form6k.htm

Translation of consolidated financial statements originally issued in Spanish and prepared in accordance with IFRSs as adopted by the European Union (see Notes 2 and 30). In the event of a discrepancy, the Spanish-language version prevails.

PROMOTORA DE INFORMACIONES, S.A. (PRISA)

AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS FOR 2012 AND 2011

(1)	GROUP ACTIVITIES AND PERFORMANCE

Group activities

Promotora de Informaciones, S.A. (“Prisa” or “the Company”) was incorporated on January 18, 1972, and has its registered office in Madrid, at Gran Vía, 32. Its business activities include, inter alia, the exploitation of printed and audiovisual media, the holding of investments in companies and businesses and the provision of all manner of services.

In addition to the business activities carried on directly by the Company, Prisa heads a group of subsidiaries, joint ventures and associates which engage in a variety of business activities and which compose the Group (“the Prisa Group” or “the Group”). Therefore, in addition to its own separate financial statements, Prisa is obliged to present consolidated financial statements for the Group including its interests in joint ventures and investments in associates.

The consolidated financial statements for 2011 were approved by the shareholders at the Annual General Meeting held on June 30, 2012.

The Group’s consolidated financial statements for 2012 were authorized for issue by the Company’s directors on February 27, 2013.

These consolidated financial statements are presented in thousands of euros as this is the currency of the main economic area in which the Group operates. Foreign operations are accounted for in accordance with the policies described in Note 2d.

Shares of Prisa are admitted to trading on continuous market of the Spanish Stock Exchanges (Madrid, Barcelona, Bilbao and Valencia), and since November 29, 2010, on the New York Stock Exchange.

Evolution of the financial structure of the Group

The Group adopted further measures in 2012 to restructure its debt and strengthen its capital structure.

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In January 2012, principal shareholders converted 75 million warrants worth EUR 150 million into Prisa shares. In addition, in July 2012, it issued EUR 434 million of bonds with mandatory conversion into shares in two tranches, one for EUR 334 million, subscribed by creditor banks via conversion of outstanding debt, and one for EUR 100 million subscribed in cash by Telefónica, S.A. (see Note 11c).

On June 30, 2012, shareholders at the General Meeting of Prisa agreed to amend the minimum preferred dividend payment system for non-voting Class B shares, whereby these shares may be paid by the Company in cash, in Class A shares (at a fixed ratio of EUR 1 per share) or a combination of both (see Notes 11a and 13).

These measures come on top of others adopted in prior years, which include the partial disposal of some assets, capital increases or refinancing agreements entered into with bank creditors (see Note 12).

(2)	BASIS OF PRESENTATION OF THE CONSOLIDATED FINANCIAL STATEMENTS

Application of International Financial Reporting Standards (IFRSs)

The Group’s consolidated financial statements were prepared in accordance with International Financial Reporting Standards (“IFRSs”) as adopted by the European Union, in conformity with Regulation (EC) no. 1606/2002 of the European Parliament and of the Council, taking into account all mandatory accounting policies and rules and measurement bases with a material effect, as well as with the Commercial Code, the obligatory legislation approved by the Institute of Accounting and Auditors of Accounts, and other applicable Spanish legislation.

In accordance with IFRSs, the following should be noted in connection with the scope of application of International Financial Reporting Standards and the preparation of these consolidated financial statements of the Group:

The IFRSs are applied in the preparation of the consolidated financial information of the Group. The financial statements of individual companies that are part of the Group are prepared and presented in accordance with accounting standards in each country.

In accordance with IFRSs, these consolidated financial statements include the following consolidated statements of the Group:

Consolidated balance sheet

Consolidated income statement

Consolidated statement of comprehensive income

Consolidated statement of changes in equity

Consolidated statement of cash flows

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As required by IAS 8, uniform accounting policies and measurement bases were applied by the Group for all transactions, events and items in 2012 and 2011.

In 2012, the following amendment to accounting standard came into force which, therefore, was taken into account when preparing the accompanying consolidated financial statements:

Amendment to IFRS 7- Financial Instruments: Disclosures – Transfers of financial assets

The application of these amendments and interpretations did not have a significant impact on the Group’s consolidated financial statements for this year.

At December 31, 2012, the Prisa Group had not applied the following standards or interpretations issued, since the effective application thereof was required subsequent to that date or they have not been adopted by the European Union.

Standards, amendments, and interpretations		Mandatory application for financial years beginning on or after
Approved for use in the EU
Amendment to IAS 1	Presentation on other comprehensive income	July 1, 2012
Amendment to IAS 19	Employee benefits	January 1, 2013
IFRS 10	Consolidated financial statements	January 1, 2013 (*)

IFRS 11	Joint arrangements	January 1, 2013 (*)
IFRS 12	Disclosure of interests in other entities	January 1, 2013 (*)
IFRS 13	Measuring fair value	January 1, 2013

IAS 27 (Revised)	Individual financial statements	January 1, 2013 (*)
IAS 28 (Revised)	Investments in associates and joint ventures	January 1, 2013 (*)
IFRIC interpretation 20	Stripping costs in the production phase of a surface mine	January 1, 2013

Amendment to IFRS 1	First-time Adoption of International Financial Reporting Standards - Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters	January 1, 2013
Amendment to IAS 12	Income Tax - Deferred tax in connection with investment property	January 1, 2013
Amendment to IFRS 7	Disclosures - Offsetting financial assets and financial liabilities	January 1, 2013
Amendment to IAS 32	Presentation - Offsetting financial assets and financial liabilities	January 1, 2014
Not yet approved for use in the EU
IFRS 9	Financial Instruments: Classification y valuation	January 1, 2015

Improvements to IFRSs	Cycle 2009-2011	July 1, 2013

Transition Guidance	Amendments to IFRS 10, IFRS 11 and IFRS 12	January 1, 2013
Investment Entities	Amendments to IFRS 10, IFRS 12 and IAS 27	January 1, 2014

(*) On June 1, 2012, the EU Accounting Regulatory Committee agreed to push back the effective dates of IFRS 10, 11 and 12 and the new IAS 27 and 28 until the annual periods beginning on or after January 1, 2014, although early adoption is permitted.

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All the accounting principles and measurement bases with a material effect on the consolidated financial statements were applied.

As at the date of authorization of the accompanying financial statements, the directors are assessing the potential impact of the future application of these standards on the Group’s consolidated financial statements.

Fair presentation and accounting principles

The consolidated financial statements were obtained from the separate financial statements of Prisa and its subsidiaries and, accordingly, they present fairly the Group’s equity and financial position at December 31, 2012, and the results of its operations, the changes in equity and the cash flows in the year then ended. The Group prepared its financial statements on a going concern basis. Also, with the exception of the consolidated statement of cash flows, these consolidated financial statements were prepared in accordance with the accrual basis of accounting.

Given that the accounting policies and measurement bases applied in preparing the Group’s consolidated financial statements for 2012 may differ from those applied by some of the Group companies, the necessary adjustments and reclassifications were made on consolidation to unify these policies and bases and to make them compliant with IFRSs as adopted by the European Union.

Responsibility for the information and use of estimates

The information in these financial statements is the responsibility of the Group’s directors.

In the consolidated financial statements for 2012 estimates were occasionally made by executives of the Group and of the entities in order to quantify certain of the assets, liabilities and obligations reported herein. These estimates relate basically to the following:

The measurement of assets and goodwill to determine the possible existence of impairment losses (see Notes 4f and 4d).

The useful life of property, plant, and equipment, and intangible assets (see Notes 4b and 4e).

The hypotheses used to calculate the fair value of financial instruments (see Note 4g).

The assessment of the likelihood and amount of undetermined or contingent liabilities.

Estimated sales returns received after the end of the reporting period.

Although these estimates were made on the basis of the best information available at the date of preparation of these consolidated financial statements on the events analyzed, events that take place in the future might make it necessary to change these estimates (upwards or downwards) in the coming years. Changes in accounting estimates would be applied prospectively, with the effects recognized in the future related consolidated income statements.

In 2012, there were no significant changes in the accounting estimates made at the end of 2011, apart from those used to determine goodwill (see Note 6).

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Basis of consolidation

The consolidation methods applied were as follows:

Full consolidation-

Subsidiaries are fully consolidated and all their assets, liabilities, income, expenses and cash flows are included in the consolidated financial statements after making the corresponding adjustments and eliminations. Subsidiaries are companies in which the Parent controls a majority of the voting power or, if this is not the case, has the power to govern their financial and operating policies. The fully consolidated companies are listed in Appendix I.

The results of subsidiaries which are acquired or sold during the year are included in the consolidated income statement from the effective date of acquisition or until the effective date of disposal, as appropriate.

On acquisition, the assets, liabilities and contingent liabilities of a subsidiary are measured at their fair values. Any excess of the cost of the subsidiary’s acquisition over the Parent Company’s share of the net fair value of its assets and liabilities is recognized as goodwill. Any deficiency is credited to the consolidated income statement.

The share of third parties of the equity of Group companies is presented under “Equity – Non-controlling interests” in the consolidated balance sheet and their share of the profit for the year is presented under “Profit attributable to non-controlling interests” in the consolidated income statement.

The interest of non-controlling shareholders is stated at those shareholders’ proportion of the fair values of the assets and liabilities recognized.

All balances and transactions between the fully consolidated companies were eliminated on consolidation.

Proportionate consolidation-

Under this consolidation method, the Group combines the balances and eliminations are made in proportion to the Group’s ownership interest in the capital of these entities. The assets and liabilities consolidated under proportional consolidation are classified in the consolidated balance sheet according to their nature. Similarly, the Group’s share of the income and expenses of these entities is recognized in the consolidated income statement on the basis of the nature of the related items. The fully consolidated companies are listed in Appendix I. The effect of proportionate consolidation on the Group’s consolidated financial statements is not significant.

Equity method-

Associates are accounted for using the equity method. Associates are companies in which Prisa holds direct or indirect ownership interests of between 20% and 50%, or even if the percentage of ownership is less than 20%, it has significant influence over their management.

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The companies accounted for using the equity method are listed in Appendices I and II, together with their main financial aggregates.

Under the equity method, investments are recognized in the balance sheet at the Group’s share of net assets of the investee, adjusted, if appropriate, for the effect of transactions performed with the Group, plus any unrealized gains relating to the goodwill paid on the acquisition of the company.

Dividends received from these companies are recognized as a reduction in the value of the Group’s investment. The Group’s share of the profit or loss of these companies is included, net of the related tax effect, in the consolidated income statement under “Result of companies accounted for using the equity method.”

Other matters -

The items in the balance sheets and income statements of the foreign companies included in the scope of consolidation were translated to euros using the closing rate method, i.e. all assets, rights and obligations were translated at the exchange rates prevailing at the end of the reporting period. Income statement items were translated at the average exchange rates for the year. The difference between the value of the equity translated at historical exchange rates and the net equity position resulting from the translation of the other items as indicated above is recognized under "Equity– Exchange differences" in the accompanying consolidated balance sheet.

Balances and transactions in currencies of hyperinflationary economies are translated at the closing exchange rate. At December 31, 2012, the only country in which the Group operates that pursuant to IAS 21 could be considered to be a hyperinflationary economy is Venezuela.

In keeping with standard practice, these consolidated financial statements do not include the tax effect of transferring to Prisa’s accounts the accumulated reserves and retained earnings of the other consolidated companies, since it is considered that these balances will be used as equity by said companies.

The data relating to Sociedad Española de Radiodifusión, S.L., Prisa Radio, S.L., Grupo Santillana de Ediciones, S.L., Prisa Brand Solutions, S.L.U., Dédalo Grupo Gráfico, S.L., Promotora de Emisoras de Televisión, S.A., Gran Vía Musical de Ediciones, S.L., Grupo Latino de Radiodifusión Chile, Ltda., Sistema Radiópolis, S.A. de C.V., Grupo Media Capital SGPS, S.A., Antena 3 de Radio, S.A. and Prisa Televisión, S.A.U. contained in these notes were obtained from their respective consolidated financial statements.

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(3)	CHANGES IN THE GROUP STRUCTURE

The most significant changes in the scope of consolidation in 2012 were as follows:

Subsidiaries

In May 2012, Rede Teledifusora Independente, S.A. (RETI), belonging to Grupo Media Capital, SGPS, S.A., was sold.

Also in May 2012, Promotora de Emisoras de Televisión, S.A. absorbed Localia TV Madrid, S.A.U.

Also in July 2012, Ediciones Aguilar Venezolana, S.A, disolved.

Also in July 2012, Productora de Televisión de Córdoba, S.A.U, Televisión Digital de Baleares, S.A.U, Promotora Audiovisual de Zaragoza, S.L.U and Legal Affairs Consilium, S.L.U. were absorbed by Promotora de Emisoras de Televisión, S.A.

In September 2012, Lúdicodrome – Editora Unipessoal, Lda, which belongs to the Media Capital Group, merged with Media Capital Editora Multimedia, S.A.

Also, in September 2012, TV Ciudad Real, S.L.U was absorbed by Promotora de Emisoras de Televisión, S.A.

In December 2012, Desenvolvimento e Comercialização de Sistemas de Comunicação, S.A was absorbed by Media Capital Servicios de Consultoria y Gestao, S.A.

Associates

In January 2012, 35% of Factoría Plural, S.L., belonging to Grupo Media Capital, SGPS, S.A., was sold. As a result, Factoría Plural, S.L. is now accounted for using the equity method, rather than the full consolidation method.

In May 2012, Uniao de Leira, SAD., belonging to Grupo Media Capital, SGPS, S.A., was sold.

In June 2012, Distribuidora Cordobesa de Medios Editoriales, S.L. was absorbed by Distrimedios, S.L

In October 2012, Souto S.L.U, is absorbed by Distribuidora de Publicaciones Boreal, S.L. Also that month, Suscripciones de Medios Editoriales, S.L was absorbed by Distrimedios, S.L.

In November 2012, Prensa Serviodiel, S.L. was absorbed by Distrimedios, S.L.

Significant operations

The financial statements of Dédalo Grupo Gráfico, S.L. and subsidiaries are fully consolidated in the Group's accounts since 1 April 2012, as the option of the reciprocal purchase and sale agreement for the shares of Dédalo Grupo Gráfico signed by Prisa in 2010 with the other shareholders of Dédalo Grupo Gráfico was exercisable. Also in June 2012 Prisa has announced its decision to exercise the call option for one euro, which involves the acquisition of the remaining 60% of society, reaching a total participation of 100%.

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Additionally, in June 1, 2012 Dédalo Grupo Gráfico, S.L. sold 100% of Dédalo Offset, S.L., Macrolibros, S.L., Dédalo Heliocolor, S.A. y Gráficas Integradas, S.A.

The main impacts of the fully integration of Dédalo Grupo Gráfico in the consolidated balance sheets at December 31, 2012 is as follows:

	Thousand of euros
Non current asests		32,249
Current financial assets and cash and cash equivalents		467
Other current assets		3,355
Current and non-current liabilities		(127,353	)

At December 31, 2011 the Group registered provisions which correspond to the estimated risks in this investment. Therefore, the aforementioned operations have had no impact in the accompanying consolidated income statement (see Notes 8 and 14).

The fully consolidation of Dédalo Grupo Gráfico has not had a significant impact in the equity of the Group, which contemplated the risks associated with Dédalo Grupo Gráfico through the provision created on loans granted to this group and the provision of the printing business (see note 14).

Prisa was the guarantor of all the debt and the underlying hedges of Dédalo Grupo Gráfico until the company started to be fully consolidated.

From April 1, 2012, Dédalo Grupo Gráfico has contributed to consolidated revenues with EUR 12,411 thousand and with losses of EUR 5,607 thousand to profit from operations.

In case Dédalo Grupo Gráfico had been fully consolidated since January 1, 2012, its contribution to total consolidated revenues would have amounted to EUR 23,895 thousand and it would have impacted to the profit from operations with a loss of EUR 11,080 thousands.

When comparing the information for 2012 and 2011, these changes, the effect of which is presented separately in these notes to the consolidated financial statements in the “Changes in the consolidation scope" column, should be taken into account.

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(4)	ACCOUNTING POLICIES

The principal accounting policies used in preparing the accompanying consolidated financial statements for 2012 and comparative information were as follows:

Presentation of the consolidated financial statements

In accordance with IAS 1, the Group opted to present the assets in its consolidated balance sheet on the basis of a current/non-current assets distinction. Also, income and expenses are presented in the consolidated income statement according to the nature of the related item. The statement of cash flows was prepared using the indirect method.

Property, plant, and equipment

Property, plant and equipment are carried at cost, net of the related accumulated depreciation and of any impairment losses.

Property, plant and equipment acquired prior to December 31, 1983, are carried at cost, revalued pursuant to applicable legislation. Subsequent additions are stated at cost, revalued pursuant to Royal Decree-Law 7/1996 in the case of Agrupación de Servicios de Internet y Prensa, A.I.E., Pressprint, S.L.U., Sociedad Española de Radiodifusión, S.L., Ítaca, S.L. and Algarra, S.A.

The costs of expansion, modernization or improvements leading to increased productivity, capacity or efficiency or to a lengthening of the useful lives of the assets are capitalized.

Period upkeep and maintenance expenses are charged directly to the consolidated income statement.

Property, plant and equipment are depreciated by the straight-line method at annual rates based on the years of estimated useful life of the related assets, the detail being as follows:

	Years of estimated useful life

Buildings and structures	30 - 50
Plant and machinery	5 – 10
Digital set-top boxes	7
Digital access cards	5
Other items of property, plant and equipment	4 – 20

The gain or loss arising on the disposal or derecognition of an asset is determined as the difference between the selling price and the carrying amount of the asset and is recognized in the consolidated income statement.

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Finance leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

Items of property, plant and equipment held under finance lease are recognized in the balance sheet according to the nature of the leased asset. A liability is recognized simultaneously for the same amount, which is the lower of the fair value of the leased asset or the sum of the present values of the lease payables and, where appropriate, the price of any purchase option.

The finance charge on these leases is allocated to the income statement so as to produce a constant periodic rate of interest over the lease term.

Assets held under finance leases are depreciated over the same estimated useful life as owned assets.

Goodwill

Any excess of the cost of the investments in the consolidated companies over the corresponding underlying carrying amounts at the date of acquisition or at the date of first time consolidation, provided that the acquisition is not after control is obtained, is allocated as follows:

If it is attributable to specific assets and liabilities of the companies acquired, by increasing the value of the assets whose market values were higher than the carrying amounts at which they had been recognized in their balance sheets and whose accounting treatment was similar to that of the same assets of the Group.

If it is attributable to non-contingent liabilities, by recognizing it in the consolidated balance sheet if it is probable that the outflow of resources to settle the obligation embody economic benefits and the fair value can be measured reliably.

If it is attributable to specific intangible assets, by recognizing it explicitly in the consolidated balance sheet provided that the fair value at the date of acquisition can be measured reliably.

The remaining amount is recognized as goodwill.

Changes in ownership interests in subsidiaries that do not result in a loss of control are accounted for as equity transactions. Once control is obtained, additional investments in subsidiaries and decreases in ownership interest without the loss of control do not affect the amount of goodwill. When a parent loses control of a subsidiary, it derecognizes the carrying amount of assets (including any goodwill) and liabilities and the share of non-controlling interests, recognizing the fair value of the consideration received and any residual ownership in the subsidiary. The remaining difference is taken to profit or loss in the income statement for the year.

The assets and liabilities acquired are measured provisionally at the acquisition date, and the provisional amounts are reviewed within a period of a year from the acquisition date. Therefore, until the definitive fair value of the assets and liabilities has been established, the difference between the acquisition cost and the carrying amount of the company acquired is provisionally recognized as goodwill.

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Goodwill is considered to be an asset of the company acquired and, therefore, in the case of a subsidiary with a functional currency other than the euro, it is valued in that subsidiary’s functional currency and is translated to euros using the exchange rate prevailing at the reporting date.

