FY08 US GAAP Results

1st May 2009 07:00



GRUPO CLARÍN S.A.

2008 ANNUAL REPORT

To the Shareholders of 

Grupo Clarín S.A.

We hereby submit to your consideration the 2008 Annual Report, supplementing the consolidated financial statements as of and for the years ended December 31, 2008 and 2007, which were prepared in accordance with US GAAP.

Financial information of Grupo Clarín S.A. (the "Company") and its subsidiaries set forth in this supplemental annual report, except those included in the Financial Statements, are derived from our consolidated financial statements prepared in accordance with Argentine GAAP as of and for the year ended December 31, 2008, stated in Argentine Pesos, unless otherwise indicated, and presented on a consistent basis with the information issued by the Company through its institutional communications. 

The main subsidiaries in which Grupo Clarín S.A. has a direct or indirect controlling interest are: Arte Gráfico Editorial Argentino S.A. (AGEA), Artes Gráficas Rioplatense S.A. (AGR), Compañía Inversora en Medios de Comunicación S.A. (CIMECO) Cablevisión S.A., Primera Red Interactiva de Medios Argentinos (PRIMA) S.A., Contenidos de Medios Digitales S.A. (CMD), Arte Radiotelevisivo Argentino S.A. (ARTEAR), GC Gestión Compartida S.A., Inversora de Eventos S.A. (IESA) and Radio Mitre S.A., among others. 

MACROECONOMIC ENVIRONMENT 

In 2008, the Argentine economy managed to stay somewhat dynamic and maintain its employment level, in part, as a result of the prior year's carry-over effect. In spite of the aggressive external shock brought about by the worsening of the worldwide financial crisis, the country's external and fiscal accounts showed surpluses. In contrast, growing poverty levels were recorded also this year, in a context of high (but declining) inflation and gradual slowdown of the major labor-intensive sectors.

Economic activity continued to grow in 2008 for the sixth consecutive year, though at a slightly decelerated rate compared to prior years (approximately 5.5%). This slowdown is mainly attributable to a stagnated second half of the year. Also worthy of note is that out of the six previous years of growth, almost three were devoted to the recovery of GDP lost during the severe crisis that occurred between 1998 and 2002.

Private consumption, which accounts for almost two thirds of GDP, and gross domestic investment were the main drivers of such performance (though the latter to a lesser extent compared to prior years, in line with a weakened construction sector). The agricultural sector and the automobile industry reached new record highs in 2008 (96 million tons and 593 thousand units, respectively). 

The economy's dynamics was coupled with higher inflation rates in the first half of 2008. As aggregate demand decelerated (at first, because of the agricultural sector crisis and then because of the global financial crisis), price acceleration slowed down. In spite of this and according to private estimates, the annual inflation rate for 2008 would be in the neighborhood of 21%, a rate similar to that of 2007 and three times the rate released through official statistics (7.2%).

The country's external and fiscal accounts continued to achieve positive results. Thus, the external trade balance showed surplus again, exceeding USD10 billion for the seventh consecutive year. These results can be attributable to the 27% increase in the value of exports (a record high since 1995), which was driven almost exclusively by the acceleration in prices and which offset by far the rise in imports.

Despite the large external surplus and, unlike prior years, the Central Bank's international reserves (USD46.4 billion as of December, including debts with the Basel Bank and futures) remained almost steady on a year-on-year basis. This can be attributable to increased capital outflow from the private sector which, within the framework of a dirty float system, resulted in the nominal devaluation of the Argentine currency (10% year-on-year rate, up to Ps./USD3.45) and in a rise in the nominal interest rates by the end of the year. 

In a sluggish and highly inflationary environment, tax revenues increased by 34% in 2008. Most of such rise was driven by the 73% increase in export duties, which exceeded once again the country's primary savings in terms of absolute values. Accordingly, the tax burden reached a new peak in 2008 (26% of GDP at a national level and 30% on a consolidated basis), providing funding again for the strong increase in public spending. Once more, export duties accounted for an increased share of total tax revenues (rising from 10.2% to 13.4%). 

Of particular note is the key role the prices of raw materials exported by Argentina have had in the economic recovery process which began in 2002. The terms of trade (that is, the relationship between export and import prices) have historically had a remarkable influence on the performance of the local economic activity. Thus, it can be observed that GDP grew at strong and sustained rates in cycles with favorable terms of trade. Conversely, the economic activity slowed down every time this indicator fell. Of course, this is not a one-to-one relationship since there are other relevant variables to be considered. However, there is absolutely no doubt that the terms of trade have historically had significant effects on GDP performance in general terms and specifically on the most recent recovery process. 

In fact, real GDP increased by 60% in the period 2002-2008. The strong growth of the terms of trade (almost 40%) - driven by the skyrocketing value of exports (176%) - was of utter importance in such GDP performance.

Perspectives for the Upcoming Year 

In a global context of unprecedented destruction of value and employment, the major developed economies are currently undergoing or otherwise heading towards recession. How long and deep this process will be is still unknown. Both the BRIC countries (Brazil, Russia, India and China) and the emerging countries have gradually started to feel the negative effects of the international crisis - a sudden turn in the economic prosperity of the latest years.

Given the fact that Argentina is a net exporter and thus highly sensitive to the agricultural commodities cycle, in 2009 the economy seems to be likely to face a significant decline in the value of exports and in the pace of economic activity. 

As a result of the fall in prices and the expected poorer crop harvest caused by the severe drought, exports would slow down for the first time in six years, impacting on trade surplus. The extent of such deceleration will depend on the fluctuation of raw material prices and the exchange rate and also on the length and depth of the international crisis, though it seems that the foreign currency shortage will be a predominant trait in 2009. Moreover, the low carry-over effect, the salary adjustments and the poor perspectives for the industrial and agricultural activities are some of the factors that would lead to the abovementioned GDP slowdown.

The weakened domestic demand, coupled with lower pressure on commodity prices, might result in a decreased inflation rate in 2009, though it is expected to remain in double digits, as a result of a gradually upward trend expected for the exchange rate and the adjusted rates of certain utilities.

Tax revenues are expected to be impacted negatively by two factors in 2009: the significant decline in revenues from export duties and the reduction of taxes related to the economic cycle (such as VAT). On the other hand, there will be an inflow of Ps. 15 billion in annual contributions from former enrollees of private pension and retirement funds. 

The current global crisis takes place in an economic environment with fundamental variables that would somewhat cushion its adverse effects. Amidst a hostile external environment which does not resemble at all the one that has prevailed so far, the urgent challenges consist of rebuilding trust and avoiding a "widening" of the negative phase of the cycle.

THE YEAR 2008 AND THE MEDIA SECTOR IN ARGENTINA 

As described above, 2008 is a turning point in the high and sustained growth cycle the Argentine economy has undergone since 2003. In this context, the performance of the media industry was again in line with that of the GDP. There was an increase in sales in the segments compared to the previous year, though at a different pace determined by the particular features of their respective environments. 

However, the growth rate of revenues from the industry in general and from advertising investment in particular (the source most sensitive to the cycle) was lower in 2008 than in previous years, as a result of the economic activity slowdown. Certain seasonal factors have also had an impact on advertising, such as the 2007's presidential elections, which increased the basis for annual comparison.

In the same way the audiovisual content production segments and the printing industry to a lesser extent experience the largest increase in revenues during the upward phase of business cycles due to heavy reliance on advertising (and its multiplier effect), in 2008 both segments suffered the impact of the slowdown in advertising investment in the second half of the year. The year-on-year growth of both the broadcast television and the radio advertising pies in 2008 was lower than that of 2007 and also lower than the real rate of inflation estimated by the private sector for the year (of around 21%). 

In 2008, advertising sales and circulation of printing products continued to grow on a year-on-year basis, though to a lesser extent compared to prior years. Such growth was mostly driven by the adjustment of rates and prices per copy in line with inflation. Average newspaper circulation in the City of Buenos Aires and the provinces (source: Newspaper and Magazine Circulation Verification Institute, IVC, adjusted by the Company to account for newspapers in the City of Buenos Aires for which circulation is not verified) in 2008 was 1,276,000 copies - a slight decrease compared to the previous year.

In contrast to the above, the slowdown in advertising investment did not have a significant impact on the Cable Television and Internet Access segment, due to the fact that advertising sales are not material within the revenue structure of that segment. The impact of the economic deceleration on Subscription sales (the main revenue source of that segment) became apparent in the last quarter of the year. However, it did not overshadow the favorable development of the subscriber base and the increasing penetration of additional services, which enabled the Company to increase investments in network capacity expansion. At year-end, the national paid television subscriber base was approximately 6.7 million users, out of which 5.9 million were cable television subscribers, thus maintaining its growth rate. However, despite the ongoing recovery this segment has experienced in terms of volume over the last years, the current number of subscribers reached a level similar to that recorded before the crisis just by the end of the year.

The importance of the Internet in the daily life of the Argentine people, with an increasing participation of the middle-income sector, resulted in a strong increase in World Wide Web access. Broadband, under its different modalities, is the exclusive driver of this performance, as it speeds up the spread of the Internet, by providing increasingly faster access.

In a very competitive environment, the total number of broadband clients reached 3.4 million users by year-end; a strong growth compared to 2007. Conversely, dial-up and Free-Access continued to decline, mostly due to migration to more expensive services. Therefore, broadband penetration in Argentine households increased again, reaching new record highs.

Content-development sites, particularly news sites, with the newspapers in the top ranks, continued to register an increasing number of visits. In line with developed countries, the increased audience gradually leads to increased advertising investment in this segment.

THE COMPANY. ORIGIN, EVOLUTION AND PROFILE 

Grupo Clarín is the most prominent and diversified media group in Argentina and one of the most important in the Spanish-speaking world. The Company is organized and operates in Argentina and its controlling shareholders and management are Argentine. Grupo Clarín is present in the Argentine printed media, radio, broadcast and cable television, audiovisual production, the printing industry and Internet access. Its leadership in the different media is a competitive advantage that enables Grupo Clarín to generate significant synergies and expand into new markets. The fact that the Company reaches almost all segments of the Argentine population on a daily basis provides Grupo Clarín with a unique understanding of the media consumer. 

Grupo Clarín's activities are grouped into four main segments: Cable television and Internet access, Printing and publishing, Broadcasting and content production, and Digital content and other. 

Grupo Clarín is an Argentine sociedad anónima, a corporation with limited liability, and substantially all of its assets, operations and clients are located in Argentina, where it generates most of its revenues. The Company also carries out operations at a regional level. All of Grupo Clarín's activities are conducted through subsidiaries. Therefore, the Company derives substantially all of its revenues from dividends received from such subsidiaries, as well as certain management fees.

Grupo Clarín and its subsidiaries have approximately 15,000 employees and, by the end of 2008, reached annual consolidated revenues of Ps.5,736 million. 

Grupo Clarín's history dates back to 1945, the year in which Roberto Noble founded the newspaper Clarín of Buenos Aires ("Diario Clarín"). Since 1969, the Company has been led by his wife, Ernestina Herrera de Noble, and has become one of the highest circulated Spanish-language newspapers in the world. In the mid-seventies, the Company entered a stage of vertical integration in response to Diario Clarín's increasing printing and production needs. This marked the beginning of commercial printing activities through AGR (which today owns one of the most important printing plants in South America) and AGEA's interest, along with other partners, in Papel Prensa, the first newsprint paper mill in Argentina.

In the early 1990s, the Company commenced its horizontal diversification, entering the radio and television sectors. Today, it is the owner of one of the two leading broadcast television channels in Argentina (ARTEAR/Canal Trece) and of AM/FM broadcast radio stations. Along with the newspaper, these are recognized as the most credible media of Argentine journalism. Grupo Clarín also publishes Olé, the first and only sports daily in Argentina; the free newspaper La Razón and the magazines Ñ, Genios, Jardín de Genios, Pymes and Elle, among other publications. The Company holds equity interests in a regional newspaper network (CIMECO) and in a national news agency (DyN). In the audiovisual arena, it produces cable signals (TodoNoticias and Volver, among others), sports channels and events (TyC Sports), television series and motion pictures (through Pol-ka, Ideas del Sur and Patagonik). 

One of Grupo Clarín's strengths is its strategic stake in the content distribution sector, through cable television and Internet access. Since the beginning of Multicanal's operations in 1992 and after the recent acquisition of a majority interest in Cablevisión, Grupo Clarín has created the largest cable television system in Latin America in terms of subscribers. It also owns one of the largest broadband Internet subscriber bases in the country, through Fibertel and Flash. In line with the global trend, Grupo Clarín has committed itself to expanding digital content production. Grupo Clarín's Internet portals and sites receive more than half of the visits to Argentine websites. 

Grupo Clarín has continued to expand its businesses after 2000. Among its new ventures are Ferias y Exposiciones Argentinas, engaged in organizing public events, such as fairs and exhibitions; Impripost, focused on variable printing and document distribution; Tinta Fresca, engaged in publishing text books and GC Gestión Compartida, a provider of administrative and company support services.

In relation to its mission and values; since its foundation, Grupo Clarín has undertaken intense community activities. Grupo Clarín, together with the Noble Foundation, which was established in 1966, organizes and sponsors several programs and activities, particularly focused on education, culture and citizen participation. Furthermore, as an indication of its social responsibility throughout its history, Grupo Clarín focuses on the ongoing improvement of its processes and develops initiatives that arise from engaging with different stakeholders.

In several of its business activities, Grupo Clarín's partners are leading Argentine and international communication groups and companies. In July 1999, Grupo Clarín was incorporated as an Argentine sociedad anónima, a corporation with limited liability, (Grupo Clarín S.A.) that consolidated the interests held at that time by its majority shareholders. In December 1999, a group of investors related to Goldman Sachs joined Grupo Clarín S.A. as minority shareholders with an 18% interest. The investment represented an important step towards Grupo Clarín's goal of consolidating and gradually becoming a public company. This was achieved in October 2007, when Grupo Clarín launched an Initial Public Offering (IPO) in the Buenos Aires Stock Exchange and in the London Stock Exchange. 

