors. Actual
results may differ from these estimates.
The underlying estimates and assumptions are
continually reviewed. The effects of the
reviews of accounting estimates are recognized
for the year in which estimates are reviewed.
These estimates basically refer to:
Impairment of Goodwill
The Company assesses goodwill for impairment
on an annual basis. In determining if there
is impairment of goodwill, the Company
calculates the value in use of the cash generating
units to which it has been allocated. The
calculation of the value in use requires
the determination by the entity of the future
cash flows that should arise from the cash
generating units and an appropriate discount
rate to calculate the present value.
During this year, no impairment losses have
been recorded for goodwill.
Recognition and Measurement of Deferred
Tax Items
As disclosed in Note 2.9, deferred tax assets
are only recognized for temporary differences to
the extent that it is likely that the entity will
have enough future taxable income against
which the deferred tax assets can be used. Tax
loss carryforwards from prior years are only
recognized when it is likely that the entity will
have enough future taxable income against
which they can be used.
The Company examines the recoverable value
of deferred tax assets based on its business plans
and books a valuation allowance, if appropriate,
so that the net position of the deferred tax asset
will reflect the probable recoverable value.
Determination of the Useful Lives of Property,
Plant and Equipment
The Company reviews the reasonableness of
the estimated useful life of property, plant and
equipment at each year-end.
Measurement of the fair value of certain
financial instruments
The fair value of a financial instrument is
the amount at which the instrument could be
purchased or sold between knowledgeable,
willing parties in an arm's length transaction.
If there is a quoted market price available for an
instrument in an active market, the fair value
is calculated based on that price.
If there is no quoted market price available for
a financial instrument, its fair value is estimated
based on the price established in recent
transactions involving the same or similar
instruments and, otherwise, based on valuation
techniques regularly used in financial markets.
The Company uses its judgment to select a
variety of methods and makes assumptions
based on market conditions at closing.
Note 4
Breakdown of the Main Items of the Parent Company only Balance Sheet
4.1 Property, Plant and Equipment
Main Account
the Beginning
Additions
Retirements
2012
Historical value
Balance at
Balances as of
December 31,
Furniture and Fixtures
Audio and Video Equipment
Telecommunication Equipment
Computer Equipment
Total as of December 31, 2012
352,594
122,179
103,740
4,367,683
4,946,196
83,826
-
47,957
693,933
825,716
-
-
-
-
-
436,420
122,179
151,697
5,061,616
5,771,912
Balance
at the
Depreciation
Balances
Net Book
as of
Value as of
December
December
Main Account
Rate
Beginning
Retirements
For the year
31, 2012
31, 2012
Furniture and Fixtures
Audio and Video Equipment
Telecommunication
Equipment
Computer Equipment
Total as of
December 31, 2012
10%
20%
20%
33%
147,429
81,889
60,010
3,737,449
4,026,777
-
-
-
-
-
40,271
14,272
187,700
96,161
19,222
436,923
79,232
4,174,372
248,720
26,018
72,465
887,244
510,688
4,537,465
1,234,447
Balance at
Historical value
Balances as of
December 31,
Main Account
the Beginning
Additions
Retirements
2011
Furniture and Fixtures
Audio and Video Equipment
Telecommunication Equipment
Computer Equipment
Total as of December 31, 2011
282,845
118,159
98,280
3,980,149
4,479,433
69,749
4,020
5,460
387,534
466,763
-
-
-
-
-
352,594
122,179
103,740
4,367,683
4,946,196
Balance
at the
Depreciation
Balances
Net Book
as of
Value as of
December 31, December 31,
Main Account
Rate
Beginning
Retirements
For the year
2011
2011
Furniture and Fixtures
Audio and Video Equipment
Telecommunication Equipment
Computer Equipment
Total as of
December 31, 2011
10%
20%
20%
33%
117,069
62,481
46,772
3,241,400
3,467,722
-
-
-
-
-
30,360
19,408
13,238
147,429
81,889
60,010
496,049
3,737,449
205,165
40,290
43,730
630,234
559,055
4,026,777
919,419
182
183
4.2 Intangible Assets
Balance at
Historical value
Balances as of
December 31,
Main Account
Software
Total as of December 31, 2012
the Beginning
Additions
Retirements
2012
-
-
173,632
173,632
-
-
173,632
173,632
Balance
at the
Amortization
Balances
Net Book
as of
Value as of
December 31,
December
Main Account
Rate
Beginning
Retirements
For the year
2012
31, 2012
Software
Total as of
December 31, 2012
33%
-
-
-
-
33,376
33,376
140,256
33,376
33,376
140,256
4.3. Investment in Unconsolidated Affiliates
Included in non-current assets:
Corporate Name Main business activity
and votes
2012
2011
2011
Direct interest
Valuation as of
Valuation as of
Valuation as of
in capital
December 31,
December 31,
January 1,
Investing and financing
97.0%
889,863,588
728,689,320
579,712,064
SHOSA (1)
SHOSA
Goodwill
Vistone (1)
VLG (1)
VLG Goodwill
CVB (1)
CLC (1)
Pem S.A.
AGEA
AGR
CIMECO
CIMECO
Goodwill
CMI
ARTEAR
Investing
Investing and financing
Investing and financing
Investing and financing
Investing
Publishing and Printing
Printing
Investing and financing
Advertising
Broadcasting Services
Radio Mitre
Broadcasting Services
IESA
Investing and financing
GC Services
Investing and financing
GCGC
CMD
GC Minor
Services
Investing and financing
Investing and financing
95.0%
11.0%
95.0%
99.9%
0.1%
99.9%
0.9%
20.7%
0.8%
(2) 97.0%
94.7%
96.9%
100%
97.5%
84.6%
95.6%
495,735,087
935,907,491
165,692,576
100,503,301
213,426,388
58,904,881
2
681,361,011
1,440,978
35,321,311
58,837,707
176,242
359,734,353
27,119,367
102,314,354
11,182,693
8,030,273
23,786,177
5,338,870
495,735,087
817,446,091
122,793,570
100,503,301
182,300,990
49,022,825
2
593,652,512
1,459,237
32,296,420
58,837,707
137,066
325,733,460
34,560,469
102,719,135
9,840,619
7,810,923
25,439,017
5,873,423
495,735,087
706,600,891
108,613,463
100,503,301
155,539,492
41,431,643
2
574,265,229
1,326,116
28,056,493
58,837,707
100,650
261,024,651
24,363,148
103,707,575
6,918,261
12,857,978
23,551,159
5,805,858
4,174,676,650
3,694,851,174
3,288,950,768
Included in non-current liabilities:
Direct interest
Valuation as of
Valuation as of
Valuation as of
in capital
December 31,
December 31,
January 1,
Main business activity
and votes
2012
2011
2011
Corporate
Name
GCSA
Investments
Investing and financing
100%
28,624,787
28,624,787
25,706,586
25,706,586
19,155,260
19,155,260
(1) Companies through which an interest is held in Cablevisión S.A.
(2) Interest in votes amounts to 98.8%.
Equity in Earnings from Affiliates and Subsidiaries
December 31, 2012
December 31, 2011
SHOSA
Vistone
VLG
CVB
CLC
AGEA
CIMECO
GCSA Investments
ARTEAR
IESA
Radio Mitre
GCGC
CMD
GC Services
Other
4.4 Other Receivables
Non-Current
Guarantee Deposits
Tax on assets
Valuation Allowance for
Tax on Assets
Other
Current
Related Parties (Note 8)
Tax Credits
Advances
Other
228,480,831
164,088,477
43,964,793
39,559,876
9,378,433
27,119,742
7,170,843
(13,610,201)
34,000,893
(404,782)
(25,775,855)
(1,707,198)
(1,653,734)
1,342,074
(905,414)
511,048,778
171,118,903
121,458,459
32,508,406
29,033,136
6,886,064
81,273,503
6,934,796
(6,551,328)
103,488,817
(988,439)
4,252,320
(5,047,055)
1,887,858
2,922,358
159,915
549,337,713
December 31, 2012
December 31, 2011
January 1, 2011
30,000
27,993,242
30,000
31,305,899
(27,993,242)
(31,305,899)
-
30,000
22,994,617
603,090
1,563,841
37,280
25,198,828
-
30,000
83,218,676
492,599
640,829
761,586
85,113,690
30,000
32,470,574
(32,470,574)
2,105,600
2,135,600
2,488,645
425,334
914,214
1,212,800
5,040,993
184
185
4.5 Other Investments
Financial Instruments
Money Market
4.6 Cash and Banks
Cash and Imprest Funds
Cash at Banks
4.7 Debt
Current
Related Parties (Note 8)
December 31, 2012
December 31, 2011
January 1, 2011
572,684
7,170,245
7,742,929
500,593
29,365,968
29,866,561
6,730,099
6,909,143
13,639,242
December 31, 2012
December 31, 2011
January 1, 2011
145,927
5,105,379
5,251,306
59,527
2,891,153
2,950,680
59,327
2,996,632
3,055,959
December 31,
December 31,
January 1,
(1) Rate
2012
2011
2011
14%
62,084,479
62,084,479
127,730,585
127,730,585
71,242,000
71,242,000
(1) Annual Average Nominal Rate applicable as of December 31, 2012.
The following table details the changes in loans and indebtedness
for the year ended December 31, 2012 and the prior year:
Balances as of January 1st
New Loans and Indebtedness
Accrued Interest
Other Financial Effects
Settlement of principal and interest
Balances as of December 31
4.8 Taxes Payable
Current
Taxes Payable on a
National Level
Taxes Payable on a
Provincial Level
4.9 Trade Payables and Other
Current
Suppliers and Trade Provisions
Related Parties (Note 8)
Employer's Contributions
2012
2011
127,730,585
62,894,866
7,819,631
-
(136,360,603)
62,084,479
71,242,000
121,637,672
10,067,391
1,802,792
(77,019,270)
127,730,585
December 31, 2012
December 31, 2011
January 1, 2011
1,327,384
296,184
1,623,568
2,470,487
139,433
2,609,920
1,313,690
149,428
1,463,118
December 31, 2012
December 31, 2011
January 1, 2011
4,294,506
1,415,638
22,926,499
28,636,643
2,737,602
289,052
17,313,431
20,340,085
1,791,309
1,274,025
13,638,125
16,703,459
Note 5
Breakdown of the Main Items of the Parent Company only Statement of Comprehensive Income
5.1 Information Required under Section 64, Subsection b) of Law No. 19,550
Administrative Expenses
December 31, 2012
December 31, 2011
65,902,696
524,000
24,929,742
4,016,887
918,901
80,600
346,693
1,035,567
489,712
986,987
2,810,603
83,154
510,688
33,376
3,572,883
106,242,489
52,683,078
195,000
17,138,361
3,378,725
706,914
92,730
276,936
947,768
514,447
705,553
2,314,133
47,706
559,055
-
3,402,002
82,962,408
December 31, 2012
December 31, 2011
5,793,333
142,163
5,935,496
561,802
95,399
657,201
December 31, 2012
December 31, 2011
(7,879,150)
(3,251,839)
-
(11,130,989)
(13,380,039)
(2,031,828)
(1,851,375)
(17,263,242)
Item
Salaries, Social Security and Benefits to Personnel (1)
Supervisory Committee's fees
Fees for services (2)
Taxes, Duties and Contributions
Other personnel expenses
General expenses
IT expenses
Maintenance Expenses
Communication expenses
Advertising expenses
Travel Expenses
Stationery and Office Supplies
Depreciation of Property, Plant and Equipment
Amortization of Intangible Assets
Other expenses
Total
(1) Includes fees for technical and administrative
services to Directors in the amount of Ps. 8,488,955
and Ps. 6,925,658, respectively. Additionally,
they include the effect of the long-term savings plan
mentioned in Note 13.
(2) Includes Directors' fees in the amount Ps. 1,071,585
and Ps. 861,112, respectively.
5.2 Financial Income
Exchange Difference and Other Financial Results
Interest
5.3 Financial Costs
Interest
Other Taxes and Expenses
Exchange Difference and Other Financial Results
186
187
Note 6
Income tax
The following table shows the breakdown of net
deferred tax assets (amounts stated in thousands
of Argentine Pesos):
Assets
Tax Loss Carryforwards
Other Investments
Employer's Contributions
Other
Subtotal
Valuation Allowance for
Deferred Tax Assets
Net Deferred Tax Assets
December 31, 2012
December 31, 2011
January 1, 2011
28,180
7,463
3,692
8
39,343
(28,180)
11,163
28,268
7,645
2,694
14
38,621
(28,268)
10,353
21,217
7,828
1,916
-
30,961
(21,217)
9,744
The following table shows the reconciliation
between the income tax and tax on assets
charged to net income for the years ended
December 31, 2012 and 2011 and the income
tax liability that would result from applying
the current tax rate on income before income
tax and tax on assets and the income tax
liability assessed for each year (amounts stated
in thousands of Argentine Pesos):
Income Tax Assessed at the Current Tax Rate (35%)
on Income before Income Tax
Permanent Differences:
Gain/Loss on Investments in Subsidiaries
Non-Taxable Income
Other
Subtotal
Valuation Allowance for Net Deferred Tax Assets
Charged to Income
Income Tax
Deferred Taxes for the Year
Income Tax
Tax on assets
Total
December 31, 2012
December 31, 2011
(169,318)
(180,564)
178,867
(4,529)
832
5,852
(5,042)
810
810
810
(2,266)
(1,456)
192,268
(4,447)
403
7,660
(7,051)
609
609
609
(1,752)
(1,143)
As of December 31, 2012, the Company's
accumulated tax loss carryforwards amounted
to approximately Ps. 80.5 million, which
calculated at the current tax rate, represent
deferred tax assets in the amount of
approximately Ps. 28.2 million. The following
table shows the expiration date of the
accumulated tax loss carryforwards pursuant
to statutes of limitations (amounts stated
in thousands of Argentine Pesos):
Expiration year
Amount of Tax Loss
Carryforward
2013
2014
2015
2016
2017
11,678
19,023
15,345
20,061
14,406
80,513
Note 7
Reserves, Retained Earnings and Dividens
Balances at the beginning of the year:
Legal Reserve
Accumulated Results
Other Reserves
Total
Net Income Attributable to the Parent Company
Dividend Distribution
Changes in Reserves for Acquisition of Investments
Balance at the end of the year
a. Grupo Clarín
The Company's bylaws set forth that retained
earnings shall be appropriated as follows:
(i) 5% to the Company's legal reserve until such
reserve equals 20% of the Company's capital
stock; and (ii) the balance, in whole or in part,
to the payment of the fees of the members
of the Board of Directors and the Supervisory
Committee, to dividends on common shares,
or reserve accounts, or as otherwise determined
by the Shareholders, among other situations.
At the Company's Annual Regular Shareholders'
Meeting held on April 28, 2011, the
shareholders decided, among other things, to
appropriate the earnings for the year 2010;
which at that time amounted to Ps.
533,714,480 as follows: (i) Ps. 26,685,724 to
the legal reserve; (ii) Ps. 120,000,000 to
dividend distribution, which has been paid as
of the date of these financial statements, and
(iii) Ps. 387,028,756 to retained earnings.
188
189
December 31, 2012
December 31, 2011
64,740,233
1,539,154,967
(18,384,533)
1,585,510,667
482,310,720
(135,000,000)
23,591,807
1,956,413,194
38,054,509
1,171,087,483
(16,485,290)
1,192,656,702
514,753,208
(120,000,000)
(1,899,243)
1,585,510,667
On April 26, 2012, Grupo Clarín's Annual
Regular Shareholders' Meeting decided, among
other things, to appropriate the accumulated
results for the year 2011; which at that time
amounted to Ps. 1,540,313,089 as follows:
(i) Ps. 23,912,434 to the legal reserve,
(ii) Ps. 135,000,000 to dividend distribution,
which have already been paid,
(iii) Ps. 387,028,756 to the judicial reserve
for future dividend distribution,
(iv) Ps. 300,000,000 to the optional reserve
for future dividends and (v) Ps. 694,371,899 to
the optional reserve for illiquidity of results.
b. Cablevisión
On April 23, 2012, Cablevisión's General
Regular and Special Shareholders' Meeting
decided to distribute dividends in the amount
of Ps. 217 million, payable in two equal
installments, the first one on or before May 24,
2012, as determined by the Board of Directors,
and the second one on or before December 31,
2012, as determined by the Board of Directors.
Out of such amount, approximately Ps. 87
million corresponds to the non-controlling
interest in that company. On April 27, 2012,
Cablevisión's Board of Directors, taking into
consideration that the company had enough
earnings to settle the entire amount of the
approved dividends, decided to make available
to shareholders, as from such date, the
amount of Ps. 217 million.
Note 8
Balances and Transactions with Related Parties
The following table shows the breakdown of
the Company's balances with its related parties:
Company
Item
December 31,
December 31,
January 1,
2012
2011
2011
Subsidiaries
Vistone
SHOSA
CVB
CLC
AGEA
Long-Term Debt
Long-Term Debt
Long-Term Debt
Long-Term Debt
Other Receivables
Trade Payables and Other
ARTEAR
Other Receivables
IESA
Radio Mitre
GCGC
Trade Payables and Other
Trade Payables and Other
Other Receivables
Other Receivables
(30,327,556)
(23,636,527)
(3,147,155)
(4,973,241)
18,912,095
(27,906)
157,374
(240,774)
(29,975)
8,042
10,742
Trade Payables and Other
(1,024,735)
Indirectly controlled
Cablevisión
Other Receivables
PRIMA
AGR
UNIR
Impripost
Ferias y
Trade Payables and Other
Trade Payables and Other
Other Receivables
Trade Payables and Other
Other Receivables
Trade Payables and Other
Other Receivables
Exposiciones S.A.