Goodwill acquired on or after January 1, 2004 is measured at acquisition cost and that acquired earlier is recognized at the carrying amount at December 31, 2003, in accordance with Spanish GAAP. In both cases, since January 1, 2004, goodwill has not been amortized and at the end of each reporting period goodwill is reviewed for impairment (i.e. a reduction in its recoverable amount to below its carrying amount) and any impairment loss is recognized (see Note 4f).

Intangible assets

The main items included under “Intangible assets” and the measurement bases used were as follows:

Computer software-

“Computer software” includes the amounts paid to develop specific computer programs or the amounts incurred in acquiring from third parties the licenses to use programs. Computer software is amortized using the straight-line method over a period ranging from three to six years, depending on the type of program or development, from the date on which it is brought into service.

Prototypes-

This account includes basically prototypes for the publication of books, which are measured at the costs incurred in materials and work performed by third parties to obtain the physical medium required for industrial mass reproduction. The prototypes are amortized using the straight-line method over three years from the date on which they are launched on the market, in the case of textbooks, atlases, dictionaries and major works, and over two years in the case of other publications. The cost of the prototypes of books that are not expected to be published is charged to the income statement for the year in which the decision not to publish is taken.

New subscribers – Installation and connection-

This item includes the direct costs incurred in the installation of equipment and the connection of new subscribers to digital satellite pay TV, net of accumulated amortization. These costs are amortized over a useful life of seven years, which is the estimated average subscription period. The Group writes off the carrying amount of the installation and connection costs relating to subscriptions cancelled during the year. These costs are individually identifiable for each subscriber, by DTS, and future economic benefits will flow from them for the digital satellite pay TV business.

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This item also includes certain costs incurred in installing community digital satellite TV receivers (required to complete the satellite TV signal reception system), net of the related accumulated amortization. These costs are also amortized over an estimated useful life of seven years.

These costs are amortized using the method described above by crediting directly the related asset account in the balance sheet.

Advances on copyrights-

This account includes the advances paid to authors for the acquisition of book publishing rights. These advances are taken to expenses in the income statement from the date on which the book is launched on the market, at the rate established in each contract, which is applied to the book cover price. These items are presented in the balance sheet at cost, less the portion charged to income. This cost is reviewed each year and, where necessary, an allowance is recognized based on the projected sales of the related publication.

Audiovisual rights-

”Audiovisual rights” in the accompanying consolidated balance sheet includes the cost of various long-term audiovisual rights and rights of publicity (including both the cost of rights currently being exploited and the cost of the options to exploit these rights in the future). These rights are amortized on the basis of the income obtained therefrom over the term of the related contracts. At the date of preparation of these consolidated financial statements no decision had been taken not to exercise these options, which were recognized at their expected recoverable amount.

Other intangible assets-

”Other intangible assets” includes basically the amounts paid to acquire administrative concessions for the operation of radio frequencies, which are subject to temporary administrative concessions. These concessions are generally granted for renewable ten-year periods and are amortized using the straight-line method over the term of the arrangement, except in cases where the renewal costs are not significant, in which case they are deemed to be assets with an indefinite useful life.

Impairment losses

At each reporting date, or whenever it is considered necessary, the Group reviews the carrying amounts of its assets to determine whether there is any indication that those assets might have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the amount of the impairment loss (if any). In the case of identifiable assets that do not generate cash flows that are largely independent of those from other assets or groups of assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Cash-generating units to which goodwill has been assigned and intangible assets with an indefinite useful life are systematically tested for impairment at the end of each reporting period or when the circumstances so warrant.

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Recoverable amount is the higher of fair value less costs to sell and value in use. Value in use is taken to be the present value of the estimated future cash flows to derive from the asset based on most recent budgets approved by management. These budgets include the best estimates available of the income and costs of the cash-generating units based on industry projections and future expectations.

These projections cover the following five years and include a residual value that is appropriate for each business. These cash flows are discounted to their present value at a rate that reflects the weighted average cost of capital employed adjusted by the country risk and business risk corresponding to each cash-generating unit. Therefore, in 2012 the rates used ranged from 7.2% to 15.4% depending on the business being analysed. The range used for the most relevant impairment tests was from 8.0% to 10.0%.

If the recoverable amount is lower than the asset’s carrying amount, the related impairment loss is recognized in the consolidated income statement for the difference.

In case the goodwill of a company with minority interests was fully recognized in the consolidated financial statements of the parent company, the assignment of the corresponding impairment between the parent company and the minority interests is made in accordance with their participation in the profit and losses of the company, that means in accordance with the participation in the share capital of the company. According to IFRS 3, the Group maintains the 100% of the goodwill of the pay TV business, as sales of minority stakes in previous years did not imply a loss of control. Consequently, the Group is considering a 100% of future cash flows of this business in the analysis of the goodwill impairment test and therefore the potential impairment of the goodwill will be assigned to the parent company (Prisa) and minority interests according with their stakes in DTS share capital, as there is no goodwill corresponding to minority interest not recorded in the consolidated financial statements of the Group.

Impairment losses recognized on an asset in previous years are reversed when there is a change in the estimate of its recoverable amount by increasing the carrying amount of the asset up to the limit of the carrying amount that would have been determined had no impairment loss been recognized for the asset. The reversal of the impairment loss is recognized immediately as income in the consolidated income statement. An impairment loss recognized for goodwill must not be reversed.

Financial instruments

Non-current financial assets-

“Non-current financial assets” includes the following categories:

Loans and receivables: these assets are recognized at amortized cost, i.e. cash delivered less principal repayments, plus accrued interest receivable, in the case of loans, and the present value of the related consideration in the case of receivables. The Group records the related allowance for the difference between the recoverable amount of the receivables and their carrying amount.

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Held-to-maturity investments: investments that the Group has the positive intention and ability to hold to the date of maturity. They are carried at amortized cost.

Available-for-sale financial assets: this category includes the remaining assets not included in the two categories above. These are almost entirely equity investments. These assets are carried on the consolidated balance sheet at fair value when this can be measured reliably. If the market value of investments in unlisted companies cannot be determined reliably, which is generally the case, these investments are measured at acquisition cost or at a lower amount if there is any indication of impairment.

Cash and cash equivalents-

“Cash and cash equivalents” in the consolidated balance sheet includes cash on hand and at banks, demand deposits and other short-term highly liquid investments that are readily convertible into cash and are not subject to a risk of changes in value.

Financial liabilities-

Financial liabilities

Loans, bonds and other similar liabilities are carried at the amount received, net of transaction costs. Interest expenses, including premiums payable on settlement or redemption and transaction costs, are recognized in the consolidated income statement on an accrual basis using the effective interest method. The amount accrued and not paid is added to the carrying amount of the instrument if settlement is not made in the accrual period.

Accounts payable are recognized initially at market value and are subsequently measured at amortized cost using the effective interest method.

Compound financial instruments

Compound financial instruments are non-derivative instruments that have both a liability and an equity component.

The Group recognizes, measures and presents separately the liability and equity components created by a single financial instrument.

The Group distributes the value of its instruments in accordance with the following criteria which, barring error, will not be subsequently reviewed.

The liability component is recognized by measuring the fair value of a similar liability that does not have an associated equity component.

The equity component is measured at the difference between the initial amount and the amount assigned to the liability component.

The transaction costs are distributed in the same proportion.

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Derivative financial instruments and hedge accounting-

The Group is exposed to fluctuations in the exchange rates of the various countries in which it operates. In order to mitigate this risk, foreign currency hedges are used, on the basis of its projections and budgets, when the market outlook so requires.

Similarly, the Group is exposed to foreign currency risk as a result of potential fluctuations in the various currencies in which its bank borrowings and debts to third parties are denominated. Accordingly, it uses hedging instruments for transactions of this nature when they are material and the market outlook so requires.

The Group is also exposed to interest rate risk since all of its bank borrowings bear interest at floating rates. In this regard, the Group arranges interest rate hedges, basically through contracts providing for interest rate caps.

Pursuant to IFRSs, changes in the value of these financial instruments are recognized as finance income or finance costs, since by their nature they do not qualify for hedge accounting under IFRSs.

For instruments settled at a variable amount of shares or in cash, the Company recognizes a derivative financial liability when measuring these financial instruments using the Black- Scholes model.

Investments accounted for using the equity method

As discussed in Note 2d, investments in companies over which the Group has significant influence are accounted for using the equity method. The goodwill arising on the acquisition of these companies is also included under this heading.

Investments in companies accounted for using the equity method whose carrying amount is negative at the end of the reporting period are recognized under “Non-current liabilities – Long- term provisions” (see Notes 9 and 14) at their negative excluding the financial effect given the nature of the investments.

Inventories

Inventories of raw materials and supplies and inventories of commercial products or finished goods purchased from third parties are measured at the lower of their average acquisition cost and market value.

Work in progress and finished goods produced in-house are measured at the lower of average production cost and market value. Production cost includes the cost of materials used, labor and in-house and third-party direct and indirect manufacturing expenses.

The main inventory item is “Audiovisual rights,” which are stated at acquisition cost and taken to income as follows:

Broadcasting rights for the “Canal+” premium pay TV family of channels:

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Film broadcasting rights acquired from third parties (outside productions): the cost of these rights is recognized in the income statement on a straight-line basis from the date of the first showing or commercial release until the expiry of the broadcasting rights.

Sporting event broadcasting rights: these rights are taken to income in full at the date of the first showing.

Acquired series broadcasting rights: the cost of these rights is taken to income on a straight-line basis over the various showings.

Other rights: these relate basically to documentaries, in-house productions and introductory program slots, and are recognized as cost of sales when broadcast.

Broadcasting rights for free-to-air television channels: mainly broadcasting rights acquired from third parties; they are taken to income in accordance with the number of showings.

Obsolete, defective or slow-moving inventories are reduced to their realizable value.

The Group assesses the net realizable value of the inventories at the period end and recognizes the appropriate write-down if the inventories are overstated. When the circumstances that previously caused inventories to be written down no longer exist or when there is clear evidence of an increase in net realizable value because of changed economic circumstances, the amount of the write-down is reversed.

Assets classified as held for sale

Assets classified as held for sale are considered to be groups of assets directly associated with them, to be disposed of together as a group in a single transaction that is expected to be realized within twelve months from the date of their classification under this heading.

Assets classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell.

Long-term provisions

Present obligations at the consolidated balance sheet date arising from past events which could give rise to a loss for the Group, which is uncertain as to its amount and timing, are recognized in the consolidated balance sheet as provisions at the present value of the most probable amount that it is considered the Group will have to pay to settle the obligation.

Provisions for taxes-

The provisions for taxes relate to the estimated amount of the tax debts whose exact amount or date of payment has not yet been determined, since they depend on the fulfillment of certain conditions.

- 16 -

Provisions for third-party liability-

At the end of 2012, certain litigation and claims were in process against the Group companies arising from the ordinary course of their operations.

“Provisions for third-party liability” also includes the estimated amount required to cover potential claims arising from obligations assumed by the consolidated companies in the course of their commercial operations and the estimated termination benefits payable to employees whose contracts will foreseeably be terminated.

Recognition of income and expenses

Revenue and expenses are recognized on an accrual basis, regardless of when the resulting monetary or financial flow arises.

Revenue is measured at the fair value of the consideration received or receivable and represents the amounts receivable for the goods and services provided in the normal course of business, net of discounts, and other sales-related taxes.

The accounting policies applied to recognize the revenue of the Group’s main businesses are as follows:

Revenue from subscribers arising from the pay TV business is recognized when the subscribers are registered in the system. Subscription revenue is recognized on a monthly basis. Pay per view revenue is recognized when the program acquired by the subscriber is screened.

Advertising revenue is recognized when the advertisement appears in the media, less the amount of volume rebates offered to the media agencies.

Revenue from book sales is recognized on the effective delivery thereof. Where the sales of the copies are subject to sales returns, the actual sales returns are deducted from the revenue recognized. Also, the amounts corresponding to rebates or trade discounts that are not of a financial nature are deducted from revenue.

Revenue from the sale of newspapers and magazines is recognized on the effective delivery thereof, net of the related estimated provision for sales returns. Also, the amounts relating to distributors’ fees are deducted from revenue.

The revenue and the costs associated with audiovisual production agreements are recognized in the income statement by reference to the stage of completion at the balance sheet date, using the percentage of completion method. When the final outcome of the agreement cannot be estimated reliably, the revenue must only be recognized to the extent that it is probable that the costs incurred will be recovered, whereas the costs are recognized as an expense for the year in which they are incurred. In any case, the expected future losses would be recognized immediately in the income statement.

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Revenue related to intermediation services is recognized at the amount of the fees received when the goods or services under the transaction are supplied.

Other income: this item includes broadcasting services, sales of add-ons and collections, telephone hotline services, music sales, organization and management of events, e- commerce, Internet services, leases and other income.

Offsetting

Assets and liabilities are offset and the net amount presented in the consolidated balance sheet when, and only when, they arise from transactions in which the Group has a contractual or legally enforceable right to set off the recognized amounts and its intends to settle them on a net basis, or to realize the asset and settle the liability simultaneously.

Tax matters

The current income tax expense or receipt represents the sum of the current tax expense and the deferred tax assets and liabilities. The current income tax expense, which determines the payment obligation to the tax authorities, is calculated by applying the tax rate in force to the taxable profit, after deducting the tax relief and tax credits generated and taken in the year.

Deferred tax assets and liabilities arise from temporary differences defined as the amounts expected to be payable or recoverable in the future which result from differences between the carrying amounts of assets and liabilities and their tax bases, as well as non-deductible costs which will be deductible later on. These amounts are measured at the tax rates that are expected to apply in the period when the asset is realized or the liability is settled.

Deferred tax assets may also arise from the carryforward of unused tax loss and unused tax credits.

Deferred tax liabilities are recognized for all taxable temporary differences, unless the temporary difference arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit (loss) nor taxable profit or loss.

Deferred tax assets are recognized for temporary differences to the extent that it is considered probable that the consolidated companies will have sufficient taxable profits in the future against which the deductible temporary difference can be utilized, and the deferred tax assets do not arise from the initial recognition of an asset or liability that is not a business and, at the time of the transaction, affects neither accounting profit (loss) nor taxable profit (loss). The other deferred tax assets (carryforward of tax losses and unused tax credits) are only recognized if it is considered probable that the consolidated companies will have sufficient future taxable profits against which they can be utilized.

The deferred tax assets and liabilities recognized are reassessed at the end of each reporting period in order to ascertain whether they still exist, and the appropriate adjustments are made on the basis of the findings of the analyses performed and the tax rate then in force.

- 18 -

Loss after tax from discontinued operations

A discontinued operation is a line of business that the Group has decided to abandon and/or sell and whose assets, liabilities and net profit or loss can be distinguished physically, operationally and for financial reporting purposes.

The income and expenses of the discontinued operations are presented separately in the consolidated income statement under “Loss after tax from discontinued operations.”

Foreign currency transactions

Foreign currency transactions are translated to euros (the Group’s functional currency) at the exchange rates ruling at the transaction date. During the year, differences arising between the result of applying the exchange rates initially used and that of using the exchange rates prevailing at the date of collection or payment are recognized as finance income or finance costs in the consolidated income statement.

Also, balances receivable or payable at December 31 each year in currencies other than the functional currency in which the consolidated companies’ financial statements are denominated are translated to euros at the closing exchange rates. Any resulting translation differences are recognized as finance income or finance costs in the consolidated income statement.

Current/non-current classification

Debts are recognized at their effective amount and debts due to be settled within twelve months from the balance sheet date are classified as current items and those due to be settled within more than twelve months as non-current items.

Consolidated statements of cash flows

The following terms are used in the consolidated statements of cash flows with the meanings specified:

Changes in cash flows in the year: inflows and outflows of cash and cash equivalents, which are short-term, highly -liquid investments that are subject to an insignificant risk of changes in value.

Operating activities: the principal revenue-producing activities of the Group and other activities that are not investing or financing activities.

Investing activities: the acquisition and disposal of long-term assets and other investments not included in cash and in cash equivalents. For transactions between the parent and non-controlling interests, these only include those representing a change of control, in accordance with IAS 27.

- 19 -

Financing activities: activities that result in changes in the size and composition of equity and borrowings, as well as transactions between the parent and non-controlling interests which do not represent a change of control in accordance with IAS 27.

Environmental impact

In view of the printing activities carried on by certain consolidated Group companies, mainly Pressprint, S.L.U. and Dédalo Grupo Gráfico, S.L., and in accordance with current legislation, these companies control the degree of pollution caused by waste and emissions, and have an adequate waste disposal policy in place. The expenses incurred in this connection, which are not significant, are expensed currently.

The evaluation carried out indicates that the Group does not have any environmental liability, expenses, assets, provisions or contingencies that might be material with respect to its equity, financial position or results.

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(5)	PROPERTY, PLANT, AND EQUIPMENT

2012

The changes in 2012 in “Property, plant and equipment” in the consolidated balance sheet were as follows:

	Thousands of euros
	Balance at			Monetary			Translation			Changes in scope												Balance at
	12/31/2011			adjustment			adjustment			of consolidation			Additions			Disposals			Transfers			12/31/2012

Cost:
Land and buildings		92,813			782			1,454			17,928			912			(488	)		32			113,433
Plant and machinery		477,529			507			3,063			52,010			8,939			(15,325	)		2,858			529,581
Digital set-top boxes and cards		363,274			-			-			-			10,970			(43,255	)		-			330,989
Other items of property, plant and equipment		120,875			538			185			1,199			24,048			(13,231	)		1,302			134,916
Advances and property, plant and equipment in the course of construction		3,664			-			(137	)		370			1,395			(177	)		(3,049	)		2,066
Total cost		1,058,155			1,827			4,565			71,507			46,264			(72,476	)		1,143			1,110,985

Accumulated depreciation:
Buildings		(28,931	)		(310	)		(364	)		(3,353	)		(2,919	)		168			-			(35,709	)
Plant and machinery		(349,394	)		(800	)		(2,680	)		(29,376	)		(30,825	)		13,964			(223	)		(399,334	)
Digital set-top boxes and cards		(268,515	)		-			-			-			(26,042	)		42,245			-			(252,312	)
Other items of property, plant and equipment		(92,762	)		(451	)		89			(489	)		(11,254	)		11,710			(129	)		(93,286	)
Total accumulated depreciation		(739,602	)		(1,561	)		(2,955	)		(33,218	)		(71,040	)		68,087			(352	)		(780,641	)

Impairment losses:
Buildings		(182	)		-			-			-			(1,798	)		182			(6,783	)		(8,581	)
Plant and machinery		(195	)		-			-			-			-			938			(20,436	)		(19,693	)
Digital set-top boxes and cards		(9,643	)		-			-			-			4,086			1,001			(1	)		(4,557	)
Other items of property, plant and equipment		(1,092	)		-			(10	)		-			(35	)		42			1			(1,094	)
Total impairment losses		(11,112	)		-			(10	)		-			2,253			2,163			(27,219	)		(33,925	)
Property, plant and equipment, net		307,441			266			1,600			38,289			(22,523	)		(2,226	)		(26,428	)		296,419

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2011

The changes in 2011 in “Property, plant and equipment” in the consolidated balance sheet were as follows:

	Thousands of euros
	Balance at			Monetary			Translation			Changes in scope												Balance at
	12/31/2010			adjustment			adjustment			of consolidation			Additions			Disposals			Transfers			12/31/2011

Cost:
Land and buildings		90,428			941			(1,694	)		63			3,910			(1,195	)		360			92,813
Plant and machinery		491,240			689			(664	)		(6,902	)		12,016			(20,058	)		1,208			477,529
Digital set-top boxes and cards		367,862			-			-			-			44,235			(48,823	)		-			363,274
Other items of property, plant and equipment		108,231			609			(261	)		(483	)		13,001			(10,004	)		9,782			120,875
Advances and property, plant and equipment in the course of construction		5,067			-			(1,258	)		6			3,791			(261	)		(3,681	)		3,664
Total cost		1,062,828			2,239			(3,877	)		(7,316	)		76,953			(80,341	)		7,669			1,058,155

Accumulated depreciation:
Buildings		(27,743	)		(280	)		444			(34	)		(2,308	)		919			71			(28,931	)
Plant and machinery		(350,776	)		(485	)		840			6,939			(27,130	)		21,255			(37	)		(349,394	)
Digital set-top boxes and cards		(291,279	)		-			-			-			(24,774	)		47,538			-			(268,515	)
Other items of property, plant and equipment		(84,900	)		(368	)		201			524			(7,988	)		6,996			(7,227	)		(92,762	)
Total accumulated depreciation		(754,698	)		(1,133	)		1,485			7,429			(62,200	)		76,708			(7,193	)		(739,602	)

Impairment losses:
Buildings		(182	)		-			-			-			-			-			-			(182	)
Plant and machinery		(195	)		-			-			-			(7	)		7			-			(195	)
Digital set-top boxes and cards		(11,901	)		-			-			-			-			1,320			938			(9,643	)
Other items of property, plant and equipment		(292	)		-			2			-			(5	)		163			(960	)		(1,092	)
Total impairment losses		(12,570	)		-			2			-			(12	)		1,490			(22	)		(11,112	)
Property, plant and equipment, net		295,560			1,106			(2,390	)		113			14,741			(2,143	)		454			307,441

Changes in the scope of consolidation-

The main change in the scope of consolidation in 2012 was the change in the consolidation method used for Dédalo Grupo Gráfico from the equity to the full consolidation method (see Note 3).