GRUPO CLARÍN AND ITS BUSINESS SEGMENTS IN 2008

In terms of results, Grupo Clarín and its business segments grew again in 2008. In 2008, the Company consolidated the positive economic and financial performance trends of the previous years. 

Net consolidated sales increased by 30.9%, from Ps. 4,383.7 million to Ps. 5,736.1. This increase was driven mainly by increased subscription and advertising revenues. 

Advertising revenues rose 27%. The advertising activity in general, however, failed to display its usual level of elasticity with respect to changes in the country's economic activity. The positive basic and digital subscribers net-adds of and the increased growth in cable modem Internet access subscribers played a key role in the performance of subscription revenues. Sales of the remainder of the Company's products and services also increased.

By the end of 2008, Grupo Clarín's gross consolidated financial debt (including sellers financing, accrued interest and fair value adjustments) was approximately Ps. 3 billion, while net consolidated debt was Ps. 2.5 billion, representing a slight increase of 2.4% and 7.1%, respectively. The changes in the exchange rate and the acquisition of subsidiaries account for such increase.

FINANCIAL HIGHLIGHTS

 

(In millions of Ps.)	2008	2007	YoY
Net Sales	5,736.1	4,383.7	30.9%
Adjusted EBITDA (1)	1,674.6	1,350.8	24.0%
Adjusted EBITDA Margin (2)	29.2%	30.8%	-5.3%
Net Income	262.7	209.6	25.4%

1) We define Adjusted EBITDA as net sales minus cost of sales (excluding depreciation and amortization) and selling and administrative expenses (excluding depreciation and amortization). We believe that Adjusted EBITDA is a meaningful measure of our performance. It is commonly used to analyze and compare media companies on the basis of operating performance, leverage and liquidity. Nonetheless, Adjusted EBITDA is not a measure of net income or cash flow from operations and should not be considered as an alternative to net income, an indication of our financial performance, an alternative to cash flow from operating activities or a measure of liquidity. Because Adjusted EBITDA is not an Argentine GAAP measure, other companies may compute Adjusted EBITDA in a different manner. Therefore, Adjusted EBITDA as reported by other companies may not be comparable to Adjusted EBITDA as we report it. 

(2) We define Adjusted EBITDA Margin as Adjusted EBITDA over Net Sales.

NET SALES 

(In millions of Ps.)	2008	2007	YoY
Cable TV and Internet Access	3,417.5	2,613.0	30.8%
Printing and Publishing	1,519.9	1,173.5	29.5%
Broadcasting and Programming	1,037.6	784.4	32.3%
Digital Content and Others	165.9	138.1	20.1%
Subtotal	6,140.9	4,709.0	30.4%
Eliminations	(404.7)	(325.3)	24.4%
Total	5,736.1	4,383.7	30.9%

ADJUSTED EBITDA 

(In millions of Ps.)	2008	2007	YoY
Cable TV and Internet access	1,195.5	889.8	34.4%
Printing and Publishing	320.0	286.1	11.8%
Broadcasting and Programming	158.6	140.4	13.0%
Digital Content and Others	0.5	34.4	-98.4%
Subtotal	1,674.6	1,350.8	24.0%
Eliminations	-	-	NA
Total	1,674.6	1,350.8	24.0%

OPERATING STATISTICS BY BUSINESS SEGMENT 

CABLE TV AND INTERNET ACCESS 

	2008	2007	YoY
Homes Passed (1)	6,753.6	6,753.6	0.0%
Bidirectional Homes Passed	47.0%	47.0%	0.0%
Cable TV
Total Subscribers (1)	3,190.6	3,022.3	5.6%
Subscribers - Argentina	3,011.9	2,859.9	5.3%
Subscribers - International	178.7	162.4	10.0%
Uruguay	88.4	80.5	9.8%
Paraguay	90.3	81.9	10.2%
% over Homes Passed	47.2%	44.8%	5.6%
Churn Rate %	15.3%	13.2%	15.5%
Digital Video
Digital ready Pay TV Subs (1)	1,974.1	1,381.9	42.9%
Subscribers (1)(3)	367.2	221.4	65.8%
Penetration over Digital Ready TV Subs	18.6%	16.0%	16.1%
Internet Subscribers
Total Internet Subscribers (1)	938.8	758.2	23.8%
Cablemodem(1)	889.1	670.3	32.6%
ADSL(1)	33.8	57.8	-41.5%
Dial Up (1)	15.9	30.0	-47.0%
% over Bidirectional Homes Passed	29.0%	22.9%	26.9%
Total ARPU(2)	91.7	75.3	21.7%

(1) Figures in thousands 

(2) Average Net Sales/ Average Pay TV Subscribers 

(3) Argentina Only

PRINTING AND PUBLISHING 

	2008	2007	YoY
Circulation (1)	429.7	442.9	-3.0%
Circulation share (%) (2)	48.0%	49.6%	-3.1%
Advertising share %(2)	60.8%	60.0%	1.3%

(1) Average number of copies according to IVC (including Diario Clarín and Olé) 

(2) Share in Buenos Aires and greater Buenos Aires Area (AMBA) Diario Clarín. Company estimates.

BROADCASTING AND PROGRAMMING 

	2008	2007		YoY
Advertising Share % (1)	41.5%	45.4%	-8.7%
Audience Share % (2)
Prime Time	43.3%	42.4%	2.1%
Total Time	33.5%	34.5%	-2.9%

(1) Company estimate, over ad spend in Ps. In broadcast TV for AMBA region. 

(2) Share of broadcast TV audience according to IBOPE for AMBA. PrimeTime is defined as Monday through Friday from 8pm to 12am. Total Time is defined as Monday through Sunday from 12 pm to 12 am.

DIGITAL CONTENT AND OTHERS 

	2008
Page Views (1)	505.8
Unique Visitors (1)	15.4

(1) In millions. Monthly average. Source IAB 

DEBT AND LIQUIDITY 

(In millions of Ps.)	FY08	FY07	% change
Short Term and Long Term Debt
Current Financial Debt	398.5	252.0	58.1%
Financial loans	140.5	83.8	67.6%
Negotiable obligations	153.1	112.8	35.7%
Accrued interest	28.1	19.9	41.1%
Acquisition of equipment	0.9	4.2	-78.5%
Sellers Financing Capital	50.7	8.0	530.6%
Sellers Financing accrued interest	12.6	23.2	-45.6%
Related Parties	12.5	0.7	1741.5%
Non-Current Financial Debt	2,658.9	2,766.4	-3.9%
Financial loans	55.2	78.9	-30.0%
Negotiable obligations	2,025.0	1,983.3	2.1%
Accrued interest	1.3	0.7	95.8%
Acquisition of equipment	26.2	0.3	9036.6%
Sellers Financing	551.2	703.3	-21.6%
Total Financial Debt (A)	3,057.4	3,018.4	1.3%
Bank overdraft	10.5	7.2	44.7%
Measurement at fair Value	(45.2)	(76.2)	-40.7%
Total Short Term and Long Term Debt	3,022.6	2,949.4	2.5%
Cash and Cash Equivalents (B)	467.6	565.5	-17.3%
Net Debt (A) - (B)	2,589.8	2,452.9	5.6%
Net Debt/Adjusted Ebitda (Last 12 Months)	1.5 x	1.8 x	-14.8%
% USD Debt	83.6%	80.4%	3.9%
% Ar. Ps Debt	16.4%	19.6%	-16.2%

(1) Debt Coverage Ratio is defined as Total Financial Debt minus Cash and Equivalents divided by Adjusted EBITDA (last 12 months). Total Financial debt is defined as financial loans and debt for acquisitions, including accrued interest.

The following is a description of the most significant events related to the situation and management of each of Grupo Clarín's business segments during 2008.

CABLE TELEVISION AND INTERNET ACCESS

Grupo Clarín operates, through Cablevisión, the first regional integrated cable television and broadband system. This segment's revenues mainly derive from monthly subscriptions to basic cable television service and high-speed Internet access, as well as from advertising charges, premium and pay-per-view programming, digital package sales, DVR and sales of the magazine "Miradas". 

Out of Grupo Clarín's total sales in 2008, the Cable television and Internet access segment was the Company's main revenue driver, with sales of Ps. 3,417.5 million, taking into consideration intersegment sales. 

 

In terms of subscribers, by the end of 2008, the Company's cable television systems had approximately 3 million subscribers in Argentina and 178,700 in Paraguay and Uruguay. Also, Grupo Clarín had 938,800 Internet service subscribers by the end of 2008. In line with market behavior, the price of basic cable television subscription was adjusted to Ps. 96.90, VAT included, as of December 31, 2008.

Regarding the geographic availability of Grupo Clarín's services, by the end of 2008, its network reached approximately 6.5 million households in Argentina and approximately 0,2 million households in Paraguay and Uruguay. Grupo Clarín provides services in the City of Buenos Aires and suburban areas, as well as in the provinces of Buenos Aires, Santa Fe, Entre Ríos, Córdoba, Corrientes, Misiones, Salta, Chaco, La Pampa, Neuquén and Río Negro. Regionally, Grupo Clarín also operates in Uruguay and Paraguay.

In the last quarter of 2008, technical procedures were carried out towards the merger of Multicanal S.A., Delta Cable S.A., Holding Teledigital S.A., Teledigital Cable S.A., Televisora La Plata S.A., Pampa TV S.A., Construred S.A. and Cablepost S.A. into Cablevisión. The merger seeks to simplify the corporate structure and optimize the operations of all the companies involved. As indicated in Note 9.2.d to the Consolidated Financial Statements, the merger commitment was executed subsequent to closing.

Networks

Cablevisión's network backbone consists entirely of fiber optic cable. Bi-directional service network's architecture and the new networks rely on a fiber to service area ("FSA") design, which combines cable network fiber trunks with coaxial cable extensions and permits bi-directional transmission. Networks are designed to provide high-quality cable television services and also to be used as a platform for additional services and products, including modems for Internet access and telephony services. 

During 2008, Cablevisión increased its networks' coverage to provide broadband services in 11,564 city blocks. This milestone entails that broadband services are now available to 3,100,000 homes, accounting for approximately 47% of all homes passed. As to the network consolidation project, the first stage of the plan comprised the transition of around 530,000 customers and the dismantling of a 11,000-city-block network. 

During this period, the first steps were taken towards the creation of an intercity digital network relying on a fiber optic infrastructure. Once completed, this network or "Intercity Backbone' will become the foundations of the interconnection between the main operations in the provinces with the AMBA (City of Buenos Aires and its surrounding areas) network. Such a network will reduce costs in the provision of Internet services to cities in the provinces, enable the implementation of broadband services in new cities and provide sufficient broadband capacity and reliability to broadcast digital video signals to the main cities in the provinces.

The first stage, completed in November, contemplated the implementation of a 2100-Km-long fiber optic ring in the north, which connects the cities of Rosario, Córdoba and Santa Fe. The Buenos Aires-Bahía Blanca 1100-Km route, interconnecting the cities of Mar del Plata, Necochea, Tres Arroyos and Pinamar, is expected to be completed in 2009.

Programming, Cable Television and Internet Services 

Cablevisión offers subscribers a basic service plan including up to 120 programming signals, depending on the capacity of the local network. It offers basic and premium programming from more than 25 providers and Buenos Aires' broadcast television stations. Most of the programming contracts include pricing terms denominated in Argentine Pesos generally linked to the number of subscribers. Programming costs are composed largely by categories such as sports and movie signals. 

By paying an additional fee and renting a digital set top unit, Cablevisión subscribers receive premium packages and pay-per-view programming that include soccer broadcasts, additional movie signals, adult programming, and additional sports broadcasting, among other products. 

In order to increase premium offerings of interactive services and also to reduce piracy through digital technology, during 2008, Cablevisión enhanced coverage and offered Premium digital video service to the cities of Rosario, Córdoba, Santa Fe, Mar del Plata, Bahía Blanca and Neuquén. As a result of this enhanced coverage, 1,640,000 more households in the main Argentine cities now have access to this type of products. As of December 31, 2008, there were approximately 367,200 Premium service set top units in use in Argentina. 

Among this year's milestones were the launch of a high definition signal package and the sale of state-of-the-art digital set top units with digital video recorder (DVR). Also in 2008, the onscreen guide was upgraded, thus adopting a state-of-the-art system called Aptive guide.

As to Internet access services, Cablevisión offers products specially designed to meet the needs of both residential and corporate users. The products offered comprise high-speed cable modem Internet access through its 750 MHz network under the FiberTel brand, and ADSL, dial-up and telephony services under the brands Flash, Datamarkets and Vontel.

Amidst a competitive environment among the main providers, Cablevisión and its subsidiaries maintained their prominence and share in the Internet connectivity market. This was thanks to the momentum created by its products through vigorous advertising campaigns, as well as the constant optimization of the already traditional quality of its connectivity services. One of the main differentiating features of FiberTel connectivity service lies in the great broadband potential of its services compared to the more limited ADSL connectivity service offered by its main competitors. 

As of December 31, 2008, Cablevisión had 938,800 subscribers to Internet service in Argentina, Paraguay and Uruguay, 922,900 subscribers to high-speed Internet service and approximately 15,900 subscribers to dial-up service. 

During the year, progress was made on the implementation of its residential telephony platform. This project required a research and selection process for the platform provider. As a result, Siemens-Nokia was selected and the implementation process is about to be completed. The service is currently going through the trial stage. 

Commercialization and Customer Service

Cablevisión uses several market positioning mechanisms for its products and brands, including promotions, customer service centre locations, newsletters about the company, institutional information and programming through its websites. It advertises in the printing media and in its own broadcasting signals. Cablevisión publishes a free monthly guide distributed to its subscribers and also publishes an optional, monthly paid magazine called Miradas, which, during 2008, had a monthly circulation of 336,900.

