ANTENA 3JP MORGAN MEDIA CEO CONFERENCE 2009
Silvio González (CEO)
30th June – 1st July 2009
2 Antena 3 – JPMorgan CEO Conference – July 2009
ACCELERATE CHANGES IN THE SECTOR
PUBLIC TV: TVEDTT PAY TVCONSOLIDATION
Severe cyclical and structural changes
INNOVATION& CREATIVITY
DTT STRATEGYANTENA 3.0
INTERNAL CHANGESFLEXIBILITY IN CONTENTS & COSTS
3 Antena 3 – JPMorgan CEO Conference – July 2009
Severe cyclical and structural changes
ACCELERATE CHANGES IN THE SECTOR
PUBLIC TV: TVEDTT PAY TVCONSOLIDATION
INNOVATION& CREATIVITY
DTT STRATEGYANTENA 3.0
INTERNAL CHANGESFLEXIBILITY IN CONTENTS & COSTS
4 Antena 3 – JPMorgan CEO Conference – July 2009
The Spanish TV Ad Market is suffering the biggest recession of the last two decades
Cyclical changes: Advertising market in Spain
-20 %
-16 %
-12 %
-8 %
-4 %
0 %
4 %
8 %
12 %
16 %
20 %
'92 '93 '9 4 '95 '96 '97 '9 8 '9 9 '00 '01 '02 '0 3 '04 '05 '06 '0 7 '0 8 '09E
Real GDP growth
TV Ad. Market growth
Source : Banco de España (GDP) and INFOADEX (Advertising Market). 2009 consensus
?
TV Ad market growth since 1992
5 Antena 3 – JPMorgan CEO Conference – July 2009
Cyclical changes: Advertising market in Spain
Source : Infoadex
Spanish TV Ad market
TV Ad market is currently at 2003-2004 levels in nominal terms and <2002 in real tems
3,073
2,1722,317
2,670
2,951
3,188
3,467
2002 2003 2004 2005 2006 2007 2008 2009E
€ NOMINAL TERMS: 2003-2004 LEVEL2,496
2,172 2,222
2,4632,616
2,727
2,887
2002 2003 2004 2005 2006 2007 2008 2009E
€ REAL TERMS: <2002 LEVEL
6 Antena 3 – JPMorgan CEO Conference – July 2009
8 operators in Free-To-Air TV + additional Pay TV players Around 20 channels at present in FTA, more than 40 after analogue switch off
Structural changes: Stronger competition in TV
Audience Share Jan-May 2009 Total Individuals
TVE Forta A3TV T5 Veo TVCuatro Sexta
Source: TNS Sofres24h, Total Individuals: 4+
Net TV Thematic
DTTAnalogue and rest
22.4
14.116.7
15.6
9.17.1
1.2 0.4
7.5
Public TVs FTA TVs Pay TVs
7 Antena 3 – JPMorgan CEO Conference – July 2009
Structural changes: Competition from other media
Audiovisual content predominance increases competition, forcing innovation in advertising
Radio
Mobile CLIENT
Television Internet (Vídeos)
Magazines www
Outdoor www
IPTVPress
www
8 Antena 3 – JPMorgan CEO Conference – July 2009
Structural changes: Changes in TV contents & advertising
TV contents and advertising need to adapt to structural changes
Structural changes
MagazinesNewsSports
Realities
In house productions
Live contents
Live contents
Control over the content and thus the advertising
Contents
Product placement
Special initiatives
Sponsorships
Integrating the adsinto the contentsAds
9 Antena 3 – JPMorgan CEO Conference – July 2009
Despite cyclical and structural changes, TV has maintained its appeal throughout the years
Market share by media
35.7 37.5 40.143.9 43.4
1991 1995 2000 2005 2008
TV
RADIO
PRESS
INTERNETOTHERS
TV leadership
Source: Infoadex (except 1991: Nielsen)
10 Antena 3 – JPMorgan CEO Conference – July 2009
54
89
42
53
32
Radio TV Newsp. Magaz. Internet