Additions-

The most significant additions in 2012 were as follows:

“Digital set-top boxes and cards,” in the amount of EUR 10,970 thousand, from investments made by DTS Distribuidora de Televisión Digital, S.A. in iPlus, a next-generation decoder.

“Plant and machinery,” in the amount of EUR 8,939 thousand, primarily from investments made by Prisa Televisión, S.A.U. refurbishment of its headquarters and equipment for VOD (video on demand) and Canal+ Yomvi, and by Gruoi Media Capital, SGPS, S.A. for the acquisition of electronic and audiovisual equipment.

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“Other items of property, plant and equipment,” in the amount of EUR 24,048 thousand, from investments made for Santillana in digital developments and learning systems.

Disposals-

In 2012, the Prisa Televisión Group derecognized the cost, accumulated depreciation and impairment losses relating to digital set-top boxes and cards that were not in an adequate condition to be used.

Impairment losses-

In 2012, impairment losses of EUR 18,354 thousand were recognized for the printing plant in Barcelona due to its closure in December and EUR 8,868 thousand for the printing plants in Lugo and Valencia. The provision recognized in 2010 was released in this connection (see Note 14).

There are no restrictions on holding title to the property, plant, and equipment other than those indicated in Note 12.

There are no future property, plant, and equipment purchase commitments.

At December 31, 2012, the Prisa Group´s assets included fully amortized property, plant, and equipment amounting to EUR 469,992 thousand (December 31, 2011: EUR 441,964 thousand).

Non-current assets held under leases-

At December 31, 2012, “Property, plant, and equipment” on the consolidated balance sheet included assets held under finance leases amounting to EUR 89,821 thousand (December 31, 2011: EUR 68,447 thousand).

The breakdown of the carrying amounts of non-current assets held under finance leases by nature of the leased asset at December 31, 2012 and 2011 is as follows (in thousands of euros) is as follows:

	12/31/2012							12/31/2011
	Cost		Accumulated depreciation			Carrying amount		Cost		Accumulated depreciation			Carrying amount
Digital set-top boxes and cards		90,542		(26,212	)		64,330		77,819		(13,797	)		64,022
Plant and machinery		8,502		(4,885	)		3,617		6,812		(3,389	)		3,423
Other items of property, plant and equipment		26,863		(4,989	)		21,874		2,413		(1,411	)		1,002
Total		125,907		(36,086	)		89,821		87,044		(18,597	)		68,447

“Other items of property, plant and equipment” mainly include digital developments and learning systems of Santillana under financial leases.

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The breakdown of the value of the purchase option, the amount of payments made in the year and the nominal value of outstanding payments in 2012 is as follows:

					Nominal value of outstanding payments
	Value of purchase option		Amount of payments made in the year		Total		Less than 1 year		Between 1 and 5 years		More than 5 years
Digital set-top boxes and cards		132		25,770		43,388		26,569		16,819		-
Plant and machinery		35		937		3,038		784		2,254		-
Other items of property, plant and equipment		9,245		15,365		21,948		2,991		18,957		-
Total		9,412		42,071		68,374		30,344		38,030		-

On June 15, 2011, and for a period of five years, Prisa TV signed a master lease agreement with Cisco System Capital Spain, S.L in the amount of USD 80 million, to finance the purchase of iplus set-top boxes, which includes purchases made since May 2010.

Cisco System Capital Spain, S.L. has reached an agreement with Prisa TV to become the exclusive supplier of the set-top boxes required, over the next five years, for the Company’s line of business. The detail of these agreements at 31 December 2012 is as follows:

Cost		Purchase option		Contract Duration (months)		Period elapsed (months)		Amount of payments made in the year		Outstanding payments
	43,427		-		36		19		13,098		16,373
	12,631		-		36		17		4,593		6,888
	1,742		-		36		16		633		950
	3,207		-		36		15		1,167		2,040
	3,476		-		36		14		1,264		2,212
	3,476		-		36		13		1,264		2,212
	1,717		-		36		12		624		1,250
	586		-		36		6		107		532
	1,707		-		36		4		310		1,552
	408		-		49		8		86		370
	2,163		-		49		7		303		2,117
	2,830		-		49		5		396		2,770
	2,397		-		49		4		168		2,514
	905		-		49		3		63		949
	80,672								24,076		42,729

The Group companies take out insurance policies to cover the potential risks to which the various items of property, plant, and equipment are exposed. At December 31, 2012 and 2011, the insurance policies taken out sufficiently covered the related risks.

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(6)

GOODWILL

2012

The detail of the goodwill relating to fully and proportionately consolidated Group companies and of the changes therein in 2012 is as follows:

	Thousands of euros
	Balance at 12/31/2011	Translation adjustment		Impairment		Changes in scope of consolidation		Balance at 12/31/2012

Antena 3 de Radio, S.A.	6,115	-		-		-		6,115
Editora Moderna, Ltda.	60,565	21,403		-		-		81,968
Editora Objetiva, Ltda.	12,237	(1,196	)	-		-		11,041
Grupo Latino de Radiodifusión Chile, Ltda.	60,286	4,465		-		-		64,751
Grupo Media Capital, SGPS, S.A.	420,881	-		-		(3,796	)	417,085
Propulsora Montañesa, S.A.	8,608	-		-		-		8,608
Sistema Radiópolis, S.A. de C.V.	28,787	(4,787	)	-		-		24,000
Sociedad Española de Radiodifusión, S.L.	29,470	-		-		-		29,470
Prisa Televisión, S.A.U.	2,987,587	-		(294,327	)	-		2,693,260
Other companies	30,541	(167	)	(6,955	)	-		23.419
Total	3,645,077	19,718		(301,282	)	(3,796	)	3,359,717

The detail, by business segment, of the goodwill relating to fully and proportionately consolidated Group companies and of the changes therein in 2012 is as follows:

	Thousands of euros
	Balance at 12/31/2011	Translation adjustment		Impairment		Changes in scope of consolidation		Balance at 12/31/2012

Radio	157,205	(449	)	(6,955	)	-		149,801
Education	73,671	20,167		-		-		93,838
Audiovisual	3,408,469	-		(294,327	)	(3,796	)	3,110,346
Other	5,732	-		-		-		5,732
Total	3,645,077	19,718		(301,282	)	(3,796	)	3,359,717

Changes in scope of consolidation in audiovisual segment were due mainly to elimination the goodwill of Rede Teledifusora Independente, S.A belonging to Grupo Media Capital, SGPS, S.A., derived from its sale (EUR 3.8 million), and to exchange rate variations.

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2011

The detail of the goodwill relating to fully and proportionately consolidated Group companies and of the changes therein in 2011 is as follows:

	Thousands of euros
	Balance at 12/31/2010		Translation adjustment			Impairment			Changes in scope of consolidation		Balance at 12/31/2011

Antena 3 de Radio, S.A.		6,115		-			-			-		6,115
Editora Moderna, Ltda.		60,565		-			-			-		60,565
Editora Objetiva, Ltda.		13,543		(1,306	)		-			-		12,237
Prisa Brand Solutions, S.L.U.		33,944		-			(33,944	)		-		-
Grupo Latino de Radiodifusión Chile, Ltda.		65,020		(4,734	)		-			-		60,286
Grupo Media Capital, SGPS, S.A.		639,881		-			(219,000	)		-		420,881
Propulsora Montañesa, S.A.		8,608		-			-			-		8,608
Sistema Radiópolis, S.A. de C.V.		28,787		-			-			-		28,787
Sociedad Española de Radiodifusión, S.L.		29,470		-			-			-		29,470
Prisa Televisión, S.A.U.		2,987,587		-			-			-		2,987,587
Other companies		29,994		(71	)		-			618		30,541
Total		3,903,514		(6,111	)		(252,944	)		618		3,645,077

The detail, by business segment, of the goodwill relating to fully and proportionately consolidated Group companies and of the changes therein in 2011 is as follows:

	Thousands of euros
	Balance at 12/31/2010		Translation adjustment			Impairment			Changes in scope of consolidation		Balance at 12/31/2011

Radio		161,967		(4,762	)		-			-		157,205
Education		75,020		(1,349	)		-			-		73,671
Audiovisual		3,627,469		-			(219,000	)		-		3,408,469
Other		39,058		-			(33,944	)		618		5,732
Total		3,903,514		(6,111	)		(252,944	)		618		3,645,077

Impairment tests

At the end of each reporting period, or whenever there are indications of impairment, the Group tests goodwill for impairment to determine whether it has suffered any permanent loss in value that reduces its recoverable amount to below its carrying amount.

To perform the aforementioned impairment test, the goodwill is allocated to one or more cash-generating units. The recoverable amount of each cash- generating unit is the higher of value in use and the net selling price that would be obtained from the assets associated with the cash-generating unit. In the case of the main cash-generating units to which goodwill has been allocated, their recoverable amount is their value in use.

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Value in use was calculated on the basis of the estimated future cash flows based on the business plans most recently approved by management. These business plans include the best estimates available of income and costs of the cash-generating units using industry projections and future expectations.

These projections cover the following five years and include a residual value that is appropriate for each business, applying a constant expected growth rate ranging from 0% to 2.5% depending on the business analyzed.

In order to calculate the present value of these flows, they are discounted at a rate that reflects the weighted average cost of capital employed adjusted for the country risk and business risk corresponding to each cash-generating unit. Therefore, in 2012 the rates used ranged from 7.2% to 15.4% depending on the business being analyzed. The range used for the most relevant impairment tests was from 8.0% to 10.0%.

Prisa Televisión-

According to five-year forecasts, management has based its value-in-use calculations for Prisa Televisión’s audiovisual business on the following:

Variations in the number of subscribers and ARPU (average revenue per user) – The combination of these variables make up the bulk of revenues from Prisa TV’s business (84.6% of the total in 2012). In its assumptions, management factored in any increase in the numbers of subscribers of the offering that DTS is distributing by satellite and internet as a result of not only a recovery in the number of new subscribers, but also a decrease in cancellation rates. In addition, DTS signed content distribution agreements in 2012 with the leading telecommunications operators, allowing it to raise its growth forecasts for other platforms.

Based on the marketing of new pay channels (e.g. soccer, bullfighting), together with the offering of a new, more complete television service with high-definition channels and 3D broadcasts, Prisa TV is projecting growth in its revenue.

Increase in programming costs – In its projections, management has estimated the future consequences of commitments acquired with service and content providers, assuming where applicable, that those services will continue to be provided and that it will have access to the same high-quality content as now. In this sense, it will take some time to absorb the initial increase in costs related to the change in the soccer model for the next seasons. Estimates operating costs reflect streamlining plans begun in prior years, as well as growth plans that should strengthen and transform certain business areas.

Media Capital-

The main variables used by management to determine the value in use of Media Capital’s audiovisual business were as follows:

Evolution of the audience share and advertising share- management predicts growth, albeit small, in both audience share and advertising share in the future projections of TVI, Media Capital’s free-to- air TV channel and the current market leader, which has maintained its market share in recent years.

- 27 -

Variations in the advertising market – management has adjusted its projections for the advertising market to the new macroeconomic environment in Portugal. Consequently, it has estimated a lower market base following the drop in advertising in recent years and modest growth from 2014, in line with the trends highlighted in outside studies.

Results of the impairment tests-

- Prisa Televisión

In 2012, operating indicators for Prisa Televisión’s audiovisual business were affected by a number of factors, mainly the change in the model for marketing soccer for the coming seasons. The new agreement entails high quality pay TV content at the expense of free-to-air broadcasts of soccer matches, which in the medium term should boost penetration of the pay TV service in Spain.

However, it will take some time to absorb the initial increase in costs related to the new soccer model. These incremental costs will be offset by a combination of the wholesale of soccer broadcasting rights to other pay TV operators and a gradual increase in the customer base.

Meanwhile, the economic downturn and waning consumption in Spain, coupled with the hike in the VAT for pay TV from 8% to 21%, have hurt subscriber numbers, meaning it will take longer to reach the subscriber base targets implied in the profitability plan for the new soccer model.

As a result, an impairment loss of EUR 294 million.

- Media Capital

In 2011, it is clear that the economic situation in Portugal has not only brought about a rise in the discount rate, owing to the factoring in of the country risk in that rate, but it has also affected trends in the advertising and other markets and growth prospects of businesses located in the country. Consequently, an impairment loss of EUR 219 million was recognized on the accompanying consolidated income statement. At December 31, 2012, the carrying amount of Media Capital’s goodwill was similar to its value in use.

- 28 -

- Other impairment tests

In 2012, owing to the struggles of the music and record industry in general, an impairment of EUR 5,955 thousand was recognized on RLM, S.A. and Merchandising On Stage, S.L.’s goodwill in the accompanying consolidated income statement.

In 2011, due to new management model of advertising commercialization and the general difficulties in the advertising market, an impairment loss of EUR 33,944 thousand was recognized on the accompanying consolidated income statement for Prisa Brand Solutions’ goodwill.

According to the estimates and projections available to the Group’s directors, the expected future cash flows attributable to the cash-generating units or groups of cash-generating units to which goodwill is allocated indicate that the net value of each goodwill allocated at December 31, 2012, may be recovered.

Sensitivity to changes in key assumptions-

- Prisa Televisión

Due to the impairment of goodwill recognized during 2012, the carrying amount is quite similar to value in use.

In case objectives underlying the business plan elaborated by the managers were to take place with a delay of two years, considered in addition to the delay already included in the business plan that lead to register the impairment this year, impairment would increase by EUR 127 million.

Additionally, an adverse change in key valuation assumptions individually considered might lead to recognition of impairment at a later date. Specifically, a 5.0% decrease in ARPU for the following five years would generate an additional impairment of goodwill of approximately EUR 144 million. For a 5.0% decrease in subscriber numbers for the following five years, impairment would increase by EUR 99 million. A 0.5% increase in the discount rate would lead to additional impairment of EUR 258 million.

- Media Capital

In order to determine the sensitivity of value in use calculations to changes in the key assumptions, an analysis was carried out on the following changes in the key assumptions without producing additional impairment losses on the goodwill allocated:

Increase of 0.5% in the discount rate.

Decrease of 0.5% in the expected growth rate from the fifth year.

Decrease of 1% in advertising share.

- 29 -

(7)	INTANGIBLE ASSETS

2012

The changes in 2012 in “Intangible assets” in the consolidated balance sheet were as follows:

	Thousands of euros
	Balance at			Monetary			Translation			Changes in scope												Balance at
	12/31/2011			adjustment			adjustment			of consolidation			Additions			Disposals			Transfers			12/31/2012

Cost:
Computer software		222,570			262			(453	)		90			32,031			(7,461	)		9,606			256,645
Prototypes		223,276			866			(8,864	)		-			38,919			(17,505	)		(25,830	)		210,862
New subscribers – Installation and connection		109,528			-			-			-			41,749			(45,814	)		-			105,463
Advances on copyrights		71,024			(9	)		(3,575	)		-			8,432			(1,592	)		(160	)		74,120
Audiovisual rights		52,792			-			-			-			250			(3,897	)		27,668			76,813
Other intangible assets		121,836			496			1,444			(101	)		1,115			(4,087	)		(9,644	)		111,059
Total cost		801,026			1,615			(11,448	)		(11	)		122,496			(80,356	)		1,640			834,962

Accumulated amortization:
Computer software		(155,136	)		(272	)		261			(63	)		(24,106	)		7,318			(309	)		(172,307	)
Prototypes		(153,540	)		(764	)		7.746			-			(34,427	)		32,609			-			(148,376	)
Advances on copyrights		(45,302	)		-			516			-			(4,855	)		1,342			559			(47,740	)
Audiovisual rights		(40,840	)		-			3			-			(3,960	)		(12,877	)		-			(57,674	)
Other intangible assets		(45,534	)		(371	)		(1,111	)		171			(49,599	)		49,432			662			(46,350	)
Total accumulated amortization		(440,352	)		(1,407	)		7,415			108			(116,947	)		77,824			912			(472,447	)

Impairment losses:
Computer software		-			-			-			-			(3,356	)		-			(17	)		(3,373	)
Prototypes		(13,363	)		-			5			-			(54	)		50			12,833			(529	)
Advances on copyrights		(16,051	)		-			184			-			(7,328	)		1,017			50			(22,128	)
Other intangible assets		-			-			-			-			(4,003	)		1,255			(13,505	)		(16,253	)
Total impairment losses		(29,414	)		-			189			-			(14,741	)		2,322			(639	)		(42,283	)
Intangible assets, net		331,260			208			(3,844	)		97			(9,192	)		(210	)		1,913			320,232

- 30 -

2011

The changes in 2011 in “Intangible assets” in the consolidated balance sheet were as follows:

	Thousands of euros
	Balance at			Monetary			Translation			Changes in scope												Balance at
	12/31/2010			adjustment			adjustment			of consolidation			Additions			Disposals			Transfers			12/31/2011

Cost:
Computer software		206,105			337			(564	)		1,559			32,872			(18,182	)		443			222,570
Prototypes		195,093			1,388			(8,434	)		-			39,680			(3,972	)		(479	)		223,276
New subscribers – Installation and connection		103,837			-			-			-			47,262			(41,571	)		-			109,528
Advances on copyrights		66,827			(2	)		(2,722	)		-			8,137			(640	)		(576	)		71,024
Audiovisual rights		136,003			-			-			-			750			(29,368	)		(54,593	)		52,792
Other intangible assets		110,983			777			(1,168	)		(1,649	)		12,324			(203	)		772			121,836
Total cost		818,848			2,500			(12,888	)		(90	)		141,025			(93,936	)		(54,433	)		801,026

Accumulated amortization:
Computer software		(151,470	)		(356	)		303			295			(19,903	)		16,006			(11	)		(155,136	)
Prototypes		(131,223	)		(1,076	)		5,688			-			(30,202	)		2,915			358			(153,540	)
Advances on copyrights		(40,466	)		-			716			-			(5,965	)		(15	)		428			(45,302	)
Audiovisual rights		(66,721	)		-			-			-			(3,497	)		29,378			-			(40,840	)
Other intangible assets		(40,500	)		(529	)		946			1,665			(49,556	)		41,778			662			(45,534	)
Total accumulated amortization		(430,380	)		(1,961	)		7,653			1,960			(109,123	)		90,062			1,437			(440,352	)

Impairment losses:
Prototypes		(13,405	)		(4	)		(1	)		-			(750	)		755			42			(13,363	)
Advances on copyrights		(14,551	)		-			135			-			(2,441	)		824			(18	)		(16,051	)
Total impairment losses		(27,956	)		(4	)		134			-			(3,191	)		1,579			24			(29,414	)
Intangible assets, net		360,512			535			(5,101	)		1,870			28,711			(2,295	)		(52,972	)		331,260

Additions-

The most significant additions in 2012 were as follows:

“New subscribers – Installation and connection” amounting to EUR 41,749 thousand which included the costs incurred by Prisa Televisión Group in connection with the installation of equipment and the connection of new subscribers to digital satellite pay TV.