Customer service is provided through an integrated service center offering round-the-clock support, with the aim of optimizing customer relationship. Although subscribers mainly contact customer service via telephone, they can also do it via Internet or in person in the numerous customer service locations available in each region. Subscriber base turnover rate for the year ended December 31, 2008 was 15.3%. Cablevisión added 168,200 subscribers to its base compared with 184,900 recorded in 2007 and, during the year, continued with its vigorous customer attraction and retention policy. 

Strategy 

The long-term business strategy for the cable television and Internet access segment involves an expansion of the cable television and Internet broadband connectivity subscriber base, improvements in technology, and broader investments intended to streamline a flexible network architecture serving as a platform for developing additional video Internet and voice services to realize the potential provided by technology convergence. 

PRINTING AND PUBLISHING

Grupo Clarín, through Arte Gráfico Editorial Argentino S.A. ("AGEA"), is the main newspaper editor in Argentina and one of the most prominent editorial content producers in Latin America.

Out of Grupo Clarín's total sales in 2008, the printing and publishing segment accounted for Ps. 1,519.9 million, taking into consideration intersegment sales. This segment derives revenues primarily from the sale of advertising, copies of newspapers and magazines and optional products.

Arte Gráfico Editorial Argentino

AGEA publishes Diario Clarín, the flagship Argentine newspaper and one of the most important in terms of circulation in the Spanish-speaking world, Olé, launched in 1996, the first and only sports newspaper of its kind in the Argentine market, and Genios, a magazine with a high penetration rate in the children's segment. It also publishes Elle, Jardín de Genios; Ñ, a cultural magazine that reflects all cultural news and trends; Revista Pymes, aimed at small and medium-sized entrepreneurs; and Diario de Arquitectura, aimed at the construction sector, architects, designers and building contractors, among other products. 

Through Artes Gráficas Rioplatense S.A. ("AGR"), Grupo Clarín is also engaged in color printing, publishing and distribution activities. AGR prints Viva, Clarín's Sunday magazine, and carries out other production activities for AGEA and for third parties, including book series and flyers. 

Clarín leads the online classified advertising market through its vertical sites: Autos, Inmuebles, Empleos and Más Oportunidades. It also has a leading position in the digital content market through its subsidiary Clarín Global, which provides millions of users with access to web portals such as Clarin.com, Olé.com.ar, and Más Oportunidades.com.ar, among others. These activities are contemplated under the Digital content and other segment.

Diario Clarín

With a long-standing journalistic and commercial leadership consolidated in its 63-year track-record, Clarín is the most prominent Argentine newspaper in terms of outreach, influence, circulation and advertising. 

Its daily circulation reaches approximately 380,000 copies and its volume is 2.4 times higher than its closest competitor. On Sundays Diario Clarín sells approximately 748,000 copies, which places it among the major Sunday newspapers worldwide. According to the Newspaper and Magazine Circulation Verification Institute ("IVC"), in 2008 Clarín maintained its lead in circulation in the Buenos Aires area and managed to increase its share in different segments, with an 11.8% penetration in Argentina (excluding the City of Buenos Aires) and 30% nationwide (including the City of Buenos Aires).

Given its broad circulation and reach to all social classes, Dario Clarín leads the printing media market. It is ranked first in terms of advertising revenues, sold advertising space and also leads in all advertising categories (display, special section and classified ads). In 2008, Diario Clarín's advertising sales were of Ps. 652 million, an increase of 12% compared to 2007, while AGEA's advertising sales were of Ps. 704.1 million.

From an editorial perspective, Clarín reaffirmed its long-standing journalistic leadership. Its in-depth coverage of this year's most outstanding news revealed once again the production quality of its reports and the depth of its approaches and insights. The work of the paper's investigation team, the constant proposal of new editorial products and the launch of new publications continue to reflect the work of the greatest team of journalists in Argentina. 

During 2008, the integrated newsroom and multi-platform journalism project materialized. In line with state-of-the-art international trends, the initiative contemplated round-the-clock operations aimed at establishing an editorial trend for all news content, improving multi-platform production, editing and publishing processes, generating synergies among newsroom teams and new working cultures in order to face the challenges posed by new social customs and behaviors regarding media consumption, and developing a profile of multimedia publishers and editors. 

Also in this year, Grupo Clarín's journalists and media once again received prestigious awards and acknowledgments. Javier Drovetto received the prestigious King of Spain International Journalism Award in the category Written Press. Gustavo Sierra received in New York the traditional María Moors Cabot award and María Eugenia Cerutti received the 2008 CEMEX+FNPI New Journalism Lifetime Achievement Award in the Photography category. In the annual Argentine Press Association (ADEPA) Contest, Diario Clarín received five honor awards and several excellence awards in the categories design and infographics at the 29th "The Best of Newspaper Design" contest organized each year by the Society For News Design. Diario Clarín was the most awarded at Malofiej Awards ceremony and was ranked third in the general ranking after The Guardian and The New York Times.

In 2008, Diario Clarín offered outstanding promotions that increased interaction with readers, among them, the promotion "Libros Bilingües Clarín" and the game "El Gran DT". Among editorial milestones, Clarín launched its new supplement Buena Vida, published every other Friday and distributed for free with the purchase of the newspaper. In 2008, the economic supplement iEco launched iEco's Brand Ranking and its website www.ieco.com.ar Diario de Arquitectura celebrated its sixth anniversary with a renewed design and the launch of the collectible publication "Guías de Arquitectura Latinoamericana". It also featured a new edition of DNI, a magazine covering the highlights in national and international design.

In April and October, Diario Clarín launched regional supplements in San Miguel - José C.Paz - Malvinas Argentinas; and Quilmes - Berazategui - Florencio Varela, increasing sales revenues in their respective areas. As far as soccer is concerned, Diario Clarín relaunched Gran DT, and published other supplements such as the Clausura and Apertura tournament guides. Special supplements were published covering prominent events such as the Olympic Games and Davis Cup, among others.

In 2008 the magazine Ñ was further consolidated, with several initiatives aimed at engaging readers: the publishing of collectible products, the creation and sponsorship of forums comprising different cultural issues and the involvement in major cultural events, such as the 34th Book Fair. Special editions maintained important sale levels on average, with an outstanding sales performance of March's edition "La marca del exilio".

In order to continue to add value to its readers, Diario Clarín constantly keeps up to date and offers a wide range of editorial products together with the core product, addressing the need to satisfy an increasing segmentation among the diverse demographic groups. It was an intense year in terms of collectible and optional products, consolidating Grupo Clarín as one of the major book editors of Argentina. 

The highlights were: "Libros Bilingües Clarín"; "Maestros de la Fotografía"; "Atlas Total País"; "Colección Mario Vargas Llosa"; "Ilustradores y Humoristas de Clarín"; "Ídolos del Espectáculo Argentino"; "Mundo Tecno"; "Los Secretos de la Abuela"; "Grandes Civilizaciones de la Historia", "Argentina Ruta a Ruta"; "Grandes Ídolos de la Música Popular Argentina"; "El Gran Libro de Tejido 2008"; "El Gran Libro del Crochet 2008"; "El Gran Libro de la Moda y la Costura 2008" and "El Libro de los secretos de la abuela por Blanca Cotta", among others.

Clarín's products continued to set trends and brand loyalty activities contributed to the consolidation of readers' strong relationship with the brand. Further efforts were channeled into strengthening the bond with advertisers, bringing together new sectors and identifying their needs.

Clarín organized the 2008 edition of its renowned Clarín Awards, honoring its strong commitment to the promotion of Argentina's best in the cultural and sports fields. The eleventh consecutive "Premio Clarín de Novela" was awarded to Raquel Robles for her novel "Perder". Also in 2008, the ceremony for the 2008 Premios Clarín Espectáculos (show business awards) 2007 was held at Luna Park, where Clarín recognized the best in motion pictures, theatre, music, dance, radio and television, chosen by a panel of more than 800 specialists. Diego Capusotto was acclaimed as the Star of the Year, while Mercedes Sosa received the Lifetime Achievement Award. Clarín also awarded the best sportsmen of the year at the Premios Consagración y Revelación 2008 - La gran noche del Deporte Argentino ceremony. Luciana Aymar, the best field hockey player worldwide, won the Gold Establishment Award and the junior golfer Victoria Tanco won the Gold Revelation Award. 

Other Newspapers 

La Razón continued to lead the free distribution newspaper segment. It is distributed on an exclusive basis in all subway and train lines in the City of Buenos Aires, in airlines, in residential communities, as well as in all highway tollbooths within Buenos Aires. During 2008, the Company began distributing the morning issue of La Razón and increased advertising revenues compared to 2007 both in its traditional publications and special editions.

After eleven years of existence and with a daily average circulation of 50,000 copies, Olé, the first and only Argentine sports newspaper, continues to consolidate its market positioning. It is the fifth largest newspaper in Buenos Aires in terms of circulation. Since its inception, it has revolutionized reading habits and managed to attract not only sports fans, but also a new generation of young readers, offering advertisers an opportunity to reach a specific market. 

At the beginning of the various sports championships of the 2008 season, Olé continued to publish Guides to follow in detail each championship fixture. As a result of Olé's initiative, the six largest sports newspapers worldwide founded the International Association of Sports Newspapers (IASN), an organization that seeks to unify criteria, share experiences and foster sports among children as a basic tool in the educational process. The other members of IASN are the newspapers L'Equipe (France), Mundo Deportivo and Marca (both from Spain), La Gazzetta dello Sport (Italy) y Lance! (Brazil).

Magazines

In 2008, the magazine Genios celebrated its 10th anniversary in the Argentine market. Since it was launched in March 1998, it has led the children's magazine segment. Its editorial offering is always renewed at the beginning of each academic year, presenting new sections, updated school materials and collectible books prepared by experts. Genios sold 160,000 copies in its first annual issue at the beginning of the academic year and had an average weekly circulation of 80,000 copies throughout the year. During 2008, Genios consolidated its efforts in the website genios.com.ar and launched a benefit program. Jardín de Genios, the monthly publication aimed not only at pre-school children and those attending the first years of primary school, but also at parents and teachers, had average sales of 63,500 copies per issue during 2008. "Mi primera enciclopedia de Disney" stood out among the main optional products of this magazine.

The magazine Elle reaffirmed its leadership in the high-end advertisers segment and recorded a significant increase in terms of advertising. In 2008, sales increased by more than 9%, to a monthly average of 33,196 copies.

Tinta Fresca

Tinta Fresca Ediciones S.A. ("Tinta Fresca") is a young Argentine publishing company, engaged in textbook publishing for the different stages of the Argentine education system. Tinta Fresca looks to place books as central elements of the teaching and learning processes and, proproses to use books as effective and updated tools for teachers and students. Its strength is to provide access to textbooks to the largest number of students possible, at competitive prices, relying on a sales force capable of promoting its products by visiting teachers throughout the country and points of sale nationwide. 

In 2008 Tinta Fresca continued to improve its position. Tinta Fresca strengthened its editorial offering with "Pupic", a book aimed at children attending the first years of primary school, the new series "Vía Libre" and two new series of natural sciences and math books. The math series was illustrated by Fernando Sendra and included a CD with interactive games, which made it one of the most successful publications in 2008.

Tinta Fresca had to adapt its publications aimed at secondary school to a new scheme of the curriculum introduced by the Province of Buenos Aires and added the series "Respuestas para la Formación Docente" comprising the following three books: "Enseñar Matemática", "Enseñar Lengua" and "Enseñar a mirar imágenes en la escuela". It also published literature books for children: "Yo también leo", aimed at beginners in reading, "Cuentos y leyendas de la Argentina" and "Clásicos de colección", for students in the second and third level of EGB (elementary school).

In 2007, Tinta Fresca went beyond Argentine borders with the creation of Contenidos Estudiantiles Mexicanos S.A. ("CEM") in Mexico, a publishing company created jointly with the Mexican multimedia group Milenio. Under the brand Ríos de Tinta, CEM presented its first catalogue of 33 books aimed at children and youths at the International Book Fair held in Guadalajara, Mexico. 

Artes Gráficas Rioplantense 

AGR meets certain special printing needs of Clarín and Olé (magazines, optional and collectible products, among others), and also publishes large volumes of graphic material for third parties. It is the leading printing services company in Argentina. 

In 2008, AGR retained its leading position in the sector with sales of Ps. 167 million. The company continued to exploit one of its main strengths: its participation in the entire value chain of the printing industry, which enables it to offer comprehensive customer service, including drafting, prepress, variable printing, offset printing, finishing and distribution. 

AGR strengthened its presence in the foreign market, where sales reached Ps. 6 million. In 2008, its local sales reached Ps. 94 million and it printed 468 million 16-page sheets commercial brochures, textbooks and magazines. 

In May 2000, AGR entered into an agreement with the Techint Group, acquiring 50% of Impripost Tecnologías S.A. ("Impripost"). Impripost is mainly engaged in the overall production and printing of invoices, advertising brochures, forms, labels and cards. It also provides envelop stuffing services for mass mailing. 

UNIR S.A. ("Unir") is a company engaged in wholesale mail reception, classification, transportation, distribution and delivery services. As from August 25, 2008, AGEA holds a 93.41 % direct controlling interest in Unir. In 2008, Unir totaled sales of Ps. 32 million, a 61% increase compared to 2007.

CIMECO

Compañía Inversora en Medios de Comunicación S.A. ("CIMECO") was organized in 1997 with the aim of acquiring equity interests in Argentine and foreign newspapers, seeking to preserve the regional journalistic industry, blending experience, synergy and economies of scale. To date, CIMECO holds a majority interest in two of the three largest regional newspapers in Argentina: La Voz del Interior (Córdoba) and Los Andes (Mendoza).

During 2008, Diario Los Andes celebrated its 125th anniversary with special publications, events, and the inauguration of a new KBA Commander 60 rotary press bought in 2006. 

La Voz del Interior, a 104-year old newspaper, has a strong presence in the province of Cordoba. During 2008, La voz del Interior managed to consolidate its position as distributor of other publications at newsstands. At the beginning of 2008, in addition to La Voz and Día a Día, it began to distribute AGEA's optional products. It is the undisputed leader in its market. Its newspapers account for 63% of total average copies sold. 