%
Coverage by media
TV leadership
Source: EGM 1st survey 2009
TV is the leading media in terms of coverage
11 Antena 3 – JPMorgan CEO Conference – July 2009
7%
52%2%
11%
8%5%
15%
Television is the media with the highest notoriety
TV leadership
Notoriety by media
Television
Internet
Magazines
Newspapers
Cinema
Outdoor
Radio
Source: IOPE. Total brand mentions / media. Ind. +14. FY 2008
12 Antena 3 – JPMorgan CEO Conference – July 2009
TV leadership
Source : Internal estimates*Cost per thousand: Cost per 1,000 views of the ad (in euros)
5.6
7.0
8.59.5
3.62.7
TV RADIO SUNDAY SUPPL. INTERNET NEWSPAPERS MAGAZINES
CPT benchmarking by media
The lowest Cost per Thousand (CPT*) among the media
13 Antena 3 – JPMorgan CEO Conference – July 2009
Forecasted recovery of TV Ad market following GDP trend
Advertising market in Spain
Source : Banco de España (GDP) and INFOADEX (Advertising Market)
100
150
200
250
300
350
400
'91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09E
'10E
'11E
'12E
'13E
'14E
'15E
Nominal GDP : 7.0%CAGR 91-07
Nominal TV Ad Market: 7.1%CAGR 91-07
R²=98.3%A
B
TV Ad market vs GDP
Based on historical correlation between GDP and TV Ad growth, Scenario A is more likely than B
+5-1
0%
14 Antena 3 – JPMorgan CEO Conference – July 2009
Severe cyclical and structural changes
INNOVATION& CREATIVITY
DTT STRATEGYANTENA 3.0
ACCELERATE CHANGES IN THE SECTOR
PUBLIC TV: TVEDTT PAY TVCONSOLIDATION
INTERNAL CHANGESFLEXIBILITY IN CONTENTS & COSTS
15 Antena 3 – JPMorgan CEO Conference – July 2009
DTT Penetration in Spain
DTT will become a reality in April 2010
DTT Penetration
4.25.2
6.0
7.5
9.3
Jan-08 May-08 Sep-08 Jan-09 May-09
Penetration55,8%
12%
20%
68%
2008 Jun-09 Dec-09 Apr-10
12,6%
32.6%
100%
0.6%
Phase I Phase II Phase IIIPilot Project
Analogue switch off schedule
2.2x
Source : TNS Sofres Source : Impulsa TDT
In million households % population
16 Antena 3 – JPMorgan CEO Conference – July 2009
Antena 3 DTT channels: Neox & Nova
Development of a family of channels in addition to the core channel: Opportunity to increase audience share
Improved market leverage to face fragmentation Marketing focused on enhancing brand image: Neox and Nova: Wide commercial target, no contraints to contents
growth
•Young Adults•Females Children Sports News Fiction Politics Music Household
• Variety of contents• Higher growth potential
• Narrower commercial target• Limited growth
DTT channels
Target
Orientation Client Product
17 Antena 3 – JPMorgan CEO Conference – July 2009
Source: TNS Sofres. 24h, Total individuals 4+
DTT: Advertising bundling
Unique simultaneous advertising across the three channels, as of 1st February 2009
High audience High prices
Low audience Low prices
Feb-May 09
15.2
1.5
No bundling
16.7
More attractive for advertisers (+GRPs)Wider coverageHigher frequency Better Day part mix
Higher revenues in DTT
Bundling
Feb-May 09
18 Antena 3 – JPMorgan CEO Conference – July 2009
GRPs: Gross Rating Point.Source: TNS Sofres. 24h, Total individuals 4+
Why did Antena 3 make it possible?