“Prototypes,” amounting to EUR 38,919 thousand, relating to new prototypes for the publication of books at Grupo Santillana de Ediciones, S.L.

“Computer software,” amounting to EUR 32,031 thousand, relating to the computer software acquired and/or developed by third parties for Group companies.

“Advances on copyrights,” amounting to EUR 8,432 thousand, relating mainly to the amounts paid to authors by Grupo Santillana de Ediciones, S.L. for the acquisition of book publishing rights.

- 31 -

Disposals-

Grupo Santillana de Ediciones, S.L. derecognized EUR 17,294 thousand of fully depreciated prototypes.

“Other intangible assets” includes administrative concessions amounting to EUR 48,882 thousand, which are considered to be intangible assets with indefinite useful lives because it is highly probable that they will be renewed and the related costs are not material.

At the end of each reporting period, the residual useful life of these concessions is analyzed in order to ensure that it continues to be indefinite; if this is not the case, the concessions are amortized.

At December 31, 2012, the Prisa Group’s assets included fully amortized intangible assets amounting to EUR 223,966 thousand (December 31, 2011: EUR 158,466 thousand).

There are no restrictions on holding title to the intangible assets other than those indicated in Note 12.

There are no future relevant intangible asset purchase commitments other than those indicated in Note 26.

- 32 -

(8)	NON- CURRENT FINANCIAL ASSETS

2012

Non-current financial assets

The changes in “Non-current financial assets” in the consolidated balance sheet in 2012, by type of transaction, were as follows:

	Thousands of euros
	Balance at 12/31/2011			Translation / monetary adjustment			Changes in scope of consolidation		Additions / allowance		Disposals / Transfers			Balance at 12/31/2012

Loans and receivables		84,733			382			-		24,849		(68,828	)		41,136
Loans to associates		144,493			(18	)		-		23,566		(149,258	)		18,783
Long-term loans to third parties		30,778			-			-		1,283		(12,253	)		19,808
Other non-current financial assets		5,305			400			-		-		-			5,705
Allowance		(95,843	)		-			-		-		92,683			(3,160	)

Held-to-maturity investments		20,680			(24	)		6		2,123		(1,666	)		21,119

Available-for-sale financial assets		16,275			8			16		483		(14,398	)		2,384
Non-controlling equity interests		40,608			31			-		459		(32,287	)		8,811
Other non-current financial assets		33			-			16		22		(9	)		62
Allowance		(24,366	)		(23	)		-		2		17,898			(6,489	)
Total		121,688			366			22		27,455		(84,892	)		64,639

Disposals/transfers-

The movement in “Loans and receivables” was mainly due to the elimination the loans granted to Dédalo Grupo Gráfico, S.L, net of provisions, amounting to EUR 44,110 thousand, as the group is being fully consolidated from April 1, 2012 (see Note 3).

- 33 -

2011

Non-current financial assets

The changes in “Non-current financial assets” in the consolidated balance sheet in 2011, by type of transaction, were as follows:

	Thousands of euros
	Balance at 12/31/2010			Translation / monetary adjustment			Changes in scope of consolidation		Additions / allowance			Disposals / Transfers			Balance at 12/31/2011

Loans and receivables		31,052			217			-		49,493			3,971			84,733
Loans to associates		100,830			13			-		38,692			4,958			144,493
Long-term loans to third parties		18,768			1			-		10,879			1,130			30,778
Other non-current financial assets		7,240			203			-		-			(2,138	)		5,305
Allowance		(95,786	)		-			-		(78	)		21			(95,843	)

Held-to-maturity investments		19,568			(115	)		1		1,367			(141	)		20,680

Available-for-sale financial assets		19,991			5			-		(3,963	)		242			16,275
Non-controlling equity interests		86,697			16			-		5			(46,110	)		40,608
Other non-current financial assets		-			-			-		-			33			33
Allowance		(66,706	)		(11	)		-		(3,968	)		46,319			(24,366	)
Total		70,611			107			1		46,897			4,072			121,688

Additions/allowances-

The movement in “Loans and receivables- long term loans to associates” was due mainly to the increase in loans granted to Dédalo Grupo Gráfico, S.L.

Additions in “Loans and receivables- long term loans to third parties” included a loan to Le Monde Libre amounting to EUR 8,384 thousands.

Disposals/transfers-

In September 2011, the 15.38% stake in Iberbanda, S.A. was sold, giving rise to the derecognition of this ownership interest from “Non-controlling equity interests” and of the corresponding allowance of EUR 45,394 thousand, with a neutral effect on “Non-current financial assets.”

The carrying amount of the financial assets does not vary significantly from their fair value.

- 34 -

(9)	INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

2012

The changes in 2012 in “Investments accounted for using the equity method” in the consolidated balance sheet were as follows:

	Thousands of euros
	Balance at 12/31/2011		Additions/ Changes in scope of consolidation		Share of results / Impairment losses			Transfers			Disposals			Balance at 12/31/2012

Investments accounted for using the equity method:
Dédalo Grupo Gráfico, S.L. and subsidiaries		-		905		(905	)		-			-			-
Distributors (*)		11,047		2		94			2,898			(611	)		13,430
Mediaset España Comunicación, S.A.		586,379		4,342		7,829			-			(9,758	)		588,792
V-me Media, Inc.		-		-		(4,270	)		4,270			-			-
Le Monde Libre Societé Comandité Simple		-		14,388		(8,194	)		-			-			6,194
Other companies		6,656		195		(829	)		(2,224	)		-			3,798
Total		604,082		19,832		(6,275	)		4,944			(10,369	)		612,214

(*) Val Disme, S.L., Cirpress, S.L., Beralán, S.L., Dima Distribución Integral, S.L., Distrimedios, S.L., Distribuidora de Publicaciones Boreal, S.L., Marina Bcn Distribucions, S.L., Distribuciones Papiro S.L. and subsidiaries.

The Group has valued its stake in Mediaset España Comunicación, S.A. considering its value in use, according to future projections available. As a result of this analysis, no impairment has to be registered.

2011

The changes in 2011 in “Investments accounted for using the equity method” in the consolidated balance sheet were as follows:

	Thousands of euros
	Balance at 12/31/2010		Additions		Share of results / Impairment losses			Transfers		Disposals			Balance at 12/31/2011

Investments accounted for using the equity method:
Dédalo Grupo Gráfico, S.L. and subsidiaries		-		-		(12,246	)		12,246		-			-
Distributors (*)		10,421		491		672			1,803		(2,340	)		11,047
Promotora de Emisoras de Televisión, S.A.		399		-		(6	)		194		(587	)		-
Mediaset España Comunicación, S.A.		582,214		-		20,040			-		(15,875	)		586,379
V-me Media, Inc.		15,854		7,039		(27,019	)		4,126		-			-
Other companies		4,654		2,432		(1,141	)		752		(41	)		6,656
Total		613,542		9,962		(19,700	)		19,121		(18,843	)		604,082

- 35 -

In 2011 the Group has deteriorated the entire goodwill resulted from its investment in V-me Media Inc., (EUR 21,291 thousands), as the value in use of the investment, calculated considering the estimated projections for the following five years and a residual value appropriated for the business, is not expected to cover it.

At December 31, 2012 and 2011, the Group had ownership interests in companies accounted for using the equity method, the net negative value of which is recognized under “Long-term provisions” (see Note 14).

(10)	INVENTORIES

The detail of “Inventories,” in thousands of euros, at December 31, 2012 and 2011, is as follows:

	12/31/2012							12/31/2011
	Cost		Write- downs			Carrying amount		Cost		Write- downs			Carrying amount
Goods held for resale		26,693		(8,646	)		18,047		3,820		(1,917	)		1,903
Finished goods		269,376		(35,133	)		234,243		289,379		(34,654	)		254,725
Work in progress		3,992		-			3,992		2,005		-			2,005
Raw materials and other supplies		15,832		(1,805	)		14,027		17,862		(1,092	)		16,770
Total		315,893		(45,584	)		270,309		313,066		(37,663	)		275,403

“Finished goods” includes publications amounting to a net EUR 62,208 thousand (2011: EUR 81,442 thousand) and audiovisual rights amounting to a net EUR 172,035 thousand (2011: EUR 173,283 thousand).

“Raw materials and other supplies” includes mainly paper and printing machinery spare parts.

(11)

EQUITY

Share capital

On January 3, 2012, Prisa executed the capital increase corresponding to Otnas Inversiones, S.L.’s exercise of 75,000,000 warrants. Otnas is a company indirectly owned by Rucandio, S.A.- through Timón, S.A., Asgard Inversiones, S.L.U., Promotora de Publicaciones, S.L. and the Shareholder Contract of Prisa-, by Berggruen Acquisition Holdings and by Martin Franklin .

The exercise of the 75,000,000 warrants gave rise to the subscription of the same number of newly issued Class A ordinary shares, at a strike price of EUR 2 each, increasing the Company’s capital by EUR 150,000 thousand.

On June 30, 2012, shareholders at the General Meeting of Prisa agreed to amend the aforementioned dividend payment system, whereby the Company may pay cash, Class A shares (at a fixed rate of EUR 1 per share) or a combination of both. In September 2012, Prisa raised capital by issuing 64,097,105 Class A shares to pay the minimum annual dividend of Class B shares for 2011. In December 2012, Prisa raised capital by issuing 26,000,823 Class A shares for payment of the minimum annual dividend of Class B shares for 2012 up to the moment of the conversion.

- 36 -

In addition, during 2012, due to the capital increase against cash contributions with recognition of pre-emptive subscription rights through warrants, which was approved by Prisa's shareholders in general meeting on November 27, 2010, Prisa executed the public deed for the capital increase corresponding to the warrants’ 13 to 24 exercise windows. A total of 10,109 warrants were exercised, with a total of 10,109 new Class A ordinary shares were issued at the price of EUR 2 each.

Also, in 2012, 47,942,019 Class B non-voting shares were converted into Class A ordinary shares.

Prisa’s share capital, at December 31, 2012 after such increases and conversions of shares totals EUR 99,132 thousand, represented by 651,054,490 Class A ordinary shares and 340,268,409 Class B non-voting shares, with a par value of EUR 0.1 each.

Share capital is fully subscribed and paid in.

At year-end 2012, according to information published by the CNMV, the holders of a significant number of Prisa shares are the following:

	Number of voting rights
	Direct		Indirect		% of voting rights
Rucandio, S.A. (*)		-		221,591,841		34.036
BH Stores IV, B.V.		22,571,198		-		3.467
BNP Paribas, Societe Anonyme		15,143,403		-		2.326
Inmobiliaria Carso, S.A. de CV		8,665,000		6,030,000		2.257
UBS AG		25,872,175		4,712		3.975

(*) Rucandio, S.A.’s indirect ownership interest is exercised through the following direct holdings:

Promotora de Publicaciones, S.L., holder of 77,248,921 voting rights, representing 11.865% of the subscribed share capital with voting rights.

Timón, S.A., holder of 7,928,140 voting rights, representing 1.218% of the subscribed share capital with voting rights.

Asgard Inversiones, S.L.U., holder of 17,487,164 voting rights, representing 2.686% of the subscribed share capital with voting rights.

Otnas Inversiones, S.L. holder of 93,000,000 voting rights, representing 14.285% of the subscribed share capital with voting rights.

Rucandio Inversiones SICAV, S.A., holder of 339,094 voting rights, representing 0.052% of the subscribed share capital with voting rights.

- 37 -

In addition, Rucandio, S.A.’s declared indirect stake includes 25,588,522 voting rights of the Company, linked by the Shareholder Contract of Prisa signed on December 22, 2011 (in which Rucandio indirectly holds a voting majority), the terms of which have been notified to the CNMV.

Share premium

The Consolidated Text of the Corporate Enterprises Act expressly permits the use of the share premium account balance to increase capital with a charge to reserves and does not establish any specific restrictions as to its use.

The share premium includes the amount exceeding the par value of the shares issued. It also includes the amount corresponding to the obligation to pay a minimum annual dividend on the Class B shares, as well as value adjustments as a result of the Company’s potential obligation to deliver additional shares as part of the mandatory conversion of the Class B shares (see Notes 12 and 13). This share premium at December 31, 2012, amounted to EUR 803,973 thousand (December 31, 2011: EUR 437,879 thousand).

The share premium corresponding to the Class B shares issued in 2010 in accordance with the commitments assumed in the issue of the shares is non-distributable so as to cover future related commitments stemming from this class of shares (see Note 4g), until they have been converted into Class A shares and the minimum associated dividend of the Class B shares has been paid in full. This non-distributable share premium at December 31, 2012, amounted to EUR 277,108 thousand (December 31, 2011: EUR 125,131 thousand).

Issue of financial instrument

A resolution was passed at the Ordinary Shareholders Meeting of Prisa held on June 30, 2012 to issue bonds mandatorily convertible into newly-issued Class A common shares with exclusion of pre-emption rights at a fixed conversion rate (1 share per EUR 1.03). This issue was carried out in July and entailed two tranches: Tranche A for EUR 334 million aimed at creditor banks via the cancellation of financial debt and Tranche B for EUR 100 million to be paid in cash by Telefónica, S.A.

This is treated as a compound financial instrument with a liability component, recognized at the present value of the guaranteed coupon under “Financial liabilities” in the accompanying consolidated balance sheet (see Note 13), and an equity component, with the difference between the amount of the bond and the value assigned to the liability component recognized under “Other reserves” in the accompanying consolidated balance sheet.

Reserves

Revaluation reserve 1983-

Pursuant to the legislation on the revaluation of property, plant and equipment and intangible assets published in 1983, the cost and accumulated depreciation and amortization of these assets were increased by a net amount of EUR 3,289 thousand, recognized under “Revaluation Reserve 1983.” This reserve is unrestricted.

- 38 -

Revaluation reserve Royal Decree-Law 7/1996-

Under Royal Decree 2607/1996, of December 20, approving the regulations for asset revaluations pursuant to Royal Decree-Law 7/1996, of June 7, the surpluses arising from the revaluations must be charged to “Revaluation reserve Royal Decree-Law 7/1996." The balance of this account at year end amounts to EUR 10,650 thousand and has been unrestricted since January 1, 2007, except for the portion of the assets not yet depreciated.

Legal reserve-

Under the Consolidated Text of the Corporate Enterprises Act, 10% of net profit for each year must be transferred to the legal reserve until the balance of this reserve reaches at least 20% of the share capital.

The legal reserve can be used to increase capital by the amount exceeding 10% of the new capital after the increase.

Except as indicated above, until the legal reserve exceeds 20% of share capital, it can only be used to offset losses, provided that sufficient other reserves are not available for this purpose.

Reserve for treasury shares-

Section 142 of the Consolidated Text of the Corporate Enterprises Act states that when a company acquires treasury shares, it must record on the liability side of the balance sheet a restricted reserve equal to the carrying amount of the treasury shares. This reserve must be maintained until the shares are sold or cancelled.

Bylaw-stipulated reserves-

Under Article 32 of the Parent’s bylaws, at least 10% of the profit after tax must be transferred to a reserve each year until the balance of this reserve reaches at least 20% and does not exceed 50% of the paid-in share capital.

Reserves for first-time application of IFRS

As a result of the first-time application of IFRSs to the Group’s consolidated financial statements, certain assets and liabilities arose at January 1, 2004, the effect on equity of which is included in this account.

- 39 -

Accumulated profit – From prior years

The breakdown, by company, of “Accumulated profit – From prior years” at December 31, 2012 and 2011, is as follows:

	Thousands of euros
	12/31/2012			12/31/2011

Audiovisual		389,929			371,004
Education		231,915			285,259
Radio		183,713			201,323
Radio in Spain		158,627			183,908
International radio		25,086			17,415
Press		47,959			39,155
País		39,685			42,164
Spanish press		8,238			(3,009	)
Other		36			-
Other		174,833			23,987
Prisa		651,036			162,024
Other		(476,203	)		(138,037	)
Total accumulated profit of fully consolidated companies		1,028,349			920,728
Radio		(2,947	)		(2,857	)
International radio		(2,947	)		(2,857	)
Audiovisual		(7,286	)		(2,562	)
Other		6,500			(83,809	)
Total accumulated loss of companies accounted for using the equity method		(3,733	)		(89,228	)
Total accumulated profit from prior years		1,024,616			831,500

Accumulated profit for the audiovisual segment includes an after-tax capital gain of EUR 453 million generated by the sale of 44% of DTS, Distribuidora de Televisión Digital, S.A. on December 28, 2010.

Accumulated profit in the education segment included capital gains of EUR 168 million generated by the sale of 25% of Grupo Santillana de Ediciones, S.L.’s share capital to DLJSAP, which was adjusted by the initial measurement of the financial liability generated by the obligation to pay a minimum annual dividend of USD 25.8 million to the holders of the preferred shares delivered to DLJSAP (see Note 13).

Treasury shares

The changes in “Treasury shares” in 2012 and 2011 were as follows:

	Thousands of euros
	2012						2011
	Number of shares			Amount			Number of shares			Amount
At beginning of year		2,879,503			2,505			3,150,000			4,804
Purchases		4,046,689			2.515			1,928,312			2,082
Deliveries		(3,824,957	)		(3,786	)		(2,198,809	)		(3,425	)
Reserve for treasury shares		-			(507	)		-			(956	)
At end of year		3,101,235			727			2,879,503			2,505

At December 31, 2012, Promotora de Informaciones, S.A. held a total of 3,101,235 treasury shares, representing 0.31% of its share capital.

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Treasury shares are valued at market price at December 31, 2012 (0.235 euros per share). The average acquisition price stood at 0.762 euros per share.

Deliveries of shares are detailed in note 16 of this Annual Report.

At December 31, 2012, the Company did not hold any shares on loan.

Exchange differences

Exchange gains at December 31, 2012, amounted to EUR 17,805 thousand (December 31, 2011: exchange gains of EUR 9,755 thousand). Exchange gains generated at Grupo Santillana de Ediciones, S.L. companies in Brazil and Prisa Radio, S.L. companies in Colombia are offset with exchange losses at companies in US and Mexico.

Translation differences

The detail, by company, of the translation differences in 2012 and 2011 is as follows:

	Thousands of euros
	12/31/2012		12/31/2011

GLR Chile, Ltda.		5,250		(6,323	)
Grupo Santillana de Ediciones, S.L. and subsidiaries		263		515
Other		115		71
Total		5,628		(5,737	)

Capital management policy

The principal objective of the Group’s capital management policy is to optimize the cost of capital and achieve a gearing ratio that enables it achieve its strategic targets and contribute to the growth of the Company. Therefore, in 2012 the Group adopted further measures to restructure its financial debt and strengthen its capital structure.

The net financial debt/Ebitda ratio at December 31, 2012 was 6.88 times.

(12)	FINANCIAL DEBT

Bank borrowings

The detail, in thousands of euros, of the bank borrowings at December 31, 2012, of the credit limits and of the scheduled maturities is as follows:

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	Maturity		Limit		Drawn-down amount maturing at short term			Drawn-down amount maturing at long term
Syndicated loan and credit facility to Prisa	2014			1,282,544		-			1,282,544
Bridge loan to Prisa	2015			1,340,882		-			1,340,882
Syndicated loan and credit facility to Dédalo	2015			80,400		39,790			40,610
Credit facilities		2013-2015		314,246		96,651			142,102
Loans		2013-2023		128,046		41,548			86,498
Finance leases, interest and other		2013-2015		-		28,232			18,540
Loan arrangement costs		2013-2015		-		(754	)		(44,390	)
Total				3,146,118		205,467			2,866,786

Bank borrowings are adjusted in the consolidated balance sheet by the loan origination and arrangement costs.