On April 3, 2008, as a result of a process initiated in 2007, Grupo Clarín and other companies exercised a call option, increasing the equity interest in CIMECO, as detailed in Note 9 to the Consolidated Financial Statements.

Papel Prensa 

Papel Prensa is the first Argentine producer of newsprint that is wholly owned by Argentine capital. It began its operations in 1978 and is currently the largest Argentine producer of newsprint, with an annual production capacity of approximately 170,000 tons. As of December 31, 2008, the shareholders of Papel Prensa were AGEA (37%), CIMECO (12%), S.A. La Nación (22.5%), the Argentine federal government (27.5%), and other minor investors (1%). 

Papel Prensa has implemented production policies based on the procurement of strategic inputs without contributing to the depletion of natural resources. To this end, the paper mill recovers raw materials from the recycling of returned newspapers, instead of using virgin fiber. In 2008, Papel Prensa produced 160,530 tons of paper for newspapers. 

Ferias y Exposiciones Argentinas

Created in 2002, Ferias y Exposiciones Argentinas S.A. ("FEASA") is engaged in the organization of Grupo Clarín's events, exhibitions and fairs. Until 2006, it was primarily engaged in the organization of Feriagro, an open field fair showcasing the best of the Argentine agro-industrial sector. 

As from 2007, its has been in charge of the organization of Caminos y Sabores, an exhibition intended to foster Argentina's food and crafts through tourism. The 2008 exhibition was once again sponsored by Diario Clarín and received approximately 60,000 visitors. It was held in La Rural de Palermo, a venue in the City of Buenos Aires with an area of 10,000 square meters.

FEASA also took part in the organization of Expo Educativa Argentina. In its fourth consecutive year, it has consolidated itself as the main event covering undergraduate, graduate and other higher education opportunities in Argentina for the young. The exhibition comprised more than 100 exhibitors and was sponsored by the Ministry of Education, the Secretaria de Educación Porteña (Secretary of Education of the City of Buenos Aires) and the Dirección de Escuelas Bonaerense (Department of Schools of the Province of Buenos Aires).

In 2007, AGEA entered into an agreement with S.A. La Nación for the organization of Expoagro, a new agro-industrial fair, improving the results obtained to date by Feriagro and achieving a record high of exhibitors. In 2008, the exhibition, held from March 5 through March 8 in Armstrong, province of Santa Fe, was a success and received more than 200,000 visitors.

BROADCASTING AND PROGRAMMING 

Grupo Clarín is also the leading company in the audiovisual broadcasting and programming segment. Through Artear, it holds the license to broadcast Canal Trece, one of the two largest broadcast television channels in Argentina, and leads the segment in terms of advertising share, and prime time audience share. It also has presence in broadcast television stations in Córdoba (Telecor), Bahía Blanca (Telba) Bariloche (Bariloche TV), and Río Negro (Radio Televisión Río Negro). Grupo Clarín also produces and sells some of the most popular cable television signals. 

Its audiovisual broadcasting and programming array includes agreements and equity interests in the main television and film producers, such as Pol-ka Producciones, Ideas del Sur and Patagonik Film Group. Grupo Clarín also owns prominent radio stations, such as Mitre AM 790, La 100 (FM 99.9), both in Buenos Aires, and, more recently, Mitre AM 810 in the province of Córdoba.

Grupo Clarín also has a strong stake in sports commercialization and broadcasting rights, mainly soccer and motor racing, directly and through joint ventures.

 

Out of Grupo Clarín's total sales in 2008, the broadcasting and programming segment accounted for Ps. 1,037.6 million, taking into consideration intersegment sales.

Artear

Amidst a scenario marked by industry challenges and strong competition, Canal Trece (Artear's main broadcast signal) performed well in 2008. Notwithstanding the disparity observed in the economic situation between the first and the second semester, there was a 16% increase in year-on-year total sales. 

The growth was evidenced in Artear, with a 39% share in the traditional advertising market of broadcast television. In terms of audience share, although it shared its leadership overall, Canal Trece achieved an undisputed leadership in Prime Time, which accounts for 70% of advertising revenues.

This milestone was also due to the performance of products such as "Show Match", "Por amor a vos", "Socias", "Patito feo" and "Mañanas informales", which led audience ratings. As regards news programs, "Arriba Argentinos" continued to consolidate its morning audience rating. Canal Trece's news programs -"El Noticiero de Santo", "Telenoche" and "En Síntesis"- further validated their already existing recognition and credibility with audience ratings that led their respective time slots.

With respect to cable television signals, TN achieved the highest audience share throughout the year across all time slots. On several ocassions, it outperformed broadcast stations, for example, upon the occurrence of particularly significant news events, thus reaffirming its journalistic leadership. TN celebrated its 15th anniversary with a campaign that highlighted the strong identification and bond with the audience and consolidated its leadership in terms of acknowledgments and credibility. Several political talk-shows stood out, such as "El Juego Limpio", "Palabras más, Palabras menos", "Código Político", "Desde el Llano", "Argentina para Armar", "Otro tema" and "A Dos Voces". 

 

Artear further developed its expansion strategy, generating new TV slots seeking to offer diverse options in terms of information and entertainment. In August 2008, Artear launched "Quiero Música en mi Idioma", an interactive music signal featuring the main music genres in Spanish language. Volver continued to offer the best of classic and vintage Argentine films and television shows. Magazine and Metro, general interest cable signals, renewed their shows and continued to develop their respective programming criteria through thematic modules and standardized broadcasting. 

Revenues from the sale of Canal Trece programming increased compared to 2007. This increase was primarily due to the recovery in the number of cable television subscribers, the adjustment of fees implemented by cable operators and an increasing number of local stations in Argentina that began to broadcast the signal.

In 2008, Artear further developed its international market expansion strategy aimed at maintaining and consolidating its penetration in the European, Asian and Latin American markets. By the end of 2008, a new strategy was implemented in this front, focusing on the direct distribution of all its content. 

As to its fiction content production strategy for television series and motion pictures, on September 2, 2008 Artear acquired 25% additional interests in Pol-Ka Producciones S.A. and SB Producciones S.A., increasing its interest to 55%. Pol-ka is the most awarded producer (Martín Fierro, Clarín Espectáculos, among others) and leads fiction production in Argentina. On October 2, 2008 Artear acquired 10% of Canal Rural Satelital S.A., increasing its interest to 25%.

Sports Programming 

Soccer is the pre-eminent sport in Argentina, which is evidenced by television and radio audience ratings.

The sports programming industry in Argentina began in the early 1980s when Torneos y Competencias S.A. ("TyC") purchased the rights to produce and distribute soccer matches of the leagues organized by the Argentine Football Association ("AFA"). AFA represents all Argentine competitive soccer teams and the national team, and owns the rights to broadcast their respective matches. By 1990, TyC had become one of the largest producers of soccer programming. 

In 1991, Grupo Clarín created Inversora de Eventos S.A. ("IESA"), a company engaged in sports marketing operations. Through IESA, it is a party to two joint ventures with TyC:

TSC holds all TV rights for AFA's Premier League soccer matches in Argentina, as well as for the rest of the world with respect to certain matches. These rights include the audio and visual broadcast of matches in Argentina and abroad, as well as all other rights of use, commercialization and distribution. 

TRISA holds the title to broadcast additional national and international soccer tournaments (national team World Cup qualifying matches and friendly matches), as well as other sports such as basketball, tennis, motor racing and boxing. As part of its broadcasting, production and marketing activities, TRISA broadcasts sporting events through its cable signal "TyC Sports" and "TyC Max", (the sports premium and pay-per-view cable signal). 

Grupo Clarín's business units related to sports grew in 2008, both in terms of sales and audience share. In 2008, TyC Sports was among the cable signals with the highest audience share from Monday through Sunday from 12pm to 12am.

By the end of 2007 and beginning of 2008, the Company carried out certain acquisitions aimed at engaging in activities related to the commercialization, organization and broadcast of motor racing, on which the Company is strongly focusing its efforts.

Radio Mitre

In 2008, Radio Mitre S.A. reaffirmed its track record. Mitre AM 790 retained its second place in the ranking of audience share during the whole year hitting 18 points by the end of the year. This was accomplished, among other things, by renewing part of its staff without losing journalistic credibility and leadership.

 The radio talk show "Primera edición", hosted by Ernesto Tenembaum, a prestigious journalist with a remarkable track record in the last years, stood out among Radio Mitre's programming. Another show worth mentioning is "Dady 790", in the second morning slot, hosted by Dady Brieva, together with Marcelo Zlotogwiazda, Horacio Pagani and Carlos Ulanovsky. 

FM 100's music programming relies on multitarget hits and anglo/latin pop, combining communication, information and entertainment slots. In 2008, the shows "El Show de la Noticia", hosted by Roberto Pettinato, and "Lalo por hecho", hosted by Lalo Mir, stood out once again. To further consolidate its bond with listeners, the radio station continued to organize acoustic concerts and on-location broadcasts from its mobile studio featuring highly acclaimed national and international artists.

During 2008, Grupo Clarín also consolidated the presence of Mitre AM 810 in the province of Córdoba. With a permanent staff in the city and its own news service, Mitre AM 810 developed a comprehensive coverage of news comprising Córdoba, Argentina and the world. In less than two years, it has become the AM station with the second highest audience share in Córdoba (21%).

DIGITAL CONTENT AND OTHER

Revenues in this segment are derived from the sale of advertising in Internet websites and portals and the provision of administrative and corporate services by Grupo Clarín and its subsidiary GC Gestión Compartida S.A. ("GCGC") to third parties and other subsidiaries. They also include digital content production through Clarín Global and Contenidos de Medios Digitales (CMD) S.A. ("CMD"). 

Out of Grupo Clarín's total sales in 2008, this segment accounted for Ps. 165.9 million, taking into consideration intersegment sales.

Digital Content 

Grupo Clarín is the leading producer of digital content. Through CMD and Clarín Global, the Company developed the broadest network of portals and digital content in Argentina, covering news, entertainment, sports, classified advertisements, e-commerce, digital photography, video, blogs, chat rooms, music, mobile content (ringtones, SMS and games) and a browser. This network seeks to replicate in Internet the presence and relevance of Grupo Clarín's several offline media.

According to the traffic measurements undertaken by Certifica.com for the International Advertising Bureau (IAB), by the end of 2008, Clarín.com website received 8.3 million monthly unique visits, while Olé received 3.5 million, a 28% increase, compared to 2007. Clarín and Olé received an annual average of 226,7 and 108,5 million webpage visits per month, respectively. These traffic levels reaffirm once again Clarín Global's Internet portal leadership and places Clarín Global portals as the number one portals in the news and sports segments, respectively. Clarin.com is also one of the most visited digital newspapers in the Spanish-speaking world. In the ranking of the world's 500 most visited Internet websites published by Alexa.com, Clarin.com is ranked 334 in the general classification, 50 positions higher than in 2007, and is second among the news websites in Spanish. 

In order to consolidate its leadership position, Clarin.com has made progress in the redesign of its website and added new supplements such as IECO.com and enie.com, meeting the needs of diverse users seeking economic, cultural and entertainment information. It has also developed a new platform for online blogs in response to the demands of new 2.0 web technology, based on interaction with users. It has also launched new supplements such as Clarín Iphone, Clarín Mapas Web, Clarín Mapas GPS, Clarín Widgets and Guía Restaurant, in response to the interests of the diverse users looking for both information and entertainment.

During 2008, MasOportunidades.com became the second largest online shopping portal. In the last year, the shopping portal was up 78% in GMVe (total items traded online) compared to 2007. There was a 59% increase in new users compared to 2007. 

In commercial terms, during 2008, the Company has maintained the new operating arrangement with AGEA (owner of www.clarin.com.ar and other websites), whereby Clarín Global is AGEA's exclusive agent for the commercialization of advertising space across all of its websites, replacing the joint production scheme effective until 2006.

Also in this segment, Oportunidades S.A., incorporated in 2003 deserves a special mention. It is engaged mainly in the exploitation of classified ads, such as those found on the websites www.argenprop.com, www.buscainmuebles.com, www.deautos.com and www.demotos.com. As in previous years, during 2008, the efforts were also focused on the development of sites related to the real estate, automobile and labor markets. Subscribers to the real estate intranet reached 1,233, a 28% increase compared to 2007. 

In June 2008, with the aim of streamlining the technical, administrative and financial structures, the Boards of Directors of Oportunidades, Autos Virtuales and Mercoprop approved the initiation of dealings towards a merger into Oportunidades effective as from July 1, 2008.

As to CMD's other operations, during 2008, the Company continued to consolidate its leadership position in specific content production for Internet and mobile phones, reflected in the growth of brands such as Ciudad, Ubbi, VXV and the tourism portals Interpatagonia.com, Welcomeargentina.com, Welcomechile.com and Welcomeuruguay.com. 

In August 2008, CMD increased by 13.67% its interest in Dineromail, an online payment portal in Argentina, with startup operations in Colombia, Mexico and Brazil. It acquired 100% of Nits S.A., which owns Confronte.com, a leading portal engaged in comparing prices, products and online stores. 

By the end of December 2008, and in order to streamline operating and administrative efficiency, the Company initiated the merger process of Clarín Global and Nits S.A into CMD, effective as from January 1, 2009. 

Other Services

Through GCGC, Grupo Clarín renders specialized process outsourcing services to medium and large companies. The services focus on reducing costs, optimizing quality and providing innovative management tools. During 2008, sales to third parties increased compared to the previous year. 

The company continues to bolster the services offered, increasingly focusing on a customer-driven approach, as well as on strengthening improvement processes. During 2008, progress was made on the upgrading and implementation of SAP's EECC 6.0 system. 