Auto Sports
Other Receivables
Other Receivables
-
(6,682)
(29,537)
3,334,710
(56,029)
1,158
-
377,075
128
193,293
(44,846,677)
(70,968,174)
(10,299,790)
(1,615,944)
75,303,174
(60,367)
1,412
(166,065)
(29,975)
1,312,190
4,692
(14,457)
-
(4,629)
(12,726)
4,575,889
(833)
1,157
-
(23,880,000)
(41,650,700)
(5,711,300)
-
-
(918,295)
142,599
(26,618)
(29,975)
1,526,790
4,692
(83,646)
600
(87,372)
(127,186)
523,961
(890)
1,200
(43)
442,425
288,675
128
1,577,609
128
-
The following table details the transactions carried
out by the Company with related parties for the
years ended December 31, 2012 and 2011:
Company
Item
December 31, 2012
December 31, 2011
Subsidiaries
AGEA
ARTEAR
Vistone
CLC
SHOSA
CVB
Radio Mitre
GCGC
Management fees
Advertising
Management fees
Services
Interest Expense
Interest Expense
Interest Expense
Interest Expense
Management fees
Interest Income
Management fees
Services
Indirectly controlled
Cablevisión
Management fees
PRIMA
AGR
Impripost
Auto Sports
Services
Services
Management fees
Services
Management fees
Management fees
The fees paid to the Board of Directors and the
Upper Management of the Company for the years
ended December 31, 2012 and 2011 amounted
to approximately Ps. 40 million and Ps. 30 million,
respectively.
28,800,000
(18,581)
32,200,000
-
(3,650,625)
(411,069)
(3,390,119)
(367,818)
240,000
35,671
5,000
(4,826,042)
22,800,000
(40,209)
(280,192)
8,400,000
(49,254)
1,380,000
1,521,439
28,800,000
(5,656)
15,600,000
(17,466)
(3,668,554)
(116,168)
(5,431,890)
(850,779)
240,000
40,041
-
(4,103,627)
22,800,000
-
(258,959)
7,200,000
(5,739)
1,140,000
1,909,987
190
191
Note 9
Terms and Interest Rates of Investments, Receivables and Liabilities
December 31, 2012
Investments (1)
Without any established term
Receivables (2)
Without any established term
To fall due
- Within three months
Liabilities (2) (3)
Without any established term
To fall due
- Within three months
- More than three months and up to six months
Debts (4)
Without any established term
To fall due
- More than three months and up to six months
- More than nine months and up to twelve months
7,742,929
7,742,929
23,666,405
1,562,423
1,562,423
25,228,828
3,511,135
26,878,576
14,308,174
41,186,750
44,697,885
212,383
44,727,271
17,144,825
61,872,096
62,084,479
(1) Bearing interest at floating rate.
(2) Non-interest bearing.
(3) Do not include equity interests in the amount of Ps. 28,624,787 (see Note 4.3).
(4) Bearing interest at fixed rate.
Note 10
Provisions and Other Contingencies
10.1 Regulatory Framework
a. SCI Resolution No. 50/10 approved certain
rules for the sale of pay television services.
These rules provide that cable television
operators must apply a formula to estimate their
monthly subscription prices. The price arising
from the application of the formula was to
be informed to the Office of Business Loyalty
(Dirección de Lealtad Comercial) between
March 8 and March 22, 2010. Cable television
operators must adjust such amount
semi-annually and inform the result of such
adjustment to said Office.
Even though as of the date of these financial
statements the subsidiary Cablevisión cannot
assure the actual impact of the application
of this formula, given the vagueness of the
variables provided by the Resolution to calculate
the monthly subscription prices, Cablevisión
believes that Resolution No. 50/10 is arbitrary
and bluntly disregards its freedom to contract,
which is part of the right to freedom of industry
and trade. Therefore, it has filed the pertinent
administrative claims and has brought the
necessary legal actions requesting the suspension
of the Resolution's effects and ultimately
requesting its nullification.
Even though Cablevisión, like other companies
in the industry, has strong constitutional
arguments to support its position, it cannot be
assured that the final outcome of this issue
will be favorable. Therefore, Cablevisión may
be forced to modify the price of its pay
television subscription, a situation that could
significantly affect the revenues of its core
business. This creates a general framework of
uncertainty over Cablevisión's business that
could significantly affect the recoverability
of its relevant assets reported in these financial
statements and Grupo Clarín S.A.'s assets
related to its investment in Cablevisión.
Notwithstanding the foregoing, as of the date
of these financial statements, in accordance
with the decision rendered on August 1, 2011
in re "LA CAPITAL CABLE S.A. v/ Ministry
of Economy-Secretary of Domestic Trade",
the Federal Court of Appeals of Mar del Plata
has ordered the SCI to suspend the application
of Resolution No. 50/10 with respect to all
cable television licensees represented by the
Argentine Cable Television Association
("ATVC", for its Spanish acronym). Upon
being served on the SCI and the Ministry of
Economy on September 12, 2011, such
decision became fully effective and may not be
disregarded by the SCI.
On June 1, 2010, the SCI imposed a Ps. 5
million fine on Cablevisión alleging that it had
failed to comply with the information regime
set forth by Resolution No. 50/10, and invoking
the Antitrust Law to impose such penalty.
The fine was appealed and submitted to the
Federal Administrative Court of Appeals,
Chamber V, which decided to reduce the fine
to Ps. 300,000. Cablevisión appealed this
decision by filing an extraordinary appeal with
the Supreme Court of Argentina.
On March 10, 2011 SCI Resolution No. 36/11
was published in the Official Gazette. This
Resolution falls within the framework of SCI
Resolution No. 50/10. Resolution No. 36/11
sets forth the parameters to be applied to the
services rendered by Cablevisión to its
subscribers from January through April 2011.
These parameters are as follows: 1) the monthly
basic subscription price shall be Ps. 109 for that
period; 2) the price of other services rendered
by Cablevisión should remain unchanged as
of the date of publication of the resolution; and
192
193
3) the promotional benefits, existing rebates
and/or discounts already granted as of that same
date shall be maintained. The resolution also
provides that Cablevisión shall reimburse users
for any amount collected above the price set
for that period.
Cablevisión believes that Resolution No. 36/10
is illegal and arbitrary, since it is grounded
on Resolution No. 50/2010, which is absolutely
null and void. Since the application of
Resolution No. 50/10 has been suspended,
the application of Resolution No. 36/2011,
which falls within the framework of the former,
is also suspended.
The claim filed by Cablevisión seeking the
nullification of Resolution No. 50/2010
is currently pending before the Federal
Administrative Court of First Instance No. 7
of the City of Buenos Aires.
Subsequently, the SCI issued Resolutions Nos.
65/11, 92/11, 123/11, 141/11, 10/11, 25/12,
97/12 and 161/12 pursuant to which the
SCI extended the effectiveness of Resolution
No. 36/11 up to and including March 2013,
and adjusted the cable television subscription
price to Ps.130. Cablevisión believes, however,
that given the terms under which the Federal
Court of the City of Mar del Plata granted
the preliminary injunction, that is, ordering
the SCI to suspend the application of
Resolution No. 50/97 with respect to all cable
television licensees (among them, Cablevisión
and its subsidiaries) represented by ATVC, and
also given the fact that Resolutions No. 36/11,
65/11, 92/11, 123/11, 141/11, 25/12, 97/12
and 161/12 merely extend the effectiveness
of Resolution No. 50/10, Cablevisión continues
to be protected by said preliminary injunction,
and, therefore, its ordinary course of business
will not be affected.
On January 13, 2012, the Secretariat of
Domestic Trade issued Resolution No. 2/2012
granting Cablevisión 24 hours to resume service
to those subscribers who had duly paid their
subscription fee in the amount established by
the National Government. In its sixth section,
the Resolution provides that if the company
does not comply with its obligations thereunder,
penalties may be imposed as provided by Law
20,680. On February 10, 2012, Cablevisión
received a fine of Ps. 1 million for alleged non-
compliance with such Resolution. Such fine
has been appealed but no decision has been
rendered on the matter yet.
After the Federal Court of Mar del Plata issued
its injunction, several Municipal Offices of
Consumer Information (“OMIC”, for its
Spanish acronym) and several individuals filed
claims requesting that Cablevisión comply
with Resolution No. 50/10 and the subsequent
resolutions that extended its effectiveness.
In some cases, preliminary injunctions were
granted. In every case, Cablevisión appealed
such preliminary injunctions alleging that
Resolution No. 50/10, as amended, and/or
the subsequent resolutions that extended its
effectiveness, had been suspended with respect
to Cablevisión, its branches and subsidiaries
prior to the issuance of such preliminary
injunctions.
b. On August 19, 2010 the Media Secretariat
issued Resolution No. 100/2010, whereby
it revoked the license that had been granted to
Fibertel. Cablevisión believes that this resolution
is an absolutely null and void administrative act.
Its language contradicts express provisions of
the National Constitution, of Law No. 19,550
(Argentine Business Associations Law), Decrees
Nos. 1,185/90 and 764/00 and Law No. 19,549
of Administrative Procedures, among others.
The Resolution disregards the several filings
made by Cablevisión with the Media Secretariat
requesting such agency to issue an
administrative act evidencing that Cablevisión,
pursuant to section 82 of the Argentine Business
Associations Law, is the successor of Fibertel
and, therefore, the holder of the exclusive
telecommunication service license and of the
registrations that had been previously granted
to Fibertel. More than eight years after that
request, in spite of the existence of a draft of a
favorable decision in the case file, with a
completely arbitrary attitude that contradicts
other precedents of the same agency, and
without prior notice that would have allowed
Cablevisión to exercise its defense right, the
SECOM ordered that the license be revoked
and that the users migrate within 90 days of the
resolution's notification. On August 26, 2010
Cablevisión filed an appeal requesting the
reversal of the resolutions, and if such appeal is
rejected, a subsidiary appeal against that
Resolution before the highest administrative
authority. The appeal was dismissed pursuant to
SECOM Resolution No. 132/2010 dated
October 7, 2010. However, since Cablevisión
had filed a subsidiary appeal to have the case
heard by the highest administrative authority;
the file was submitted to the Ministry of Federal
Planning, Public Investment and Utilities.
As of the date of these financial statements, this
appeal is pending resolution.
On February 24, 2011, Chamber No. 3 of
the Federal Court of Appeals on Civil
and Commercial Matters of the City of Buenos
Aires, in re “ANTITRUST ASSOCIATION V.
NATIONAL GOVERNMENT MEDIA
SECRETARIAT ON COMPLAINT FOR
THE PROTECTION OF
CONSTITUTIONAL RIGHTS” confirmed
the decision rendered in the first instance,
stating that the National Government, Media
Secretariat, shall refrain from disrupting or
limiting in any way the Internet access services
offered by Cablevisión. It also partially amended
the above decision by broadening its effects,
ordering the National Government to refrain
from enforcing Resolution No. 100/10, thus
allowing new customers to subscribe to the
Internet access services offered by Cablevisión.
On December 16, 2011, Federal Civil and
Commercial Court No. 3, Clerk's Office
No. 5 issued a related injunction in re
“CABLEVISION S.A. v. NATIONAL
GOVERNMENT ON COMPLAINT
FOR THE PROTECTION OF
CONSTITUTIONAL RIGHTS”, ordering the
suspension of the effects of SECOM Resolution
No. 100/10 and also guaranteeing new
subscribers the possibility to subscribe to the
Internet Access service offered by Cablevisión.
On December 20, 2011, at the request of
Cablevisión, a new preliminary injunction
was issued in re “CABLEVISION S.A. v.
National Government - Argentine Secretariat
of Communications on COMPLAINT
FOR THE PROTECTION OF
CONSTITUTIONAL RIGHTS”. On the basis
of the above-mentioned precedent, and on the
existing connection between the subject matters
of both cases, as alleged by Cablevisión, the
injunction ordered the suspension of the effects
of SECOM Resolution No. 100/10. The
National Government filed an appeal with
Chamber No. 3 of the Federal Court of Appeals
on Civil and Commercial Matters which is
still pending as of the date of these financial
statements.
Argentina in due time and form against such
decision. On July 12, 2012, Chamber No. 2
of the Federal Court of Appeals on
Administrative Matters decided to dismiss the
appeals filed by both parties.
Cablevisión filed an appeal against the above-
mentioned dismissal since it believes it has
sufficient grounds to have the fine revoked.
However, Cablevisión cannot assure that the
outcome of the appeal will be favorable.
Since the appeal does not have staying effects,
on October 18, 2012 the National
Administration of Domestic Trade ordered
Cablevisión to pay within ten (10) business
days the fine reduced by Chamber No. 2.
On October 29, 2012 Cablevisión settled the
fine in the amount of Ps. 380,000 and the
compliance was recorded in the file.
c. Pursuant to the Antitrust Law and to
Broadcasting Law No. 22,285, the transactions
carried out on September 26, 2006 that
resulted in an increase in the indirect interest
the Company held in Cablevisión to 60%,
Cablevisión's acquisition of 98.5% of
Multicanal and 100% of Holding Teledigital,
and Multicanal's acquisition of PRIMA (from
PRIMA Internacional (now CMD)), required
the authorization of the CNDC (validated by
the SCI), and the COMFER. On October 4,
2006, the Company, Vistone, Fintech, VLG
and Cablevisión, as purchasers, and AMI
CV Holdings LLC, AMI Cable Holdings Ltd.
and HMTF-LA Teledigital Cable Partners LP,
as sellers, filed for the approval of the
acquisition. After several requests for
information, the SCI issued Resolution No.
257/07, with a prior opinion of the CNDC in
favor of the approval of the above-mentioned
transactions and after consulting the COMFER
and the SECOM, which did not raise any
objections. The Company was served notice
in this respect on December 7, 2007. Such
Resolution was appealed by five entities. As
of the date of these financial statements,
the CNDC has dismissed the five appeals filed
against the above-mentioned resolution.
Four of the entities filed direct appeals before
the judicial branch. Three of those appeals were
dismissed and one is still pending resolution.
Due to the imminent possibility that the
application of Law No. 26,522 will affect the
assets used to provide Internet access services,
within the framework of this same file
Cablevisión requested the extension of the
scope of the effective injunction, which was
granted on December 6, 2012. Such extension
entailed notifying AFSCA of the injunction
which prevents it from affecting in any way the
Internet access services offered by Cablevisión.
Based on the above-mentioned preliminary
injunctions, Cablevisión is authorized to
continue to render the telecommunication
services granted to Fibertel.
Cablevisión will resort to all available
administrative and judicial remedies in order
to have SECOM Resolution No. 100/2010
declared null and void. Even though
Cablevisión has strong grounds that support its
position, it cannot be assured that the final
outcome of this issue will be favorable.
On September 10, 2010, the National
Administration of Domestic Trade notified
Cablevisión that a Ps. 5 million fine had been
imposed for promoting the Fibertel service
without being the holder of the license (Section
7 of Law No. 24,240), for the impossibility
of honoring the promotion offered to
undetermined potential consumers (Section
7 of Law No. 24,240), for providing wrong
information to the customers (Section 4
of Law No. 24,240), and for the impossibility
of honoring promotions because Cablevisión
was not the holder of the Fibertel license
(Section 19 of Law No. 24,240). Cablevisión
appealed such decision in due course, since
it believes it has sufficient arguments in
its favor. The file was assigned No. 1,276 and
is pending before Chamber No. 2 of the Court
of Appeals on Administrative Matters.
On April 17, 2012 the appeal was partially
granted, reducing the fine to Ps. 380,000.
Notwithstanding the foregoing, Cablevisión
filed an appeal with the Supreme Court of
194
195
Cablevisión believes that if the CNDC acts as it
did in the case of the three dismissed direct
appeals, the fourth appeal is unlikely to be
admitted.
On June 11, 2008, Cablevisión was served
with a decision of the Federal Court of Appeals
on Civil and Commercial Matters revoking a
decision rendered by the CNDC on September
13, 2007, whereby such agency had dismissed
a claim filed by Gigacable S.A. prior to the
December 7, 2007 decision referred to above.
The Court of Appeals revoked CNDC's
decision only with respect to matters relating
to the conduct of Cablevisión and Multicanal
prior to CNDC's authorization of the
transactions on December 7, 2007, and ordered
an investigation to determine whether a fine
should be imposed on Cablevisión and
Multicanal due to such conduct. As of the date
of these financial statements, Cablevisión has
filed its response, which is pending analysis by
such agency.
d. On December 15, 2008, the shareholders
of Cablevisión approved the merger of
Multicanal, Delta Cable S.A., Holding
Teledigital, Teledigital, Televisora La Plata
Sociedad Anónima, Pampa TV S.A., Construred
S.A. and Cablepost S.A. into Cablevisión,
whereby, effective as of October 1, 2008,
Cablevisión, as surviving company, became the
universal successor to all of the assets, rights and
obligations of the merged companies.
The merger commitment was executed on
February 12, 2009 and was filed with the
CNV pursuant to applicable regulations that
require administrative approval. As of the date
of these financial statements, such merger is
pending administrative approval by the CNV
and registration with the IGJ.
On September 3, 2009, the COMFER issued
Resolution No. 577/09 whereby it withheld
approval of Cablevisión's merger with
Multicanal S.A.
On September 8, 2009, Multicanal was served
with CNDC Resolution No. 106/09, dated
September 4, 2009, whereby the CNDC
ordered an audit to articulate and harmonize the
several aspects of Resolution No. 577/09 issued
by the COMFER with Resolution No. 257/07
issued by the Secretariat of Domestic Trade.
Resolution No. 106/09 also sets forth that the
notifying companies shall not, from the
enactment thereof and until the end of the audit
and / or resolution of the CNDC, be able to
remove or replace physical or legal assets.
On September 17, 2009 Judge Dr. Esteban
Furnari of the National Court on Federal
Administrative Matters No. 2, in re “Multicanal
and Other v. Conadeco- Decree 527/05 and
other on Proceeding leading to a declaratory
judgment”, ordered the suspension of the effects
of COMFER Resolution No. 577/09, of
CNDC Resolution No. 106/09, and any other
act resulting therefrom, until a final decision
was rendered in the case.
On October 23, 2009, the court decision that
had suspended the effects of COMFER
Resolution No. 577/09 and CNDC Resolution
No. 106/09 was revoked by Chamber No. 3 of
the Court of Appeals on Federal Administrative
Matters, in re “Multicanal and Other v.
Conadeco- Decree 527/05 and other on
Proceeding leading to a declaratory judgment”.
Therefore, the calculation of the suspended
terms was automatically resumed. On that basis,
on December 1, 2009, Cablevisión ratified the
filing it had made with the COMFER at the
time of the merger, and specified the licenses
to which it had decided to maintain title.
On December 16, 2009, the Chamber No. 3 of
the Court of Appeals on Federal Administrative
Matters, in re "Multicanal and other v.