Of the total bank borrowings at December 31, 2012, 98.40% were denominated in euros (98.92% at December 31, 2011) and the remainder in foreign currencies.

The average interest rates on the Group’s bank borrowings were 3.34% in 2012 and 3.66% in 2011.

The Group considers that the current fair value of the bank borrowings amounts to EUR 3,055,782 thousand.

Syndicated loan and credit facility-

In June 2007, Prisa entered into a syndicated loan and credit facility with a group of 39 banks for a maximum amount of EUR 2,050,000 thousand, consisting of a long-term loan amounting to EUR 1,675,000 thousand and a revolving facility of EUR 375,000 thousand drawable throughout the term of the loan.

Repayment of the loan commenced in 2007. With respect to the remaining balance of the loan at December 31, 2010, the proceeds from the sale of 10% of Grupo Media Capital, SGPS, S.A., were used to repay EUR 11,228 thousand in 2011 in advance.

In January 2012, with the proceeds from the capital increase EUR 150,000 thousand (see Note 11a) were repayed EUR 100,000 thousand of the Syndicated Loan. The remainder of outstanding loan at December 31, 2012 amounted to EUR 1,282,544 thousand.

This syndicated loan is tied to Euribor plus a spread negotiated and adapted in accordance with financial market rates.

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Bridge loan-

In December 2007, Prisa entered into a six-month financing agreement (bridge loan) with a bank for a maximum amount of EUR 4,230,000 thousand and bearing interest at a market rate. The agreement stated that the purpose of this financing was to cover the financial obligations arising from the takeover bid for all the share capital of Prisa Televisión, S.A.U. submitted to the CNMV.

On February 29, 2008, Prisa signed the syndication of this bridge loan initially granted by one bank. On June 20, 2008, the initial maturity date of the bridge loan, and after the result of the takeover bid became known, the amount of the bridge loan was EUR 1,948,935 thousand; the Company also signed a one-month extension for the purpose of finalizing the agreement relating to the novation of this loan until March 2009.

On July 14, 2008, the Parent obtained authorization from the majority of the banks participating in the syndicated financing agreement relating, inter alia, to the additional debt incurred as a result of the takeover bid for Prisa Televisión, S.A.U.

On July 18, 2008, the Parent signed the renewal of the bridge loan amounting to EUR 1,948,935 thousand until March 31, 2009. In August 2008, EUR 113,098 thousand of this bridge loan were repaid.

On March 31, 2009, the term of the loan was extended by one month until April 30, 2009, and was subsequently extended again until May 14, 2009.

On May 13, 2009, Prisa arranged with the banks that granted the bridge loan for an extension of its term until March 31, 2010, and obtained the authorization of the banks that were party to the syndicated financing agreement for the additional borrowings arising from the aforementioned extension.

On April 19, 2010, Prisa signed a refinancing master agreement with its creditor banks by which the maturity date of the bridge loan was extended until May 19, 2013.

Regarding the bridge loan, and as a result of the mentioned renewals, Prisa agreed with the financial entities participating in the loan to pay a variable amount in cash, depending on the listed price of the ordinary shares from the date of the final agreement (April 19, 2010) until the loan falls due.

During 2011, EUR 12,514 thousand of the bridge loan was paid off, in advance with the proceeds from the sale of 10% of Grupo Media Capital, SGPS, S.A.

In July, 2012, EUR 200,000 thousand was paid with proceeds from the issue of bonds mandatorily convertible into Class A shares (EUR 434,000 thousand) (see Note 11c), leaving a debt of EUR 1,340,882 thousand.

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Subordinated credit facility-

On December 20, 2007, the Parent arranged a subordinated credit facility of EUR 200,000 thousand bearing interest at a market rate.

The balance drawn down at December 31, 2011 was EUR 134,000 thousand, which is the definitive amount of this credit facility after Prisa requested a reduction in its limit.

This facility was paid in July 2012 with proceeds from the issue of bonds mandatorily convertible into Class A shares (see Note 11c).

Credit facilities-

“Credit facilities” includes mainly the amounts drawn down against credit facilities used to finance the Prisa Group companies’ operating requirements in Spain through cash-pooling. The total amount of borrowing facilities with maturities exceeding one year is EUR 142,102 thousand, and is recognized under "Non-current bank borrowings" on the accompanying consolidated balance sheet. Borrowing facilities maturing in 2013 total EUR 96,651 thousand, and are recognized under "Current bank borrowings" on the accompanying consolidated balance sheet. The interest rate applicable to these credit facilities is Euribor plus a market spread.

At year-end 2012, the syndicated loan and credit facility, the bridge loan, some bilateral loans, counterparties of hedges and the subordinated credit facility are guaranteed jointly and severally by the following Prisa Group companies: Diario El País, S.L., Grupo Empresarial de Medios Impresos, S.L., Prisa Radio, S.L. and Vertix, SGPS, S.A.

In 2010, the Parent pledged its shares in Prisa Televisión, S.A.U., its shares in Prisa Radio, S.L., the shares it indirectly owns in Grupo Media Capital, SGPS, S.A. and the shares it owns of Grupo Santillana de Ediciones, S.L. On January 27, 2011, Prisa Televisión, S.A.U. pledged its shares in DTS, Distribuidora de Televisión Digital, S.A., representing 56% of its share capital.

The syndicated loan and credit facility, and the bridge loan establish that Grupo Prisa must comply with certain financial ratios which were renewed on December 26, 2011 in order to adapt them to the Group’s new financial position. The Group’s directors consider that the covenants established in these contracts were fulfilled at December 31, 2012.

Refinancing agreement-

On December 26, 2011, Prisa signed an agreement to refinance its bank borrowings, comprising the syndicated loan, the bridge loan, the subordinated credit facility and a series of bilateral loans.

The current conditions for the different bank borrowings after the refinancing are as follows:

The transformation of the syndicated loan into a bullet loan with a single maturity of March 19, 2014. In addition, subject to the fulfilment of certain targets, such as the issue of a bond, maturity may be deferred to December 19, 2014.

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The maturity of the bridge loan, which does not provide for partial repayments, and of some of the bilateral loans, was extended to January 15, 2015. Also subject to the same targets, the maturity of these loans may be extended to September 19, 2015.

The subordinated credit facility is extended until January 16, 2015 and September 21, 2015, when the milestones for the bridge loan are met. As indicated previously, this bridge loan was paid off in July 2012.

Financial ratios ("covenants") have been reviewed to be adapted to the new financial estimates of the group.

Cost of debt has been maintained tied to Euribor plus a spread negotiated and adapted in accordance with financial market rates.

Conditions of these loans have been analysed at that moment and there were no significant changes with respect to the previous situation.

Derivative financial instruments

The Prisa Group arranges derivative financial instruments with Spanish and international banks with high credit ratings.

In 2012, the Prisa Group held interest rate derivatives, foreign currency hedges and share options.

The objective of these interest rate hedges is to mitigate, by arranging swaps and option combinations, the fluctuations in cash outflows in respect of payments tied to floating interest rates (Euribor) on borrowings.

“Non-current financial liabilities” and “Current financial liabilities” on the accompanying consolidated balance sheet include at year end the market value of the various financial instruments.

The fair value of the outstanding derivatives at December 31, 2012 was a negative EUR 4,123 thousand (December 31, 2011: negative EUR 3,327 thousand), of which EUR 4,092 thousand related to the negative fair value of interest rate derivatives and EUR 31 thousand to the negative fair value of foreign currency hedges.

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Interest rate derivatives-

In order to determine the fair value of the derivatives, the Prisa Group uses valuations provided by financial entities.

The interest rate derivatives arranged by the Prisa Group at December 31, 2012, and their fair values at that date are as follows (in thousands of euros):

								Nominal
Company	Instrument	Expiry	Nominal value		Fair value			Outstanding at 2013		Outstanding at 2014		Outstanding at 2015
Prisa	IRS	2013		134,000		(855	)		134,000		-		-
Prisa	IRS	2015		300,000		(3,237	)		300,000		300,000		300,000
Total				434,000		(4,092	)		434,000		300,000		300,000

The outstanding interest rate derivatives at December 31, 2012 and 2011, had negative fair values of EUR 4,092 thousand and EUR 2,500 thousand, respectively.

Pursuant to IFRSs, changes in the value of these financial instruments are recognized as finance income or finance costs, since by their nature they do not qualify for hedge accounting under IFRSs.

Analysis of sensitivity to interest rates

The fair value of the interest rate derivatives arranged by the Prisa Group depends on the changes in the Euribor and long-term swap interest rate curves.

Following is a detail, in thousands of euros, of the analysis of the sensitivity of the fair values of derivatives to changes in the euro interest rate curve that the Group considers to be reasonable:

Sensitivity (before tax)	12/31/2012			12/31/2011
+0.5% (increase in interest rate curve)		4,046			936
-0.5% (decrease in interest rate curve)		(4,046	)		(936	)

The sensitivity analysis shows that the negative fair value of the interest rate derivatives decreases in the event of upward shifts in the interest rate curve, partially reducing the projected higher cost of borrowings.

The Group considers that interest rates will probably fluctuate by 0.5% over the period analyzed. An increase in interest rates by the aforementioned percentage would lead to an increase in finance costs of EUR 15,213 thousand during 2013, based on the expected maturities and the Group’s intention to renew certain bank credit facilities.

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Foreign currency derivatives-

In 2012, the Group arranged foreign currency hedges in order to mitigate exposure to exchange rate fluctuations.

In order to determine the fair value of the derivatives, the Prisa Group uses valuations provided by financial entities.

			Nominal value
Company	Instrument	Expiry	Thousands of USD		Thousands of euros		Fair value (thousands of euros)

Santillana del Pacífico, S.A. de Ediciones	Forward	2013		1,200		910		(31	)
Total				1,200		910		(31	)

The Prisa Group recognized finance cost of EUR 31 thousand in this connection in the consolidated income statement for 2012 (a finance cost of EUR 1,027 thousand in 2011).

Analysis of sensitivity to exchange rates

The changes in the fair value of the foreign currency hedges arranged by the Prisa Group depend on fluctuations in the EUR/USD and USD/BRL exchange rates.

Following is a detail, in thousands of euros, of the sensitivity (changes in fair value) of the foreign currency hedges:

Sensitivity (before tax)	12/31/2012			12/31/2011
+10% (increase in USD exchange rate)		(29	)		2,634
-10% (decrease in USD exchange rate)		(34	)		(918	)

The sensitivity analysis shows that the positive fair value of the foreign currency derivatives increases in the event of increases in exchange rates, whereas the fair value of the derivatives decreases in the event of decreases in exchange rates.

Liquidity and interest rate risk tables

The following table shows an analysis of the Prisa Group’s liquidity in 2012 for its derivative financial instruments. The table was prepared on the basis of undiscounted net cash flows. When the related settlement (receivable or payable) is not fixed, the amount was determined using the implicit values calculated on the basis of the interest rate curve and forward exchange rates.

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Liquidity risk-

	Thousands of euros
Maturity	Interest rate derivatives			Foreign currency derivatives
Within 3 months		(910	)		-
From 3 to 6 months		(740	)		(31	)
From 6 to 9 months		(424	)		-
From 9 to 12 months		(387	)		-
From 1 to 2 years		(1,232	)		-
From 2 to 3 years		(399	)		-
After 3 years		-			-

The management of liquidity risk includes the detailed monitoring of the repayment schedule of the Group’s borrowings and the maintenance of credit lines and other financing channels that enable it to cover foreseeable cash needs at short, medium and long term.

The table below details the liquidity analysis of the Prisa Group in 2012 in relation to its bank borrowings, which represent substantially all the non-derivative financial liabilities. The table was prepared using the cash outflows not discounted with respect to their scheduled maturity dates; when it is expected that the outflows will take place prior to the contractually stipulated dates. The flows include both the expected repayments and interest payments. When the settlement is not fixed, the amount was determined using the underlings calculated based on the interest rate curves at the end of 2012.

Maturity	Thousands of euros		Floating euro rates
Within 3 months		121,104		0.10	%
From 3 to 6 months		79,025		0.10	%
From 6 to 9 months		53,619		0.12	%
From 9 to 12 months		32,943		0.15	%
From 1 to 2 years		1,405,750		0.30	%
From 2 to 3 years		1,509,031		0.65	%
After 3 years		13,986		1.57	%
Total		3,215,458

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Share options-

Financial liabilities arising from the settlement options as part of the mandatory conversion of the Class B shares

At December 31, 2010, as a result of the capital increase transactions, a non-current financial liability amounting to EUR 89,317 thousand was recognized; this corresponds to the Company’s potential obligation to deliver additional shares or cash as part of the mandatory conversion of the Class B shares, if during the 20 trading sessions immediately prior to the date of conversion the weighted average price of Class A ordinary shares is below EUR 2. At December 31, 2012, the fair value of this liability stands at EUR 26,385 thousand (2011: EUR 74,758 thousand) and is recognized under “Non-current financial liabilities” in the accompanying consolidated balance sheet. The Black-Scholes Method was used to determine fair value.

Other share options

At December 31, 2012, the fair value of the cash-settled share options delivered to financial entities participating in the bridge loan, with variable amounts depending on the listed price of Prisa’s ordinary shares, was zero.

Fair value of financial instruments: applicable valuation techniques and assumptions for measuring fair value

The financial instruments are grouped together on three levels based on the degree to which the fair value is observable.

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

Level 3: those determinable on the basis of valuation techniques, which include inputs for the asset and liability that are not based on observable market data (unobservable inputs).

The Prisa Group’s interest rate and foreign currency derivatives are classified as level-2 derivatives.

(13)	FINANCIAL LIABILITIES

“Financial liabilities” includes the amount of the derivatives described in Note 12, as well as the following:

Financial liability from the minimum Class B dividend

In 2010, the Company carried out a capital increase, issuing 402,987,000 non-voting convertible Class B shares; their holders had the right to receive a minimum annual dividend per share amounting to EUR 0.175 from the date of their issue until they are converted. Therefore, at year-end 2010, the Company recognized a financial liability net of arrangement expenses totalling EUR 165,200 thousand related to the obligation to pay the dividend with a charge to the issue premium for the Class B shares. The obligation was calculated as the present value of the payments due discounted at the interest rate which would have been applicable to Prisa if it had issued a debt instrument with similar characteristics and credit rating, but without the conversion option.

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On June 30 2012, the Annual General Meeting approved a modification in the conditions of the minimum preferred dividend of the non- voting convertible B shares, through which this dividend can be paid in cash, in A shares (at a fixed conversion ratio of 1 Euro – 1 share) or a combination of both. This has resulted in the reclassification of the financial liability by the minimum dividend of Class B shares for an amount of EUR 191,527 thousand to share premium (EUR 184,279 thousands net of costs associated to the capital increase).

Financial liability from the minimum annual dividend from DLJSAP’s investment in Grupo Santillana de Ediciones, S.L

The sale of 25% of Grupo Santillana de Ediciones, S.L.’s share capital in 2010 included the obligation to pay a preferential dividend of at least USD 25.8 million per year. Therefore, at December 31, 2012, the Group recognized a financial liability of EUR 108,772 thousand (December 31, 2011: EUR 110,916 thousand), calculated as the present value of the preferential annual dividends discounted at the interest rate applicable to credit instruments with similar characteristics. These liabilities are in USD, and therefore, differences arising from exchange rate fluctuations are recognized as finance income or cost in the consolidated income statement.

Financial liability from the sale of 10% of Grupo Media Capital, SGPS, S.A.

In February 2011, the Group recognized a financial liability for the cash inflow from the sale of 10% of Grupo Media Capital, SGPS, S.A., for EUR 23,742 thousand. The sale was not produced for accounting purposes since Prisa has not transferred to the buyer the risks and rewards of ownership. This transaction has been reversed in February, 2013 (see Note 22).

Financial liability for measurement of the coupon paid to bondholders

The bonds mandatorily convertible into Class A shares (see Note 11c), subscribed in July 2012, were treated as a compound financial instrument, with a liability component at the present value of the guaranteed coupon at a the 1-month Euribor rate plus a spread of 4.15%, which led to the recognition of EUR 16,866 thousand under “Non-current financial liabilities” and EUR 18,508 thousand under “Current financial liabilities” in accordance with their payment dates. The bond matures in 2014 and coupons are paid annually.

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(14)	LONG-TERM PROVISIONS

The changes in 2012 in "Non-current liabilities– Long-term provisions” were as follows:

	Thousands of euros
	Balance at 12/31/2011		Translation adjustment			Charge for the year		Changes in scope of consolidation			Amounts used /Disposals			Transfers			Balance at 12/31/2012

For taxes		187,762		3			15,763		-			(514	)		(1,183	)		201,831
For third-party liability and other		168,758		(203	)		25,040		(64,178	)		(7,333	)		(69,897	)		52,187
Total		356,520		(200	)		40,803		(64,178	)		(7,847	)		(71,080	)		254,018

The “Provision for taxes” relates to the estimated amount of tax debts arising from the tax audit carried out at various Group companies (see Note 19).

The “Provision for third-party liability” relates to the estimated amount required to meet possible claims and litigation brought against Group companies.

In 2012 Dédalo Grupo Grafico has started to be fully consolidated (see Note 3). Therefore the provision related to this company amounting to EUR 64,178 thousand euros has been eliminated.

Additionally, in 2012 the restructuring provided for in the printing business has been undertaken. As a result, the provision created for this concept has been applied in an amount of approximately EUR 40 million. Impairment losses of EUR 18 million were recognized in the year in relation to the printing plant in Barcelona and EUR 9 million for the printing plants in Lugo and Valencia. The amounts were also used from this provision (see Note 5).

Meanwhile, a provision for EUR 20 million was recognized in relation to termination benefits arising from employee reduction procedures payable to official bodies.

In view of the nature of the contingencies covered by these provisions, it is not possible to determine a reasonable payment schedule, if indeed there is one, or their financial effect. However, the Prisa Group’s legal advisers and directors consider that the outcome of these procedures and claims will not have a significant effect on the consolidated financial statements for the years in which they come to an end additional to the amount provisioned in the accounting records.

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The breakdown of the charge for 2012 in the consolidated income statement is as follows:

	Thousands of euros

Termination benefits		22,106
Other staff costs		662
Taxes		15,762
Other		2,273
Total		40,803

At December 31, 2012, the Group had ownership interests in companies accounted for using the equity method, the negative net value of which is recognized under “Non-current liabilities – Long-term provisions” in the accompanying consolidated balance sheet, the detail being as follows (see Note 9):

	Thousands of euros

V-me Media, Inc.		1,257
Distributors (*)		3,444
WSUA Broadcasting Corporation		1,065
Green Emerald Business, Inc.		780
Ediciones Conelpa, S.L.		1,040
Other		1,146
Total		8,732

(*) Distrimedios, S.L., Gelesa Gestión Logística, S.L., Comercial de Prensa siglo XXI, S.A. and Distribución de Prensa por Rutas, S.L.

(15)	OPERATING INCOME

The breakdown of income from the Group’s main business lines is as follows:

	Thousands of euros
	12/31/2012		12/31/2011

Revenue from subscribers		906,843		887,092
Advertising sales and sponsorship		553,368		620,063
Sales of books and training		718,781		697,881
Newspaper and magazine sales		146,219		168,744
Sales of add-ons and collections		20,504		23,151
Sale of audiovisual rights and programs		125,594		88,236
Intermediation services		20,069		20,985
Broadcasting services		10,638		17,260
Other services		121,479		117,869
Revenue		2,623,495		2,641,281
Income from non-current assets		3,319		20,263
Other income		37,878		62,906
Other income		41,197		83,169
Total operating income		2,664,692		2,724,450

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The most significant exchange transactions occurred under “Advertising sales and sponsorship” and the most significant segments were radio, press and audiovisual, whose exchanges with third parties amounted to EUR 8,982 thousand in 2012 (December 31, 2011: EUR 8,936 thousand).