GRUPO CLARÍN AND ITS CORPORATE SOCIAL RESPONSIBILITY 

OUR COMMITMENT 

Since its foundation, Grupo Clarín has been conscious of its social responsibility as a company and as a member of the mass media, and has strived to assume such responsibility abiding by the laws, honoring its active and sustained social and community involvement and, especially, fulfilling its duty to inform with honesty and accuracy. 

A commitment to society is an inherent and essential part of Grupo Clarín's vision and mission statement. The Company attaches special importance to the relationship with its different audiences, which acknowledge and validate its activities each day and, over time, have established multiple communication and interaction channels with Clarín's stakeholders.

From the standpoint of its audiences, readers and society in general, Grupo Clarín's media and journalists work day after day towards respecting and consolidating citizens' right to information; combining high credibility with a comprehensive journalistic and entertainment offering.

STANDARDS AND GUIDELINES

Through its renewed commitment to the Global Compact proposed by the United Nations, Grupo Clarín seeks to intensify and, to a greater extent, systematically embody the values and principles that guide the Company's daily work, especially those concerning labor, sustainable development, and human rights. 

Grupo Clarín also participates in several groups and spaces, which gather other Argentine, Latin-American and global media players and stakeholders to share experiences, identify best practices, and foster cooperation on the specific issues that media companies address as part of their social responsibility strategies.

In-line with the Company's commitment to transparency, Grupo Clarín intends to participate in the multi-stakeholder development of the Media Sector Supplement for the Global Reporting Initiative. The GRI guidelines act as a reference for an extensive process, currently underway at the Company, to further consolidate, identify and report relevant information regarding the environmental and social impacts, while establishing new goals to strengthen its related initiatives and strategy. The social and environmental information contained in this annual report should be approached based on the scale of producing consolidated sustainability information for a company the size of Grupo Clarín. It was produced with the utmost respect for accuracy and transparency to provide an illustrative overview of Grupo Clarín´s commitments and actions regarding social responsibility. 

Grupo Clarín's observance to the principles included in those guidelines is also outlined in the Company's Code of Ethics and "Guía para la Acción", a document which proposes models for management, organization and roles, while outlining Grupo Clarín´s policies and procedures concerning labor, the environment and human rights.

Freedom of expression and transparency are values which are indispensable to the Company and its professionals. Both principles are particularly relevant in areas linked to news services. At Grupo Clarín, each company commits to the quality, rigor and transparency of its information and content. News coverage and programmes aim to be impartial and fair, reflecting the journalists' efforts to inform on facts and events in a balanced and unbiased manner, while allowing opinion regarding the parties involved. 

Style guides, ethics manuals, news coverage guidelines for kidnapping and hostage situations and several other self-regulations and commitments guide the different activities of news and entertainment oriented companies. This does not mean that every issue, especially regarding content and editorial view, is addressed as expected. For that reason business units are continuously designing new means to engage with its readers and audiences.

PEOPLE'S VOICES

The proliferation of new media, Internet based networks and the web 2.0 phenomenon, started a revolution in journalism and in terms of how people consume news. This requires a serious assessment on how to face the challenges of the digital era, adapting the Company's business models to satisfy Grupo Clarín's audiences, and at the same time sustaining the Company's leadership position.

Grupo Clarín's media companies have a long history of audiences' and readers' engagement. The ability to anticipate trends together with a profound knowledge of media consumers and the ability to interpret their needs and meet their demands, explain the Company's sustained leadership and favored place amongst consumers' preferences.

The pace of change calls for new and creative means of interaction. Clarín's newspaper segments such as "El juicio final", "Cartas al país" and daily readers' surveys, all traditional means of engaging readers, are complemented by more recent initiatives to accompany peoples' needs to participate in the news process. Over the last few years, the Company has launched a growing number of new blogs, and generated greater interaction not only with journalists, but also between our users. Interactivity opens space for informative content deriving from readers, listeners and web users. 'TN y la gente' is a web-based tool developed by the Company's news channel, where audiences send photos or video footage captured from personal and mobile cameras, as another way of introducing citizen journalism and increasing end-user participation in our media. 

SOCIAL AND SUSTAINABILITY COVERAGE 

To better assess the influence the media can have on different audiences, Grupo Clarín establishes goals to ensure the quality and pluralism of its content

Grupo Clarín's newspapers and television newscasts have a long and highly praised record in investigative reporting, and provide comprehensive news coverage and insightful pieces on relevant social and environmental issues.

Special supplements, expert and academic voices and editorials, onsite coverage and skilled journalists and infographics complete an extensive offering on topics that vary from health, consumption and development to science, education and conservation. Weekly TV Programs such as 'TN Ecología' and 'TN Ciencia', in Todo Noticias, Grupo Clarín's 24 hour news channel and the leading cable channel in Argentina, have become leaders in their fields.

The Company also developed weblogs that create social awareness within Clarín.com. Some examples are "¿Estás?" in association with Red Solidaria, "Espacio Positivo", with Fundación Huésped and "El Otro, el Mismo", with Universidad Católica Argentina and social organizations engaged in fostering the inclusion of people with disabilities. Moreover, the "Calendario del Compromiso con la Comunidad" was published in Revista Viva for the third consecutive year.

Education is deeply rooted in the Noble Foundation's mission and history of community involvement since its origin, and is also one of the key social issues frequently addressed by Grupo Clarín's editorial coverage. During the last few years, third party, academic and the company's own monitoring processes have all registered a gradual, yet sustained increase in social topics coverage. 

Still, there is much to be done. In this regard, Grupo Clarín aims to continuously enhance its role in promoting public debate, encouraging individual involvement by better and further portraying the challenges of society under social, economic and environmental aspects with a plural view.

PROMOTING INVOLVEMENT

In search of, and to further transparency, Grupo Clarín's different media companies also endorse several initiatives promoting citizens' involvement in democracy and responsible civic control of representatives' acts and decisions. 

Among 2008's most relevant activities, was the Company's organization of the third stage of the debate forum "Los Desafíos de la Justicia" (The Challenges of Justice) aimed at contributing to the improvement of judicial proceedings, along with the Center for the Implementation of Public Policies for Equity and Growth (or "CIPPEC", for its Spanish acronym). 

Grupo Clarín also organized several activities to celebrate the 25th anniversary of Argentina's return to democracy such as conferences, publications and special TV shows. 

COMMUNITY ENGAGEMENT AND SOCIAL ADVERTISING 

Grupo Clarín's impact and relation with communities and individuals exceed those of its editorial coverage. Support for vulnerable communities, mentoring education projects, campaigning for disaster affected regions and different types of donations and expertise are only some examples of the many initiatives organized and fostered jointly or separately by Grupo Clarín's different media companies. 

In terms of social advertising, during 2008, through the Noble Foundation and several of its media companies, Grupo Clarín contributed over 445 thousand seconds of advertising time and approximately 138 pages of advertising space to promote social, civic and environment related causes, through its own programs or within strategic alliances with renowned NGOs. These combined efforts of contributed advertising space and time reached an approximate value of nearly 42 million pesos*. 

\* The figures are company estimates for illustrating purposes only, and do not include space and time contributed by some programs and related media companies for which the information was not available for the period.

The impact made by specific contributions to projects and campaigns by other subsidiaries, can be added to the 1.4 million pesos budget of the Noble Foundation for the 07/08 period. Nevertheless, the total figure of donations cannot be calculated at the group level since information is not available in detail. As well as contributing with our own funding, knowhow and expertise, Grupo Clarín aims to leverage support from others by seeking matching funding and regular donations from individuals and partner organizations for supported initiatives. 

During 2008, the Noble Foundation renewed its presence in the "Grupo de Fundaciones y Empresas", a space for sharing knowledge in the field of strategic social investment.

In response to community organizations growing communication needs and demands, Grupo Clarín launched a multiple approach program that combines spreading and raising active awareness of public and social interest topics through advertising, design and communication services for NGOs and the development of web based blogs and sites. 

During 2008, the Company strived to make a strategic contribution to the improvement of social and charity advertising and communication skills in community organizations. One of the ways to engage this issue involved increasing the scale and impact of "Segundos para Todos", a advertising contest for NGOs organized by Cablevisión, which combined broadcasting spots with coaching sessions in Buenos Aires, Córdoba and Santa Fe. In 2009, Cablevisión has set a goal of including new districts in two of Argentina's northern and southern provinces. This was also addressed from the advertising supply chain perspective, adding a "Social" category to the well-known "Premio Clarín Creatividad" (Clarín Creativity Awards). The contest invited advertising agencies and companies to act as judges, and involved students and academic institutions in the production of high quality and socially sensitive ads, which were later published and adapted for television. The initiative provided a unique opportunity to engage in debate regarding the challenges of effectiveness, quality, balance and the risks of stereotyping in promoting awareness in social issues through advertising.

An additional issue in which Grupo Clarín has a sustained and strategic commitment is in reducing the digital divide and promoting digital inclusion. This is addressed by raising awareness through news coverage and TV programmes in different media outlets. During 2008, Cablevisión gave steps to extend a cable TV and Internet access connections program to a growing number of schools, hospitals and other institutions. This is completed with specific programs such as social tariffs for low income neighborhoods.

FOSTERING EDUCATION AND CULTURE

As part of the Company's initiatives to support education, Grupo Clarín used its cross-segment position and ability to communicate with society to raise awareness of education's importance as a right and as a critical driver of social development in Argentina's future. In this sense, the Company tried to foster equal opportunities in education through the generation of updated, affordable and quality educational materials for students, teachers and schools throughout the country, through its publishing company Tinta Fresca. It also aimed to become involved with high-level public and private consensus projects. 

As part of its actions to promote public debate on education issues, the achievements of the program and conference cycle "La Infancia en Agenda" (Childhood in the Agenda), developed together with the Arcor Foundation and CIPPEC, were consolidated in 2008. The Company also provided renewed support to the traditional campaign "Un sol para los chicos", together with Artear and UNICEF. Grupo Clarín also developed a program to train and support projects that promote reading and writing in rural areas called "Yo te cuento que una vez", and, for the seventh consecutive year, the Company successfully organized a campaign entitled "Digamos Presente", an initiative focused on education involvement and rural education, together with APAER, Red Solidaria, Cimientos Foundation, Arcor Foundation and YPF Foundation. 

Among the main alliances are specific initiatives such as the public-private project entitled "Escuelas del Bicentenario" (Bicentennial Schools). This project seeks to assist public elementary schools to which vulnerable children attend throughout the country, and to contribute to public policy, by developing scalable, sustainable and replicable school improvement mechanisms. Another relevant initiative is the "Premio Clarín-Zurich a la Educación" (Education Awards). Awarded for the first time in 2008-2009, this edition recognizes the best projects aimed at improving the quality of technical education. 

Likewise, Grupo Clarín plays an important role in the recognition, promotion and encouragement of literary creation, through prestigious awards such as "Premio Clarín de Novela" and the recently launched "Premio Clarín de Cuentos". The Company is committed to the support and dissemination of culture. Cultural editorial products and collectibles, partnership agreements with renowned institutions and several sponsorships add to Grupo Clarín and its brands' sustained presence in important events such as the National Book Fair, the Book Fair for Kids and the Youth, Arte BA, Expo Trastiendas and Arte Clásica, among others. 

Through its cable and broadcasting channels, the Company also makes significant efforts to promote the most important cultural, cinema and sports events, and makes an increasing contribution in the field of cultural diversity and local identity. Noteworthy are initiatives such as "Volver", a cable channel that preserves the most complete Argentine programming archive, or the "Word Archive" at Radio Mitre, which offers an online record of some of the country's most valuable audio heritage. 

MEDIA LITERACY AND YOUNG PEOPLE 

There is debate about the increasing role of media in the lives of young people. Specialists agree that the best approach is to encourage critical analysis and to take advantage of opportunities presented by media for young people to explore their identities, creatively express their thoughts and opinions, and amplify their voices. 

The Noble Foundation embodies Grupo Clarín's mission and values, and one of its main activities in 2008 was that of expanding the outreach of "Los medios de comunicación y la educación" ('Education and Media'), a leading and recognized program that has been in place for more than 24 years. This initiative is Grupo Clarín´s main tool for fostering media literacy, a working area globally identified as one of the key pillars of media's social responsibility. The program consists of workshops and booklets for teachers and students to promote a critical approach to the media and to utilize them as complementary resources in education. 

2008 Education and Media Program

Teachers' workshops: 126

Attendees: 5.040

Student workshops: 714

Attendees: 28.560

 

Also in 2008, together with the Ministry of Education, Science and Technology; the Foundation developed the third stage of the program "Los Medios en Familia" (Family & Media). This program provides recommendations and tools for the safe and responsible use of the Internet, television and other media. Nearly a million copies were distributed in each edition, and web based forums invited audiences to engage in a rich debate over content, media and audience choices. Furthermore, the Foundation renewed the presence and coordination of the media section at the "Museo de los Niños" (Children's Museum), and increased the number of visitors to its printing facilities to 15,943 (mainly students). 

The Foundation strengthened its donations of bibliographical material, distance learning programs and several sponsorships, and renewed its long time support of several schools which carry the name of the Clarín's founder, Roberto Noble ('Escuelas Roberto Noble').

Noble Foundations' educational donations 

Books  39,659 

Magazines  8,267

Booklets  658 

Within its Cable and Internet access segment, the Company contributes with the necessary tools for parents to keep their children from accessing sensitive or age inappropriate programming. This includes parental control options in Cable TV service and equipment, in addition to guidance tips and tools for web access. 

 

Regarding children's artistic participation in television and films, the Company complies with regulations and self-imposed guidelines by setting limited time schedules and engaging with parents and tutors. 

EXCELLENCE IN JOURNALISM 

Reaffirming its commitment to journalistic excellence, the Noble Foundation also carried out activities to consolidate the training and excellence of current and future communicators. 

Among them is the support provided to the Masters Degree in Journalism, an international graduate course at the highest academic level, organized by Grupo Clarín and the University of San Andrés, with the participation of the School of Journalism at Columbia University and the University of Bologna, and dictated by renowned national and international journalists and academics. 