DTT: Advertising bundling
Advertising bundling
Spanish Ad market based on GRPs* vs discounts
13
54
Age
Male Female
Affinity among the channels
0.65
2.3x 1.48
May 09Jan 08
Relevant audience share in DTT
19 Antena 3 – JPMorgan CEO Conference – July 2009
DTT: Advertising bundling
Relevant audience for advertisers: A3 Group´s audience share
1616.3
15.9
16.816.716.816.7
16.7
Feb Mar Apr May
2008 A3 2009 A3 Group
Total individuals Commercial Target
Source: TNS Sofres24hTotal individuals: 4+Commercial Target: 16-54 yrs. Up to 10,000 inhabitants
+5.0%
+2.7%+4.4%
-0.6%
16.717
16.3
17.2
17.917.918.017.9
Feb Mar Apr May
2008 A3 2009 A3 Group
+10.4%+5.3% +7.2%
+4.1%
20 Antena 3 – JPMorgan CEO Conference – July 2009
DTT: 24 h Audience Performance
16.8 16.7 16.8 16.7
15.215.514.9
15.6 16.6
17.6
Jan-09 Feb-09 Mar-09 Apr-09 May-09
Total individuals (Jan-May 2009)
Commercial Target (Jan-May 2009)
Source: TNS Sofres24hTotal individuals: 4+Commercial Target: 16-54 yrs. Up to 10,000 inhabitants
Leadership in Commercial Target
17.9 18 17.8 17.8
16.116.4
14.916.3
13.313.6
Jan-09 Feb-09 Mar-09 Apr-09 May-09
A3 Group (A3+Neox+Nova) A3 Group (A3+Neox+Nova)
21 Antena 3 – JPMorgan CEO Conference – July 2009
DTT: Prime Time Audience Performance
14.713.6
16.2
18.5
16.017.0 15.715.3
16.316.0
Jan-09 Feb-09 Mar-09 Apr-09 May-09
Source: TNS SofresPrime Time: From 20:30 to 24:00hTotal individuals: 4+Commercial Target: 16-54 yrs. Up to 10,000 inhabitants
Closing the gap in Prime Time
17.8
16.6
14.9 16.1
19.2
13.113.4
18.3
17.2
16.6
Jan-09 Feb-09 Mar-09 Apr-09 May-09
A3 Group (A3+Neox+Nova) A3 Group (A3+Neox+Nova)
Total individuals (Jan-May 2009)
Commercial Target (Jan-May 2009)
22 Antena 3 – JPMorgan CEO Conference – July 2009
A3 Group leads the DTT offer in 2009: the only player to monetise its audience share through advertising bundling
DTT channel overview
Jan-May 2009 Total Individuals
1.431.33
1.18
0.61
0.37 0.35
0.13
A3 TVE Net TV T5 Veo TV Cuatro La Sexta
Source: TNS Sofres24h, Total Individuals: 4+
Young Adult
Female
Children
Sports
News
Politics
ChildrenFiction
Fiction
Fiction
Fiction News
Music
Decor
Client Product
23 Antena 3 – JPMorgan CEO Conference – July 2009
13.3 13.212.4
11.2
9.08.2
3.5 3.4 3.1 3.02.0 1.8 1.4 1.3 1.2 1.0 0.9 0.8 0.8 0.7 0.5 0.5
DTT household
Source : TNS SofresShare DTT (DTT: 100).24h, Total individuals 4+
In a DTT household, A3 Group holds the leadership among TV private players, widening the gap with Telecinco
Antena 3 TV18.7%
Telecinco TV15.7%
Jan-May 2009 Total Individuals
24 Antena 3 – JPMorgan CEO Conference – July 2009
Why 3.0?
Antena 3.0: A Three-screen model
Three screens
Three channels
How, when & where
25 Antena 3 – JPMorgan CEO Conference – July 2009
Antena 3.0
Antena 3.0: A Three-screen model
New BUSINESS
OPPORTUNITIES
INNOVATIONAntena 3 leads
audiovisual changes
BRAND IMAGE Antena 3, Neox & Nova
aligned with Internet and Mobile
Increases the value of the
ADVERTISING BUNDLING
Reinforces the MULTIPLATFORM
CONTENTconcept
26 Antena 3 – JPMorgan CEO Conference – July 2009
Antena 3.0: Launched May 2009
Antena3.com Multiplexation Antena3.mobi
Antena 3.0: A Three-screen model
Previews and re-runs Watch and chat Exclusive contents (making
of, deleted scenes,…)
Live contents on the mobile phone (“El internado”)
Exclusive contents (making of, deleted scenes)
Mobile games
• Navigator 3.0: Graphic tools informing on the three-screen offer• Presenter 3.0: Continuity presenter informs on the most interesting
events on the three screens
DTT: Previews and re-runs “El Internado”: 1st episode
Simultaneous emission
27 Antena 3 – JPMorgan CEO Conference – July 2009
5.6
9.2
3.8
2.1
May-08 May-09
Unique Users Visits
Antena 3.0: Internet
Website redesign based on Antena 3.0 strategy boosts visits, unique users and video streams as of may 2009
A3 Visits & Unique Users (MM)
Source: OJD/Nielsen Market Intelligence
19.3
22.9
May-08 May-09
A3 Group Video Streams (MM)
+78%
+110% +19%
Source: Akamai, Flumotion, Admotion, Youtube
28 Antena 3 – JPMorgan CEO Conference – July 2009
Severe cyclical and structural changes
ACCELERATE CHANGES IN THE SECTOR
PUBLIC TV: TVEDTT PAY TVCONSOLIDATION
INNOVATION& CREATIVITY
DTT STRATEGYANTENA 3.0
INTERNAL CHANGESFLEXIBILITY IN CONTENTS & COSTS
29 Antena 3 – JPMorgan CEO Conference – July 2009
Flexibility in contents
Cost contention in contents
60%63%
68%
2006 2007 2008
Occupancy by contentsTV Programming costs
2002 2003 2004 2005 2006 2007 2008
In-house production
External productionNOMINAL TERMS CAGR: +4.1%
REAL TERMS CAGR: +0.6%
Source: Antena 3Source: Antena 3
30 Antena 3 – JPMorgan CEO Conference – July 2009
Large variety in contents
Flexibility in Contents
MarisolMarisol, 23, 23--F, F, Días Días sin sin Luz, Luz, Una balaUna bala….….Share 09: 15.8%
TV MOVIESTV MOVIES FILMSFILMS
SPORTSSPORTS ENTERTAINMENTENTERTAINMENT
¿¿Donde estás corazónDonde estás corazón? ?