In 2011, “Income from non-current assets” mainly included the result of the sale of Canal Viajar and the dissolution of Canal+ Investment Inc. made by Prisa TV, amounting to EUR 12,288 thousands and EUR 5,378 thousands respectively.

(16)	OPERATING EXPENSES

Staff costs

The detail of “Staff costs” is as follows:

	Thousands of euros
	12/31/2012		12/31/2011

Wages and salaries		443,838		483,272
Employee benefit costs		89,243		93,667
Termination benefits		52,098		77,213
Other employee benefit costs		19,778		20,170
Total		604,957		674,322

Cost of termination benefits corresponds to the restructuring plan addressed by the group in all business segment and geographical areas during 2012 and 2011.

The average number of employees at the Group, by professional category, was as follows:

	12/31/2012		12/31/2011

Executives		462		486
Middle management		1,481		1,526
Other employees		10,248		11,147
Total		12,191		13,159

The breakdown of the workforce, by gender, was as follows:

	12/31/2012				12/31/2011
	Women		Men		Women		Men
Executives		127		335		142		344
Middle management		544		937		561		965
Other employees		4,973		5,275		5,583		5,564
Total		5,644		6,547		6,286		6,873

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Share-based payments

Share option plan of Promotora de Informaciones, S.A.-

The Extraordinary General Shareholders’ Meeting held on November 27, 2010, authorized the 2010-2013 Share/Stock Options Delivery Plan, consisting of the delivery of Prisa shares and/or share options to the directors and executives of the Prisa Group, for 2010, 2011, 2012 and 2013.

As part of that remuneration policy, and in accordance with the resolutions adopted by the Board of Directors, the Company directors would receive 40% of their fixed remuneration for belonging to the Board in Company shares. On October 24, 2012, after the reduction of the remuneration, the Board of Directors passed a motion allowing directors to choose whether to receive 40% of their fixed annual remuneration in shares of the Company or cash. Shares would be delivered to directors four times a year, once each quarter.

The Company has recognized an expense for this plan in the income statement for 2012 in the amount of EUR 429 thousand. The number of shares delivered is 664,701 (see Note 11g).

In addition, approval was given for the delivery of shares to certain members of the executive team as part of their variable remuneration, with the corresponding amount having been provisioned in the accompanying consolidated income statement.

During 2011, the now Executive Chairman of Prisa has received EUR 5,014 thousands by delivery of shares (1,350,000 shares), according to a reference value of 2.08 euros per share. This extraordinary compensation is linked to the success of the recapitalization of the Company and was communicated to the CNMV at the time of the delivery, being also reported in the financial information of the first half of 2011 (see Note 11g).

Additionally, during 2011, 660,728 shares have also been delivered to the Executive Chairman, amounting to EUR 2,560 thousands, at a reference price of 2.17 euros per share, for his commitment to continue at the Company for a period of three years, according to the contract signed with Prisa in October 2010 as part of the restructuring and corporate recapitalization. Out of this total amount, EUR 853 thousands were registered in the accompanying consolidated income statement as a personal expense, equivalent to 220,242 shares. In 2012, an expense of EUR 853 thousand was recognized in this connection, equivalent to 220,242 shares (see Note 24).

In June 2011, the Nomination and Remuneration Committee approved a multiyear, Long-Term Incentive Scheme, consisting of the delivery of shares of Prisa or of some of its listed subsidiaries, subject to the fulfillment of certain goals.

Prisa has recognized an expense on the income statement for 2012 in the amount of EUR 3,100 thousand (2011: EUR 1,845 thousand).

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Outside services

The detail of “Outside services” in 2012 and 2011 is as follows:

	Thousands of euros
	12/31/2012		12/31/2011

Independent professional services		130,414		174,877
Leases and fees		136,345		138,195
Advertising		99,080		114,768
Intellectual property		59,774		67,899
Transport		56,947		63,913
Other outside services		260,417		229,161
Total		742,977		788,813

Fees paid to auditors

The fees for financial audit services relating to the 2012 financial statements of the various companies composing the Prisa Group and subsidiaries provided by Deloitte, S.L. and by other entities related to the auditor amounted to EUR 2,345 thousand (2011: EUR 2,441 thousand), of which EUR 438 thousand relate to Prisa (2011: EUR: 482 thousand); this amount includes EUR 255 thousand for the 2012 audit of the consolidated group, in keeping with PCAOB audit procedures. Also, the fees relating to other auditors involved in the 2012 audit of the various Group companies amounted to EUR 339 thousand (2011: EUR 343 thousand).

In addition, the fees for other professional services provided to the various Group companies by the principal auditor and by other entities related to the auditor, and fees paid in this connection to other auditors participating in the audit of the various Group companies are as follows (in thousands of euros):

	2012				2011
	Principal auditor		Other audit firms		Principal auditor		Other audit firms
Other verification services		277		240		281		-
Tax advisory services		519		257		405		170
Other services		213		284		447		2,802
Other professional services		1,009		781		1,133		2,972

Operating leases

Various assets and services used by the Group are held under operating leases, the most significant of which are the buildings in Gran Vía 32, Miguel Yuste, Tres Cantos and Caspe, the provision of analogue, digital terrestrial and satellite broadcasting services and the radio frequencies. The most significant lease relates to Media Latina. The schedule for the minimum lease payments arising from these leases is as follows:

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Year	Thousands of euros

2013		80,234
2014		77,569
2015		77,715
2016		76,954
2017		78,124
2018 and beyond		659,627
		1,050,223

The main characteristic of the leases for the buildings on Gran Vía 32, Miguel Yuste, and Caspe are lease terms that range from 18 months to 15 years which, in the case of the buildings leased at 15 years, include the possibility of extending the lease by two consecutive five-year periods. The duration of the Tres Cantos lease is 20 years, which is renewable for four consecutive periods of five years each. In 2012, the lease expense relating to these buildings amounted to EUR 31,836 thousand (2011: EUR 30,826 thousand) and was recognized under “Outside services – Leases and fees."

Radio frequencies are leased from Media Latina for a term of ten years. The lease expense for 2012 in this connection amounted to EUR 6,822 thousand (2011: EUR 7,272 thousand), recognized under “Outside services – Leases and fees.”

The lease for the provision of satellite broadcasting services expires in 2017. The expense relating to these services amounted to EUR 42,812 thousand in 2012 (2011: EUR 52,940 thousand), which is recognized under “Outside services – Leases and fees”.

Change in allowances, write-downs and provisions

The detail of the “Change in allowances, write-downs and provisions” is as follows:

	Thousands of euros
	12/31/2012			12/31/2011

Change in operating allowances		80,563			27,947
Change in inventory write-downs		20,016			16,723
Change in provision for sales returns		(385	)		501
Total		100,194			45,171

In May 2012, the Group has reached an agreement with Cableuropa, S.A.U. (Ono) by means of which EUR 54,374 thousand have been recovered by the Company (half of the total EUR 108,748 thousand paid) which ends the lawsuits that Prisa had with Ono (see note 28). As a consequence of this deal, the Group has registered the same amount under the “Variation in operating allowances” of the consolidated income statement, which corresponds to the amount that has not been recovered.

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(17)	FINANCIAL LOSS

The detail of “Financial loss” in the consolidated income statements is as follows:

	Thousands of euros
	12/31/2012			12/31/2011

Income from current financial assets		1,045			839
Finance income from hedging transactions		-			705
Income from equity investments		287			395
Other finance income		4,137			5,357
Finance income		5,469			7,296
Interest on debt		(113,636	)		(124,653	)
Finance costs on hedging transactions		(1,739	)		(8,445	)
Adjustments for inflation		(3,895	)		(699	)
Other finance costs		(58,331	)		(71,356	)
Finance costs		(177,601	)		(205,153	)
Exchange gains		24,031			24,186
Exchange losses		(23,750	)		(28,067	)
Exchange differences (net)		281			(3,881	)
Change in fair value of financial instruments		(2,241	)		6,586
Financial loss		(174,092	)		(195,152	)

“Other finance cost” mainly included the updating of the financial liability registered for the minimum Class B dividend and loan arrangement costs.

(18)	BUSINESS SEGMENTS

Segment reporting is structured on a primary basis by business segment and on a secondary basis by geographical segment.

The business segments were determined based on the Prisa Group’s organizational structure at year-end 2012 considering the nature of the products and services offered, and the customer segments which they target.

At December 31, 2012, Prisa’s operations are divided into four main businesses:

Audiovisual, which obtains revenue mainly from the subscribers to the Canal+ platform, the broadcasting of advertising and audiovisual production;

Education, which includes primarily the sale of general publishing and educational books and education system;

Radio, the main source of revenue from which is the broadcasting of advertising and, in addition, the organization and management of events and the provision of other supplementary services; and

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Press, which groups together mainly the activities relating to the sale of newspapers and magazines, advertising, promotions and distribution;

Segment information about these businesses for 2012 and 2011 is presented below:|

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- 59 -

The detail of capex in 2012 and 2011 by business segment is as follows (in thousands of euros):

	2012						2011
	Property, plant and equipment		Intangible assets		Total		Property, plant and equipment		Intangible assets		Total
Audiovisual		16,404		48,038		64,442		57,421		58,958		116,379
Education		24,009		54,351		78,360		11,926		55,524		67,450
Radio		4,582		2,684		7,266		5,765		2,360		8,125
Press		859		2,420		3,279		529		3,183		3,712
Other		410		15,003		15,413		1,312		21,000		22,312
Total		46,264		122,496		168,760		76,953		141,025		217,978

In relation to the audiovisual segment, the breakdown, by business line, of the main items under “Profit/(loss) from operations” is as follows:

	Thousands of euros
	2012									2011
	Pay television			Free-to-air television			Other			Pay television			Free-to-air television			Other
Revenue		1,071,549			106,252			67,900			988,563			149,024			76,524
Other income		8,375			4,174			1,595			22,715			1,165			3,194
TOTAL OPERATING INCOME		1,079,924			110,426			69,495			1,011,278			150,189			79,718

Cost of materials used		(596,875	)		(21,261	)		(1,791	)		(506,699	)		(23,122	)		(3,869	)
Staff costs		(82,944	)		(20,926	)		(31,538	)		(114,138	)		(25,067	)		(42,955	)
Other operating expenses		(364,573	)		(39,940	)		(34,774	)		(294,869	)		(34,181	)		(74,896	)
TOTAL OPERATING EXPENSES		(1,044,392	)		(82,127	)		(68,103	)		(915,706	)		(82,370	)		(121,720	)
PROFIT/(LOSS) FROM OPERATIONS		35,532			28,299			1,392			95,572			67,819			(42,002	)

At December 31, 2012 and 2011, the non-current and current assets and liabilities directly related to the free-to-air TV business, as well as the current assets and liabilities directly allocable to that business, correspond to the free-to-air Grupo Media Capital “TVI.” The related amounts are as follows:

	12/31/2012			12/31/2011
Non-current assets		16,308			22,748
Current assets		107,402			97,735
Current liabilities		(66,450	)		(81,480	)

The other assets and liabilities are either allocable to the pay TV and audiovisual production businesses or are deemed to be shared by the various business lines of the audiovisual segment.

The Group’s activities are located in Europe and America. Operations in Europe are carried out mainly in Spain, although since 2005 the Group has expanded into Portugal. The activities in America are located mainly in Brazil, Mexico and Colombia.

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The breakdown of certain of the Group’s consolidated balances based on the geographical location of the companies that gave rise to them is as follows:

	Thousand of euros
	Revenue				Other income				Profit/(loss) before non- controlling interests and tax
	2012		2011		2012		2011		2012			2011

Europe		1,899,046		1,975,446		35,570		73,960		(468,246	)		(359,625	)
Spain		1,720,562		1,776,041		29,683		70,496		(489,251	)		(395,847	)
Rest of Europe		178,484		199,405		5,887		3,464		21,005			36,222
America		724,449		665,835		5,627		9,209		112,827			114,910
TOTAL		2,623,495		2,641,281		41,197		83,169		(355,419	)		(244,715	)

	Thousand of euros
	Non- current assets (*)				Total assets
	2012		2011		2012		2011

Europe		4,355,234		4,676,153		7,052,320		7,305,629
Spain		4,169,221		4,483,084		6,735,632		6,988,294
Rest of Europe		186,013		193,069		316,688		317,335
America		239,353		214,168		609,693		572,895
TOTAL		4,594,587		4,890,321		7,662,013		7,878,524

(*) Include property, plant and equipment, goodwill, intangible assets, investments accounted for using the equity method and other non-current assets.

(19)	TAX MATTERS

As indicated under “Accounting Policies,” Promotora de Informaciones, S.A. files consolidated income tax returns in Spain, in accordance with the Spanish Corporation Tax Law, and is the Parent of consolidated tax group 2/91, which includes all its subsidiaries (see Appendix I) that meet the requirements provided for in Spanish legislation regulating the taxation of the consolidated profits of corporate groups.

Dts Distribuidora Television Digital, S.A. is the parent of tax group 136/11 which includes all the subsidiaries that meet the statutory requirements (see Appendix I) .

Also, on January 1, 2009, Prisa Radio, S.L. created its own consolidated tax group in Spain, identified with number 194/09, which also includes all the subsidiaries that meet the statutory requirements (see Appendix I).

In addition, on January 1, 2011 Grupo Cronos Distribución Integral, S.L. created its own consolidated tax group in Spain, identified with number 445/11, which also includes the subsidiaries that meet the statutory requirements (see Appendix I).

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Dédalo Grupo Gráfico, S.L., created its own consolidated tax group in Spain, identified with number 225/04, which includes the subsidiaries that meet the statutory requirements for application of this special consolidated tax regime.

Lanza, S.A. de C.V. (Mexico) files consolidated tax returns in Mexico together with its Mexican subsidiaries.

GLR Services, Inc. also files consolidated tax returns in the United States together with its subsidiaries that meet the requirements for application of this special consolidated tax regime.

Media Global, SGPS, S.A. and the companies in which it directly or indirectly holds at least 90% of the share capital and which also meet the conditions required under Portuguese law constitute a consolidated tax group in Portugal.

The other Group subsidiaries file individual tax returns in accordance with the tax legislation prevailing in each country.

In prior years, certain Group companies performed or participated in corporate restructuring transactions under the special tax neutrality regime regulated in Chapter VIII of Title VII of the Consolidated Spanish Corporation Tax Law approved by Legislative Royal Decree 4/2004, of March 5. The disclosures required by this legislation are included in the notes to the financial statements of the related Group companies for the year in which these transactions were carried out.

Also, in prior years, several tax group companies availed themselves of tax credits for the reinvestment of extraordinary income under Article 21 of the repealed Spanish Corporation Tax Law 43/1995. The disclosures required by this Law are made in the notes to the financial statements of the corresponding companies.

In the financial statements for 2009, 2010 and 2011, several Group companies availed themselves of the tax credit for reinvestment of extraordinary income envisaged in Article 42 of the Spanish Corporation Tax Law amounting to EUR 1,226 thousand, EUR 41,805 thousand and EUR 559,498 thousand, respectively. The disclosures required by current legislation were included in the notes to the financial statements of the companies involved.

At the time of filing of the 2011 income tax statement, in July 2012, several companies availed themselves of the tax credit for the reinvestment of extraordinary income amounting to EUR 42,363 thousand, having fulfilled, in the year in which the income was obtained, the obligation to reinvest the sale price in the acquisition of property, plant and equipment, intangible assets, and financial assets, in accordance with the terms established by the tax legislation.

During the year, certain companies within the tax group deducted, for tax purposes excluding the recognition of impairment losses on equity interests from taxable income provided for under article 12.3 of the Spanish Corporation Tax Law. The disclosure requirements of this Law were met in the notes to the financial statements of these companies.

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Reconciliation of the accounting profit to the taxable profit

The following table shows a reconciliation of the result of applying the current standard tax rate in Spain to consolidated net accounting profit, calculated under International Financial Reporting Standards, to the consolidated Group’s income tax expense for 2012 and 2011.

	Income statement
	2012			2011
CONSOLIDATED NET PROFIT UNDER IFRSs*		(355,419	)		(244,715	)
Tax charge at 30%**		(106,626	)		(73,415	)

Consolidation adjustments		61,782			74,804
Permanent differences (1)		(22,704	)		(4,499	)
Tax loss carryforwards		(399	)		-
Tax credits and tax relief (2)		(2,133	)		(1,952	)
Effect of applying different tax rates (3)		3,258			1,247
INCOME TAX		(66,822	)		(3,815	)

ADJUSTMENT OF PRIOR YEARS’ TAX (4)		5,700			146,171
FOREIGN TAX EXPENSE (5)		3,392			4,092
EMPLOYEE PROFIT SHARING (6)		2,721			1,525
ADJUSTMENTS TO CONSOLIDATED TAX		34,573
TOTAL INCOME TAX		(20,436	)		147,973

*Loss

** The parentheses mean income

(1)

The permanent differences are due mainly to different accounting and tax criteria of certain provisions and non-computable income and non-deductible expenses. Also included is the effect of those companies with losses which do not generate deferred tax.

(2)

The Spanish Prisa reporting Group companies took a domestic dividend double taxation tax credit on dividends not eliminated on consolidation, an international double taxation credit and a tax credit provided for in Article 20 of Law 49/2002, of December 23, on the Tax Regime of Not-for-Profit-Entities and Tax Incentives for Patronage.

(3)

Relating to the effect of taxation of profits from American and European subsidiaries at different rates.

(4)

Refers to the impact on the income statement of the adjustment of income tax from prior years.

(5)

This relates to the expense for taxes paid abroad and arose from withholdings at source on the income from exports of services provided by the Group's Spanish companies abroad and dividends.

(6)

This is an additional component of the income tax expense in countries such as Mexico.

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Deferred tax assets and liabilities

The following table shows the origin and amount of the deferred tax assets and liabilities recognized at year-end 2012 and 2011 (in thousands of euros):

2012-

DEFERRED TAX ASSETS ARISING FROM
	12/31/2012		Additions		Transfers			Disposals			12/31/2011
Advance Payment Tax Assessments		26,532		26,532		-			-			-
Non-deductible financial expenses		13,209		13,209		-			-			-
Non-deductible provisions		12,298		11,107		-			(3,247	)		4,438
Non-capitalizable assets		37				-			-			37
Tax loss carryforwards		906,126		98,948		(12,017	)		(3,435	)		822,630
Unused tax credit recognized		345,593		37,501		-			(8,494	)		316,586
Other		40,074		7,265		12,017			(2,211	)		23,003
Total		1,343,869		194,562		-			(17,387	)		1,166,694

DEFERRED TAX LIABILITIES ARISING FROM
	12/31/2012		Additions		Disposals			12/31/2011
Impairment losses on equity investments and goodwill		12,601		158		(7,194	)		19,637
Deferral for reinvestment of extraordinary income		5,176		-		(918	)		6,094
Accelerated depreciation and amortization		957		486		(17	)		488
Other		3,443		29		(776	)		4,190
Total		22,177		673		(8,905	)		30,409

2011-

DEFERRED TAX ASSETS ARISING FROM
	12/31/2011		Additions		Transfers			Disposals			12/31/2010
Non-deductible provisions		4,438		2,218		-			(6,623	)		8,843
Non-capitalizable assets		37		-		-			-			37
Tax loss carryforwards		822,630		44,386		12,936			(4,109	)		769,417
Unused tax credit recognized		316,586		83,280		(121	)		(10,886	)		244,313
Other		23,003		13,218		(12,815	)		(820	)		23,420
Total		1,166,694		143,102		-			(22,438	)		1,046,030

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DEFERRED TAX LIABILITIES ARISING FROM
	12/31/2011		Additions		Disposals			12/31/2010
Impairment losses on equity investments and goodwill		19,637		125		(549	)		20,061
Deferral for reinvestment of extraordinary income		6,094		-		(150	)		6,244
Accelerated depreciation and amortization		488		-		(17	)		505
Other		4,190		2,582		(137	)		1,745
Total		30,409		2,707		(853	)		28,555

The tax assets and liabilities on the consolidated balance sheet at December 31, 2012 are recognized at their estimated recoverable amount.