In May, the new Graduate Course in Scientific, Medical and Environmental Communication was launched. This program is organized by the University Pompeu Fabra in Barcelona, together with the Leloir Institute and the cable station Todo Noticias (TN). 

OUR PEOPLE 

Grupo Clarín's success and leadership is mostly the result of the efforts, professionalism and creativity of its employees. It is essential that the business units attract and retain the best talents.

Total Employees - 2008 15,735

Distribution of company employees by category:

Management  249

Middle management 2,073

Junior management, administration and commercial  3,983

Qualified technical personnel  6,254

Journalists and others 3,176

It is no coincidence that Grupo Clarín's media companies are amongst the most preferred working places by communication professionals. The Company strives to offer better opportunities, incentives and tools to sustain and strengthen the firm commitment of those who believe and want to contribute towards the realization of Grupo Clarín's vision. 

The Company possesses a special make-up in terms of age and gender diversity among its employees. When it comes to gender, the higher proportion of male employees is significantly explained by the large number of technical personnel, which in Argentina is predominantly male, working in the printing facilities and in the Cable TV and Internet access segment. The gender composition in other companies of the Group is more balanced. 

Employees by sex - 2008

Men  12,211

Women 3,524

Employees by groups of age - 2008

4,819

31-50 9,110

>51 1,806

In 2008, employee turnover reached 8.5%. This figure shows the number of employees that left the Company or its subsidiaries voluntarily or due to dismissal, retirement or death, and partially reflects the particular process deriving from the Cablevisión acquisition.

Turnover by Sex and Age

Men  5.94%

Women 2.57%

3.78%

31-50 3.74%

>51 0.99%

The Group believes in the utmost respect for basic labor rights for all employees. In addition to strictly abiding by the laws, the Company sets higher than standard conditions for all its employees. Of Grupo Clarín's total workforce, more than 76% of employees are covered by collective agreements. For those that are not, the Company applies the conditions established by the best existing agreement. 

Taking care of the work environment and conditions, health and job safety and offering training to improve employees' professional skills and techniques are some of the actions aimed at consolidating the sense of integration and achievement of organizational goals.

One of the key ways of obtaining feedback on the Company's performance is via the annual global staff survey. This is a very important component of Grupo Clarín's internal management process, which was launched in 2008. It its first stages, it included activities for the joint development of measurement tools, a thorough analysis of variables and improvement opportunities and a collaborative effort to define a rational and sustained approach to future stages of the process. 

Moreover, Grupo Clarín analyzed the multiple internal communication tools and increased efforts to implement and streamline the information channels on benefits, policies and relevant organizational changes.

New challenges for the media and changing business models often require change. During 2008, Clarín initiated a process to integrate its newsroom. A central hub, 24 hour news production and multimedia training helped enhance and integrate editorial resources, produce news for different outputs, and helped print media journalists deepen their skills on reporting live news stories in a digital environment. The Cablevisión acquisition posed another challenge; during 2008 the gradual merger of companies, operations and cultures required detailed and comprehensive planning and implementation. 

Benefits and career development

Although most benefits are common to the whole Company, each business unit integrates additional benefits that vary in nature according to tasks. During the last quarter of 2007, the Company, together with its subsidiaries, began to implement a Long Term Savings Plan for directors and managers, which became effective in January 2008. 

During 2008, corporate and business units' human resources departments have continued to implement different programs to identify internal talent for career development. Also, the Young Professionals program was reinstated, creating opportunities for professionals that are taking their first steps in their career paths.

In order to develop new skills and build up existing strengths, people need encouragement and support. In addition to increasing the number and variety of training options, during 2008, the Company continued efforts to extend and enhance the employee performance appraisal program in different categories. The program grew 15.2% in 2008, but it is still not extensively applied.

Grupo Clarín's employees and professionals can update and expand their knowledge and skills through several training programs, ranging from seminars and courses to graduate degrees and MBAs. Human Resources departments are in the process of consolidating individual training records and training hour's information

One of the main initiatives in this respect is the 'Corporate Training Program' which includes a wide variety of courses. In addition, throughout the business units, there have been seminars and programs on quitting smoking, diseases, and other relevant topics, as well as special action campaigns regarding health and medical check-ups. The Group carries our several different activities designed to prevent job related accidents. 

In 2008, Grupo Clarín started to explore alternatives of interaction or joint approaches to general interest issues at the various levels of its value chain. Grupo Clarín also continued with the implementation of systems to guarantee the application of best practices for purchases, hiring, and contracting with suppliers, within a framework of supervision and transparency.

ENVIRONMENT 

Any organization that manufactures goods and provides services has an impact on resources and the environment. Within the framework of an environmental management policy aimed at improving eco-efficiency, the Company and its subsidiaries primarily consume energy, wood, newsprint, cable and water and generate waste. 

Although the media industry has a lower impact than most other industrial processes, during 2008, the Company continued to take steps towards the measurement, planning and improvement of manufacturing processes to optimize results and address possible impacts. Progress was made in achieving the period's goals by introducing sustainable methods to obtain and use resources; implementing policies for investment in equipment and raising awareness for the adequate use of technology. 

The United Nations Global Compact, signed by Grupo Clarín in 2004, also sets principles regarding environmental protection. Businesses are asked to: 

(Principle 7) support a precautionary approach to environmental challenges;

(Principle 8) undertake initiatives to promote greater environmental responsibility; 

(Principle 9) and encourages the development and diffusion of environmentally friendly technologies.

The present report reflects the global impact of the Group, while indicating some specific effects with regards to the nature of the different business activities.

Consumption 

Wood, Newsprint and Energy

A company that publishes newspapers and magazines with a vertically integrated structure achieves a comprehensive view of product's life cycles. Through its subsidiaries and related companies, Grupo Clarín participates in the production of newsprint, which is then used as a raw material by some of its subsidiaries. Printed products can subsequently be recovered and reused via recycling processes to generate more newsprint.

The principal raw materials for the production of newsprint are fresh fiber from round wood and recovered paper. 

In 2008, Papel Prensa, the paper mill in which Grupo Clarín owns a minority stake, consumed 335.673 tones of fresh fiber and 14.501 tones of recovered paper. The type of fiber source (mainly Poplar, Willow and Eucalyptus) depends upon the availability of materials, as well as economic considerations such as the minimization of transport distances and costs, which is a relevant economic and environmental consideration. Nevertheless, it is important to mention that fresh fiber comes entirely from sustainable plantations. This means that no native forests are involved or endangered.

When evaluating sustainability, it is important to realize how different parts interact and affect each other, and to consider them in the proper context. Despite what is commonly assumed, a process relying entirely on recycled paper is not sustainable. The manufacturing of pulp and paper requires the use of fresh fiber, because over time, the used fibers wear out and lose their capacity to bind together to form strong paper. In addition, although it requires less energy and expenses to separate fiber in recovered paper than from wood chips during fiber processing, there are several local conditioning factors: the availability of used paper as a raw material resource in a low-recycling culture such as ours is limited. Low consumer awareness, inexistence of good waste management systems and the growing alternative uses for used paper influence its collection rate. On the other hand, when recovered paper is used, it means that bark and wood bio fuels are not available for energy generation and alternative sources of energy must be consumed.

In light of all things mentioned, sustainably managed plantations stand not only as a safe alternative, but also have proven to play an important role in the challenge of tackling climate change. Sustainably managed forests absorb carbon dioxide and can help to offset other emissions.

The forestry division undertakes its activities with a sustainability strategy that involves the protection of biodiversity. Protected forestry areas and the banning of hunting and fishing activities have led to a sustained increase in bird fauna. These pristine conditions allows for the development of several R&D programs in collaboration with universities, whose academics conduct ambitious programs such as the introduction of certain endangered deer species for their proper and secure development.

Most of the other Company activities are undertaken in urban areas with no relation to natural areas, and complying with urban planning standards in force.

At the printing plants, paper and ink constitute the main material consumed. Almost the entire newsprint supply comes from Papel Prensa. The Company also follows established guidelines to ensure the provision of other materials, such as inks and other specific inputs, at quality levels compatible with international standards.

Paper 133,322 Tn

Ink  2,787 Tn 

Aluminum plates  296 Tn 

Other materials 762 Tn

Company qualified teams continuously strive to reduce consumption by identifying and adopting increasingly eco-efficient processes. Recently, through a six sigma scheme, employees at one of the Company's printing sites determined the convenience of switching from the traditional printing technique to a stochastic printing approach. This style uses same size dots, but varies the density to create a pattern that is closer to a continuous tone than the conventional halftone processes, therefore optimizing ink usage. 

The percentage of polybagging in the Company's newspapers and magazines is not significant, although; nevertheless, an assessment is under way to replace the use of polypropylene in some parts of the dispatching process for more environmentally friendly options.

The primary resource used by Grupo Clarín and its subsidiaries is energy. It is only significant in the paper related and printing activities and, to a lesser extent, in the business units which operate with technology, such as cable television and Internet services, broadcasting, etc. Grupo Clarín's consumption comes from both direct and indirect sources; the indirect consumption comes from electricity taken from the grid.

Direct and Indirect energy consumption by primary source:

Electricity  462,839 MW

Natural Gas  35,533,914 m3

Gasoline 62,841 GJ

Fuel Oil 40,726 GJ

Gasoil 63,726 GJ

LP Gas 771 GJ

Emissions and discharges

In terms of emissions, by far the main contributors to the Company's carbon footprint are print sites and the paper mill. Nevertheless, Grupo Clarín's indicators include other emissions such as those arising from transport and the daily use of its facilities. The Company is constantly exploring alternatives to improve processes and efficiency in these areas, and to continue to enhance the analysis and inventory of Co2 emissions generated by Grupo Clarín's activities.

Total CO2 direct emissions 82,654 Tn

Indirect emissions arising from electricity usage can only be calculated based on Argentina's energy matrix. The latest available information (CAMMESA, 2007) shows the following breakdown:

Natural Gas  43.72%

Fuel Oil 8.09%

Gasoil 3.03 %

Coal  1.41%

Hydraulic  34.40%

Nuclear 6.20%

Imports 3.15%

The primary strategies available to reduce greenhouse gas emissions is reducing the consumption or changing the energy sources. Increased use of renewable forms of fuel and bioenergy is a positive strategy. During 2008, Papel Prensa made the decision to secure the necessary capital expenditure to purchase a bark boiler. This wood waste boiler will be operational by the end of 2009, therefore allowing the Company to set a goal of significantly reducing CO2 emissions in 2010, while better managing waste.

Each Grupo Clarín subsidiary and related company identifies and manages waste production and disposal. This management includes the recycling of 14,896 tones of recuperated paper and cardboard, 49 tones of ink and the reuse of nearly 30 thousand cable modem units.

Contrary to the production of white paper, the newsprint manufacturing process does not involve the use of chlorine for bleaching. This results in a significantly lower chemical impact.

As part of the treatment of industrial waste from the printing process, the Company collects and separates other waste materials (ink, oils, greases and solvents), which are shipped to certified third parties for recycling and reuse. Aluminum plates used in printing can be 100% reused.

Hazardous waste is carefully handled and handed over to authorized waste management companies. 

Urban or non-hazardous waste 54,625 Tn

Hazardous waste 495 Tn

Special care is also maintained regarding the handling of liquid effluents resulting from development processes, subjecting them to rigorous treatments and measurements before disposal. 

The main water usage, recycling and discharges are related to the paper mill. Since the beginning of its operations in 1978, Papel Prensa's investments have allowed it to reduce its water usage in more than 40%.

Strict procedures are set in place to permanently asses and manage the quality of discharges. Routine testing validates compliance with nationwide regulation in terms of toxicity of the discharges.

In addition, Grupo Clarín continued to increase the contribution to the Garrahan Foundation through an office paper recycling program. This was combined with programs for reducing the use of paper in Company offices while seeking to optimise printing techniques, and renewed efforts to raise employee awareness regarding sustainability issues.

INVESTOR RELATIONS 

Creating value and fostering the relationship with its shareholders and investors are two particularly important aspects in the sustainability strategy embodied in Grupo Clarín's daily conduct. Since Grupo Clarín is listed in the Buenos Aires Stock Exchange and in the London Stock Exchange, its commitment to transparency embraces different scenarios and requires new tasks in the Company's daily work. 

In addition to a thorough control on the reliability of information, Grupo Clarín pays special attention to disclosing accurately and through multiple channels relevant news, market developments and the financial perspectives of the Company and the sector. 

In 2008, a perception analysis was carried out, specially addressed to these stakeholders and new communication channels were opened to learn about their concerns and information needs. This action resulted in a process aimed at the quantitative and qualitative improvement of the information disclosed in the quarterly performance reports. Moreover, by year-end, the Company started to review and update other communication tools, such as the Investors' Web Site. In recognition of these efforts, Grupo Clarín received an Eikon Award in the category Financial Communications.

PROJECTED BUSINESS POLICY AND OTHER RELEVANT ASPECTS OF CORPORATE, FINANCIAL AND INVESTMENT PLANNING

In the forthcoming years and as part of Argentina's challenge to achieve sustainable growth, Grupo Clarín seeks to maintain and consolidate its presence in the local market, both in the production and in the distribution of content. 

Grupo Clarín's business units, along with the development of its core activities, will continue to work in order to seize opportunities, seeking to reinforce, improve and expand the range of products and services offered; increase market share; reach new audiences and promote permanent innovations.

Grupo Clarín will continue to focus on further optimizing the productivity and efficiency levels in all of its areas and companies, seeking to develop and apply the best practices related to each of these processes.

At a corporate level, it will continue to focus on the main processes that allow a sustainable, healthy and efficient growth from different perspectives: financial structure, management control, business strategy, human resources, innovation and corporate social responsibility. Grupo Clarín will continue to analyze alternative new ventures related to its mission and strategic objectives both in Argentina and abroad, as long as they add value to shareholders and are feasible and viable under the prevailing economic environment. 