CONADECO Decree 527/05 and other on
Proceeding leading to a declaratory judgment"
File No. 14,024/08, granted the extraordinary
appeal filed by Multicanal and Grupo Clarín
against the decision rendered by that same
court on October 23, 2009. With the granting
of that appeal, Cablevisión's preliminary
injunction regained full force and effect.
Accordingly, on January 8, 2010 Cablevisión
notified such circumstance to the COMFER.
Subsequently, on March 9, 2011, the Supreme
Court of Argentina in re “MULTICANAL and
Other v./ CONADECO - Decree 527/05 and
other on/Proceeding leading to a declaratory
judgment”, granted the appeal by right and
the extraordinary appeal filed by the National
Government and revoked the decision rendered
by Chamber No. 3 of the Court of Appeals
on Federal Administrative Matters, which had
confirmed the preliminary injunction
requested by Cablevisión in the first instance.
Notwithstanding the foregoing, Cablevisión
believes that this matter does not have a
material impact on the substantive issues.
Notwithstanding the required filings made by
Cablevisión and its shareholders to prove that
they were complying with the commitment
agreed with the CNDC on December 7, 2007
(date on which the SCI granted authorization),
on September 23, 2009, the SCI issued
Resolution No. 641, whereby it ordered the
CNDC to verify compliance with the parties'
proposed commitment by visiting the
parties' premises, requesting reports, reviewing
documents and information and carrying out
hearings, among other things.
On December 11, 2009, Cablevisión notified
the CNDC of the completion and
corresponding verification of the fulfillment
of the voluntary undertakings made by
Cablevisión at the time of the enactment of
SCI Resolution No. 257/07. On December 15,
2009, Chamber No. 2 of the Federal Court
of Appeals on Civil and Commercial Matters
issued a preliminary injunction in re “Grupo
Clarín S.A. v. Secretariat of Domestic Trade
and other on preliminary injunctions”
(case 10,506/09), partially acknowledging
the preliminary injunction requested by Grupo
Clarín, and instructing the CNDC and the
SCI to notify Grupo Clarín whenever their
own verification of Cablevisión's fulfillment of
its undertakings had been concluded, regardless
of the result. Should such agencies have any
observations, they should notify Grupo Clarín
within a term of 10 days. On the same date,
the CNDC issued Resolution No. 1,011/09
whereby it deemed Cablevisión's voluntary
undertakings unfulfilled and declared the
rescission of the authorization granted under
Resolution No. 257/07.
On December 17, 2009, the Federal Court of
Appeals on Commercial-Criminal Matters,
Chamber A, decided to suspend the term to
appeal Resolution No. 1,011/09 until the main
case was transferred back to the CNDC,
considering it had been in such court since
December 16, 2009.
196
197
On December 17, 2009, the CNDC notified
Cablevisión of the initiation of the motion for
execution of Resolution No. 1,011/09. On
December 18, 2009, Chamber No. 2 of the
Federal Court of Appeals on Civil and
Commercial Matters issued an injunction in re
“Grupo Clarín S.A. v. Secretariat of Domestic
Trade and other on preliminary injunctions”,
which suspended the effects of Resolution No.
1,011/09 until the notice set forth in the
injunction of December 15, 2009 was served.
Accordingly, the CNDC served notice to
Cablevisión by means of Resolution No.
1,101/09.
On December 30, 2009, the Federal
Commercial and Civil Court of Appeals,
Chamber No. 2, issued a preliminary injunction
in re “Grupo Clarín S.A. v. Secretariat of
Domestic Trade and other on preliminary
injunctions”, partially acknowledging Grupo
Clarín's request and suspending the term
for Grupo Clarín to respond to Resolution
No. 1,101/09 until Grupo Clarín is granted
access to the administrative proceedings related
to the charges brought by the CNDC in its
Opinion No. 770/09 (on which Resolution
No. 1,011/09 was based).
On February 19, 2010, Cablevisión requested
the nullification of the notice, and as a default
argument, submitted the response requested
under Resolution No. 1,101/09. On February
26, 2010, the Federal Court of Appeals on
Commercial-Criminal Matters approved
the recusation filed by Cablevisión and excluded
the Secretary of Domestic Trade from the
proceedings.
On March 3, 2010, the Argentine Ministry
of Economy and Public Finance issued
Resolution No. 113 (subscribed by the Minister
of Economy, Dr Amado Boudou) rejecting
the request for the nullification of Resolution
No. 1,011/09, the requests for abstention
and excusation of certain officials, and all the
evidence produced in connection with such
request for nullification. The voluntary
undertakings made by Cablevisión under
Resolution No. 257/07 were deemed unfulfilled,
thus declaring the rescission of the authorization
granted under such resolution. The parties
involved were ordered to take all necessary
actions to comply with such rescission within a
term of six months, and to inform the CNDC
about the progress made in that respect on a
monthly basis. Such resolution was appealed
in due time and form. The appeal was granted
without staying the execution of judgment.
The appeal is currently pending before
Chamber No. 2 of the Federal Court of Appeals
on Civil and Commercial Matters in re “AMI
CABLE HOLDING and other on/ Appeal of
the National Antitrust Commission Resolution”
(File No. 2,054/2010).
On March 3, 2010, the Company brought a
claim seeking to nullify of COMFER
Resolution No. 577/09. Upon being served with
this claim, the COMFER filed an exception,
which was responded by Cablevisión. On
September 4, 2012 the Judge decided to dismiss
the exception filed by the COMFER, which
shall bear the legal costs incurred. On December
13, 2012 the order to notify about such
decision was submitted and it was issued by the
Court on December 26, 2012. In that same act,
a request was submitted to set the preliminary
hearing (before the discovery proceedings).
On April 20, 2010, Chamber 2 of the Federal
Court of Appeals on Civil and Commercial
Matters granted the appeal filed by Grupo
Clarín S.A. in re “Grupo Clarín on delay in
the appeal of the proceedings”, and decided that
the appeal granted by the CNDC to Grupo
Clarín S.A. against Resolution No. 113/10 had
the effect of staying such resolution.
The National Government filed an appeal
asking that the Court of Appeals revoke its
own decision with respect to the effect granted
to the April 20 decision, and that it decline its
jurisdiction. It also filed an extraordinary
appeal. Both appeals were dismissed. Chamber
No. 2 requested the administrative file and
the Court's decision is pending. Cablevisión
considers that it has strong grounds to have the
effects of the above Resolution suspended and
therefore has brought the relevant legal actions.
However, it cannot assure that the outcome
will be favorable.
Decisions made on the basis of these financial
statements should consider the eventual impact
that the above-mentioned resolutions might
have on Cablevisión and its subsidiaries,
and these financial statements should be read in
light of such uncertainty.
e. Under Proceeding File No. 21,788/08 dated
November 17, 2008, Cablevisión informed
the COMFER about the corporate business
reorganization process effective as of October 1,
2008. In that same act, Cablevisión informed
the COMFER about: i) all the licenses to
which it became universal successor under the
corporate business reorganization process;
ii) the exercise of an option for one of the
licenses in each of the locations where it held
multiple licenses, and iii) the relinquishment
of original licenses and extensions so as to
eliminate the multiple licenses accumulated in
each of the locations where it held multiple
licenses. As a result of such corporate business
reorganization process, Cablevisión became the
universal successor of 158 licenses to exploiting
Supplementary Services in several locations
(pursuant to section 44, subsection b) of Law
22,285. To avoid having multiple licenses,
Cablevisión informed the COMFER about its
irrevocable intention to relinquish a total
of 78 licenses (including original licenses and
extensions) so as to eliminate all the
supplementary service licenses that exceeded
the limit set for supplementary services in each
location (which was one license per designated
area). Notwithstanding the foregoing,
through Resolution No. 577/COMFER/09,
the COMFER illegitimately decided to
withhold approval of the merger requested by
Cablevisión, requesting Cablevisión to submit
a divestiture plan on the grounds that the
license relinquishments spontaneously
communicated by that company were not
sufficient. (See Note 10.1.d).
f. On May 23, 2011, Supercanal S.A. filed a
claim for the protection of constitutional rights
(acción de amparo) before the Federal Court
of Mendoza against Cablevisión, Grupo Clarín
and other co-defendants, requesting that they
refrain from exercising alleged anti-competitive
practices and that the assets, liabilities and
businesses that used to belong to Multicanal
and that were subsequently merged into
Cablevisión (see Note 10.1.d.) be separated
from the other assets, liabilities and businesses
of Cablevisión and transferred to third parties.
Together with the claim for the protection of
constitutional rights, Supercanal S.A. requested
a preliminary injunction - for the same purposes
- which was granted on December 16, 2011.
The injunction ordered the separation of
the assets, liabilities and businesses that used
to belong to Multicanal and that were
subsequently merged into Cablevisión within
a term of 60 days. The court also appointed
a supervisor (interventor) and co-administrator
for a term of twelve months, who shall
enforce the injunction, order the changes to
such company's management required for the
effective enforcement of the duties to be
fulfilled by the Board of Directors, and also
report on a monthly basis to the court about
his/her performance. Such court-appointed
supervisor (interventor) and co-administrator
shall have the obligation to perform the
necessary functions aimed at fulfilling
the actions ordered pursuant to the injunction.
Cablevisión filed an appeal against such
injunction and presented the grounds for its
defense in due time and form. Cablevisión
also requested the replacement of such
injunction with another less burdensome, one
that could largely cover the risks alleged by
Supercanal in its claim.
On April 26, 2012, the Federal Court of
Appeals of Mendoza, Chamber A, dismissed the
appeal filed by Cablevisión against the decision
of December 16, 2011, but extended the term
to divest the assets, liabilities and businesses of
Multicanal that had been merged into
Cablevisión to 120 days. The court also
dismissed the request to replace the injunction.
Cablevisión believes it has strong grounds to
defend its position. Therefore, it has already
informed the Court that it shall proceed
to file an appeal with the Supreme Court of
Argentina against such decisions.
Notwithstanding the foregoing, Cablevisión
cannot assure the outcome of this appeal.
On August 14, 2012, Cablevisión was served
notice of a decision rendered by Chamber
No. 2 of the Federal Court of Appeals on Civil
and Commercial Matters of the City of Buenos
Aires (“the Court of Appeals”) on August 13,
2012 whereby it declared the existence
of a connection between the case brought by
198
199
Supercanal S.A. in the Province of Mendoza and
the appeal of MECON Resolution No. 113/10
(“Ami Cable Holding LTD and other on/
Appeal of the National Antitrust Commission
Resolution). The Court of Appeals stated that
the hearing of the case in the Province of
Mendoza gives rise to an atypical jurisdictional
issue that affects the correct rendering of justice
in the case and the powers of said Court of
Appeals. The Court of Appeals therefore
ordered Federal Court No. 2 of Mendoza to
send the file so that the case could continue
under the jurisdiction of the Federal Courts on
Civil and Commercial Matters of the City
of Buenos Aires. The Federal Court No. 2 of
Mendoza and the Federal Court of Appeals
of Mendoza were served notice of said order on
the same date and both of them rejected it,
giving rise to a jurisdictional conflict between
Chamber No. 2 of the Court of Appeals and
Federal Court No. 2 of Mendoza.
Pursuant to Section 24, subsection 7 of
Decree/Law No. 1285/58, if a jurisdictional
conflict arises between a federal judge of a given
jurisdiction and a Federal Court of Appeals
of a different jurisdiction, said conflict must be
resolved by the Argentine Supreme Court.
After having been served notice of the decision
of Chamber No. 2 of the Court of Appeals, on
August 17, 2012, Judge Walter Bento of the
Federal Court Nº 2 of Mendoza issued an order
to notify Cablevisión of an extension of the
scope of the injunction issued in re “Supercanal
S.A. v. Cablevisión S.A. and other on Claim for
the protection of constitutional rights (acción
de amparo)”. Under this injunction, the judge
ordered the removal of the Board of Directors
of Cablevisión and its replacement with a court-
appointed administrator (interventor) whose
role was to fulfill court orders. However, in
response to the claim brought by Cablevisión on
August 21, 2012 with the Argentine Supreme
Court in connection with the abovementioned
jurisdictional conflict, the Supreme Court
ordered the immediate suspension of the
proceedings until a decision is rendered on the
jurisdictional conflict.
Notwithstanding this, Cablevisión and its legal
advisors believe that the order issued on August
17 is irregular and that it may not be deemed
a valid notice, because it should have been
issued within the framework of the proceedings
pending with the Federal Court on Civil and
Commercial Matters rather than being served at
a domicile established in the city of Mendoza.
At present, all these proceedings are suspended
and were sent to the Argentine Supreme Court
for it to render a decision on the jurisdictional
conflict.
g. On October 21, 2010, the National
Administration of Domestic Trade served notice
to Cablevisión of (i) a fine of Ps. 5 million
for failing to comply with the duty to inform
(Section 4 of Law 24,240) concerning one
of its promotions and (ii) a fine of Ps. 500,000
for infringing Section 2, subsection c) of Decree
1153/95 of the regulations to Section 10 of
Law 22,802. Cablevisión appealed the fine
because it believes it has strong arguments in its
favor. The file was assigned No. 1281 and is
pending before Chamber No. 2 of the Court
of Appeals on Federal-Administrative Matters.
On October 4, 2011, the Court of Appeals
partially affirmed Resolution 739/10 and
reduced the fine to Ps. 2.2 million, imposing
75% of the legal costs on Cablevisión. On
October 13, 2011 Cablevisión filed a Federal
Ordinary appeal with the Supreme Court of
Argentina and on October 20, 2011 it filed a
federal extraordinary appeal with that same
court in the event that the ordinary appeal may
be dismissed.
On October 21, 2011, Chamber No. 2 of
the Federal Court of Appeals on Administrative
Matters granted the ordinary appeal and the
legal brief was submitted in due time and form.
On August 7, 2012 the Supreme Court of
Argentina decided that the Ordinary Appeal
had been wrongly granted.
On December 13, 2012 the Chamber dismissed
the appeal filed by Cablevisión, which shall bear
the costs incurred.
On December 20, 2012 Cablevisión filed an
appeal against the above-mentioned dismissal
since it believes it has sufficient grounds to
have the fine revoked. However, Cablevisión
cannot assure that the outcome of the appeal
will be favorable.
h. On May 31, 2012, Cablevisión was served
notice of Resolution No. 16,819 dated May 23,
2012 whereby the Argentine Securities
Commission (CNV, for its Spanish acronym)
ordered the initiation of summary proceedings
against Cablevisión and its directors, members
of the Supervisory Committee and the
Head of Market Relations for an alleged failure
to comply with the duty to inform. The CNV
considers that Cablevisión failed to comply
with its duty to inform because the investor
community was deprived of its right to become
fully aware of the grounds of a decision
rendered by the Federal Court of Mendoza and
the scope of the powers granted by that court
to the co-administrator appointed in re
“Supercanal S.A. v. Cablevisión S.A. on
protection of constitutional rights”, in addition
to the fact that other self-regulated authorities
were allegedly not notified of the information
furnished by Cablevisión. On June 25, 2012,
Cablevisión filed a response petitioning that its
defenses be sustained and all charges dismissed.
Cablevisión and its legal advisors believe that
the company has strong arguments in its favor.
Nevertheless, Cablevisión cannot assure that
the outcome of the said summary proceedings
will be favorable.
i. Pursuant to CNV Resolution No. 16,834
dated June 14, 2012 notified to the Company
on June 27, 2012, the CNV ordered the
initiation of summary proceedings against the
Company and the members of its Board of
Directors, Supervisory Committee and
Audit Committee in office at the time of the
occurrence of certain events under review
(September 19, 2008) for alleged failure to
comply with the duty to inform. Under said
Resolution, the CNV argues that the Company
allegedly failed to comply with the duty to
disclose the filing of a claim against it entitled
“Consumidores Financieros Asociación Civil
para su defensa and other v. Grupo Clarín
on/Ordinary”, which the CNV considers
relevant. On July 25, 2012, Cablevisión filed
a response petitioning that its defenses
be sustained and that all charges against it
be dismissed. The Company and its legal
advisors believe that the company has strong
arguments in its favor. Nevertheless,
Cablevisión cannot assure the outcome of said
summary proceedings.
j. The Executive Branch of Uruguay issued
Decree No. 73/012, published in the Official
Gazette on March 16, 2012, whereby it
expressly repealed Decree No. 231/011,
which had revoked certain signals' broadcast
frequencies. However, the new decree ratified
and repeated - virtually in identical terms -
the decree that was being repealed, and added
certain provisions that caused further detriment
to two companies with which a subsidiary
of Cablevisión has contractual arrangements
in place. Consequently, on March 23, 2012
the two affected companies filed an appeal
requesting that Decree No. 73/012 be revoked.
The appeal is still pending resolution.
In May 2012, the aforesaid companies brought
a legal action with the Court in Administrative
Litigation Matters requesting the nullification
of the resolution and the suspension of its
execution.
Those appeals have progressed through
the corresponding instances and are pending
resolution as of the date of these financial
statements. Notwithstanding the foregoing,
said companies cannot assure the outcome of
these actions.
In the preparation of these consolidated
financial statements, the Company has
considered the effects that could be derived,
and that may be projected to date within a
foreseeable period as a result of the effects,
if any, from these regulatory changes.
k. On June 4, 2012, the Federal Court of
Appeals of Rosario partially confirmed SCI
Resolution No. 219/2010, whereby the
Secretary of Domestic Trade found that
Cablevisión and Multicanal had engaged in
market sharing practices in connection
with the paid-television service in the City of
Santa Fe and reduced the fine imposed on
each of the companies involved from Ps. 2.5
million to Ps. 2 million. However, this decision
is not yet final, because Cablevisión and
Multicanal and the Ministry of Economy filed
appeals with the Argentine Supreme Court,
which are still pending.
Notwithstanding the foregoing, Cablevisión
cannot assure that the appeals will be resolved
in its favor.
200
201
l. On March 1, 2011, the SCI served notice to
Multicanal and Cablevisión of Resolution No.