Share 09: 19.8%
Champions League Champions League
Share 09: 40.1%
CinematrixCinematrix
Share 09: 15.5%
SPANISH FICTIONSPANISH FICTION
Los hombres de Los hombres de PacoPacoShare 09: 15.8%
Doctor MateoDoctor MateoShare 09: 19.9%
Física Física o o QuímicaQuímicaShare 09: 16.2%
El El InternadoInternadoShare 09: 17.4%
Source: TNS Sofres. Total Individuals:4+.January-May 2009
31 Antena 3 – JPMorgan CEO Conference – July 2009
Flexibility in contents
Key guidelines
Align the organization
towards multichannel
production
Produce MULTIPLATFORM
content
Use Cross-media promotion capabilities
Optimize our Newsroom
Seek to interact with the audience
Antena 3.0
Antena 3.0 SMSContexta
Espejo publicoAntena 3 newsA fondo
32 Antena 3 – JPMorgan CEO Conference – July 2009
Flexibility in costs
Changes in the industrial area of the business
2009 2010
Production services
Make-up &Hairdressing
News operators
Storage
Scenography
Align the organisation to maximize resources
• Flexibility in the use of the resources• Adapting costs to market standards
Programming
Contentpurchase
Product definition
Service externalization
TV businesstoday
...
Programming
Contentpurchase
Product definition
TV businesstomorrow
33 Antena 3 – JPMorgan CEO Conference – July 2009
Severe cyclical and structural changes
ACCELERATE CHANGES IN THE SECTOR
PUBLIC TV: TVEDTT PAY TVCONSOLIDATION
INNOVATION& CREATIVITY
DTT STRATEGYANTENA 3.0
INTERNAL CHANGESFLEXIBILITY IN CONTENTS & COSTS
34 Antena 3 – JPMorgan CEO Conference – July 2009
Re-design the role of state-owned television (TVE):
Changes in the sector: TVE
Timing Bill to be passed by parliament via “urgent procedure” so that it may come into force as of Q4 09
Obligations in contents
• Banned to counterbid against a private player for premium contents • Expenses capped on sports rights (max 10% on operating costs) • Max 70 premiere movies/year• Obligation to broadcast political, cultural and children´s contents• 60% of prime time contents to be produced in Europe
FinancingTVE´s budget 1.200 M€,as of 2010
• Public budget
• 80% on radiowave spectrum canon (max 330 M€)
• 0.9% tax on yearly gross revenues for telecoms
• 3.0% tax on yearly gross revenues for TV players
• 1.5% tax on yearly gross revenues from Pay TV suscriber fee
Sources
35 Antena 3 – JPMorgan CEO Conference – July 2009
Changes in the sector: TVE
100 98 97
78
7075
86 (with TVE)
89 (without TVE)+3.5%
Effect in average prices
Marginal increase in average price without TVE
Source: Internal estimates. Prices in conventional advertising jan-may 09
Antena 3= 100
36 Antena 3 – JPMorgan CEO Conference – July 2009
Changes in the sector: TVE
Prices
Prices today at 2003-2004 levels
Source: Internal estimates. Prices in conventional advertising jan-may 09
100
131
81 8393
114119
126
2002 2003 2004 2005 2006 2007 2008 2009
IN NOMINAL €: 2004-2005 LEVELS
100
131128126
1079899
131
2002 2003 2004 2005 2006 2007 2008 2009
IN REAL €: 2002-2003 LEVEL
2009= 100
37 Antena 3 – JPMorgan CEO Conference – July 2009
Changes in the sector: TVE
CPT benchmarking
TV, >30% price gap to match the next cheapest media
Source: Internal estimates.