Grupo Clarín will continue to strengthen its presence in traditional media, with a growing focus in the area of digital media, and connectivity. To such end, the Company will leverage the value added by its presence in distribution networks, brand strength and, fundamentally, its broad experience in the production of content, recognized by the Spanish-speaking market for its quality, credibility and prestige.

RISK FACTORS 

As an Argentine multimedia Company, Grupo Clarín is exposed to a wide range of risks, related to the country and also to its operations. Nevertheless, one of the Company's strengths lies in its strategic diversification helping spread possible exposures.

The company relies on strong internal control and risk management systems. The identification of risk and its assessment is part of each unit's business plans, and is also addressed by a corporate based control department and by the Board on a regular basis.

Argentina's economic environment

Substantially all of our operations are conducted in Argentina, and are therefore affected by changes in Argentina's economic environment. After six years of sustained economic growth, the Argentina economy began to slow down in the second half of 2008, affected by the international crisis as well as internal political developments. A downturn in economic activity may result in increased subscriber churn as well as decreased advertising revenues.

We seek to address the cycles affecting the Argentine economy by diversifying the scope of our business and managing our financial exposure to foreign currencies.

Political and Economic Instability 

Our financial condition and results of operations depend to a significant extent on macroeconomic and political conditions prevailing in Argentina. 

The country´s economy could be adversely and lengthily affected by economic developments in other markets, and Argentina's ability to obtain financing from international markets remains limited. Inflation may continue to increase, causing adverse effects on the Argentine long-term credit markets as well as the Argentine economy generally. A contraction of the economy would also adversely affect our financial condition and results of operations. Political and economic factors may impair the governments´ ability or decision to implement reforms, foster economic growth and embark in pending infrastructure investments. Restrictions on the supply of energy could also negatively affect the country´s growth and impact the Company's results of operations. The Company has taken the measures to lessen the impact of increase in energy cost and availability, but this remains an exposure. 

Some of our costs, including a significant portion of our financial expenses, are dollar denominated. Currency fluctuations, such as a considerable devaluation of the Peso against the U.S. dollar may adversely affect the Argentine economy and have impact on our financial performance.

Legislation and Regulation

In most countries, the media industry in general is subject to some form of government regulation. Uncertainty as to the application of the current legal and regulatory environment that governs our cable television, telecommunications and Internet and digital content segments and the adoption of new regulations may be disadvantageous to us, and may limit our ability to operate our business. Failure or delay in renewing our licenses or obtaining regulatory approvals may also influence the availability of our services to our customers. The executive branch has recently made public a draft bill that, if adopted in its current formulation could have an adverse impact on our operations. 

In Argentina certain guarantees are set forth in order to safeguard journalistic activities from regulation intended to limit the independence of the press. As a media company, we are vigilant as to the menaces that might arise in this respect and widely cooperate with journalistic associations and other NGOs that advocate for the protection of essential rights such as those of freedom of speech and freedom of the press. The draft bill prepared by the executive branch in the first quarter of 2009 has been made available for public discussion and comments by interested parties, but has not been submitted to Congress. Through industry federations as well as individually, we intend to participate in the debate regarding the draft bill, defending the legitimate interests of our company and our stakeholders, including our customers and public opinion at large. 

 

Sector Development and Competition

 

The media industry is dynamic and undergoing significant developments, at a pace that may differ from our current expectations affecting our growth. Increased competition through new technological developments may adversely affect our business if we are not able to adapt readily our operations. Also some of our activities are built on maturing markets. 

While our analysis may not always be accurate, the Company devotes significant resources to analyzing emerging trends and has vast experience and history in correctly interpreting consumer demands and successfully developing new products and services, adapting its business model in time 

Programming and Personnel

 We may not be able to renew our rights to certain programming, and our results of operations may be adversely affected by the loss of key personnel.

The production of content is part of our strategy and we dedicate significant resources to the identification of market trends and new figures and matters of public interest, to preserve the position of leadership we have acquired in the market.

 

Liquidity and Funding

We have financial debt outstanding, a significant portion of which is denominated in foreign currency. Financial markets remain practically closed for Argentine companies, and we must rely primarily on our cash flow generation to service our debt.

We have engaged in an active liability management policy, and improved our debt to free cashflow ratio to limit our need to access the market as a means of repayment of our financial obligations.

ORGANIZATION AND INTERNAL CONTROL SYSTEM

Day-to-day decisions relating to Grupo Clarín's businesses are taken by an executive committee of our Board of Directors formed by three members, appointed and supervised by the Board of Directors from among its own members. 

Board of Directors 

Héctor Horacio Magnetto  Chairman 

José Antonio Aranda  Vice Chairman

Lucio Rafael Pagliaro  Director

Alejandro Alberto Urricelqui   Director

Jorge Carlos Rendo  Director

Pablo César Casey  Director

Muneer Satter  Director 

David Castelblanco Director

Mario Parrado  Independent Director 

Alberto César José Menzani   Independent Director

Executive Committee 

Héctor Horacio Magnetto

 José Antonio Aranda

 Lucio Rafael Pagliaro.

Grupo Clarín also has a Supervisory Committee comprised of 3 members and 3 alternate members, who are appointed on an annual basis at the Ordinary Shareholders' Meeting. 

To assist the Executive Committee in their daily duties, Grupo Clarín organizes its activities under an executive structure comprising: External Relations Division; Corporate Finance Division; Corporate Control Division; Corporate Strategy Division; Audiovisual Content Division; Corporate Human Resources Division; Corporate Affairs Division; Digital Content Division.

In order to identify opportunities and streamline structures and systems with the aim of improving processes and making informed decisions, Grupo Clarín sets forth several procedures and polices for the specific purpose of controlling the Company's operations. The areas responsible for the Company's internal controls, both at the Company level and at the level of its subsidiaries and affiliates, contribute to the safeguard of the shareholders' equity, the reliability of financial information and the compliance with laws and regulations.

Pursuant to the resolution issued by the "Comisión Nacional de Valores" ("CNV", the Argentine Securities Commission) concerning the filing of a report on the adoption of the Code of Corporate Governance (Resolution N°516/07), Grupo Clarín is not required to file such report no later than June 10, 2009.

DIVIDEND POLICY

Grupo Clarín does not have a formal dividend policy governing the amount and payment of dividends or other distributions. According to its Bylaws and Argentine Corporate Law, Grupo Clarín may lawfully pay and make declarations of dividends only out of the retained earnings stated in the Company's annual Financial Statements prepared in accordance with Argentine GAAP and CNV regulations and approved by the annual ordinary shareholders' meeting. In such case, dividends must be payable on a pro rata basis to all holders of shares of common stock as of the relevant record date.

COMPENSATION OF THE MEMBERS OF THE BOARD OF DIRECTORS AND SENIOR MANAGEMENT

Compensation of the members of the Board of Directors is fixed by the Shareholders' Meeting after the close of each fiscal year, considering the threshold established by section 261 of Law No. 19,550 and related regulations of the CNV. 

Grupo Clarín has compensation arrangements with all of its officers in executive and managerial positions, which contemplate a fixed and variable remuneration scheme. Fixed compensation is tied to the level of responsibility attached to each position and prevailing market salaries. The variable component is tied to performance during the fiscal year, of the objectives set at the beginning of the year. 

Grupo Clarín does not have any stock option plans in place for its personnel.

As mentioned in Note 13 to the parent company only Financial Statements, on January 1, 2008 Grupo Clarín began to implement a Long-term Savings Plan ("PALP") for certain executives of Grupo Clarín and its subsidiaries. Executives who adhere to such plan will contribute regularly a portion of their salary to a fund that will allow them to increase their income at the retirement age. Furthermore, each company matches the sum contributed by such executives. This matching contribution will be added to the fund raised by the employees. Under certain conditions, employees may access such fund upon retirement or upon termination of their jobs with Grupo Clarín. 

SETTING UP OF RESERVES

Pursuant to the Argentine Corporate Law, Grupo Clarín is required to set up a legal reserve of no less than 5% of each year's retained earnings until such reserve reaches 20% of its outstanding capital stock. The legal reserve is not available for distribution to shareholders.

FINANCIAL POSITION AND RESULTS OF ITS OPERATIONS 

In 2008, the main changes in the Company's financial position and results of its operations were the following:

Working capital (current assets minus current liabilities) at year-end decreased by Ps. 148.0 million, from Ps. 121.2 million to (negative) Ps. 26.8 million. This decrease is basically evidenced in the Company's funds (the items Cash and Banks and Other Current Investments), with a reduction of Ps. 133.0 million, mainly due to the acquisition of an interest in Compañía Inversora en Medios de Comunicación (CIMECO) S.A., as detailed in Note 12.b to the parent company only Financial Statements.

The most significant variation in non-current items was recorded in 'Investments', due to the income/(loss) generated by Grupo Clarín's subsidiaries, mainly Cablevisión S.A. (indirectly), Arte Gráfico Editorial Argentino S.A., Arte Radiotelevisivo Argentino S.A., and Inversora de Eventos S.A., and the above-mentioned acquisition of an interest in Compañía Inversora en Medios de Comunicación (CIMECO) S.A.

The Statement of Operations as of December 31, 2008 recorded a net income of Ps. 262.7 million. Such income is basically derived from equity in earnings (losses) from affiliates and subsidiaries of Ps. 313.5 million. Income from management fees, net of administrative expenses, generated a gain of Ps. 8.9 million.

Grupo Clarín S. A. is still controlled by GC Dominio S.A., which holds 64.2% of its voting rights. Balances and transactions with subsidiaries and affiliates are detailed in Note 4 to the Parent Company Only Financial Statements. 

Finally, with respect to net income for the year, which was Ps. 262,741,296, the Board of Directors of Grupo Clarín S.A. proposed to the Ordinary Shareholders' Meeting that the net income for fiscal year ended December 31, 2008 be distributed as follows:

To the Legal reserve: 5% of Net Income for the year	Ps. 13,137,065
The balance to Retained earnings	Ps. 249,604,231

Subsequently to the end of the period, on April 23, 2009, Grupo Clarín held its second General Annual Ordinary Shareholders Meeting. On that occasion, the shareholders considered and approved the 2008 Financial Statements and other related documentation and the performance and compensation of Directors, Supervisory Committee and Audit Committee. Also, they elected members of the Board of Directors and mentioned committees for fiscal year 2009, along with an external auditor. No dividends were distributed.

DIRECTORS' RESPONSIBILITY STATEMENT 

We confirm that to the best of our knowledge:

- the consolidated financial statements included with this annual report, prepared in accordance with US GAAP, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and 

- this annual report includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face. 

On behalf of the Board,

Alejandro Urricelqui 

Chief Financial Officer

Grupo Clarín

  

GRUPO CLARIN S.A.

CONSOLIDATED

FINANCIAL STATEMENTS

As of and for the years ended 

December 31, 2008 and 2007

GRUPO CLARIN S.A. consolidated financial statements

as of and for the years ended December 31, 2008 and 2007

GLOSSARY OF SELECTED TERMS

AD 2000	Automóviles Deportivos 2000 S.A.
AFA	Asociación del Fútbol Argentino (Argentine Football Association)
AFIP	Administración Federal de Ingresos Públicos (Argentine Federal Revenue Service)
AGEA	Arte Gráfico Editorial Argentino S.A.
AGR	Artes Gráficas Rioplatense S.A.
ANA	Administración Nacional de Aduanas (National Customs Administration)
Antitrust Law	Law No. 25,156, as amended
APE	Acuerdo preventivo extrajudicial (out-of-court restructuring agreement)
ARB	Accounting Research Bulletin
Argentine GAAP	Accounting principles generally accepted in Argentina
ARTEAR	Arte Radiotelevisivo Argentino S.A.
Autos Virtuales	Autos Virtuales S.A.
Bariloche TV	Bariloche TV S.A.
BCBA	Bolsa de Comercio de Buenos Aires (Buenos Aires Stock Exchange)
Broadcasting Law	Law No. 22,285 and its regulations
Cablevisión	Cablevisión S.A.
Canal Rural	Canal Rural Satelital S.A.
CER	Coeficiente de Estabilización de Referencia (Reference Stabilization Coefficient, a consumer price inflation coefficient)
CIMECO	Compañía Inversora en Medios de Comunicación (CIMECO) S.A.
Clarín Global	Clarín Global S.A.
CMD	Compañía de Medios Digitales S.A. (former PRIMA Internacional)
CNDC	Comisión Nacional de Defensa de la Competencia (National Antitrust Commission)
CNV	Comisión Nacional de Valores (Argentine Securities Commission)
COMFER	Comité Federal de Radiodifusión (Federal Broadcasting Committee)
CPGB	Comercializadora de Produtos Gráficos Brasileiros Ltda.
Dineromail	Dineromail, LLC
DTVLA	DirecTV Latin America, LLC
Editorial Atlántida	Editorial Atlántida S.A.
EITF	Emerging Issues Task Force
FASB	Financial Accounting Standards Board
Fintech	Fintech Advisory, Inc. together with its affiliates
GC Minor	GC Minor S.A.
GC Services	Grupo Clarín Services, LLC
GCGC	GC Gestión Compartida S.A.
GCSA Investments	GCSA Investments, LLC
GDS	Global Depositary Shares
Grupo Carburando	Carburando S.A.P.I.C.A.F.I., Mundo Show S.A. and Mundo Show TV S.A.
Grupo Clarín, or the Company	Grupo Clarín S.A.
Grupo Radio Noticias	Grupo Radio Noticias S.R.L.
Hicks LLC	Hicks, Muse, Tate & Furst, LA Argentina Cable Company, LLC
Holding Teledigital	Holding Teledigital Cable S.A.
Ideas del Sur	Ideas del Sur S.A.
IESA	Inversora de Eventos S.A.
IGJ	Inspección General de Justicia
Impripost	Impripost Tecnologías S.A.
JPM	JP Morgan Chase Bank, N.A.
La Razón	Editorial La Razón S.A.
LSE	London Stock Exchange
Mercoprop	Mercado de Propuestas Inmobiliarias S.A.
Multicanal	Multicanal S.A.
OSA	Oportunidades S.A.
PALP	Long-Term Savings Plan
Papel Prensa	Papel Prensa S.A.I.C.F. y de M.
Pol-Ka	Pol-Ka Producciones S.A.
PRIMA	Primera Red Interactiva de Medios Argentinos (PRIMA) S.A.
PRIMA Internacional	Primera Red Interactiva de Medios Americanos (PRIMA) Internacional S.A. (now CMD)
Ps.	Argentine Pesos
Radio Mitre	Radio Mitre S.A.
Radio Televisión Río Negro	Radio Televisión Río Negro Sociedad del Estado LU 92 Channel 10 - UTE