19/11 whereby the Secretary of Domestic Trade
found that both companies had engaged in
market sharing practices in connection with the
paid-television service in the City of Paraná
and imposed a fine of Ps. 2.5 million on each
of them. Cablevisión filed an appeal in due time
and form. This appeal was dismissed by the
Federal Court of Appeals of Paraná. Therefore,
Cablevisión filed an appeal with the Argentine
Supreme Court. On November 4, 2011,
the appeal of SCI Resolution No. 19/11 filed
by Cablevisión with the Supreme Court was
partially granted by the Federal Court of
Appeals of Paraná.
On August 30, 2012, the Argentine Supreme
Court dismissed the appeal filed by Cablevisión;
therefore, Resolution No. 19/11 became final.
The case is currently pending with the Court
of Appeals of Paraná, which shall order its
referral to the SCI. The SCI, in turn, shall serve
notice to the companies involved in order for
them to pay the fine.
m. Cablevisión, by itself and as successor
of Multicanal's operations after the merger, is
a party to several administrative proceedings
under the Antitrust Law, facing charges of
anticompetitive conduct, including territorial
division of markets, price discrimination,
abuse of dominant position, refusal to deal and
predatory pricing, as well as a proceeding
filed by the Cámara de Cableoperadores
Independientes (Chamber of Independent
Cable Operators), challenging the transactions
consummated on September 26, 2006. While
Cablevisión believes that its conduct and
that of Multicanal have always been within the
bounds of the Argentine Antitrust Law and
regulations and that their positions in each of
these proceedings are reasonably grounded,
it can give no assurance that any of these cases
will be resolved in its favor.
n. On January 22, 2010, Cablevisión was
served with CNDC Resolution No. 8/10 issued
within the framework of file No. 0021390/2010
entitled “Official Investigation of Cable
Television Subscriptions (C1321)”. Pursuant
to such Resolution, Cablevisión, among other
companies, was ordered to refrain from
conducting collusive practices and, particularly,
from increasing the price of cable television
subscriptions for a term of 60 days, counted as
from the date all required notices are certified
as completed. According to said Resolution,
companies which have already increased the price
of the subscriptions shall return to the price
applicable in November 2009 and maintain such
price for the abovementioned term.
On February 2, 2010, by means of Resolution
No. 13/10, the CNDC ordered Cablevisión
to credit its subscribers the amount of any price
increase made after the date of CNDC
Resolution No. 8/10 on its March invoices.
Cablevisión appealed both resolutions in due
time and form and their effects were suspended
by an injunction issued by Chamber No. 2
of the Federal Court of Appeals on Civil and
Commercial Matters at the request of
Cablevisión.
Finally, on October 4, 2011, the same
Chamber granted the appeal, declaring that the
claim based on CNDC Resolution No. 8/10
was moot and nullifying CNDC Resolution
No. 13/10.
The National Government appealed such
decision before the Supreme Court of Argentina,
which shall grant or dismiss the appeal.
o. On August 5, 2010, Cablevisión was served
with CNC Resolution No. 2,936/2010 within
the framework of Administrative Proceeding
File No. 2,940/2010, pursuant to which
Cablevisión and/or any other individual or
entity through which the services relating to the
licenses and registrations granted to FIBERTEL
S.A. ("Fibertel") may be rendered shall refrain
from adding new subscribers and from altering
the conditions under which the services are
currently rendered.
To decide as it did, the Argentine
Communications Commission disregarded the
corporate reorganization that was completed
and registered before the IGJ, whereby Fibertel
merged into Cablevisión effective as of
April 1, 2003. By virtue of that merger process,
Cablevisión became the universal successor
to all of the assets, rights and obligations of
Fibertel as the merged company, among them,
the Exclusive License awarded through SECOM
Resolutions No. 100/96, 2375/97, 168/02 and
83/03. Therefore, Fibertel did not transfer or
divest of its rights and obligations to third
parties - among them, those derived from the
above-mentioned Exclusive License. Fibertel
continued to carry out its activities through
Cablevisión as surviving company. In order
to implement the above-mentioned corporate
business reorganization, on March 5, 2003,
the Argentine Communications Commission
and the SECOM were notified of the corporate
business reorganization for its acknowledgement.
The technical and legal areas of the Argentine
Communications Commission issued a
favorable resolution with respect to the
compliance with the requirements of current
regulations to register Fibertel's license under
the name of Cablevisión. SECOM had a term
of 60 days to decide on the corporate business
reorganization. However, such agency failed
to render a decision as required by the
applicable regulations. Not until August 19,
2010 did SECOM issue Resolution No.
100/2010, revoking Fibertel's license.
Cablevisión believes that the Resolution is
arbitrary and that it flagrantly violates due
process and its defense right. Therefore,
Cablevisión has appealed such resolution. No
decision has been rendered on the matter yet.
p.On October 28, 2010, Cablevisión was
served notice of the National Administration of
Domestic Trade's resolutions imposing two
fines of Ps. 5 million each, for allegedly failing
to observe the typographic character
requirements under applicable regulations
(Resolution 906/98) when informing its
subscribers of the increase in the price of their
cable television subscriptions. Cablevisión
appealed the fines on November 12, 2010
because it believes it has strong grounds in its
favor. However, it cannot assure that the
outcome will be favorable. One of the files was
assigned No. 1280 and is pending before
Chamber No. 1 of the Federal Administrative
Court of Appeals, and the other one was
assigned No. 1,278 and is pending before
Chamber No. 5 of the Federal Administrative
Court of Appeals.
q. The litigation brought before the Civil,
Commercial, Mining and Labor Court of the
City of Concarán, Province of San Luis, in
early 2007 in re “Grupo Radio Noticias SRL
v. Cablevisión and others”, is still pending
before the Federal Court in Administrative
Litigation Matters No. 2.
The purpose of that claim was to challenge the
share transfers mentioned in Note 10.1.c.
and to request the revocation of Cablevisión's
broadcasting licenses. Cablevisión has responded
to such claim and believes it is very unlikely
that it will be admitted.
r. The Government of the City of Mar del
Plata enacted Ordinance No. 9163, governing
the installation of cable television networks.
Such ordinance was amended and restated by
Ordinance No. 15,981 dated February 26,
2004, giving cable companies until December
31, 2007 to adapt their cable networks to the
new municipal requirements. The ordinance sets
forth that in those areas where street lighting
has underground wiring, cable television
networks are to be placed underground. In this
sense, the Executive Department of the
Municipality of General Pueyrredón has
submitted to the Municipal Council a proposed
ordinance extending the term provided until
December 31, 2015. Such ordinance is ready
for discussion by legislators. Even though
the ordinance provides for certain penalties that
may be imposed, the City has not imposed
such penalties to cable systems that are not in
compliance with such ordinance.
s. On November 27, 2012 the National
Administration of Domestic Trade served
Cablevisión with Resolution No. 308/2012,
whereby it imposed a Ps. 5 million fine on that
company alleging that it had failed to comply
with Section No. 4 of the Antitrust Law
(increase in the subscription price of cable tv
services/wrongful information provided by
Customer Service, informed by mail that SCI
Resolution No. 50/10 and the supplementing
resolutions are suspended on grounds of
unconstitutionality, when in fact they have
been suspended by an injunction). On
December 11, 2012 Cablevisión appealed
Resolution No. 308/2012. The administrative
file No. S01:0312056/2011 is currently
pending before the National Administration of
Domestic Trade and must be submitted to the
Federal Court of Appeals on Administrative
Matters for it to determine, by lottery, the first
instance court that will hear the case.
Cablevisión and its legal advisors believe that
the company has strong arguments in its favor.
Nevertheless, Cablevisión cannot assure that the
revocation of the fine will be resolved in its favor.
202
203
10.2 Claims and Disputes with
Governmental Agencies
a. Concerning the decisions made at the
Company's Annual Regular Shareholders'
Meeting held on April 28, 2011, on September
1, 2011 the Company was served with a
preliminary injunction in re “National Social
Security Administration v/ Grupo Clarín S.A.
on/ ordinary” whereby the Company may
not in any way dispose, in part or in whole,
of the Ps. 387,028,756 currently recorded
under the retained earnings account, other than
to distribute dividends to the shareholders.
On the same date, the Company was served
with a claim brought by Argentina's National
Social Security Administration requesting the
nullity of the decision made on point 7
(Appropriation of Retained Earnings) of the
agenda of the Annual Regular Shareholders'
Meeting held on April 22, 2010. As of the date
of these financial statements, the Company
has duly answered to the complaint and the
intervening judge ordered discovery proceedings
which have already commenced.
On November 1, 2011, the CNV issued
Resolution No. 593, which provides that
shareholders' meetings considering financial
statements must, with respect to retained
earnings that are not subject to restrictions on
distribution and that may be dealt with
pursuant to applicable law, expressly decide
whether to distribute them as dividends, to
capitalize them and issue shares, appropriate
them to set up reserves other than legal
reserves, or a combination of the above.
b. The Argentine Federal Revenue Service
(“AFIP”) served the subsidiary CIMECO with
a notice challenging its income tax assessment
for the fiscal periods 2000, 2001 and 2002.
In such notice, the AFIP challenged mainly the
deduction of interest and exchange differences
in the tax returns filed for those years. If
AFIP's position prevails, CIMECO's maximum
contingency as of December 31, 2012 would
amount to approximately Ps. 12 million
principal amount and Ps. 24.9 million interest.
CIMECO filed a response, which was dismissed
by the tax authorities. The tax authorities
issued their own official assessment and
imposed penalties. CIMECO appealed the tax
authorities' resolution before the National Tax
Court on August 15, 2007.
During the year ended December 31, 2010,
CIMECO received a pro forma income tax
assessment from the AFIP for fiscal periods
2003 through 2007, as a consequence of AFIP's
challenge to CIMECO's income tax assessments
for the periods 2000 through 2002 mentioned
above. CIMECO filed a response before
AFIP, rejecting such assessment and requesting
the suspension of administrative proceedings
until the Federal Tax Court renders its decision
on the merits.
During 2011, the AFIP served CIMECO with
a notice stating the income tax charges assessed
for the periods 2003 through 2007 and
ordering the initiation of summary proceedings.
The AFIP's assessment shows a difference in
the Income Tax liability for the above indicated
periods in its favor for an amount in excess
of the amount that had been estimated
originally, as a result of the method used to
calculate certain deductions. CIMECO
responded to the assessment rejecting all of the
adjustments and requesting that the proceedings
be rendered without effect and filed, with no
further actions to be taken.
On April 26, 2012, the AFIP issued a new
official assessment comprising the fiscal periods
2003 through 2007 in which it applied the
same method for the calculation than that used
for the administrative settlement, claiming
a total liability of Ps. 120 million. On May 21,
2012, an appeal was filed with the Federal
Tax Court.
CIMECO and its legal and tax advisors believe
CIMECO has strong grounds to defend
the criteria adopted in their tax returns and that
AFIP's challenges will not be admitted by the
Federal Tax Court. Accordingly, CIMECO
has not booked an allowance in connection with
the effects such challenges may have.
c. Since 2005, the ANA has brought several
claims against the holders of broadcasting
and cable TV licenses for the payment
of customs duties applicable to the import of
films documented between 2000 and 2005.
According to the ANA, holders of TV licenses
are liable to pay customs duties, VAT and
income tax not only on the customs value
of the physical supports, but also on the
reproduction rights agreed upon in the related
contracts. ARTEAR filed objections against
these claims on the basis of international
agreements, doctrine and case law on the
subject. As a consequence of the criteria
followed by ARTEAR, during the period
covered by the claim, it paid other taxes that
would not have been payable if ANA's
interpretation had been applied. As of the date
of these financial statements, ARTEAR had
to pay the differences claimed by ANA in a few
isolated cases because the appeals filed with
the Federal Court of Appeals against the
National Tax Court's decisions do not have
staying effects. In the first unfavorable decision
rendered by Chamber No. 4 of the Federal
Court of Appeals, which was appealed by
ARTEAR, the Argentine Supreme Court
refrained from rendering judgment
on the merits of the case. Over the last months,
all other Chambers of the Federal Court of
Appeals have rendered decisions against
ARTEAR's position. Therefore, as of the date
of these financial statements, ARTEAR has set
up an allowance to account for the estimated
losses that may result from such claims,
notwithstanding the fact that ARTEAR still
considers that its interpretation of the customs
law is based on reasonable legal grounds.
d. On September 10, 2010, the AFIP served
TRISA with a notice with objections to its
income tax assessment, with respect to the
application of the withholding regime set forth
under the section following section 69 of the
Income Tax law, for fiscal periods 2004, 2005
and 2006. If AFIP's position prevails, TRISA's
contingency would amount to approximately
Ps. 28.9 million, out of which Ps. 9.3 million
corresponds to taxes on dividend payments
made during those years, Ps. 6.5 million to a
70% fine on the omitted tax, and Ps. 13.1
million to late-payment interest.
TRISA filed a response, which was dismissed
by the tax authorities. On December 20, the tax
authorities issued their own official assessment
and imposed penalties. TRISA appealed the
tax authorities' resolution before the National
Tax Court on February 8, 2011.
TRISA and its legal and tax advisors believe
that TRISA has strong grounds to defend its
position and that AFIP's challenges will not be
admitted by the Federal Tax Court. Accordingly,
TRISA has not booked a provision in connection
with the effects such challenges may have.
e. On August 13, 2012, the parent company
GC Dominio S.A. was served notice of a claim
brought by the Argentine Superintendency of
Legal Entities (IGJ) whereby it seeks to annul
the registration with the Public Registry of
Commerce of the appointment of GC Dominio
S.A.'s authorities, approved at the Shareholders'
Meeting held on May 17, 2011. which is
pending before the Federal Court of First
Instance on Commercial Matters No. 25,
Clerk's Office No. 49 (“Inspección General
de Justicia v. Dominio S.A. on/Ordinary”, File
No. 58652). The claim brought by the IGJ
seeks to annul the registration with IGJ of the
appointment of GC Dominio S.A.'s authorities,
approved at the Annual Ordinary General
Shareholders' Meeting of GC Dominio held
on May 17, 2011. The appointment was
registered with the IGJ on April 23, 2012 under
No. 7147, Book No. 59 of Share Companies.
According to the IGJ and as the case file is said
to show, GC Dominio has allegedly failed to
comply with certain regulations applicable
to foreign shareholders upon registration of the
appointment of authorities. Also within the
framework of this claim, the Court ordered the
filing of a lis pendens by the IGJ.
GC Dominio S.A.'s legal advisors have strong
grounds to sustain that the resolution of
IGJ's claim seeking the de-registration of the
appointment of authorities has serious defects
and infringes the guarantees of reasonableness
and due process; a principle that derives from
the constitutional guarantee of defense in
court, which entails the right to be heard and
to produce evidence to the contrary. GC
Dominio S.A. has appealed such injunction
because it considers that the IGJ has not shown
that its legal arguments are, at least, plausible.
f. As a result of a report on suspicious activities
reported by the Argentine Federal Revenue
Service (“AFIP”) concerning transactions
carried out between the Company and some
subsidiaries, the Financial Information Unit
(“FIU”) pressed criminal charges for alleged
money laundering. The action is now pending
before Federal Court No. 9, under Dr. Luis
Rodriguez. The FIU has pressed charges against
the Company and its directors for alleged
money laundering activities related to the
trading of shares between the Company and
some of its subsidiaries. The Company has
204
205
appointed defense attorneys and has requested
a copy of the file to understand the details of
the charges. As of the date of these consolidated
financial statements, the FIU has not
yet produced all the evidence requested by
prosecutor Miguel Angel Osorio.
The Company and its legal advisors consider
that there are strong arguments in the Company's
favor having gathered evidence that supports
their lack of involvement in any such
maneuvers. However, they cannot assure that
the outcome of this action will be favorable.
g. By means of Resolution 16,364/2010, dated
and notified to AGEA as of July 15, 2010,
the CNV's Board of Directors decided to
initiate summary proceedings against AGEA
and certain current and past members of its
board of directors and supervisory commission,
for alleged infringement of the Argentine
Business Associations Law, Decree No. 677/01
and Law No, 22,315. AGEA, as well as the
current and past members of the board of
directors and supervisory commission who are
subject to the summary proceedings, duly
filed their respective responses.
h. AGEA received several inspections from the
AFIP aimed at verifying compliance with the
so-called competitiveness plans implemented by
the National Executive Branch. As a result of
such inspections, after several reports issued by
the AFIP and the corresponding Resolutions
issued by the Ministry of Economy, such
bodies allege that certain acts performed by
AGEA during 2002 lead to the nullity of some
of the benefits granted under said plans for an
estimated amount of Ps. 33.4 million.
AGEA and its legal counsel believe that there
are sufficient grounds in favor of AGEA and,
accordingly, no provision has been recorded. An
ordinary appeal has been filed by AGEA against
such Resolutions. As of the date of these
financial statements, such appeal is pending
resolution. However, AGEA cannot assure that
the appeal will be resolved in its favor.
10.3 Other Claims and Disputes
a. On December 12, 2001, Supercanal filed a
claim against Multicanal for damages as a result
of the enforcement of a preliminary injunction
brought by Multicanal against Supercanal.
Multicanal responded to such claim denying
any liability. Based on de jure and de facto
precedents of the case, Cablevisión, as successor
of Multicanal's operations, believes that the
claim filed should be rejected in its entirety,
and that the legal costs should be borne by the
plaintiff. As of the date of these financial
statements, the proceeding was at the discovery
stage. The court of first instance dismissed
Supercanal's request that it be allowed to sue
without paying court fees or costs. This decision
has been ratified by the Federal Court of
Appeals.
b. On June 22, 2007 TRISA and TSC executed
several documents with AFA, applicable from
the 2007/2008 until the 2013/2014 soccer
seasons, governing the broadcasting by TRISA
of all of the National “B” soccer tournament
matches and by TSC of ten of the Argentine
soccer first division official tournament matches
played each week. Out of those ten matches,
TRISA broadcast five through TyC Sports.
Those agreements set the price to be paid by
TRISA for these products and clearly stated
its right to sell such products and, additionally,
had AFA's express consent.
On August 12, 2009 AFA notified TSC of
its decision to terminate unilaterally the above-
mentioned agreement. TSC has challenged
AFA's unilateral termination of the agreement
and, in order to safeguard its rights, on June 15,
2010 it brought a legal action against AFA for
contractual breach and damages.
