Letter from the Chairman

Atresmedia has once again obtained excellent results in 2016. The signs of recovery that we noticed a few years ago have solidified and, although the market has still not returned to its highest levels, we can confirm that the worst is over. This factor, coupled with the ability of our Organisation to optimise and adapt to its environment, allows us to present an annual performance of which we can feel very proud. These great results are also down to the efforts and talent of an excellent team of professionals and, of course, the support of the Board of Directors and our shareholders. In short, Atresmedia has shown its strength once again this year..

The value of any company or project is mainly measured by its ability to create effective teams. This principle forms an essential part of the huge amount that I learned from José Manual Lara Bosch and, believe me, I try to apply it as much as possible every day in all of the projects in which I am involved. I am convinced that this is our great asset and the guarantee of good management

Therefore, if we have managed to attain a leading position in the market, as the main Spanish communications Group, this is thanks to the creation of a highly skilled team. However, it is also thanks to the implementation of a strategy defined many years ago on the basis of four key principles: quality, professionalism, diversity and a commitment to the industry. Four principles that guide our work and that have allowed us to become what we are today. Our position is not the result of one day’s work, but rather comes from a medium and long-term process, very distinct to the short-term approaches which have no place at Atresmedia. So the figures achieved in 2016 are the result of that work, carried out by all of those who form part of this Group, deeply rooted in a strategy designed to look to the future. It has therefore been essential to adapt to the macro-economic environment, search for new business niches to help overcome the crisis and optimise management processes.

If we have managed to attain a leading position in the market, as the main Spanish communications group, this is thanks to the creation of a highly skilled team. However, it is also thanks to the implementation of a strategy defined many years ago on the basis of four key principles: quality, professionalism, diversity and a commitment to the industry

The results from 2016 are also due to a sustainable and profitable leadership model that combines commercial needs with recognition and higher ratings from the viewers, listeners and advertisers. This proves that it is a valid model in all respects and a leading brand. We have made it clear that with our way of doing things we can become leaders without the need to betray our principles.

Each and every one of the divisions forming part of the Atresmedia Group has once again demonstrated the excellence of its operations. Atresmedia Televisión has further strengthened, if possible, a model characterised by quality, prestige and innovation. The leading position of Antena 3, our main brand, in December 2016 and January 2017 clearly shows us that the path that we have chosen is the right one, and that in this business it is indeed possible to combine television, a good image and audience success. This has not been easy, it never is, but it is good to remember that, among other factors, during the past year we have had to face the entry of new operators in both DTT and in the different forms of pay TV, and that the changes in consumer patterns force us to reinvent ourselves every day in order to compete for the leisure time of our audiences.

Atresmedia Radio, moreover, has closed a year that can only be described as excellent. Onda Cero faced yet another test of its ability to overcome the greatest challenges. In these circumstances, continuing to be the market’s most profitable broadcaster by listener and managing to achieve the most complete and attractive offer in the sector, with the addition of José Ramón de la Morena, is something that is worth shouting about. The non-conformist spirit of the professionals in our radio business and their constant desire to develop themselves has been bearing fruit for many years and few can boast of having a project that is so solid and with such promising future prospects. Europa FM, meanwhile, continues to provide us with great news year after year. With the arrival at the station of Frank Blanco in the afternoons, we are sure that we have taken another great leap in terms of quality, just like the one we took a few years ago with the signing of Javier Cárdenas, whose success is undeniable.

The results from 2016 were also due to a sustainable and profitable leadership model that combines commercial needs with recognition and higher ratings from the viewers, listeners and advertisers

Atresmedia Publicidad has managed to commercially optimise each and every one of the resources of our Group and, thanks to its talent and efforts, it has once again this year become the largest seller of multimedia advertising on the Spanish market and the most valued exclusive television agent, leading in commercial service and effective advertising. In 2016, Atresmedia Digital has turned us into the leading audiovisual group on the Internet, establishing ourselves as an unquestionable leader with an innovative product that respects the Company’s DNA. Atresmedia Diversificación includes the Group’s businesses not linked to traditional advertising. Among its most important successes is the upturn in the number of households subscribing to our three international channels, which now exceeds 45 million across the world and which has positioned us as the leading worldwide operator with the highest number of subscribers after the American ‘majors’. Finally, Atresmedia Cine released twelve films in 2016 which captured 38.4 % of the entire Spanish box office. In fact, the two highest grossing comedies of the year were productions from our Film Division.

Those of us who make up Atresmedia are aware that our leading position, achieved and consolidated in recent years throughout all of the business areas in which we are involved, obliges us to go beyond audience results or figures. For society, this Group is synonymous with leadership, with being capable of setting the paths along which current affairs run. Our media channels are positioned among the most credible, which is a source of pride but also an enormous responsibility for us all, aware that we are the ones who set the story that is shared by society and unites it. Everyone at Atresmedia knows that this ability to influence creates a series of obligations for us that we cannot leave ignore and we are certain that diversity is the best way of approaching this.