There are no significant temporary differences arising from investments in subsidiaries, branches, associates or joint ventures that generate deferred tax liabilities.

There are no significant amounts arising from temporary differences associated with retained earnings of subsidiaries in jurisdictions where different tax rates are applied and, therefore, no deferred tax liabilities were recognized in this connection.

Among the deferred tax assets the most significant amounts correspond to (i) tax credits arising from tax losses, tax credits for investments and arising from restrictions on the deductibility of financial expenses from Prisa’s 2/91 tax consolidation group, Prisa Radio’s 194/09 tax consolidation group and DTS Distribuidora Televisión Digital, S.A.’s 136/11 tax consolidation group. These deferred assets were recognized in accordance with the criteria set forth in valuation regulations.

Following is a detail, in thousands of euros, of the prior years' tax losses of Spanish companies available for offset against future profits, showing the year in which the tax losses were incurred and the last years for offset.

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The Group recognized tax loss carryforwards in respect of losses incurred in launching the satellite pay TV business. The most significant losses in this respect were those recognized by DTS Distribuidora de Televisión Digital, S.A. prior to its inclusion in the Prisa Televisión Group. The Group also recognized tax loss carryforwards in respect of losses incurred in the integration of DTS Distribuidora de Televisión Digital, S.A. The recovery thereof is reasonably assured on the basis of the recent performance of the pay TV businesses, the forecasts contained in the Prisa Televisión Group's business plan and the Notes to the Group’s consolidated financial statements.

In this respect, the management of Prisa Televisión Group has a long-term business plan, which it has kept updated and in which, among other things, matters relating to the Group's future strategy, studies by independent third parties, experiences of other operators similar to the Group in neighboring countries, and the proven experience in recent years of the Prisa Televisión Group in the pay TV market in Spain were taken into account.

The assumptions used in this business plan are conservative and relate to matters such as the penetration of pay TV in Spain, Prisa Televisión Group's share of this penetration, the trend in the number of subscribers and in the prices of the services offered by the Group and the general trend in costs, in particular programming costs within the current technological and right exploitation framework in which the Prisa Televisión Group operates. In this respect, the projection for the long-term penetration of pay TV in Spain is several points below the current penetration rates in neighboring countries. In addition, these rates are generally below the forecasts of independent third-party consultants. Consequently, the estimated annual increases at short and medium term in the net subscriber figures are lower than the annual increases achieved in recent years by certain other European operators. This business plan also includes sensitivity studies of the most significant assumptions in order to situate them in pessimistic scenarios.

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The main conclusion of the aforementioned business plan is that the Prisa Televisión Group will report rising earnings figures at medium term which, together with its legal restructuring and the transactions described in the Notes to the Group's consolidated financial statements, will enable the tax assets recognized by it to be recovered.

The breakdown, by country, of the tax loss carryforwards of the Group's foreign companies is shown below (in thousands of euros):

Years open to examination by the revenue authorities

The years open to examination by the revenue authorities for the main taxes vary from one consolidated company to another, although they are generally the last four years, with the exceptions discussed below.

The revenue authorities audited certain companies within the consolidated tax and accounting scope of Promotora de Informaciones, S.A., and several statutory notices of deficiency were issued for the following: personal income tax withholdings and payments (1994-1996), VAT (1994-1996), single revaluation tax, and income tax (1990-1996). At the date of preparation of these financial statements, the procedural status of the cases is as follows:

Company	Tax	Years	Procedural Status
Subsidiaries
Diario El País, S.L.	Personal income tax withholdings	1994 -1996	In 2012, payment was made to comply with the order to enforce the partly favorable decision.

The Antena 3 de Radio, S.A. consolidated tax group was audited by the revenue authorities in 2005. The revenue authorities reviewed the following years and taxes: 2000, 2001, and 2002 for income tax, and January 2001 to December 2002 for VAT, personal income tax withholdings and payments (employees and professionals) and tax on property income. As a result of the audit, notice of deficiency amounting to EUR 3,499 thousand was issued in respect of the consolidated income tax, which was signed on a contested basis. The appropriate motions for review were filed against these notices and a decision upholding the final tax determinations was issued. The related appeal was filed at the Madrid Regional Board of Tax Appeals against the decision, the execution of which was stayed in return for the posting of a guarantee. The Board handed down a decision, partially upholding the appeal filed in respect of substantially all of the deficiency and interest and reversed the penalty. To comply with the decision issued by the Regional Board of Tax Appeals, during 2010 the revenue authorities reopened the 2001-2002 income tax audit. During the year, this audit concluded with a determination that the entity has a tax liability of EUR 528 thousand. An appeal was filed at the Central Board of Tax Appeals against this determination.

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During 2011 verification and inquiry actions were initiated with regard to the tax on raffles, draws, wagers and games of chance for 2007 to 2010 at Sociedad Prisa Televisión, S.A. The actions concluded with a contested statutory notice of deficiency resulting in a proposed determination in the amount of EUR 8,570 thousand (deficiency plus interest). An appeal was filed at the Central Board of Tax Appeals against this decision. Despite the appeal having been filed, the corresponding tax liability was settled in the year and recognized as a tax credit as the procedure has not yet ended and as there is no final ruling which rejects the company’s claim.

During 2012 verification and inquiry actions were initiated with regard to the tax on raffles, draws, wagers and games of chance for 2007 to 2010 at Promotora de Emisoras de Televisión, S.A. The actions concluded with a contested statutory notice of deficiency resulting in a proposed determination in the amount of EUR 544 thousand (deficiency plus interest). An appeal was filed at the Central Board of Tax Appeals against the decision. The amount owed by the company has been paid and recognized as an expense.

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In 2006, the revenue authorities completed their audit of the Prisa tax group for consolidated income tax for 1999, 2000, 2001, and 2002 and for VAT, personal income tax withholdings and repayments (employees and professionals), tax on property income, investment income tax and non-resident income tax for the following companies and years:

Company	Years
Parent-
Promotora de Informaciones, S.A.	June 2000 to May 2004
Subsidiaries-
Diario El País, S.L.	June 2000 to May 2004
Sociedad Española de Radiodifusión, S.L.	June 2000 to May 2004
Prisa Brands Solutions, S.L.U.	January 2001 to December 2003
Ítaca, S.L.	January 2001 to December 2002
Mateu Cromo Artes Gráficas, S.A.	January 2001 to December 2002
Promotora de Emisoras de Televisión, S.A.	January 2001 to December 2003
Grupo Empresarial de Medios Impresos, S.L.	January 2001 to December 2003
Grupo Santillana de Ediciones, S.L.	January 2001 to December 2003
Santillana Educación, S.L.	January 2001 to December 2003
Santillana Ediciones Generales, S.L.	January 2001 to December 2003

The decisions handed down on the motions for review filed against the determinations arising from the statutory notices issued for each year (1999 to 2002) for income tax (which were partially upheld) affirmed determinations totaling EUR 34,867 thousand (deficiency plus late-payment interest). Appeals against these decisions were filed at the Central Board of Tax Appeals. The decisions handed down by the aforementioned Board, partially upholding the Group’s claims and overturning the determinations relating to all those years, formed the subject matter of a petition for review at the National Appellate Court. Payment of this amount was stayed and the related guarantee was posted. The National Appellate Court dismissed the petitions and the company filed the corresponding petitions to the Supreme Court.

The petitions for 2001 and 2002 were both deemed inadmissible on formal grounds. Similarly, motions for annulment were filed and rejected; the Parent then filed petitions for review with the Constitutional Court.

As a result, in 2012 the company received the order to enforce the decision of the National Appellate Court concerning income tax for 2001; an objection to the form of enforcement was filed. Similarly, this enforcement entailed a new tax determination of EUR 17,069 thousand against which the Parent has filed a motion for review and the corresponding appeal to the Board of Tax Appeals upon failure of the motion. This administrative act has required the posting of a guarantee.

The other taxes audited did not give rise to any determination or the amount of the determination was immaterial and has been paid or appealed.

In 2010, the tax audit of consolidated income tax for 2003 to 2005 was completed and the corresponding statutory notice was issued stating a deficiency of approximately EUR 16,960 thousand, which was signed on a contested basis. During the year, the negative decision concerning the appeal to the Board of Tax Appeals was received and a petition for judicial review was filed. Despite the petition having been filed, the corresponding tax liability was settled in the year and recognized as a tax credit as the procedure has not yet ended and as there is no final ruling which rejects the Company’s claim.

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Also, the audits of personal income tax withholdings and repayments (employees and professionals), tax on property income and investment income tax for 2004 and 2005 were completed, which gave rise to uncontested notices of deficiency that were paid in the year and a contested notice of deficiency amounting to EUR 326 thousand which was also paid. At the date of the preparation of these financial statements, the petitions for judicial review have been rejected, and all of the tax debts arising from the regularization have been fully paid.

Also, the VAT audit for June 2004 to December 2006 was completed with uncontested notices of deficiency amounting to EUR 909 thousand paid in 2010 and contested notices amounting to EUR 75 thousand and EUR 5,416 thousand respectively, which are under review at the National Appellate Court and the Central Board of Tax Appeals, respectively.

In 2012, the revenue authorities continued their audits of tax consolidation group 2/91 whose parent is Promotora de Informaciones, for income tax for 2006 to 2008.

This audit also includes VAT, personal income tax withholdings and repayments (employees and professionals) and non-resident income tax for the following years:

Company	VAT year	PIT / Non- residents year
Parent -
Promotora de Informaciones, S.A.	2008	June 2007 to December 2008
Subsidiaries
Ítaca, S.L.	2008	April 2008 to December 2008
Sociedad Española de Radiodifusión, S.L.	2008	March 2008 to December 2008
Grupo Santillana de Ediciones, S.L.	2008	April 2008 to December 2008
Santillana Educación, S.L.	2008	March 2008 to December 2008

The Supreme Court petition for review concerning the determination of income tax for 2001 was initially denied leave to proceed on purely formal grounds, and, on a prudential basis, the Company booked a provision for EUR 183,000 thousand in case of an unfavorable court ruling for the items in question, largely the export tax credit, within the proceedings in progress in relation to the tax audits. In 2012, given that the Supreme Court petition for 2002 was denied leave to proceed, the Company did the same and booked an additional provision of EUR 6,700 thousand (Note 14).

The Company considers that no additional material contingencies would arise from a tax review of the years open to examination.

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(20)	DISTRIBUTION OF RESULTS

The proposal for the distribution of the loss of Promotora de Informaciones, S.A. for 2012 is as follows (in thousands of euros):

	Amount
Basis of appropriation
Loss for the year		(685,793	)
Distribution-
Prior year losses		(685,793	)

(21)	EARNINGS PER SHARE

Basic earnings/(loss) per share was calculated by dividing the profit/(loss) for the year attributable to equity holders of the Parent by the weighted average number of ordinary shares in circulation during the period.

The impact on the number of ordinary shares of the share subscription rights (warrants) and the conversion of Class B shares is antidilutive. Therefore, basic and diluted earnings per share amounts are the same.

The basic earnings (loss) per share attributed to equity holders of the Parent corresponding to continuing and discontinued operations in 2012 and 2011 were the following:

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	Thousands of euros
	12/31/2012			12/31/2011

Profit/(loss) for the year from continuing operations attributable to the Parent(*)		(256,761	)		(518,773	)
Profit/(Loss) after tax from discontinued operations		(3,496	)		(2,646	)
Profit/(loss) for the year attributable to the Parent		(260,257	)		(521,419	)
Weighted average number of ordinary shares outstanding (thousands of shares)		947,991			845,309
Basic earnings/(loss) per share of continuing operations (euros)		(0.27	)		(0.61	)
Basic earnings/(loss) per share of discontinued operations (euros)		(0.00	)		(0.00	)
Basic earnings/(loss) per share (euros)		(0.27	)		(0.62	)

(*) In 2011, in order to calculate basic earnings/(loss) per share, the loss from continuing operations attributable to the Parent amounting to EUR 448,572 thousand were adjusted by EUR 70,201 thousand, the amount corresponding to preferential dividends of 2011.

Weighted average number of ordinary shares outstanding in 2012 and 2011:

	Thousands of shares
	2012			2011
Ordinary shares at December 31		847,861			846,978
Share capital increases		103,976			693
Weighted average of treasury shares		(3,846	)		(2,362	)
Weighted average number of ordinary shares outstanding for basic earnings per share		947,991			845,309

(22)	EVENTS AFTER THE BALANCE SHEET DATE

By virtue of the agreements entered into in 2011, in February 2013, PortQuay West I B.V., company controlled by Miguel Paes do Amaral, has exercised its right to transmit to Vertix, 100% subsidiary of Prisa, the 10% of Grupo Media Capital SGPS, S.A.'s share capital.

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(23)	RELATED PARTY TRANSACTIONS

The detail of the balances receivable from and payable to associates and related parties in 2012 and 2011 is as follows:

	Thousands of euros
	12/31/2012		12/31/2011

Receivable
Trade receivables		21,023		27,510
- Associates		20,922		27,468
- Related parties		101		42
Long-term loans		18,783		144,493
Short-term loans		5,483		4,901
Total		45,289		176,904
Payable
Trade payables		9,854		12,102
- Associates		9,854		12,102
- Related parties		-		-
Other payables		5		-
- Associates		5		-
- Related parties		-		-
Total		9,859		12,102

The transactions performed with related parties in 2012 and 2011 were as follows (in thousands of euros):

	12/31/2012				12/31/2011
	Directors and executives		Group employees, companies or entities		Directors and executives		Group employees, companies or entities

Services received		2,652		22,673		4,996		33,277
Other expenses		11,177		3,588		27,393		2,328
Total expenses		13,829		26,261		32,389		35,605

Finance income		-		156		-		180
Dividends received		-		13,727		-		24,688
Provision of services		-		123,660		-		85,826
Other income		-		12,034		-		9,875
Total revenues		-		149,577				120,569

All related party transactions have taken place under market conditions.

The aggregate amount of EUR 11,177 thousand relates to the accrued salaries of directors (see Note 24) and executives.

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Remuneration of senior executives-

The total remuneration earned by the senior executives of Promotora de Informaciones, S.A. in 2012 and of the Group companies other than it amounted to EUR 5,819 thousand (EUR 6,784 thousand in 2011), which will be paid at short term.

At December 31, 2012, remuneration of senior executives of the Prisa Group is the one accrued by those persons who are members of the Business Management Committee and the Corporate Committee who are not executive directors, in addition to the internal audit director of Promotora de Informaciones, S.A. During 2012 these senior executives were: Javier Lázaro, Fernando Martínez Albacete, Miguel Ángel Cayuela Sebastián, Iñigo Dago Elorza, Pedro García Guillén, Kamal M. Bherwani, Andrés Cardo Soria, Bárbara Manrique de Lara, Jose Luis Sainz, Óscar Gómez and Virginia Fernández Iribarnegaray.

In addition, this remuneration includes for 2012 the amounts corresponding to Ignacio Santillana del Barrio, Augusto Delkader Teig y Javier Pons Tubio until September, under General Manager of Prisa, Chairman of Prisa Radio and Chief Exective Officer of Prisa Radio. As of September, 2012 an internal reorganization was undertaken and lead to a change of senior executives.

Transactions between Group employees, companies or entities-

The aggregate amount of EUR 22,673 thousands correspond to the printing services provided by various investees of Dédalo Grupo Gráfico, S.L. up to March 31, 2012, after which the company was fully consolidated (see Note 3), distribution, transport and logistics services provided by Gelesa Gestión Logística and other companies belonging to the distribution business and advertising and technical and administrative services provided by Mediaset España Comunicación, S.A.

The aggregate amount of EUR 13,727 thousands correspond to dividends received by Prisa Televisión, S.A.U. as a result of the investment in Mediaset España Comunicación, S.A. (EUR 9,734 thousand) and dividends received by Sociedad Española de Radiodifusión, S.L. as a result of the investment in Sistema Radiópolis, S.A. de C.V. (EUR 3,993 thousand).

Finally the aggregate amount of EUR 123,660 thousands correspond to income received for technical and administrative services and for sale of advertising space and rights to Grupo Mediaset España Comunicación, S.A., as well as to income received for the sale of copies and add-ons to Gelesa Gestión Logística and other companies belonging to the distribution business.

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The detail of other transactions performed with related parties in 2012 and 2011 is as follows (in thousands of euros):

	12/31/2012						12/31/2011
	Significant shareholders		Group employees, companies or entities		Other related parties		Significant shareholders		Group employees, companies or entities		Other related parties
Financing agreements: loans		-		8,006		-		-		141,755		-
Guarantees provided (Note 25)		-		-		12,801		-		105,200		36,550
Commitments/guarantees cancelled (Note 25)		-		-		-		-		-		-
Dividends and other distributed profits		-		19,933		-		-		18,338		-
Other transactions		-		-		-		-		-		-

At December 31, 2011, the aggregate amount of EUR 141,755 thousand included the EUR 136,792 thousand credit facility granted to Dédalo Grupo Gráfico, S.L. (see Note 8).

The aggregate amount of EUR 19,933 thousands correspond to dividends distributed by DTS Distribuidora de Televisión Digital, S.A. to its shareholder Mediaset España Comunicación, S.A.

(24)	REMUNERATION AND OTHER BENEFITS OF DIRECTORS

In 2012 and 2011, the consolidated companies registered the following amounts in respect of remuneration to Prisa’s Board members:

	Thousands of euros
	12/31/2012		12/31/2011

Fixed remuneration		2,908		3,333
Variable remuneration		-		7,272
Attendance fees		463		561
Bylaw-stipulated directors’ emoluments		1,908		2,000
Other		79		7,443
Total		5,358		20,609

No credits, advances or loans have been granted to the members of the Board of Directors, and there are no pension obligations to them.

In addition, during 2012 an expense of EUR 853 thousands was registered due to the accrual of the remuneration already paid in 2011 to the current executive president of the Group (see Note 16).

Due to current general economic conditions, executive directors Mr. Juan Luis Cebrián, Mr. Manuel Polanco Moreno and Mr. Fernando Abril-Martorell have voluntarily agreed with the Company to have only the fixed remuneration stipulated in their contracts for 2012 and not to receive any variable remuneration.

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Pursuant to Section 229 of the Corporate Enterprises Act, approved by Legislative Royal Decree 1/2010 dated July 2, following is a detail of the companies with the same, analogous or similar corporate purpose as that of Promotora de Informaciones, S.A. (PRISA) in which directors and their affiliates, as defined in Section 231 of this Act, have stakes, and of the duties, if any, that they perform therein:

Owner	Company	Percentage of ownership (%)	Functions
Juan Luis Cebrián Echarri	Le Monde Libre	-	Director
Juan Luis Cebrián Echarri	Societé Editrice du Monde	-	Director
Juan Luis Cebrián Echarri	Mediaset España Comunicación, S.A.		Director
Manuel Polanco Moreno	Mediaset España Comunicación, S.A.	-	Deputy chairman
Manuel Polanco Moreno	V-me Media Inc	-	Director
Fernando Abril-Martorell	Telecomunicaciones de Sao Paulo SS-Telesp	-	Director
Nicolás Berggruen	Societé Editrice du Monde	-	Director
Arianna Huffington	AOL, Inc	-	Chairman and Director of “The Huffington Post Media Group”
Jose Luis Leal Maldonado	Punto y Seguido, S.A.	0.05	-
Gregorio Marañón y Bertrán de Lis	Universal Music Spain, S.L.	-	Chairman
Harry Sloan	Zenimax Media Inc	1.91	Director

It is also hereby stated that:

a daughter of Director Mr. Juan Luis Cebrián is Director of the Spanish TV Film Area of Corporación RTVE (Radio Televisión Española);

ii)

a son of Director Mr. Alain Minc’s is the Editor of “Paris Match”, “Journal du Dimanche” and “Version Femina” (a magazine edited by the Lagardère Group), and

iii)

Director Mr. Nicolas Berggruen owns 45% of the share capital of LeYa, the holding company of the editorial group composed of Brazilian, Portuguese, and African editors, through his company Berggruen Holding LTD.