On July 27, 2011, AFA unilaterally terminated
the agreement that bound AFA and TRISA
until the 2013/2014 soccer season for the
broadcasting of all Argentine National “B”
soccer tournament matches. AFA's decision was
totally arbitrary and illegitimate, since
TRISA has not breached any provision of the
agreement, which does not expressly allow
voluntary unilateral termination by either party.
Therefore, TRISA has challenged AFA's
unilateral termination of the agreement.
In light of the events and until the situation is
remedied, TRISA will not be able to broadcast
the five weekly matches of the first division
tournament or any of the National “B” soccer
tournament matches that it used to broadcast
on its signal TyC Sports.
The broadcasting rights for the matches of
Metropolitan First B category are not governed
by the above-mentioned agreements, but by
an agreement that is in full force and effect as
of the date of these financial statements.
The situation described above had a significant
impact on TRISA's revenues and costs.
Therefore, it had to adjust its signal to these
new circumstances.
In light of the circumstances described in the
above paragraphs, as from August 2009, TRISA
has recorded a portion of its revenues based
on the progress of negotiations with each client
and the new content of the signal.
During this year, TRISA has completed those
negotiations. As a result, no significant
differences arose between the actual results
and the original estimates.
c. On January 31, 2012, FADRA informed
Grupo Carburando's subsidiary Mundo Show
S.A. the unilateral rescission of the agreement
executed in 2006 whereby FADRA assigned
to that company the rights comprising image,
sound and static advertising of motor racing
at the road racing events Turismo Carretera and
TC Pista until December 31, 2015. Mundo
Show S.A. has challenged and rejected FADRA's
unilateral rescission of the agreement and is
analyzing the legal actions it will bring to
safeguard its rights. In light of the events and
until the situation is remedied, Mundo
Show S.A. will not be able to sell or export
the audiovisual and static advertising rights of
the above-mentioned motor racing events.
Therefore, an allowance has been set up for
impairment of goodwill and other assets related
to such agreement in the amount of
approximately Ps. 17 million.
d. Pursuant to a notarial certificate issued on
September 19, 2008, AGEA and the Company
were served with a legal action brought by
an entity representing consumers and alleged
financial victims (and by six other individuals).
Claimants are Multicanal noteholders who
claim to be allegedly affected by Multicanal's
APE. The claim is grounded on a Consumer
Defense Law which, in general terms, provides
for an ambiguous procedure that is very strict
against the defendant.
The Company, AGEA and certain directors
and members of the supervisory committee
and shareholders have been served with
the claim. After rejecting certain preliminary
defenses presented by the defendants, such as
the application of statutes of limitation
and the failure to comply with prior mediation
procedures, the claim followed ordinary
procedure and the above-mentioned persons
duly filed their respective responses.
e. On September 16, 2010 the Company
was served with a claim brought against it
by Consumidores Financieros Asociación Civil
para su Defensa. The plaintiff claims a
reimbursement of the difference between the
value of the shares of the Company purchased
at their initial public offering and the value
of the shares at the time a decision is rendered
in the case. The Company has duly responded
to the claim and the intervening Court has
deemed the claim responded.
10.4 Matters concerning Papel Prensa:
I. Papel Prensa has several disputes pending
before the Commercial Court of Appeals of
the City of Buenos Aires as a consequence
of CNV Resolution No. 16,222. Pursuant to
said Resolution, the CNV declared that
certain decisions of Papel Prensa's Board of
Directors were irregular and with no effect
for administrative purposes. The Resolution
challenged the Board's fulfillment of the
formalities required in the preparation,
transcription and execution of meeting minutes
on the relevant corporate books. On June 24,
2010, in File No. 75,479/09, the Commercial
Court of Appeals of the City of Buenos Aires,
Chamber C, decided to nullify CNV Resolution
No. 16,222. On the basis of Resolution No.
16,222, the CNV has questioned subsequent
decisions of Papel Prensa's Board and of its
Shareholders. In response, Papel Prensa has
brought several administrative claims against
the CNV, questioning its position. All of such
claims were decided in Papel Prensa's favor
by the Commercial Court of Appeals of the
City of Buenos Aires. Consequently, the CNV's
decisions were nullified. Furthermore, the
Commercial Court of Appeals, Chamber C,
dismissed the appeals filed by the CNV before
the Supreme Court of Argentina against the
Court of Appeals' decisions. The CNV filed a
direct appeal before the Supreme Court.
206
207
As a consequence of the above, Papel Prensa
has continued with the criminal proceedings
brought against certain public officials.
On February 1 and 4, 2010 the Secretary
of Domestic Trade, Mario G. Moreno, and the
CNV, respectively, requested the judicial
intervention of Papel Prensa before the
commercial justice. Such claims were pending
before the Federal Commercial Court of
First Instance No. 2, Clerk's Office No. 4,
temporarily under judge Dr. Eduardo Malde,
who, on March 8, 2010, issued an injunction
whereby he suspended certain decisions
adopted at meetings of the Board of Directors
and at Shareholders Meetings held on or after
November 4, 2009. Judge Malde also appointed
a co-administrator without removing the
members of the previous corporate bodies. Papel
Prensa filed an appeal, which the Commercial
Court of Appeals, Chamber C, resolved in
Papel Prensa's favor, by revoking the injunction
on August 31, 2010. On December 7, 2010
the same Chamber C dismissed the appeals filed
by the CNV and the National Government
before the Supreme Court of Argentina against
the Court of Appeals' decision. Both the CNV
and the National Government filed direct
appeals against such decision.
None of the claims mentioned in the above
paragraphs had a material effect on AGEA's
financial and economic condition as of
December 31, 2012.
II. On January 6, 2010, the SCI issued
Resolution 1/2010 whereby certain business
practices were imposed on Papel Prensa. Papel
Prensa brought a legal action against such
resolution on grounds of unconstitutionality
before the Federal Court on Administrative
Matters and requested an injunction which was
granted by the intervening judge. Pursuant to
the injunction, the effects of such Resolution
were suspended. On May 7, 2010, the Federal
Court on Administrative Matters revoked the
injunction. Papel Prensa appealed such decision,
which was affirmed by the Federal Court
of Appeals on Administrative Matters. Papel
Prensa filed an appeal against the Court of
Appeals' decision. The appeal was denied and
Papel Prensa was served notice of that denial
on September 1, 2010.
III. Papel Prensa suspended its operations with
related parties between March 9 and April 21,
2010 pursuant to an injunction issued on
March 8, 2010 by Judge Malde. In his ruling,
Judge Malde decided to suspend the Board
of Directors' resolution of December 23, 2009,
which had approved the terms and conditions
of transactions with related parties for the
year 2010. On April 21, 2010, the Board of
Directors of Papel Prensa, following a proposal
made by the court-appointed supervisor
(interventor) and co-administrator, approved
the resumption of such company's transactions
with related parties under provisional conditions
for as long as the decision rendered by the
Board on December 23, 2009 remained
suspended and/or until Papel Prensa's corporate
bodies established a business practice to follow
with related parties. Such approval involved
suspending the application of volume discounts
in connection with purchases made by related
parties, which could be recognized in their
favor, subject to the court's decision on the
appeal filed by Papel Prensa against Judge
Malde's injunction of March 8, 2010. As from
April 21, 2010, transactions with related parties
were resumed under the provisional conditions
approved by the Board on April 21, 2010.
At a meeting held on December 23, 2010,
Papel Prensa's Board of Directors approved
new conditions that must be fulfilled for the
recognition and payment of volume discounts
that may be applicable to related parties in
connection with purchases of paper made
as from April 21, 2010. These new conditions
are as follows: (i) the lifting of the provisional
suspension of the resolutions adopted by the
Board meeting of December 23, 2009, as
explained in the previous paragraph, and (ii) the
resolution or end, by any means, of any state
of uncertainty that may eventually exist about
the conditions approved by Papel Prensa's Board
in the first item of the agenda of the meeting
held on April 21, 2010, as a consequence of the
claim brought by the National Government in
re “National Government - Secretariat of
Domestic Trade - v./ Papel Prensa S.A.I.C.F.
y de M. on/ Ordinary”, File No. 97,564,
currently pending before Federal Commercial
Court of First Instance No. 26, Clerk's Office
No. 52. Under this proceeding, the National
Government seeks to obtain, among other
things, a declaratory judgment of nullity of the
provisional conditions for the resumption of
transactions with related parties in connection
with the purchase and sale of paper approved
by Papel Prensa's Board in the first item
of the agenda of the above mentioned meeting
held on April 21, 2010.
Furthermore, at this meeting held on December
23, 2010, Papel Prensa's Board decided to
maintain the originally approved sales policy,
but to subject the accrual and enforceability,
and, consequently, the recognition and payment
to the clients, of the eventual volume discounts
that may be applicable to them with respect to
paper purchases made between January 1, 2011
and December 31, 2011, to a final favorable
ruling in the claim brought by Papel Prensa
against the constitutionality of SCI Resolution
No. 1/2010, or to the final nullification of such
Resolution No. 1/2010 in any other way or by
any other legal means, whichever happens first.
In connection with related parties, the Board
approved the same policies and conditions as
those approved for the other clients in general.
In a meeting held on December 27, 2011 Papel
Prensa's Board of Directors decided to maintain
for 2012 the same commercial policies that had
been approved for 2011 - under the same terms
and conditions mentioned in the previous
paragraph - for all of its customers in general
(including related parties).
The commercial policy approved by Papel
Prensa was affected by Law 26,736 -effective
as from January 5, 2012- which declared
a matter of public interest the production, sale
and distribution of wood pulp and newsprint
and set forth the regulatory framework to
be adopted by the producers, sellers, distributors
and buyers of such inputs. Among other things,
the Law set limits and established conditions
applicable to Papel Prensa for the production,
distribution and sale of newsprint (including a
formula to determine the price of paper), and
created the National Registry of Producers,
Distributors and Sellers of Wood Pulp and
Newsprint where all producers, sellers,
distributors and buyers shall be registered as a
mandatory requirement in order to produce,
sell, distribute, and/or purchase newsprint and
wood pulp as from the enactment of the Law.
It also contains a series of temporary clauses,
specifically and exclusively addressed to
Papel Prensa, whereby Papel Prensa is forced to
make investments to meet the total national
demand for newsprint - excluding from this
requirement the other existing company that
operates in the country with installed capacity
to produce this input. The Law also provides
for the capitalization of the funds eventually
contributed by the National Government
to finance these investments for the purposes
of increasing the equity interest and the political
rights of the National Government in Papel
Prensa, contravening public order regulations
contained in Law 19,550 and disregarding
several constitutional rights and guarantees of
Papel Prensa and its private shareholders.
On February 10, 2012 AGEA registered in the
National Registry of Producers, Distributors and
Sellers of Wood Pulp and Newsprint (Record
No. 63 in File No. S01:0052528/12), clearly
stating that the decision to register shall not be
construed as an acknowledgment or conformity
with the legitimacy of Law 26,736, Resolution
No. 9/2012 issued by the Ministry of Economy
and Public Finance and SCI Resolution
No. 4/2012 issued in connection with such Law
and/or any other issued in the future, since they
seriously affect several rights and guarantees
of AGEA which are recognized and protected by
the Argentine National Constitution.
IV. On September 12, 2011, the CNV issued
Resolution No. 16,647 whereby it rendered
irregular and with no effect for administrative
purposes the decisions made by Papel Prensa's
Board of Directors at the meetings held on July
20, 2011 and August 5, 2011. At those
meetings, the Board of Directors had called
two shareholders' meetings, to be held on
September 27, 2011 and September 15, 2011,
respectively. Notwithstanding the fact that
Resolution No. 16,647 was appealed by Papel
Prensa and is therefore not final, on September
15, 2011, Commercial Court No. 5, Clerk's
Office No. 9, issued an injunction with respect
to the Board of Directors' decisions to call the
two shareholders' meetings. The injunction had
been requested by the shareholders Arte Gráfico
Editorial Argentino S.A., Compañía Inversora
en Medios de Comunicación (CIMECO) S.A.,
and S.A. La Nación. Given that the issuance
of the injunction had validated Papel Prensa's
decision to call the two shareholders' meetings,
both were held as originally scheduled.
208
209
Nevertheless, and based on the above Resolution
No. 16,647, on October 13, 2011 the CNV
issued Resolution No. 16,671 rendering
irregular and with no effect for administrative
purposes all of the decisions made at Papel
Prensa's Shareholders' Meetings held on
September 15, 2011 and September 27, 2011.
Papel Prensa filed an appeal against Resolution
No. 16,671, which is, therefore, not final.
Also based on Resolution No. 16,647, on
November 16, 2011, the CNV issued
Resolution No. 16,691 whereby the CNV
rendered irregular and with no effect for
administrative purposes the decisions made at
the Board of Directors' Meeting held on
October 3, 2011 and the call for the Board of
Directors' meeting on November 17, 2011.
Such Resolution is not to be deemed final since
Papel Prensa filed an appeal and requested
its nullification. In this sense, of particular note
is that: (i) at the hearing held before Federal
Commercial Court No. 26 of First Instance,
Clerk's Office No. 52, the National
Government, Papel Prensa, AGEA, Compañía
Inversora en Medios de Comunicación
(CIMECO) S.A. and S.A. La Nación agreed,
among other things, on the composition of the
company's corporate bodies, and in particular
on the recognition of the authorities appointed
by the private shareholders at Papel Prensa's
Shareholders' meeting held on September 27,
2011, as well as on the agenda to be addressed
at the meeting of Papel Prensa's Board of
Directors of October 3, 2011, which had been
the subject matter of Resolution No. 16,691;
and (ii) at the hearing held in April 2012
before the same Commercial Court the
National Government, Papel Prensa, AGEA,
Compañía Inversora en Medios de
Comunicación (CIMECO) S.A. and S.A. La
Nación, with the assistance of the Argentine
Securities Commission, agreed to request the
court to order a shareholders' meeting with
an agenda substantially similar to that of Papel
Prensa's Shareholders' Meeting held on
September 27, 2011. The request was granted
by the intervening judge and the meeting was
scheduled for August 29, 2012. The meeting
began on that date but, as a consequence
of certain disturbances provoked by the
representative of the National Government,
the private shareholders that were present at the
meeting decided to adjourn it for 48 hours
without addressing the agenda. After that,
and notwithstanding the resolution adopted
at the meeting, on August 31, 2012 Judge
O`Reilly decided to order that the adjourned
meeting would resume on September 25, 2012.
However, the meeting was not held because
the Judge subsequently held that the appeals
filed against other points of her decision
resulted in the suspension of every point of the
decision she had rendered, including the new
date scheduled for the meeting, even though
all appellants had consented to that point.
Therefore, the new date of the court-convened
meeting that began on August 29, 2012 may
not be set until the Supreme Court has
rendered its decision about the appeals against
Judge O`Reilly's decision of August 31, 2012.
Once that occurs and the file is sent back
to the original court, Judge O`Reilly shall set a
new date to resume the meeting.
V. AGEA has not recorded any impact in
connection with the foregoing, since its effects
shall depend on the final outcome. Such
effects are not expected to be material to these
financial statements.
Note 11
Regulatory Framework for Audiovisual
Communication Services
Until the enactment of Audiovisual
Communication Services Law No. 26,522,
the installation, operation and acquisition of
audiovisual communication services in
Argentina were governed by Broadcasting Law
No. 22,285. Cable TV activities were regulated
and overseen mainly by the COMFER.
Under Law No. 22,285 broadcasting service
companies in Argentina required a non-
exclusive license from the COMFER in order
to operate. Other approvals were also required,
including the authorization from municipal
agencies. Broadcasting licenses were granted
for an initial period of 15 years, allowing for a
one-time extension of 10 years. The extension
of the license was subject to the approval of
the COMFER, which would determine whether
or not the licensee had met the terms and
conditions under which the license had been
granted. Both Cablevisión and its subsidiaries
and other subsidiaries of Grupo Clarín that
render broadcasting services, hold licenses
granted by the COMFER under such Law.
Some of Cablevisión's licenses, including its
original license (with an extended term that
originally expired on March 31, 2006), and the
licenses of other subsidiaries, have already been
extended for the above-mentioned 10-year term.
On May 24, 2005, Decree No. 527/05
provided for a 10-year-suspension of the terms
then effective of broadcasting licenses or their
extensions. Calculation of the terms shall be
automatically resumed upon expiration of the
suspension term, subject to certain conditions.
The Decree required that companies seeking
to benefit from the extension submit to the
COMFER's approval, within two years from
the date of the Decree, programming proposals
that would contribute to the preservation
of the national culture and the education of the
population and a technology investment project
to be implemented during the suspension
term. COMFER's Resolution No. 214/07
regulated the obligations established by Decree
No. 527/05 in order to benefit from such
suspension. The proposals then submitted were
approved and, accordingly, the terms of the
licenses originally awarded to Cablevisión, as
well as the terms of the licenses to which
Cablevisión became the universal successor,
and the licenses of other subsidiaries, are
currently suspended for ten years.
COMFER Resolution No. 275/09 lifted a
suspension of license grants that had been
ordered by COMFER Resolution No. 726/00
and approved the Rules governing the licensing
of Broadcasting and Supplementary Services by
means of a physical link, and set a term to apply
for licenses under an abbreviated procedure.
Therefore, Cablevisión and certain subsidiaries
purchased bidding forms to apply for new
licenses through this option in such locations
where they had not obtained the suspension
of the term ordered by Decree No. 527/05,
since the terms of those licenses had expired.
Cablevisión has requested the COMFER's
approval of several transactions, including
certain company reorganizations and share
transfers. The request for approval of the merger
of Cablevisión and its subsidiaries (see Note
8.1.d.) is still pending.
The Audiovisual Communication Services
Law (Law No. 26,522) was passed and
enacted on October 10, 2009, subject to strong
concerns over its content and enactment
procedure. Even though the new Law became
effective on October 19, 2009, not all of the
implementing regulations provided by the
law have been enacted. Therefore, Law No.
22,285 still applies with respect to those matters
which to date have not been regulated, until
all terms and procedures for the regulation of
the new law are defined.
The law provides for the replacement of the
COMFER with the Audiovisual
Communication Services Law Federal
Enforcement Authority (AFSCA, for its Spanish
acronym) as a decentralized and autocratic
agency under the jurisdiction of the Executive
Branch, and vests the new agency with
authority to enforce the law. It may be argued
that, as of the date of these financial statements,
AFSCA has not yet been fully formed and,
therefore, its functioning is still questionable.