Beyond the challenges that we set ourselves each year as an Organisation, the macro-economic circumstances and their influence on the advertising market and the changes that society is constantly generating, Atresmedia must address the challenges posed by the legal and administrative environment. We have spent many years demanding that the legislators provide greater levels of stability, which in turn provides more security for our business. The second digital dividend is already looming on the horizon and will undoubtedly be one of the key events for the sector in the future, which is why we have been demanding greater levels of understanding from the authorities than were seen with the first dividend. Understanding also when it comes to establishing a schedule that benefits the users and the industry in this transition, and understanding when it comes to setting the keys factors that will result from this process and that to a great extent will determine the evolution of the free-to-air television business. We also expect the Administrations to tackle the regulatory convergence necessary as a result of unstoppable technological convergence. Or, in other words, if the content now travels and is consumed through a wide variety of devices, it seems logical and fair for all operators to have the same rights and obligations. Protecting children, especially, cannot only be confined to the area of free-to-air television.

At Atresmedia we are aware of the limits that an activity such as ours must have and know that we have a responsibility to society, not only to establish these limits but also to use the Group’s potential to positively transform our environment.

Everyone at Atresmedia knows that this ability to influence creates a series of obligations for us that we cannot leave ignore and we are certain that diversity is the best way of approaching this

As part of our general Corporate Responsibility policy, through the Compromiso Atresmedia brand we continue to run numerous campaigns against road traffic accidents, encouraging scientific research, protecting intellectual property and culture, respecting the environment and encouraging healthy lifestyles. We have succeeded in rolling out the Ponle Freno fun-runs to the whole Spain, with these now taking place in Madrid, Vitoria, Tenerife and Vigo, and Objetivo Bienestar has held its 2nd Conference on well-being. We have also managed to persuade over one hundred thousand people to join the campaign on the use and installation of defibrillators run by Constantes y Vitales and, in connection with this issue, in 2016 Atresmedia became a cardio-protected space with the instillation of eight defibrillators at its facilities. We have also supported other non-profit organisations with donations and the allocation of slots for NGO advertising campaigns. These are valued at around €12 million, which is 49 % more than in 2015.

The satisfaction and welfare of its employees is also important to Atresmedia. That is why we seek to offer the best possible balance between their personal and professional lives and to contribute to their training. In 2016 we launched Atresmedia Formación with the aim of contributing to the progress of the audiovisual sector through courses on subjects relating to the world of television, radio, film, communication skills, computing, etc. I must not forget to express my gratitude to the Group’s employees who participated in the Corporate Volunteering Programme, donating more than 2,500 hours of their time to organisations which took them to soup kitchens, accompanying elderly or disabled people and training workshops for unemployed young people.

As a way of strengthening our commitment to the General Corporate Responsibility Policy, Atresmedia joined Forética, the leading forum in corporate social responsibility. In this way we have become the first communications group associated with this leading CSR organisation. Within Forética, the Group participated in the Transparency, Good Governance and Integrity Cluster. This is another sign of the importance of these values to Atresmedia.

Whilst in 2015 we received “Best Improver” from the CDP (Carbon Disclosure Project) for our progress in the commitment to climate change, in 2016 we went further in this area by teaming up with the National Geographic Channel for the release of Before the Flood, the documentary produced by Leonardo Di Caprio and Martin Scorsese which was a wake-up call on these issues.

Without wanting to boast, I should also mention the recognition that we have received this year as a company. The “RepTrak España 2016” study named us the Audiovisual Group with the best reputation based on the opinion of consumers, who took into consideration our financial strength, capacity for innovation, our leadership position ahead of the competition and our news and entertainment offer. We were also rated the most attractive company to work for in the communications groups sector in the 2016 Ranstad Employer Branding Report.

In 2016,Atresmedia has taken great steps to improve transparency and its corporate governance system. Thus, it has increased the presence of independent female board members on the Board of Directors and this now represents 31 %. There has also been an increase in the presence of independent female members on the Board’s Committees, leading to the attainment of the proportion of female board members that the Company had set as a target for 2020 in its Director Selection Policy, which was 30 % of the total number of Board members. Together with other corporate measures also implemented or improved in 2016 to reinforce the commitment of the Company with best practices in Corporate Governance, I would like to highlight that an independent female board member has also been appointed as Coordinating Director, and has been assigned, in addition to the legally established duties, all of those contained in the recommendations of the Code of Good Governance.

We continue to run numerous campaigns against road traffic accidents, encouraging scientific research, protecting intellectual property and culture, respecting the environment and encouraging healthy lifestyles

Also during 2016, Atresmedia reviewed its observance of the Code in accordance with the Technical guide on good practices for the application of the “comply or explain” principle, issued by the CNMV in July 2016. As a result of this analysis, new measures were approved to improve corporate governance including, among others, modifying the Regulations of the Board of Directors in order to ensure the dedication of the directors to the Company, limiting the number of boards on which any one director can serve; improving its transparency, adding reports to its corporate website that were previously internal; commissioning an external and independent firm to assess the board and its committees; and agreeing for the external auditor, who to date has regularly attended the Audit and Control Committee, to also attend the Board at least once a year.

I will finish there. 2016 was yet another excellent year for Atresmedia and 2017 will be the same. We know that our strategic focus, based on a leading, sustainable and profitable model, is correct. We have shown that we know how to adapt better than anyone to the changes in our ecosystem, and that the position achieved is the result of the efforts and talent of the best team of professionals. With these certainties and supported by the trust placed in us, we face the future with the security of knowing that we can achieve any objectives we set for ourselves.