This list does not include Prisa Group companies. However, it is hereby stated that the following directors of Promotora de Informaciones, S.A. are part of the managing body of certain Prisa Group companies, as disclosed in the Company’s Annual Corporate Governance Report: Juan Luis Cebrián Echarri, Fernando Abril-Martorell, Matías Cortés Dominguez, Manuel Polanco Moreno, Arianna Huffington and Gregorio Marañón and Bertrán de Lis.

Also, in accordance with Section 230 of the above-mentioned Law, it is hereby stated that there is no record that any of the Board members have been engaged in 2012, or are currently engaged, for their own account or the account of others, in a business that is the same as or analogous or supplementary to the business constituting the corporate purpose of Promotora de Informaciones, S.A.

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(25)	GUARANTEE COMMITMENTS TO THIRD PARTIES

At December 31, 2012, following the sale of Prisa’s total stake in Iberbanda, S.A. to Telefónica de España, S.A.U. in 2011, Prisa maintained the guarantee solely on certain commitments acquired to Public Administrations by Iberbanda in the amount of EUR 3,384 thousand.

At December 31, 2012, Prisa had furnished bank guarantees amounting to EUR 272,184 thousand and USD 2,863 thousand mainly in relation to the tax assessments issued by the tax authorities that were signed on a contested basis, litigation for football rights and acquisition of football rights (see Note 28).

On June 15, 2011, Prisa furnished a first-call guarantee for up to USD 40,000 thousand regarding payment obligations set forth in two contracts signed between DTS Distribuidora de Televisión Digital, S.A. and Cisco Systems Capital Spain, S.L. The contracts consist in a revolving lease, for USD 80,000 thousand, and a credit agreement, for USD 2,350 thousand, and the payment obligations relate to the lease, development and rental of advanced television-signal decoders for Canal+.

To enforce the guarantee, it shall suffice for Cisco Systems Capital Spain, S.L. to inform Prisa that a breach has taken place and to indicate the amount owed, in which event Prisa undertakes to pay the amount requested within 15 calendar days. The maximum amount guaranteed may be claimed either in whole or in part and on one or more occasions and, if the case should arise, the maximum amount will be reduced in accordance with the payments that have been made, and the guarantee on the amount pending shall remain in effect.

The guarantee is irrevocable and it is furnished in a non-specific manner and irrespective of the legal relationship between Cisco Systems Capital Spain, S.L. and DTS Distribuidora de Televisión Digital, S.A.; hence, it shall be payable upon a simple request, when the first written demand is received, with no need to evidence a prior claim or to bring any action against DTS Distribuidora de Televisión Digital, S.A. The guarantee shall remain in force until the complete discharge of the obligations covered by it. The amount guaranteed by Prisa at December 31, 2012 was EUR 20,000 thousand.

The guarantee shall be extended and shall cover any extension or broadening of or amendment to the aforementioned guaranteed contracts, and there shall be no need to notify Prisa of such extensions, broadening or amendments.

Lastly, Prisa furnishes a joint and several guarantee to Le Monde Libre in the amount of EUR 12,801 thousand covering part of the obligations that it acquired vis–a-vis the holders of the bonds redeemable into shares that were issued by Le Monde, S.A. at that moment.

The Company’s directors consider that the possible effect of the guarantees provided on the accompanying consolidated income statements would in no case be material.

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(26)	FUTURE COMMITMENTS

The Prisa Televisión Group and the Media Capital Group have entered into purchase and sale agreements with various suppliers and consumers for future program broadcasting rights and the exploitation of image rights and sports rights. These commitments partially cover the Prisa Televisión Group and Media Capital Group companies’ programming needs in the years indicated.

In addition, by virtue of an agreement entered into with Indra on December 23, 2009, Prisa assumed payment commitments totalling EUR 267,225 thousand with the aforementioned company for the coming seven years. In 2012, the scope of the project changed, affecting the Latin America and Spain service, and certain criteria for the invoicing of services were modified, while the straight-line in arrears model was replaced with a consumption-based model. As a result of these changes, the amount of the future commitments initially agreed on has also changed. The amount corresponding to services rendered in 2010, 2011 and 2012 stood at EUR 77,782 thousand and the estimated future commitments for the remainder of the contract amount to EUR 155,615 thousands.

At December 31, 2012, the Group had euro and foreign currency payment obligations and collection rights for a net amount payable of approximately EUR 2,152,958 thousand. The net amounts payable in relation to these obligations fall due as follows:

Year	Thousands of euros

2013		857,642
2014		815,465
2015		398,783
2016		49,218
2017		31,758
2018 and subsequent years		92
		2,152,958

The obligation to pay the amounts agreed upon in the purchase agreements arises only if the suppliers fulfill all the contractually established terms and conditions.

These future payment obligations were estimated taking into account the agreements in force at the present date. As a result of the renegotiation of certain agreements, these obligations might differ from those initially estimated.

Past-due payments to creditors-

Creditors who are paid after the maximum legal period are Spanish creditors (excluding suppliers of non-current financial assets or finance-lease creditors) with whom contracts have been signed for periods over the maximum 75-day period (85 days in 2011). This also includes payables to suppliers with which certain Group companies are involved in unresolved litigation.

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At December 31, 2012, trade payables over 75 days past due for the Spanish Group companies amounted to EUR 215,648 thousand (trade payables at December 31, 2011 over 85 days past due amounted to EUR 229,916 thousand).

The detail of payments made in 2012 and in 2011 is as follows:

	2012				2011
	Thousands of euros		%		Thousands of euros		%
Past-due more than 75 days in 2012 and 85 days in 2011		465,571		31.96		398,188		31.59
Others		991,186		68.04		862,113		68.41
Total payments		1,456,757		100		1,260,301		100
Weighted Average Number of Days Past-Due (DSO)		110				88

The increase in total payments is mainly due to the change in the model for marketing soccer.

(27)	LEGAL MATTERS

As a result of a statement of claim filed in 2004 by a local radio operator at an Argentine court against the Argentine state, the sale of the shares of Radio Continental, S.A. has not yet been approved by the Argentine government. The claimant also applied for injunctive relief whereby the grant of the approval in question should be stayed during the principal proceedings. In December 2004 the court granted the injunctive relief applied for and processing of the approval was stayed.

The decision was appealed against by the Argentine government and by the buying and selling parties, and in April 2007 the Argentine Federal Judicial Review Chamber upheld the decision to grant injunctive relief. The appeal to the Supreme Court was dismissed in a ruling handed down on March 15, 2011; hence, the injunctive relief remains in effect. The principal proceeding which should resolve the merits of the case is still in progress, although the operations of the radio stations involved have thus far not been affected.

(28)	ONGOING LITIGATIONS AND CLAIMS

In 2003 and 2004, the cable operators Auna, Telecable, Tenaria, Euskaltel, R Telecomunicaciones de Galicia and R Telecomunicaciones de Coruña filed requests for arbitration with the Spanish Telecommunications Market Commission (CMT), requesting the right to receive an offer to market several channels provided by Prisa Televisión S.A.U. (Sogecable at the time) to its subscribers. The CMT ruled partially in favor of these claims in 2004 and 2005. Prisa Televisión filed an appeal at the Madrid Provincial Appellate Court against these decisions, which were rejected. Subsequent to the offer submitted by Prisa Televisión, in January 2008 the Madrid Court of First Instance no. 43 closed the proceeding brought by Auna with respect to the enforcement of the award handed down by the CMT.

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Cableuropa, S.A.U. (Ono) also filed a claim for damage and loss against Prisa Televisión, S.A.U. at the Colmenar Viejo Court of First Instance nº. 3. In its judgment of December 1, 2009, the Court ordered Prisa Televisión to pay approximately EUR 44 million plus the legal interest from when the claim was filed. An appeal against this judgment was filed at the Madrid Provincial Appellate Court. On May 18, 2012, Prisa Televisión and Ono reached an out-of-court settlement, whereby Prisa Televisión withdrew its appeal and Ono repaid half of the amount that, according to the rulings, Prisa Televisión had paid, thereby ending the lawsuits between these two companies on this matter.

The proceedings initiated at the behest of the other operators requesting the execution of the aforementioned awards are still in progress at the respective courts.

Ono filed a claim against AVS and Prisa Televisión relating to the “guaranteed minimum” of the pay-per-view soccer broadcasting agreements entered into by the members of AUNA and AVS. Even though prior claims by cable operators relating to the “guaranteed minimums” have always proved fruitless, in its decision of March 4, 2010, Mercantile Court nº. 7 of Madrid which was hearing the case upheld the claim of Ono, and obliged AVS and Prisa Televisión to jointly and severally pay approximately EUR 30 million, plus an amount not yet determined for the 2007/2008 and 2008/2009 seasons (approximately EUR 29 million including interest). Regardless of the appeal that AVS and Prisa Televisión filed against this judgment, AVS and Prisa Televisión reached an agreement with Ono to avoid the negative effects of a potential provisional execution of this resolution and settled on a payment calendar which began in March 2011. The total amount, with interest, paid by Prisa Televisión was EUR 59,737,192. As with the suit over the theme channels, on May 18, 2012, AVS, Prisa Televisión S.A.U. and Ono reached an out-of-court settlement whereby Prisa Televisión, S.A.U., AVS and Ono withdrew their respective appeals and Ono repaid half of the amount that, according to the rulings, AVS had paid, thereby ending the lawsuits between these companies on this matter.

Past lawsuits between Prisa Televisión and subsidiaries with different joint intellectual property rights management companies, AGEDI, AIE, SGAE and AISGE, have also been settled out of court and are all closed.

In 2006, Warner Sogefils, AIE, an economic interest grouping owned on an equal-footing basis by Prisa Televisión and Warner Bros. Entertainment España, S.L., filed an appeal for judicial review against the penalty imposed by the Spanish Antitrust Agency for the AIE’s purported unfair trade practices, which currently is unresolved. This appeal was conducted by the Competition Court against the distributors of the Majors. Regardless of the appropriate procedural subrogation, the AIE was liquidated in 2006.

On July 24, 2006, Audiovisual Sport, S.L. (AVS), Prisa Televisión, S.A.U., TVC Multimedia, S.L. and Mediaproducción, S.L. (Mediapro) entered into an agreement to exploit the rights of the Spanish Soccer League for the 2006/07 and subsequent seasons. The main purpose of the agreement was to maintain the model of exploiting televised soccer that has prevailed in Spain since 1997. After filed a complaint against Mediapro on July 3, 2007, and supplementary pleadings on July 31, August 27, and September 12, 2007, the latter accompanied by a request for injunctive relief which was fully upheld by the Madrid Court of First Instance no. 36 in an Order dated October 8, 2007. In compliance with this order, Audiovisual Sport, S.L. deposited EUR 50,000 thousand, secured by Prisa Televisión, to guarantee the fulfillment of the contractual obligations. The Order dated October 8, 2007 was revoked by the Madrid Provincial Appellate Court in July 2008. AVS presented a new application for injunctive relief at the Madrid Court of First Instance nº. 36 for the 2008-2009 seasons which was dismissed by Order of September 12, 2008.

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The Court’s decision of March 15, 2010, upheld the claim filed by AVS in its entirety, dismissing the counterclaim filed by Mediapro against AVS, Prisa Televisión and Televisión de Cataluña. The Court also ordered Mediapro to pay more than EUR 95 million for the amounts that should have been paid to AVS under the agreement of July 24, 2006, as well as for the damage and loss arising from the aforementioned breaches. The Court also ordered Mediapro to provide AVS with the agreements entered into by Mediapro and the football clubs and to notify them of the assignment of the agreements to AVS.

The sentence was appealed by Mediapro, and AVS requested its provisional execution on June 9, 2010. The court handed down its ruling on June 21, 2010 on the request, which was suspended as a result of Mediapro's subsequent application and filing for bankruptcy proceedings, which are still underway before Barcelona Mercantile Court number 7 (Bankruptcy case no. 490/2010).

In a ruling of November 14, 2012, the Madrid Provincial Court upheld for the most part the ruling of March 15, 2010, accepting Mediapro’s appeal only with respect to the duration of the agreement of July 24, 2006, ruling it closed at the end of the 2008/2009 season. AVS and Prisa Televisión, S.A.U. have filed appeals for judicial review against this ruling.

AVS also filed a new claim against Mediapro before Barcelona Mercantile Court number 7 demanding EUR 97 million in damages not covered by the sentence handed down on March 15, 2010. This proceeding was suspended after the judge declared the existence of a preliminary judgment via ruling of September 22, 2010, which was appealed by AVS.

On July 15, 2011, Mercantile Court nº. 7 of Barcelona handed down a ruling indicating that, given that more votes were cast in favor than against the proposed settlement submitted by Mediapro (consisting of a delay of 35 months in its payment obligations, without acquittance), the court would approve it if no statement of opposition was filed in ten days.

AVS filed an incidental claim challenging the court approval of the settlement, which was granted leave to proceed on September 19, 2011. The statement of opposition was submitted along with an expert report issued by KPMG. Based on the events occurred since date of the issue of the report by the bankruptcy trustees, the expert report questioned the viability of the proposed settlement with creditors. Mediapro contested the statement of opposition on October 7, 2011.

The hearing on the statement of opposition that had been filed was scheduled for October 28, 2011. It was postponed and then rescheduled for December 21.

On December 23, 2011, Mercantile Court nº 7 of Barcelona handed down a ruling dismissing the opposition filed by AVS and approving the proposed settlement with creditors, thereby bringing the effects of the bankruptcy proceedings to an end. The bankruptcy trustees and Mediapro, in a statement issued on June 29, 2012, notified Mercantile Court nº 7 that, under the terms of the agreement, the waiting period would be calculated from April 23, 2012.

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AVS filed an appeal against the ruling of Mercantile Court No. 7 of Barcelona and all judgments issued throughout the proceedings that could be appealed under the Bankruptcy Law rejecting the actions undertaken by AVS designed to achieve an appropriate inclusion of the assets and liabilities in bankruptcy.

On October 24, 2012, the Provincial Court of Barcelona rejected the appeal against the ruling accepting the settlement and in which AVS requested the termination of the bankruptcy trustees be suspended.

The rest of the appeals are still awaiting decisions by the Provincial Court of Barcelona.

This primary proceeding against Mediapro was not affected by the agreement dated August 16, 2012 between DTS And Mediapro for the exploitation of audiovisual rights for soccer during the 2012/2013, 2013/2014 and 2014/2015 seasons.

On November 7, 2011, DTS was notified of a claim filed by the bankruptcy trustees of Real Betis Balompié being heard by Mercantile Court nº 1 in Seville (bankruptcy incident 1037/2011). This litigation stemmed from a dispute between DTS and the aforementioned Club on the nature of an advance payment of EUR 10 million that DTS made to the Club pursuant to a contract dated October 11, 2007, regarding the assignment of audiovisual rights for several seasons. The Club considered that the payment was a signing bonus and DTS considered that it was an advance payment. DTS responded to the claim on November 22, 2011 and the hearing was held on January 20, 2012. In a ruling dated April 2, 2012, the courts accepted the request from the bankruptcy trustees, prohibiting DTS from discounting the advance payment of EUR 10 million made by DTS from the payments to the Club. However, on May 24, 2012, DTS, the Club and the bankruptcy trustees reached an out-of-court settlement putting an end to this litigation. Under this agreement, DTS may allocate EUR 2.5 million to the price for the 2011/2012 season of the EUR 10 million under dispute. The remaining EUR 7.5 million will be applied proportionately to the 2012/2013, 2013/2014 and 2014/2015 seasons over which the Club and DTS have entered into a new agreement. In addition, in a ruling dated June 27, 2012, the Courts certified the agreement reached between the parties.

Elsewhere, European Home Shoping, S.L. (“EHS”) has filed a suit against DTS claiming EUR 1.2 million in indemnity for discrimination by EHS against Canal Club regarding the economic terms of access to the Digital+ platform (now Canal+) agreed upon with EHS on July 21, 2005. This suit stems from the counterclaim lodged by EHS against Sogecable Media (now absorbed in Mediaset España) and DTS related to Sogecable Media’s prior suit against EHS claiming an amount for failure to pay advertising contracted by EHS for its broadcast on TDT channel 40 Latino. EHS responded to DTS’s counterclaim and the preliminary hearing was set for December 16, 2013.

On April 8, 2008, the Investigation Unit (“IU”) of the Spanish Competition Authority (CNC) resolved to initiate disciplinary proceedings, ex oficio, against different companies (including Prisa Televisión, S.A.U. and AVS) and 39 soccer clubs due to restrictive competitive practices which would affect the market for the acquisition of audiovisual rights relating to Spanish soccer events held on a regular basis and the market for the audiovisual exploitation of such rights. On April 14, 2010, the CNC handed down its ruling, by virtue of which it fined Prisa Televisión and Mediapro EUR 150 thousand, and AVS EUR 100 thousand. The CNC based the fines on the finding that the contract between the two parties restricted competition. Prisa Televisión and AVS filed an administrative appeal which has not yet been ruled upon.

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On December 12, 2008, the CMT issued a resolution imposing a sanction against Prisa Televisión for alleged repeated breaches of the requirements relating to the information prepared by the aforementioned company in relation to compliance with the terms and conditions of the Spanish Cabinet Resolution dated November 29, 2002, on which the integration of Vía Digital with Prisa Televisión was conditional. The CMT also handed down a decision imposing a similar penalty against AVS. Both Prisa Televisión and AVS filed the corresponding appeals for judicial review against these decisions. In a ruling dated April 26, 2012, the National Appellate Court rejected the appeal for judicial review filed by AVS against the CMT resolution of December 12, 2008. AVS has filed an administrative appeal against this ruling. The appeal submitted by Prisa Televisión is pending resolution.

In addition, on December 7, 2012, the IU of the CNC resolved to initiate disciplinary proceedings for conduct prohibited under articles 1 and 2 of the anti-trust law (LDC) and articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU) against DTS, Telefónica, S.A. and Mediapro regarding the marketing of Canal+ Liga and Canal+ Liga de Campeones under case number S/0436/12. The proceedings are in the initial stages and there is no specification of facts document as yet. DTS has requested that certain documentation provided in the stage of undisclosed information prior to the proceedings remain confidential and has inspected the file before presenting any statement of allegations. The initiation of these proceedings does not prejudice the outcome of this investigation. The CNC will have up to 18 months to examine the file and issue a resolution.

On November 24, 2011, CNC issued a resolution penalizing Prisa and some of its subsidiaries (Ediciones El País, GMI, Progresa and Prisa Brand Solutions) for an alleged offence regarding competition, for a project of joint commercialization of advertising space in written press and in a Sunday supplement edited with another editor group. Both Prisa and the editor group have filed administrative appeals, which have not yet been ruled upon.

The Group’s directors and the internal and external legal advisers do not expect any material liabilities not already recognized to arise for the Group as a result of the outcome of these lawsuits.

(29)	EXPLANATION ADDED FOR TRANSLATION TO ENGLISH

These consolidated financial statements are presented on the basis of IFRSs as adopted by the European Union. Certain accounting practices applied by the Group that conform with IFRSs may not conform with other generally accepted accounting principles.

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	PROMOTORA DE INFORMACIONES, S.A.
	(Registrant)

March 11th, 2013	By:	/s/ Carlos Ulecia Palacios
	Name: Carlos Ulecia Palacios
	Title: Deputy Secretary of the Board of Directors