The new law, which governs the audiovisual
communication services activities conducted
by the Company through its subsidiaries,
establishes, among other things,:
• A license award and review scheme that grants
wide discretion to the Executive Branch and
to an Enforcement Authority with questionable
composition and powers,
• A 10-year limitation to the terms of licenses,
with a one-time non-renewable extension,
• The non-transferability of authorizations and
licenses,
• A regulatory framework and registration
requirements for signals, production companies
and advertising agencies,
• A multiple license scheme that: i) restricts to
10 the number of Audiovisual Communication
Service licenses, plus a single broadcasting
signal for radio, broadcast TV and subscription
cable TV services that make use of the radio
spectrum; ii) restricts the licensing of
subscription broadcasting services rendered by
means of a physical link (cable), limiting the
number of licenses to 24; iii) sets forth a further
restriction on these services, which may not
be provided to more than 35% of all inhabitants
or subscribers nationwide; iv) establishes that
a broadcast TV signal and a cable TV signal
210
211
may not be simultaneously exploited in the
same location, and v) establishes that broadcast
TV networks may only own one cable TV
signal. The same applies to cable TV networks,
which may only own the so-called “local
channel”, which is mandatory for every license
• Mandatory quotas for certain types of content.
Also controversially, the law sets forth
retroactive effects by requiring holders of
current broadcasting licenses - which were
legitimately acquired rights under Law
No. 22,285 as amended - to conform to
the new law within the term of one year
counted as from the time certain mechanisms
required for implementation are set in place.
It is publicly known that several concerns
have been expressed about this law, since it has
defects that render it unconstitutional;
it seriously damages the development of the
audiovisual industry and it restricts fundamental
freedoms. Some of these industry players,
among them Grupo Clarín and its main
subsidiaries, have already made court filings
in this sense. As of the date of these financial
statements, insofar as the Company is
concerned, two preliminary injunctions are in
full force and effect providing for: (i) the
provisional suspension of section 161 of the
Audiovisual Communication Services Law with
respect to Grupo Clarín, Cablevisión and
other subsidiaries, which has been confirmed
by the Supreme Court of Argentina, and (ii) at
the request of the Consumer Defense
Committee, the suspension of the application
of sections 45, 161 and 62 through 65 of such
Law. Even though this decision has been
partially revoked by the Federal Court of
Appeals of Salta, the Court of Appeals' decision
may be deemed not to be final since the
affected party filed an extraordinary appeal,
thereby restoring the effects of the decision
rendered in the first instance.
Regarding the suspension of Section 161
referred to under point (i) above, it should be
noted that the Supreme Court of Argentina
had confirmed both the injunction and the term
of three years set by Chamber I of the Federal
Court of Appeals on Civil and Commercial
Matters, only changing the date as from which
such term had to be calculated. According to
such decision, the application of Section 161
was suspended for plaintiffs until December 7,
2012, after which date Section 161 of Law
26,522 could be applicable to the Company
and its subsidiaries.
companies challenged AFSCA's resolution
because it violates the injunction granted and
extended by Chamber No. 1 of the Federal
Civil and Commercial Court of Appeals.
In light of certain delaying maneuvers carried
out by the National Government, aimed at
avoiding a decision on the constitutionality
of such law before the date mentioned above,
on December 6, 2012 the same Court of
Appeals extended the effectiveness of the
injunction then in force until a final judgment
is rendered on the merits of the case. Against
such decision, the National Government filed
an appeal directly before the Supreme Court of
Argentina. The Court dismissed in-limine the
appeal filed by the National Government on
December 10, 2012 on the grounds that there
were no urgent reasons to decide on the matter,
maintaining the effectiveness of the injunction.
The National Government filed a Federal
Extraordinary Appeal, which was granted by
the Court of Appeals on December 19, 2012
and is currently pending before the Supreme
Court of Argentina.
On December 14, 2012 the Company was
served with the decision rendered by the
Court of First Instance on the merits of the case
in re “Grupo Clarín S.A. and Other v. the
Executive Branch on Declaratory Action” (File
119/10). The judge recognized the legitimacy
of the plaintiffs to bring an action, considering
them holders of the licenses, but rejected the
unconstitutionality claim with legal costs to be
borne by the claimant. An appeal was filed
against that decision in due time and form and
is now pending before the Court of Appeals.
Subsequently, the Court of Appeals shall order
the parties to provide grounds for the appeal
filed (see Note 18).
On December 17, 2012, the Company,
Cablevisión, Artear and Radio Mitre were
served with AFSCA/12 Resolution No. 2276,
whereby the AFSCA decided to commence
the official transfer procedure, further ordering
the appraisal by the Court of Appraisals of
Argentina of the licenses and the indispensable
assets related to broadcast services and ordering
both companies to respond, within the
framework of that procedure, to a request for
information about the licenses and/or services
directly or indirectly owned by them. Those
The Executive Branch has regulated most
sections of Law No. 26,522 by means of Decree
No. 1,225/2010. The most notably arbitrary
provision of this decree is the highly discretional
mandatory divestiture system set forth to
regulate Section 50 of the Audiovisual
Communication Services Law, which has
evident confiscatory effects.
Additionally, AFSCA has issued Resolution
No. 432/2011, whereby it approved new
bidding terms and conditions for the granting
of licenses.
Even though Grupo Clarín's subsidiaries have
challenged the validity or constitutionality of
some regulations imposed by the Enforcement
Authority, they have fully complied with the
required procedures only in the event that such
requirements may be considered valid, for the
purposes of safeguarding their rights.
Cablevisión complied with AFSCA Resolution
No. 296/2010, which provides guidelines for
the organization of the programming grid that
must be followed by the owners of pay TV
audiovisual services. This resolution regulates
section 65, subsections a) and b) of Law
No. 26,522. The Resolution supplements the
provisions of the regulations to the same section
of Decree No. 1,225/2010. Cablevisión
believes that both the provisions of Decree
No. 1,225/2010 and AFSCA Resolution
No. 296/2010 are regulatory abuses and violate
the right to freedom of press, guaranteed
by the National Constitution.
In spite of Cablevisión's efforts to organize its
programming grids in accordance with the
provisions of section 65 of Law No. 26,522,
AFSCA has disregarded the effectiveness of
several court decisions ordering the suspension
of this law and its regulations and has initiated
multiple summary proceedings in connection
with the cable television licenses of which
Cablevisión is the lawful successor. AFSCA
contends that Cablevisión failed to comply with
the regulations set forth by AFSCA Resolution
No. 296/2010. Cablevisión submitted the
responses set forth under section 1, Exhibit II
of AFSCA Resolution No. 224/2010 in
connection with such accusations. A decision
has been rendered on some of the summary
proceedings and, as a result, a fine was imposed
on Cablevisión. Cablevisión has appealed
these decisions. Some of the appeals filed by
Cablevisión have been decided against it
and have again been appealed.
To date, two court decisions that order the
inapplicability of Resolution No. 296/2010 are
still in effect, to wit: i) the injunction issued
in re “CODELCO v. NATIONAL
GOVERNMENT -EXECUTIVE BRANCH
on PRELIMINARY INJUNCTION” pending
before the Federal Court of Salta, which
suspended, among other things, the application
of section 65 of Law No. 26,522 and its
regulations. Even though such decision was
revoked by the Federal Court of Appeals
of Salta, the Court of Appeals' decision may
be deemed not to be final since the affected
party filed an extraordinary appeal, thereby
restoring the effects of the decision rendered in
the first instance and ii) the injunction ordered
in re “CABLEVISIÓN S.A. v. NATIONAL
GOVERNMENT AND OTHERS ON
COMPLAINT FOR THE PROTECTION
OF CONSTITUTIONAL RIGHTS” by
the Federal Court of Appeals of Mar del Plata,
whereby the decision rendered in the First
Instance was revoked. Such decision rendered
in the First Instance had ordered the dismissal
of Cablevisión's request, ordering AFSCA to
suspend - until a final decision was rendered on
the matter - the application of the penalties
derived from the alleged non-compliance with
section 65 of Law No. 26,522 and Decree
No. 1,225/2010 and the application of section
6 of AFSCA Resolution No. 296/2010 on the
grounds that Cablevisión's alleged serious non-
compliance was not contemplated in the Law or
in the Decree. The National Government filed
an appeal with the Supreme Court against this
decision. Such appeal is still pending resolution.
In re “AFSCA v. CABLEVISION SA Decree
1225/10 - RES. 296/10 on/ Proceeding leading
to a declaratory judgment” currently pending
before the Federal Court of First Instance on
Administrative Matters No. 9, on May 16, 2012
the Court granted an injunction that had been
requested by AFSCA, ordering Cablevisión
212
213
and/or the pay television audiovisual services it
exploits to conform to Section 65, paragraph
3 b) of Decree No. 1225/2010 and Sections 1,
2, 3, 4 and 5 of AFSCA Resolution No.
296/2010, until a final judgment is rendered
on the merits of the case. Cablevisión appealed
such injunction.
On August 6, 2012, Cablevisión was served
notice of a decision rendered by the Federal
Court of First Instance on Administrative
Matters No. 9 of the City of Buenos Aires,
whereby it imposed a fine on Cablevisión
of Ps. 20,000 per day for each day of delay
in conforming to the injunction that ordered
Cablevisión to comply with Section 65 of
Decree No. 1,225/2010 and AFSCA Resolution
No. 296/2010. Cablevisión appealed such fine.
As of the date of these financial statements,
the appeals filed against the injunction and the
fine referred to above are still pending before
Chamber No. 4 of the Federal Court of Appeals
on Administrative Matters.
Between September and October 2011,
AFSCA brought 46 charges of delegation of
the exploitation of several licenses of which
Cablevisión is currently the legal successor.
The charges were brought within the framework
of COMFER file No. 2,005/08, concerning
the registration of the corporate reorganization
whereby Multicanal and Teledigital, among
other subsidiaries, merged into Cablevisión.
Cablevisión has submitted the appropriate
responses on behalf of the merged licensees
charged as indicated above, which to date have
not been decided upon. Cablevisión believes
it has strong grounds to reverse the charges
brought by administrative and/or judicial
means. As of the date of these financial
statements, the responses submitted are still
pending resolution.
The Company and its subsidiaries are evaluating
the possible effects on their business of such
questioned Audiovisual Communication
Services Law, its implementing regulations and
the matters mentioned above. Depending on
several aspects, the Company and/or some
of its subsidiaries could be forced to divest of
certain services, which shall in turn depend
on the choices made by the Company and/or
its subsidiaries.
All of the above could result in a reduction of
the services the Company currently renders, the
ownership and rights of which were acquired
in compliance with Law No. 22,285. Therefore,
at present this situation generates uncertainties
about the business of the Company and its
subsidiaries, which could significantly affect the
recoverability of the Company's relevant assets.
In re “Grupo Clarín S.A. and others v. the
Executive Branch on/Declaratory Action” (File
No.119/10), the accounting and economic
experts have submitted their reports where,
among other things related to the claim, have
estimated the potential accounting and
company value losses the Company would
suffer if compelled to make divestitures in the
final term of one year. Based on the experts'
exclusive assumptions, this situation could
result in potential accounting losses ranging
from Ps. 1.5 billion and Ps. 3.3 billion
and a potential significant impairment of the
company value. However, the experts have
stated that these estimates will depend on
several decisions that have not yet been made
by the plaintiffs and, therefore, the actual
outcome could differ from their estimates.
In this sense, AFSCA's application of other
interpretations of the law and/or its regulation
may allow for taking different actions than
those taken by expert witnesses, which may
produce different results to those originally
estimated by the latter.
However, taking into account the new
developments that have been taking place
regarding AFSCA's interpretations concerning
other companies subject to the Law, there
are uncertainties for the Company as to the
effects that would be derived from the eventual
concrete application of such law, which may
vary if a wide or restrictive interpretation of the
law prevails and, therefore, the corresponding
actions to be taken by the Company. The
Company continues analyzing the economic
impact and the possible consequences that
would be derived from an improbable but
possible unfavorable judgment. For this reason,
the Company cannot accurately quantify the
eventual impact on these financial statements.
However, the recoverability of the Company's
assets could be unaffected if the Company's and
other parties' main arguments were adopted
to create a framework of increased rationality,
either by the amendment, repeal or declaration
of unconstitutionality of the new media law
and/or its implementing regulations.
The Company and its legal advisors consider
that this Audiovisual Communication Services
law and its implementing regulations violate
fundamental constitutional rights, such as,
the property right and freedom of the press,
among others. For this reason, it will bring the
legal actions in each instance to safeguard
its rights and those of its shareholders; as well
as to protect the fundamental principles
infringed by such law.
The decisions to be made based on these
financial statements should contemplate
the eventual impact that these changes in the
regulatory framework may have on the
Company and its subsidiaries. The Company's
financial statements should be read in the
light of this uncertain environment.
Other Matters Related to the COMFER,
now AFSCA.
Cablevisión
As from November 1, 2002 and until
December 31, 2012, the COMFER and
AFSCA initiated summary administrative
proceedings against Cablevisión and
Multicanal (merged into Cablevisión) for
infringements of regulations regarding
the content of programming. Accordingly,
a provision has been set up in this regard.
ARTEAR
As of December 31, 2012, ARTEAR recorded
a provision in the amount of approximately
Ps. 7.8 million for fines imposed by the
COMFER and AFSCA, some of which have
been appealed and are pending resolution.
Note 12
Capital Stock Structure
Upon the Company's public offering during
2007, the capital stock amounted to
Ps. 287,418,584, represented by:
consist of supplementary contributions made
by each company to the PALP related to the
executive's years of service with the Group.
As of December 31, 2012, such supplementary
contributions made by the Company on a parent
company only basis amount to approximately
Ps. 11 million, and the charge to income is
deferred until the retirement of each executive.
Pursuant to IAS No. 19, the above-mentioned
savings plan qualifies as a Defined Contribution
Plan, which means that the companies'
contributions shall be charged to income on
a monthly basis as from the date the plan
becomes effective.
Note 14
Financial Instruments
14.1 Financial Risks Management
Grupo Clarín is a party to transactions
involving financial instruments, which entail
exposure to market, currency and interest
rate risks. The management of these risks is
based on the particular analysis of each
situation, taking into account its own estimates
and those made by third parties of the
evolution of the respective factors.
14.1.1 Capital Risk Management
Grupo Clarín manages its capital structure
seeking to ensure its ability to continue
as an ongoing concern, while maximizing
the return to its shareholders through
the optimization of debt and equity balances.
As part of this process, Grupo Clarín
monitors its capital structure through the
debt-to-equity ratio, which is equal to
the quotient of its net debt (loans less Cash
and Banks and other Current Investments)
divided by shareholders' equity.
The debt-to-equity ratio for the year
ended December 31, 2012 and 2011 is
as follows:
- 75.980.304 Class A common, registered,
non-endorsable shares, with nominal value of
Ps. 1 each and entitled to 5 votes per share.
- 186,281,411 Class B book-entry common
shares, with nominal value of Ps. 1 each and
entitled to 1 vote per share.
- 25,156,869 Class C common, registered,
non-endorsable shares, with nominal value of
Ps. 1 each and entitled to 1 vote per share.
On October 5 and 11, 2007, the CNV and
BCBA, respectively, granted authorization for
the Company's admission to the initial public
offering of its capital stock. Said authorizations
contemplated (i) the public offering of its
Class B book-entry common shares, (ii) the
listing of its Class B book-entry common shares,
and (iii) the listing of its registered non-
endorsable Class C common shares, trading
of which was suspended due to restrictions on
transfers set forth by the Bylaws. Also in the
last quarter of 2007, the Company was granted
authorization for the listing of its GDSs
in the LSE. Each GDS represents two of the
Company's Class B common shares.
Note 13
Long-Term Savings Plan
During the last quarter of 2007, the
Company, together with its subsidiaries, began
to implement a PALP for certain executives
(directors and managers comprising the
“executive payroll”), which became effective
in January 2008. Executives who adhere to such
plan undertake to contribute regularly a portion
of their salary (variable within a certain range,
at the employee's option) to a fund that will
allow them to strengthen their savings capacity.
Each company of the Group where those
executives render services will match the sum
contributed by such executives. This matching
contribution will be added to the fund raised
by the employees. Under certain conditions, the
employees may access such funds upon
termination of their participation in the PALP.
The PALP provides for certain special conditions
for those managers who were in the “executive
payroll” before January 1, 2007. Such conditions
214
215
December 31, 2012
December 31, 2011
62,084,479
127,730,585
(5,251,306)
(7,742,929)
49,090,244
(2,950,680)
(29,866,561)
94,913,344
4,090,030,112
3,634,142,107
0.01
0.03
Loans (i)
Less: Cash and Cash Equivalents
- Cash and Banks
- Other Current Investments
Net Debt
Shareholders' Equity
Debt-to-Equity Ratio
(i) Long-term and short-term loans, including
derivatives and financial guarantee agreements.
Since Grupo Clarín is a holding company, the
measurement of this ratio on the Company's
parent company only balances is not relevant.
On a consolidated basis, the debt-to-equity ratio
is reasonable compared to other industry players
and considering the particular situation of
Argentina and of the companies that make up
Grupo Clarín.
14.1.2 Categories of Financial Instruments
Financial Assets
Loans and Receivables (1) (2)
- Cash and Banks
- Current Investments
- Other Receivables
At fair value with an
impact on net income
- Current Investments
Total Financial Assets
Financial Liabilities
At amortized cost
- Debt (3)
- Accounts Payable and
Other Liabilities (4)
Total Financial Liabilities
(1) Net of the allowance for doubtful accounts in the
amount of Ps. 28.0 million, Ps. 31.3 million and
Ps. 32.5 million, respectively.
(2) Includes receivables with related parties in the
amount of Ps. 23.0 million, Ps. 83.2 million and
Ps. 2.5 million, respectively.
December 31, 2012
December 31, 2011
January 1, 2011
5,251,306
572,684
23,664,987
7,170,245
36,659,222
2,950,680
500,593
83,741,275
29,365,968
116,558,516
3,055,959
6,730,100
2,943,979
6,909,142
19,639,180
December 31, 2012
December 31, 2011
January 1, 2011
62,084,479
127,730,585
71,242,000
26,498,650
88,583,129
22,166,595
149,897,180
18,918,457
90,160,457
(3) Debts with related parties.