TV RADIO SUNDAYSUPPL.
INTERNET NEWSPAPERS MAGAZINES
+33%
3.6 3.6
5.6
7.0
8.59.5
2.7
38 Antena 3 – JPMorgan CEO Conference – July 2009
Changes in the sector: TVE
CON A3 GRUPO
100 200 300 400
80.778.1
67.9
50.1
81.7
77.1
69
51.1
81.2
76.5
68.4
50.6
Coverage maintained without TVE
Coverage in Adults
GRPs
Without TVE1
CON A3 GRUPO
100 200 300 400
80.676
67.7
50
79.6
74.7
66.1
48.1
78.4
73.3
64.6
46.8
Coverage in Commercial Adults
GRPs
Source: TNS, PyB, proportional share by channel 1)T5: 35%, TVE1:33%, Cuatro: 15%, La Sexta: 16%. 2) A3:36%. T5: 33%, TVE1: 31%.
3) A3: 37%, T5: 34%, Cuatro: 14%, La Sexta: 16%; Adults Commercial: 16-55 H MH MM ML +10,000 inhab. April 2009
39 Antena 3 – JPMorgan CEO Conference – July 2009
24.9
5.0
20.7
30.4
4.6
9.0
31.1 29.8
34.1
10.4
'4-12 13-24 25-44 45-64 >65
Changes in the sector: TVE
Profile of advertising campaigns maintained without TVE
WITHOUT TVEWITH TVE
+1,4
+2,9
-4,2
43.2
56.9
43.2
56.8
Male Female
61.0
39.0
59.6
40.4
HMHMM MLL
21.8
78.2
24.0
76.0
Hab -10M Hab +10M
Source: TNS, April 2009, Total Day
Genre
+1,4+2,2+2,2
Age
SocialClass
Population
40 Antena 3 – JPMorgan CEO Conference – July 2009
Pay TV in DTT: a market opportunity? Current status:
Royal Decree, pending approval, to permit at least one Pay TVchannel in DTT per FTA TV player without additional government approval
Changes in the sector: DTT (Pay TV)
Satellite2.0 m
Cable1.3 m
IPTV0.7 m
Market opportunity12.1m non Pay-TV
households...
...of which >7m are not currentlyreached by Cable or IPTV
Source: CMT. 2008
Pay TV market penetrationIn mill households
41 Antena 3 – JPMorgan CEO Conference – July 2009
Changes in the sector: DTT (Pay TV)
Subscribers & Penetration in Europe
Source: Screen Digest. 2008
Penetration Pay TV
25% 23%
55%
51%
57%
0
5
10
15
20
25
Spain Italy France UK Germany
0%
10%
20%
30%
40%
50%
60%
70%
MM subscribers Penetration2001 2004 2008
Satellite Cable IPTV Rest households
28% 21% 25%
12.3
15.016.1
Source: CMT, Antena 3
Stagnant pay TV penetration throughout the last decade and below the rest of the european markets
In million households
42 Antena 3 – JPMorgan CEO Conference – July 2009
Changes in the sector: Consolidation
Reducing competition New rules in place for consolidation process
Combined audience share below 27% in previous 12M Combinations limited to two players
Current scenario
4 Commercial FTA TV players
Audience share
Market share
2 State-ownedTV players
46%
70%
35%
30%
Future scenario
46%
88%
35%
12%
2 or 3 Commercial FTA TV players
MAIN COMPETITORSMAIN COMPETITORS
Power ratio1.5x 0.9x 1.9x 0.3x
?
Source: Audience share:TNS Sofres. Total Individuals:4+.January-May 2009 / Market share: Infoadex
43 Antena 3 – JPMorgan CEO Conference – July 2009
Changes in the sector: Consolidation
Private Public Private Public
Private Public Private Public
Spanish future outlook similar to other european markets
Power ratio1.5x 0.9x 1.3x 0.5x
Power ratio1.9x 0.1x 1.5x 0.8x
Source: Internal estimates from several sources
44 Antena 3 – JPMorgan CEO Conference – July 2009
Faced with the most important cyclical and structural changes ever seen before, TV will maintain its appeal
Advertising and content will align with the new scenario
Commitment to innovation will transform changes into opportunities (DTT, Antena 3.0)
Flexibility in costs and contents is key for the future TV business
Changes in spanish media sector are creating new major growth drivers
Conclusions
45 Antena 3 – JPMorgan CEO Conference – July 2009
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