(4) Includes debts with related parties in the amount
of Ps. 1.4 million, Ps. 0.3 million and Ps. 1.3 million,
respectively.
14.1.3 Objectives of Financial Risk
Management
Grupo Clarín monitors and manages the
financial risks related to its operations; these
risks include market risk (including exchange
risk, interest rate risk and equity price risk),
credit risk and liquidity risk.
Grupo Clarín does not enter into financial
instruments for speculative purposes as common
practice. As of December 31, 2012 and 2011,
the Company was not a party to agreements
involving derivatives.
Assets
Current Assets
Cash and Banks
Other Investments
Total Current Assets
Total Assets
The Central Bank of Argentina and the
Argentine Federal Revenue Service issued
certain resolutions related to the exchange
market, establishing regulations on the
requirements for accessing such market. These
financial statements have been prepared based
on the assumption that the Company will
be able to access such market in order
to purchase the foreign currency needed to
meet its obligations.
14.1.4 Exchange Risk Management
Grupo Clarín enters into foreign currency
transactions; therefore, it is exposed to
fluctuations of exchange rates.
The Company does not currently enter into
foreign exchange hedging transactions to
manage foreign currency fluctuation risk. In
case the Company enters into such transactions,
it cannot assure that those operations will
protect its financial position from the eventual
negative effect of exchange rate fluctuations.
The following table shows the monetary assets
and liabilities denominated in foreign currency
at the closing of the year ended December 31,
2012 and 2011:
(USD)
(USD)
December 31, 2012
December 31, 2011
59,361
1,586,666
1,646,027
1,646,027
39,179
7,010,930
7,050,109
7,050,109
14.1.4.1 Foreign Exchange Sensitivity Analysis
Grupo Clarín is exposed to exchange risk,
mainly with respect to the US dollar.
The following table shows the Company's
sensitivity to an increase in the exchange rate
of the US dollar. The sensitivity rate represents
Management's assessment of the possible
reasonable changes in exchange rates. The
sensitivity analysis only includes the outstanding
monetary items denominated in foreign
currency and adjusts its translation at the end
of the year with a 10% increase in the exchange
rate, assuming that all the remaining variables
remain constant.
216
217
Net Income
803,261
3,006,166
Effect in Ps.
Effect in Ps.
December 31, 2012
December 31, 2011
substantial increase in interest rates may limit
the Company's ability to access financing.
14.1.6. Credit Risk Management
Credit risk is defined as the risk that one of the
parties may breach its contractual obligations,
generating an eventual financial loss for Grupo
Clarín. The Company renders services solely
to companies of the same economic group. The
credit risk on liquid funds is limited due to the
fact that the counterparties are banks with high
credit ratings issued by credit rating agencies.
The following table details the maturities
of the Company's financial assets as from
the closing of the reporting year. The amounts
disclosed in the table are the undiscounted
contractual cash flows.
December 31, 2012
December 31, 2011
12,994,235
23,376,815
288,172
36,659,222
32,817,241
83,563,596
177,679
116,558,516
The sensitivity analysis presented above is
hypothetical since the quantified impact is not
necessarily an indicator of the actual impact,
because exposure levels may vary over time.
Additionally, even though Grupo Clarín
conducts its operations in Argentine pesos,
an eventual devaluation of such currency may
have an indirect impact on its operations,
depending on the ability of the suppliers
involved to adjust their prices to such effect.
14.1.5. Interest Rate Risk Management
At the closing of the year, the Company does
not have any financial assets or liabilities
with variable interest rates. However, a
Payable on Demand
Without any established term
To fall due
- Up to three months
14.1.7. Liquidity Risk Management
The Board of Directors is ultimately responsible
for liquidity management. Accordingly, it
has established an adequate framework to
manage liquidity so that Management can meet
short, medium and long-term financing
requirements, as well as the Company's liquidity
management. The Company manages liquidity
risk maintaining an adequate level of reserves,
financial facilities and loans, monitoring on
an ongoing basis projected cash flows against
actual cash flows and reconciling the maturity
profiles of financial assets and liabilities.
14.1.8. Interest Rate Risk and Liquidity
Risk Table
The following table details the maturities of
the Company's financial liabilities as from
the closing of the reporting year. The amounts
disclosed in the table are the undiscounted
contractual cash flows.
Without any established term
To fall due
Up to three months
- More than three months and
up to six months
More than nine months and
up to twelve months
Long-Term Debt
and Other Liabilities
December 31, 2012
Accounts Payable
Total as of
212,382
-
3,511,136
8,679,340
3,723,518
8,679,340
44,727,271
14,308,174
59,035,445
17,144,826
62,084,479
-
26,498,650
17,144,826
88,583,129
14.1.9. Financial Instruments at Fair Value
The following table shows Grupo Clarín's
financial assets and liabilities measured at fair
value at the closing of the reporting year:
Assets
Current Investments
Assets
Current Investments
Financial assets are valued using the prices of
similar instruments obtained from information
sources available in the market (Level 2). As
of December 31, 2012 and 2011, Grupo Clarín
did not have any asset or liability valued
using the quoted prices for identical assets and
liabilities (Level 1), or assets or liabilities for
which a comparison had not been conducted
against observable market data to determine
their fair value (Level 3).
218
219
December 31, 2012
Other Significant
Observable Items
(Level 2)
7.170.245
7.170.245
December 31, 2011
Other Significant
Observable Items
(Level 2)
29,365,968
29,365,968
14.1.10. Fair Value of Financial Instruments
The book value of cash and banks, accounts
receivable and short-term liabilities is similar to
the fair value since these are instruments with
short-term maturities.
As of December 31, 2012, the Company does
not have long-term financial liabilities.
Note 15
Covenants, Sureties and Guarantees provided
a. In July 2009, the Company executed an
agreement securing payment of GCSA
Investments' obligations under its loan, as
detailed in Note 5.12.4 to consolidated
financial statements.
b. In October 2011, the Company executed
agreements securing the payment of certain
financing transactions of one of its subsidiaries
in the amount of USD 2.9 million, effective
from October 2011 to October 2013.
c. On September 25, 2012, GCGC executed
a mortgage agreement on a building of its
property securing the payment of the
obligations under the loan with Banco de la
Ciudad de Buenos Aires mentioned in Note
5.12.3 to the consolidated financial statements.
Grupo Clarín acts as guarantor of said
financing.
d. On October 12, 2012, the Company
executed an agreement securing the payment
of the obligations under a loan taken by GCGC
with Standard Bank Argentina mentioned
in Note 5.12.3 to the consolidated financial
statements.
Note 16
Changes in the Company's Interests
a. In April 2008, AGEA assigned to the
Company 54.5% of its rights and obligations
derived from the call option described in Note
16.b. On that date, the Company exercised
such call option, acquiring shares that accounted
for 27.3% of CIMECO's capital stock.
b. During 2007, AGEA increased its interest in
CIMECO from 33.3% to 50.0%, and executed
call and put options on an additional interest in
CIMECO's capital stock. During 2008, AGEA
partially assigned the rights and obligations
arising from such options to its subsidiary AGR
and to the Company. Subsequently, in 2008,
AGEA, AGR and the Company exercised such
call option, increasing, directly and indirectly,
the Company's equity interest in CIMECO and
Papel Prensa to 100% and 49%, respectively.
On April 10, 2008, the Company and the
parties to the above-mentioned transaction
notified CNDC of such transaction and on
May 12, 2008 filed form F-1. After such notice
and as of the date of these financial statements,
the Company submitted additional information
requested by the CNDC. As of the date of
these financial statements, the above transaction
is subject to administrative approvals.
c. On January 11, 2008, IESA acquired the
controlling interest of a group of companies
mainly engaged in sports journalism,
production and commercialization of shows,
and the production of motor racing television
broadcasting. The share purchase agreement
sets forth certain objectives to be met by
such group of companies. In case of breach
of such provision, the sellers shall have to pay
an indemnification. These transactions are
subject to administrative approvals.
d. On September 2, 2008, ARTEAR increased
its equity interest in Pol-Ka and SB Producciones
S.A. to 55% of such companies' capital stock
and votes, thus acquiring a controlling interest
in both companies, in which it previously
exercised common control. These transactions
are subject to administrative approvals.
e. On February 10, 2011, CMD sold to a third
party all of its shares of Dinero Mail, for
approximately USD 4.4 million in cash; part
of the price was withheld as guarantee.
f. On August 17, 2011, CMD executed a
stock purchase agreement, whereby it increased
by 20% its interest in Interpatagonia S.A.,
where it now holds 80% of the capital stock.
CMD paid approximately Ps. 4.3 million in
consideration for the shares.
g. On October 3, 2011 the Company's
subsidiary AGR acquired 65.46% of the capital
stock and votes of Cúspide Libros S.A. and
2.40% of the capital stock and votes of Librerías
Fausto S.A.C.E.I. (controlled by Cúspide
Libros S.A.). The transaction amounted to
USD 2.8 million and Ps. 3.8 million.
h. On July 15, 2012, subject to the fulfillment
of certain conditions precedent, each of
Cablevisión's Paraguayan subsidiaries (Cable
Visión Comunicaciones S.A., Televisión
Dirigida S.A., Consorcio Multipunto Multicanal
S.A. and Producciones Unicanal S.A.) entered
into an agreement with a Paraguayan company,
whereby they agreed to assign most of their
assets and operations. Such conditions precedent
were fulfilled on October 1, 2012 and the
agreed-upon assignment was executed for a
total consideration of USD 142.4 million.
Out of that amount, USD 6.7 million was held
in escrow. As a result of that operation,
Cablevisión obtained a net consolidated gain
after taxes of approximately Ps. 444 million,
which, taking into consideration the Company's
equity interest in Cablevisión, accounts for
a gain of approximately Ps. 180 million
after taxes.
Cablevisión S.A. had a 70% interest in such
subsidiaries and the remaining 30% was held by
minority shareholders. On October 1, 2012
the minority shareholders transferred their
equity interests to the majority group for a total
consideration of USD 31.5 million.
On October 1, 2012, Cablevisión sold its
equity interest in Teledeportes Paraguay S.A. for
approximately USD 6.8 million. Out of that
amount, USD 0.2 million was held in escrow.
Note 17
Law No. 26,831 Capital Markets
On December 28, 2012 Capital Markets Law
No. 26,831 (the "Law"), which was passed on
November 29, 2012 and enacted on December
27, 2012, was published in the Official
Gazette. The Law provides for a comprehensive
amendment of the public offering regime,
regulated until that date by Law No. 17,811,
enhancing, among others, the National
Government's monitoring powers, as well as
changing the authorization, control and
monitoring mechanisms of all stages of the
public offering process and the role of all
the entities and individuals involved. The Law
became effective on January 28, 2013.
Notwithstanding the foregoing, given that as
of the date of these financial statements the
CNV had not yet regulated the Law, on January
21, 2013 that agency issued Resolution No. 615
whereby it provided that until the respective
regulations are issued, the relevant CNV rules
continue to apply (as amended in 2001).
Note 18
Subsequent Events
In re "Grupo Clarín S.A. and Other v. Executive
Branch on Declaratory Action" (File 119/10),
mentioned in Note 11, on January 25, 2013
the Company, the National Government and
AFSCA, which is also a party to this case,
submitted the brief with the grievances caused
by the decision rendered in the First Instance,
expressing the grounds of their appeal pursuant
to applicable law.
The parties were served with those grounds for
them to refute them by February 13, 2013.
As from that date, the file has been pending
before Chamber No. 1 of the Court of Appeals,
which shall render a decision on the appeal.
Note 19
Approval of Parent Company Only Financial
Statements
The Board of Directors has approved the
parent company only financial statements and
authorized their issue for March 8, 2013.
Signed for identification purposes
with the report dated March 08, 2013
Price Waterhouse & Co. S.R.L.
C.P.C.E.C.A.B.A. VOL. 1- FOL. 17
Carlos Alberto Pedro Di Candia
Chairman of the Supervisory Committee
Dr. Carlos A. Pace (Partner)
Certified Public Accountant (U.B.A.)
C.P.C.E.C.A.B.A. VOL. 150 - FOL. 106
Héctor Horacio Magnetto
Chairman
220
221
Additional Information
to the Notes to the
Financial Statements -
Section No. 68 of
the Regulations issued
by the Buenos Aires
Stock Exchange
Balance Sheet as of
December 31, 2012
1) There are no specific material regulatory
regimes currently applicable to the Company
that may entail the contingent loss or
acquisition of legal benefits.
4) The classification of receivables and liabilities
according to their related financial effects is
detailed in Note 9 to the parent company only
financial statements.
2) As mentioned in Note 16.a) to the parent
company only financial statements, during 2008
the Company carried out transactions that
resulted in the acquisition of an equity interest
in CIMECO.
3) The classification of receivables and liabilities
by maturity is detailed in Note 9 to the parent
company only financial statements.
5) Equity interest under Section 33 of Law
No. 19,550 is detailed in Note 4.3 of the parent
company only financial statements. Accounts
receivable from and payable to related
parties are disclosed under Note 8 to the parent
company only financial statements. The
following table summarizes the breakdown
of such accounts payable and receivable as per
the above points 3) and 4).
Without any established term
To fall due
- From three to six months
- From nine to twelve months
Receivables
Liabilities
(1) 22,994,617
(1) 1,628,021
-
-
(2) 44,727,271
(2) 17,144,825
Total
22,994,617
63,500,117
(1) Balances are denominated in local currency and do
not accrue any interest.
(2) The balances are denominated in local currency
and accrue interest at a fixed rate.
6) There are no trade receivables or loans to
directors, members of the Supervisory
Committee and their relatives up to, and
including, the second degree of kinship
and no such trade receivables or loans existed
during the fiscal year.
7) The Company does not have any inventories.
8) The Company has used current values for
the valuation of assets and liabilities acquired
from Cablevisión, taking into account, mainly,
the following criteria:
- Subscriber portfolio: valued based on,
among other things, an analysis of the acquired
subscriber portfolio's cash flow generation,
considering the subscriber turnover of such
portfolio, discounted at a market rate.
19,550, since its main corporate purposes are
investment and finance.
12) The Company assesses the recoverable value
of its long-term investments each time it
prepares its financial statements. In the case of
investments for which the Company does not
book goodwill with an indefinite useful life,
it assesses their recoverable value when there
is any indication of impairment. In the case of
investments for which the Company books
goodwill with an indefinite useful life, it assesses
their recoverable value by comparing the book
value with cash flows discounted at the
corresponding discount rate, considering the
weighted average capital cost, and taking
into consideration the projected performance
of the main operating variables of the respective
companies.
- Financial debt: since the acquired companies
were not listed at the time of the acquisition,
the financial debt was valued based on cash flow
discounted at a market rate.
13) As of December 31, 2012, the Company
does not have any relevant tangible property,
plant and equipment requiring efficient
insurance coverage.
- Fixed assets: valued based on internal estimates
made by the subsidiaries according to available
information (kilometers and technical
characteristics of the network, replacement
value per kilometer and type of network based
on business knowledge and purchase price of
the resources needed, state of the network at the
time of acquisition, real estate appraisals of the
most significant real property, among others).
Similarly, the Company has recorded the net
acquired assets of CIMECO at fair value.
9) The Company does not have any property,
plant and equipment subject to appraisal
write-up.
10) The Company does not have any obsolete
property, plant and equipment.
11) The Company is not subject to the
restrictions under section 31 of Law No.
14) Booked provisions for contingencies do not
exceed, either individually or as a whole, two
percent (2%) of the Company's shareholders'
equity.
15) As of the date of these financial statements,
the Company does not have any contingent
situations, the financial effects of which, if any,
have not been booked (see Note 11 to the
parent company only financial statements).
16) The Company does not have any
irrevocable contributions on account of future
share subscriptions.
17) The Company does not have any unpaid
cumulative dividends on preferred shares
18) In Notes 7.a. and 10.2.a) to the parent
company only financial statements reference
is made to the treatment given to retained
earnings.
Signed for identification purposes
with the report dated March 08, 2013
Price Waterhouse & Co. S.R.L.
C.P.C.E.C.A.B.A. VOL. 1- FOL. 17
Carlos Alberto Pedro Di Candia
Chairman of the Supervisory Committee
Dr. Carlos A. Pace (Partner)
Certified Public Accountant (U.B.A.)
C.P.C.E.C.A.B.A. VOL. 150 - FOL. 106
Héctor Horacio Magnetto
Chairman
222
223
Report
of Independent
Accountants
Free translation from
the original
prepared in Spanish
To the Shareholders, President
and Directors of Grupo Clarín S.A.
Legal domicile: Piedras 1743
Autonomous City of Buenos Aires
CUIT No 30-70700173-5
1. We have audited the attached parent company
only financial statements of Grupo Clarín S.A.
which comprise the parent company only balance
sheet at December 31, 2012, the parent company
only statements of comprehensive income , the
parent company only statements of changes in equity
and of cash flows for the year then ended and a
summary of significant accounting policies and other
explanatory information. The balances and other
information for the fiscal year 2011 are an integral
part of the above-mentioned audited financial
statements, so they are to be considered in the light
of those financial statements.
2. The Board of Directors is responsible for the
reasonable preparation and presentation of these
parent company only financial statements in
accordance with Professional Accounting Standards
of Technical Resolution No. 26 of the Argentine
Federation of Professional Councils in Economic
Sciences (FACPCE, for its Spanish acronym)
incorporated by the Argentine Securities
Commission (CNV, for its Spanish acronym) to its
regulations. These rules differ from International
Financial Reporting Standards (IFRS) adopted
by the International Accounting Standards Board
(IASB) and used in the preparation of consolidated
financial statements of Grupo Clarín S.A. with its
controlled subsidiaries, in the aspects mentioned in
Note 2.1 to the attached parent company only
financial statements. Further, the Board of Directors
is responsible for the internal control it may deem
necessary to enable preparing parent company only
financial statements free of material misstatements
caused by errors or irregularities. Our responsibility is
to express an opinion on the parent company only
financial statements based on the audit we performed
with the scope detailed in paragraph 3..
3. We conducted our audit in accordance with
auditing standards in effect in Argentina. Those
standards require that we plan and perform the
audit to obtain reasonable assurance about whether
the parent company only financial statements
are free of material misstatements and to form an
opinion on the reasonableness of the relevant
information contained in the parent company only
financial statements. An audit includes examining,
on a selective test basis, evidence supporting the
amounts and disclosures in the parent company
only financial statements. An audit also includes
assessing the accounting standards used and
significant estimates made by the Company, as well
as evaluating the overall presentation of the parent
company only financial statements. We believe that
our audit provides a reasonable basis for our opinion.
4. On October 10, 2009, Audiovisual
Communication Services Law No. 26,522 (the
“Law”) was enacted which repeals Broadcasting Law
No. 22,285 which regulate the principal activities
of the Company and some of its subsidiaries.
As mentioned in Notes 11 and 18 to the parent
company only financial statements, the Company
and certain subsidiaries are analyzing the possible
consequences that could be derived from the change
of regulatory framework on their business, and as
indicated in the same Notes, is bringing and will
bring all legal actions corresponding to each instance
to safeguard its rights and those of its shareholders.
Accordingly, there is uncertainty as to the effect
that this change in the regulatory framework and
the outcome of the legal actions being brought
by the Company could have on the activities of the
economic group and, therefore, on its parent
company only financial statements taken as a whole.
5. As mentioned in Notes 10.1.b., 10.1.c., 10.1.d.
and 10.1.e. to the parent company only financial
statements, since September 2009, the Federal
Broadcasting Committee, the National Antitrust
Commission, the Secretariat of Domestic Trade
(“SCI”, for its Spanish acronym), Argentine
Secretariat of Communications and the Ministry
of Economy and Public Finance have issued several
resolutions on matters related to: (i) several aspects
related to the acquisition of Cablevisión S.A.,
Multicanal S.A. and other companies, and their
subsequent merger, and (ii) the revocation of
the license that had been originally granted to
FIBERTEL S.A. In addition, as indicated in Note
10.1.f. to the parent company only financial
statements, the subsidiary Cablevisión was served
with a preliminary injunction granted to a third
party ordering the separation of the assets, liabilities
and businesses that used to belong to Multicanal
and that were subsequently merged into Cablevisión
and the appointment of a court-appointed
supervisor (interventor) and co-administrator. As
indicated in the above-mentioned Notes, the
subsidiary Cablevisión has brought legal actions as
it considered appropriate.
Accordingly, there is uncertainty regarding the effect
that the final outcome of these situations could have
on the activities of Cablevisión S.A. and, therefore,
on the recoverability of the investment that owns
Grupo Clarín S.A. over that company through its
subsidiaries Southtel Holdings S.A., Vistone S.A.,
VLG Argentina L.L.C., CV B Holding S.A.
and Compañía Latinoamericana de Cable S.A.
6. As mentioned in Note 10.1.a. to the parent
company only financial statements, on March 3,
2010 the Secretariat of Domestic Trade (“SCI”)
issued Resolution 50/10 establishing the formula
for calculation of the monthly subscription price to
be paid by the users of pay-television services.
As indicated in the same Note, on March 10, 2011
SCI Resolution No. 36/11 was published in the
Official Gazette establishing the parameters to
be applied to the services rendered by Cablevisión,
having been extended on several occasions the
effectiveness of Resolution No. 36/11 until March
2013. As indicated in this Note, Cablevisión
filed the corresponding administrative claims and
will bring the necessary legal actions requesting a
stay of its effects and ultimately its nullity.
Accordingly, there is uncertainty regarding the
effect that the final outcome of the situation
could have on the subsidiary Cablevisión and its
subsidiaries' business and, therefore, on the
recoverability of the investment that owns Grupo
Clarín S.A. over that companies through its
subsidiaries Southtel Holdings S.A., Vistone S.A.,
VLG Argentina L.L.C., CV B Holding S.A.
and Compañía Latinoamericana de Cable S.A..
7. In our opinion, subject to the possible effect on
the parent company only financial statements of
any potential adjustments and/or reclassifications, if
applicable, that may be required as a result of
the resolution of the uncertainties described in
paragraphs 4, 5, and 6, the parent company only
financial statements mentioned in paragraph 1
present fairly, in all material respects, the parent
company only financial position of Grupo Clarín
S.A. as of December 31, 2012 and the parent
company only comprehensive income and parent
company only cash flows for the fiscal year then
ended, in accordance with the rules of Technical
Resolution No. 26 of the Argentine Federation of
Professional Councils in Economic Sciences for the
parent company only financial statements of a
controlling entity.
8. In accordance with current regulations in respect
to Grupo Clarín S.A., we report that:
a) The parent company only financial statements
of Grupo Clarín S.A. have been transcribed to the
“Inventory and Balance Sheet” book and comply
with the Corporations Law and pertinent resolutions
of the Argentine Securities Commission, as regards
those matters within our competence;
224
225
b) The parent company only financial statements
of Grupo Clarín S.A. arise from accounting records
kept in all formal respects in conformity with legal
provisions which maintain the security and integrity
conditions based on which they were authorized
by the Argentine Securities Commission;
c) We have read the additional information to
the Notes to the parent company only financial
statements required by section 68 of the listing
regulations of the Buenos Aires Stock Exchange,
on which, as regards those matters that are
within our competence, we have no observations
to make other than those already stated in
paragraphs 4., 5. and 6.;
d) At December 31, 2012 the debt accrued in favor
of the (Argentine) Integrated Social Security System
according to the Company's accounting records
and calculations amounted to $1.416.749, none of
which was claimable at that date;
e) In accordance with section 4 of General
Resolution No. 400 issued by the Argentine
Securities Commission, amending section
18 subsection e) of the title III.9.1 of the Rules
of such Commission, we inform that the total
of fees for the audit and related services invoiced
to the Company for the year ended December
31,2012 represents:
e.1) 87% on the total fees for services invoiced to
the Company for all concepts in that year;
e.2) 14% on the total fees for audit and related
services invoiced to the Company, its parent
companies, subsidiaries and affiliates in that year;
e.3) 14% on the total fees for services invoiced
to the Company, its parent companies, subsidiaries
and affiliates for all concepts in that year.
f) We have applied the procedures on prevention
of asset laundering and terrorism funding set
forth in the relevant professional rules issued by
the Professional Council for Economic Sciences
of the Autonomous City of Buenos Aires.
Autonomous City of Buenos Aires,
March 8, 2013
Price Waterhouse & Co. S.R.L.
Dr. Carlos A. Pace (Partner)
Supervisory
Committee’s
Report
To the Shareholders of:
Grupo Clarín S.A.
TAX ID No. 30-70700173-5
Registered office: Piedras 1743
City of Buenos Aires
In our capacity as members of Grupo Clarín
S.A.'s Supervisory Committee and pursuant
to subsection 5, section 294, of the Argentine
Business Associations Law No. 19,550,
the regulations of the Argentine Securities
Commission (CNV, for its Spanish acronym)
and the Regulations issued by the Buenos Aires
Stock Exchange, we have performed a review
of the documents mentioned in Section I below,
within the scope set forth in Section II below.
The preparation and issuance of the documents
referred to above are the responsibility of the
Company's Board of Directors, in exercise of its
exclusive duties. Our responsibility is to issue
a report on such documents, based on the work
performed within the scope set forth in
Section II.
I. DOCUMENTS SUBJECT TO REVIEW
a) Parent Company Only Balance Sheet as
of December 31, 2012 disclosed in the Parent
Company Only Financial Statements as of
December 31, 2012.
b) Parent Company Only Statement of
Comprehensive Income disclosed in the Parent
Company Only Financial Statements as of
December 31, 2012.
c) Parent Company Only Statement of Changes
in Equity disclosed in the Parent Company Only
Financial Statements as of December 31, 2012.
d) Parent Company Only Statement of Cash
Flows disclosed in the Parent Company Only
Financial Statements as of December 31, 2012.
e) Notes 1 to 18 disclosed in the Parent
Company Only Financial Statements as of
December 31, 2012.
f ) The Consolidated Financial Statements of
Grupo Clarín S.A. and its subsidiaries
comprising the Consolidated Balance Sheet as of
December 31, 2012, the Consolidated Statement
of Comprehensive Income, the Consolidated
Statement of Changes in Equity and the
Consolidated Statement of Cash Flows for the
year then ended, together with the corresponding
notes 1 through 25.
II. SCOPE OF THE REVIEW
We conducted our review in accordance with
effective statutory auditing standards established
by the Argentine Business Associations Law (Law
No. 19,550), as amended, and by Technical
Resolution No. 15 issued by the Federación
Argentina de Consejos Profesionales de
Ciencias Económicas (Argentine Federation of
Professional Councils of Economic Sciences,
FACPCE, for its Spanish acronym).
Said standards require that the review of the
documents set forth in I. be conducted in
accordance with effective auditing standards
for the review of financial statements; that
the documents be checked for consistency with
the information on corporate decisions stated
in minutes and that such decisions conform
to the law and the by-laws, in all formal and
documentary aspects.
In order to conduct our professional work
on the documents detailed in Section I., we have
reviewed the work performed by the external
auditor Carlos A. Pace, a partner of Price
Waterhouse & Co. S.R.L., who issued his reports
on March 8, 2013, pursuant to the effective
auditing standards for the audit of financial
statements.
An audit requires that the auditors plan and
perform their work for the purposes of obtaining
reasonable assurance about whether the financial
statements are free from material misstatement or
significant errors. An audit comprises examining,
on a test basis, evidence supporting the amounts
and disclosures in the financial statements, as
well as assessing the accounting principles used
and significant estimates made by the Company's
Management, as well as evaluating the overall
presentation of the financial statements. Since
the Supervisory Committee is not responsible for
management control; the review did not extend
to the business criteria and decisions from the
Company's different areas as these matters are the
exclusive responsibility of the Board of Directors.
The Company's Board of Directors is responsible
for the preparation and fair presentation of: (i)
the Parent Company Only Financial Statements
in accordance with the professional accounting
standards established by Technical Resolution
No. 26 issued by the FACPCE incorporated by
the CNV to its regulations. Such standards differ
from the International Financial Reporting
Standards (IFRS) approved by the International
Accounting Standards Board (IASB) and used
in the preparation of the consolidated financial
statements of Grupo Clarín S.A. and its
subsidiaries in the aspects mentioned in Note 2.1
to the Parent Company Only Financial
Statements. Additionally, the Board of Directors
is responsible for an adequate internal control
as deemed necessary so that the parent company
only financial statements are free from material
misstatements arising from errors or irregularities;
(ii) the consolidated financial statements in
accordance with IFRS adopted as professional
accounting standards in Argentina by the
FACPCE and incorporated by the CNV to its
regulations, as approved by the IASB. The Board
of Directors is also responsible for an adequate
internal control as deemed necessary so that
the consolidated financial statements are free
from material misstatements arising from errors
or irregularities.
Our responsibility is to express our opinion
on the consolidated and parent company only
financial statements, based on the scope
mentioned in this section.
III. PRIOR COMMENTS
1. On October 10, 2009, Audiovisual
Communication Services Law No. 26,522 (the
“Law”) was enacted which repeals Broadcasting
Law No. 22,285, which governs the main
activities carried out by the Company and some
of its subsidiaries.
As mentioned in Notes 11 and 18 to the parent
company only financial statements and in
Notes 9 and 25 to the consolidated financial
statements, the Company and certain subsidiaries
are analyzing the possible impact of this change
in the regulatory framework on their business,
and, as indicated in such notes, legal actions are
being and will be brought at each instance to
safeguard its rights and those of its shareholders.
Accordingly, there is uncertainty as to the effect
that this change in the regulatory framework
and the outcome of the legal actions being
brought by the Company could have on the
activities of the economic group and, therefore,
on these parent company only financial
statements and consolidated financial statements
taken as a whole.
2. As mentioned in Notes 10.1.b., 10.1.c.,
10.1.d. and 10.1.e. to the parent company only
financial statements and in Notes 8.1.b., 8.1.c.,
8.1.d. and 8.1.e. to the consolidated financial
statements, since September 2009, the Federal
Broadcasting Committee, the National Antitrust
Commission, the Secretariat of Domestic Trade
(“SCI”, for its Spanish acronym), the Argentine
226
227
Secretariat of Communications and the Ministry
of Economy and Public Finance have issued
several resolutions on matters related to:
(i) several aspects related to the acquisition of
Cablevisión S.A., Multicanal S.A. and other
companies, and their subsequent merger, and
(ii) the revocation of the License that had
been originally granted to FIBERTEL S.A. In
addition, as indicated in Note 10.1.f. to the
parent company only financial statements and
in Note 8.1.f. to the consolidated financial
statements, the subsidiary Cablevisión was served
with a preliminary injunction granted to a
third party ordering the separation of the assets,
liabilities and businesses that used to belong
to Multicanal and that were subsequently merged
into Cablevisión and the appointment of a
court-appointed supervisor (interventor) and
co-administrator. As mentioned in the above-
mentioned notes, the subsidiary Cablevisión has
brought legal actions as it considered appropriate.
Accordingly, there is uncertainty as to the effect
that the final outcome of these situations could
have on the activities of: (i) Cablevisión and,
therefore, on the recoverability of Grupo Clarín
S.A.'s investment in such company through
its subsidiaries Southtel Holdings S.A., Vistone
S.A., VLG Argentina L.L.C., CV B Holding S.A.
and Compañía Latinoamericana de Cable S.A.
in the parent company only financial statements
and (ii) the subsidiary Cablevisión and, therefore,
on the consolidated financial statements taken
as a whole.
3. As mentioned in Note 10.1.a. to the parent
company only financial statements and in Note
8.1.a. to the consolidated financial statements,
on March 3, 2010 the SCI issued Resolution
No. 50/10 establishing a formula for the
calculation of the monthly subscription price to
be paid by the users of pay-television services.
Subsequently, as mentioned in the same notes,
on March 10, 2011, SCI Resolution No. 36/11
was published in the Official Gazette establishing
the parameters to be applied to the services
rendered by Cablevisión. The effectiveness of
such Resolution No. 36/11 has been extended
several times up to and including March 2013.
As indicated in those notes, the subsidiary
Cablevisión has filed the pertinent administrative
claims and will bring legal actions requesting a
stay of its effects and ultimately its nullity.
Accordingly, there is uncertainty as to the effect
that the final outcome of this situation could
have on the activities of: (i) Cablevisión and
its subsidiaries and, therefore, on the
recoverability of Grupo Clarín S.A.'s investment
in such companies through its subsidiaries
Southtel Holdings S.A., Vistone S.A., VLG
Argentina L.L.C., CV B Holding S.A. and
Compañía Latinoamericana de Cable S.A. in the
parent company only financial statements and
(ii) the subsidiary Cablevisión and its subsidiaries
and, therefore, on the recoverability of their assets
in the consolidated financial statements.
IV. SUPERVISORY COMMITTEE'S
OPINION
In our opinion, based on our work, within
the review scope described in Section II. of this
report:
(i) subject to the effect on the parent company
only financial statements of eventual adjustments
and/or reclassifications, if any, that may
be required as a result of the resolution of the
uncertainties described in paragraphs 1., 2. and
3. of Section III., the parent company only
financial statements mentioned in Section I.,
present fairly, in all material respects, the parent
company only financial position of Grupo Clarín
S.A. as of December 31, 2012, and the results
disclosed in the Parent Company Only
Statements of Comprehensive Income and Cash
Flows for the year then ended in accordance
with the rules of Technical Resolution No. 26 of
the FACPCE for parent company only financial
statements of a controlling entity;
(ii) subject to the effect on the consolidated
financial statements of eventual adjustments
and/or reclassifications, if any, that may be
required as a result of the resolution of the
uncertainties described in paragraphs 1., 2. and
3. of Section III., present fairly, in all material
respects, the consolidated financial position
of Grupo Clarín S.A. and its subsidiaries as
of December 31, 2012, and the results disclosed
in the Consolidated Statements of
Comprehensive Income and Cash Flows for the
year then ended in accordance with the
International Financial Reporting Standards;
Company's accounting records kept, in all formal
aspects, in accordance with effective legislation.
b) We have reviewed the Inventory and the
Board of Directors' Annual Report for the year
ended December 31, 2012. In this regard, within
the scope of our competence, we have no
observations to make. The representations about
future events included in the Annual Report are
the Board of Directors' exclusive responsibility.
c) Furthermore, we report that in exercise of the
legality control within our field of competence,
during the year ended December 31, 2012 we
have applied the procedures set forth in Section
294 of Argentine Business Associations Law
No. 19,550, as deemed necessary based on the
circumstances and we have no observations
to make in that regard.
d) We have reviewed the information included
in the Exhibit to the Annual Report about
the degree of compliance with the Code of
Corporate Governance required by CNV
General Resolution No. 606/12 and we have
no observations to make in that regard.
e) As required by CNV regulations, regarding
the independence of the external auditors and
the quality of the audit policies applied by
them and the accounting polices applied by the
Company, the above-mentioned external
auditor's report includes the representation
concerning the application of the auditing
standards effective in Argentina which provide
for independence requirements, and was issued
without qualifications as to the application
of such regulations or discrepancies as to the
professional accounting standards.
f ) We have applied the asset laundering and
terrorist financing crimes prevention procedures
provided under the professional standards issued
by Consejo Profesional de Ciencias Económicas
de la Ciudad Autónoma de Buenos Aires
(Professional Council in Economic Sciences
of the City of Buenos Aires).
V. IN COMPLIANCE WITH EFFECTIVE
REGULATIONS, WE HEREBY REPORT
THAT:
City of Buenos Aires,
March 8, 2013
a) The financial statements mentioned in
Section I. have been recorded in the “Inventory
and Balance Sheet” legal book and arise from the
Carlos Alberto Pedro Di Candia
Chairman
Grupo Clarín S.A.
Piedras 1743
C1140ABK Ciudad de Buenos Aires
Argentina
www.grupoclarin.com
Investor Relations
Grupo Clarín
Alfredo Marín / Agustín Medina Manson
+ 54 11 4309 7215
investors@grupoclarin.com
www.grupoclarin.com/ir
Design and production
Chiappini + Becker
Visual Communication
Telephone: (54 11) 4314 7774
www.ch-b.com
www.grupoclarin.com