  

Raven	Raven Media Investments, LLC
SAGAI	Sociedad Argentina de Gestión de Actores Intérpretes Asociación Civil (Argentine Association of Actors and Performers)
SCI	Secretaría de Comercio Interior (Secretariat of Domestic Trade)
SECOM	Secretaría de Comunicaciones (Argentine Secretariat of Communications)
SFAS	Statement of Financial Accounting Standards
Telba	Teledifusora Bahiense S.A.
Telecor	Telecor S.A.C.I.
Teledigital	Teledigital Cable S.A.
Tinta Fresca	Tinta Fresca Ediciones S.A.
TPO	Televisora Privada del Oeste S.A.
TRISA	Tele Red Imagen S.A.
TSC	Televisión Satelital Codificada S.A.
US GAAP	Accounting principles generally accepted in the United States of America
VAT	Value Added Tax
Vistone	Vistone, LLC, o Vistone S.A. after its incorporation as a sociedad anónima (a corporation with limited liability) under Argentine Law
VLG	VLG Argentina, LLC

CONSOLIDATED BALANCE SHEETS

(In Ps. - unless otherwise stated)

 

	As of December 31,
	2008		2007
ASSETS
Current assets
Cash and cash equivalents	389,252,232		527,619,476
Trade receivables, net	611,977,702		538,523,073
Other receivables, net	293,063,081		302,105,840
Inventories	200,368,734		141,210,463
Other assets	7,199,516		12,230,059
Total Current assets	1,501,861,265		1,521,688,911
Trade receivables, net	3,692,540		2,664,875
Other receivables, net	185,649,707		286,993,480
Inventories	26,209,721		24,809,136
Investments in unconsolidated affiliates	271,429,817		231,723,592
Other long-term investments	3,228,752		4,690,405
Property, plant and equipment, net	1,981,802,233		1,421,696,123
Intangible assets, net	495,725,406		535,369,416
Goodwill	3,162,653,758		3,134,595,616
Total Assets	7,632,253,199		7,164,231,554
LIABILITIES
Current liabilities
Accounts payable	560,802,207		499,108,121
Short-term debt and current portion of long-term debt	417,674,105		278,466,754
Salaries and social security payable	261,859,704		156,111,728
Taxes payable	239,847,087		237,134,696
Sellers financing	63,337,460		31,208,165
Other liabilities	75,408,905		80,467,696
Total Current liabilities	1,618,929,468		1,282,497,160
Accounts payable	14,373,232		10,547,274
Long-term debt	2,283,659,449		2,238,001,179
Taxes payable	148,136,648		16,762,210
Sellers financing	551,170,669		703,260,133
Other liabilities	164,721,827		183,529,422
Provisions	95,124,110		125,385,922
Minority interest	907,759,672		987,100,718	(1)
Commitments and contingencies (Note 13)
Shareholders' Equity
Common shares Class A common shares Ps.1 par value per share, 75,980,304 shares authorized, issued and outstanding. Class B common shares Ps.1 par value per share, 186,281,411 shares authorized, issued and outstanding. Class C common shares Ps.1 par value per share, 25,156,869 shares authorized, issued and outstanding.	287,418,584		287,418,584
Additional paid-in capital	1,358,001,994		1,358,001,994
Retained earnings (Accumulated deficit)	190,949,764		(31,948,182)
Accumulated other comprehensive income	12,007,782		3,675,140
Total Shareholders' Equity	1,848,378,124		1,617,147,536
Total Liabilities and Shareholders' Equity	7,632,253,199		7,164,231,554

(1) Includes Ps. 201,496,567 corresponding to minority interest in CIMECO subject to put option (see Note 6).

The accompanying notes are an integral part of these consolidated financial statements.

  CONSOLIDATED STATEMENTS OF INCOME

(In Ps. - unless otherwise stated)

	For the years ended December 31,
	2008		2007
Net sales	5,378,076,159		4,235,724,233
Cost of sales (excluding depreciation and amortization)	(2,576,556,492)		(2,055,691,923)
Selling expenses (excluding depreciation and amortization)	(596,160,727)		(430,741,916)
Administrative expenses (excluding depreciation and amortization)	(615,181,133)		(442,653,415)
Depreciation of property, plant and equipment	(295,841,039)		(236,253,265)
Amortization of intangible assets	(77,374,641)		(83,153,581)
Depreciation of other investments	(67,873)		(65,776)
Goodwill impairment	-		(14,980,978)
Other results, net	7,541,244		442.174
Operating income	1,224,435,498		972,625,553
Financial results, net	(563,720,409)		(432,675,672)
Equity in earnings from unconsolidated affiliates	44,062,116		33,709,347
Income before income tax, tax on assets and minority interest	704,777,205		573,659,228
Income tax and tax on assets	(292,509,960)		(196,549,609)
Minority interest	(141,369,299)		(105,009,000)
Net income	270,897,946		272,100,619

Net income per common share:
Basic	0.94		1.13
Weighted average number of common shares outstanding:
Basic	287,418,584		240,684,109

The accompanying notes are an integral part of these consolidated financial statements.

  CONSOLIDATED STATEMENT OF CASH FLOWS

(In Ps. - unless otherwise stated)

	For the years ended December 31,
	2008		2007
Operating activities:
Net income	270,897,946		272,100,619
Adjustments for non-cash and non-operating items:
Income tax and tax on assets	292,509,960		196,549,609
Accrued interest	239,504,680		266,278,481
Adjustments to reconcile net income to cash provided by operating activities
Depreciation of property, plant and equipment	295,841,039		236,253,265
Amortization of intangible assets	77,374,641		83,153,581
Depreciation of other investments	67,873		65,776
Goodwill impairment	-		14,980,978
Allowances for doubtful accounts	36,303,106		23,995,651
Setting up of provision for contingencies	25,750,397		12,433,329
Equity in earnings from unconsolidated affiliates	(44,062,116)		(33,709,347)
Minority interest	141,369,299		105,009,000
Other financial results	229,860,142		96,829,340
Loss (Gain) on sale of property, plant and equipment	(7.541.244)		(442,174)
Others	-		(1,542,122)
Changes in assets and liabilities
Trade receivables	(80,224,272)		(101,684,855)
Other receivables	(8,750,169)		(27,375,512)
Inventories	(28,573,180)		(8,581,174)
Other assets	(1,761)		1,050,690
Accounts payable	33,499,350		75,377,704
Salaries and social security payable	97,004,234		40,690,974
Taxes payable	66,635,818		(27,954,918)
Other liabilities	(50,390,332)		(2,998,948)
Provisions	(44,397,496)		(13,161,186)
Payment of interest and constitution of reserve account	(261,705,682)		(227,491,555)
Collection of interest	8,128,686		8,321,711
Collection of dividends	15,906,416		13,324,478
Income tax and tax on assets payments	(123,711,663)		(84,721,257)
Cash provided by operating activities	1,181,295,672		916,752,138
Investing activities:
Payment for the acquisition of property, plant and equipment	(828,159,209)		(574,461,658)
Payment for the acquisition of subsidiaries and unconsolidated affiliates, net of cash acquired	(55,313,524)		(63,256,287)
Payment for the acquisition of intangible assets	(7,677,771)		(20,533,216)
Proceeds from sale of property, plant and equipment and other investments	7,522,500		5,668,642
Restricted cash	-		(18,960,000)
Capital contributions in equity investees	(8,609,273)		-
Cash used in investing activities	(892,237,277)		(671,542,519)
Financing activities:
Loans obtained	121,510,932		6,120,607
Repayment of loans - Principal	(146,009,561)		(348,529,307)
Payments of financial instruments	(42,779,446)		(11,090,937)
Proceeds from financial instruments	14,126,700		11,879,921
Payments of sellers financing	(334,460,012)		(170,546,495)
Payments of dividends	(48,000,000)		(18,000,000)
Payments of dividends to minority interest	(11,999,439)		(4,545,370)
Cash received from initial public offering of shares, net of related expenses	1,484,015		470,808,308
Cash used in financing activities	(446,126,811)		(63,903,273)
EFFECT OF EXCHANGE RATE ON CASH AND CASH EQUIVALENTS	18,701,172		19,387,034
(Decrease) Increase in cash and cash equivalents	(138,367,244)		200,693,380
Cash and cash equivalents at the beginning of the year	527,619,476		326,926,096
Cash and cash equivalents at the end of the year	389,252,232		527,619,476

The accompanying notes are an integral part of these consolidated financial statements.

  CONSOLIDATED STATEMENT OF CASH FLOWS

(In Ps. - unless otherwise stated)

	For the years ended December 31,
	2008		2007
Supplemental cash flow information
Acquisition of subsidiaries (see Note 6)
Cash and cash equivalents	4,365,563		24,570,339
Trade receivables	21,710,340		51,658,144
Other receivables	16,634,457		18,745,569
Inventories	29,176,045		10,111,195
Other assets	-		881,477
Investments in unconsolidated affiliates	4,069,933		38,636,722
Property, plant and equipment, net	28,905,783		72,416,947
Accounts payable	(28,078,414)		(22,013,592)
Borrowings	(8,001,302)		(23,683,521)
Salaries and social security payable	(7,625,091)		(5,475,566)
Taxes payable	(3,635,755)		(7,835,828)
Other liabilities	(35,498,954)		(23,800,446)
Provisions	(24,429)		(15,918,164)
Minority interest	11,374,407		(12,210,523)
Net value of assets consolidated	33,372,583		106,082,753
Other intangible assets (net of related deferred income tax)	26,872,259		6,630,527
Goodwill	26,849,215		231,651,128
Investments in unconsolidated affiliates	-		(67,807,686)
Minority interest on net assets consolidated	(16,973,674)		290,141
Purchase price	70,120,383		276,846,863
Cash and cash equivalents acquired	(4,627,359)		(24,570,339)
Sellers financing	(10,179,500)		(4,745,680)
Minority interest subject to put option	-		(201,496,567)
Payment for the acquisition of subsidiaries, net of cash acquired	55,313,524		46,034,277
Significant non-cash investing and financing activities
Minority interest in CIMECO subject to put option	-		201,496,567
Interests paid with reserve account	40,176,776		51,001,569
Financed disposal of other assets	7,750,000		-
Financed acquisitions of subsidiaries	10,179,500		-
Payment of loans with trade receivables	5,968,557		-

CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY AND

OTHER COMPREHENSIVE (loss) INCOME

(In Ps. - unless otherwise stated)

		Common Shares		Preferred Shares		Additional Paid-In Capital		(Accumulated Deficit) Retained Earnings		Accumulated Other Comprehensive (Loss) Income		Total Shareholders' Equity
		Shares	Amount	Shares	Amount
Balance at December 31, 2006		228,999,880	228,999,880	41,261,644	41,261,644	901,082,526		(297,126,532)		(14,204,182)		860,013,336
Dividends declared		-	-	-	-	-		(6,922,269)		-		(6,922,269)
Conversion of shares (Note 11)		41,261,644	41,261,644	(41,261,644)	(41,261,644)	-		-		-		-
Increase of capital stock (Note 11)		17,157,060	17,157,060	-	-	456,919,468		-		-		474,076,528
Foreign currency translation adjustments		-	-	-	-	-		-		17,879,322		17,879,322
Net income for the year		-	-	-	-	-		272,100,619		-		272,100,619
Balance at December 31, 2007		287,418,584	287,418,584	-	-	1,358,001,994		(31,948,182)		3,675,140		1,617,147,536
Dividends declared		-	-	-	-	-		(48,000,000)		-		(48,000,000)
Foreign currency translation adjustments		-	-	-	-	-		-		8,332,642		8,332,642
Net income for the year		-	-	-	-	-		270,897,946		-		270,897,946
Balance at December 31, 2008		287,418,584	287,418,584	-	-	1,358,001,994		190,949,764		12,007,782		1,848,378,124

The accompanying notes are an integral part of these consolidated financial statements.

GRUPO CLARIN S.A. consolidated financial statements

as of and for the years ended December 31, 2008 and 2007

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 (in Ps. - unless otherwise stated)

Note 1. Description of the business

Grupo Clarín is a holding company that operates in the media industry. Its operating income and cash flows derive from the operations of its subsidiaries in which it participates directly or indirectly.

Its operations include cable television and Internet access services, newspaper and other printing, publishing and advertising activities, broadcast television, radio operations and television content production, on-line and new media services, and other media-related activities. A substantial portion of its revenues is generated in Argentina. Through its controlled companies and equity investees, it is engaged primarily in the following business segments: a) Cable television and Internet access, b) Printing and publishing, c) Broadcasting and programming and d) Digital content and others.

Note 2. Summary of Significant Accounting Policies

Basis of presentation

In preparing these consolidated financial statements, the Company has followed accounting policies that are in accordance with US GAAP.

US GAAP differs in certain respects from Argentine accounting practice applied by the Company in its statutory financial statements prepared in accordance with Argentine GAAP and in accordance with the rules of the CNV.

The consolidated financial statements include 100% of the assets, liabilities, revenues, expenses and cash flows of Grupo Clarín and all entities in which the Company has a controlling voting interest ("subsidiaries") required to be consolidated in accordance with US GAAP. When Grupo Clarín consolidates entities, the ownership interests of any minority parties are reflected as minority interest, and investment in entities in which the Company has 20% to 50% ownership, but not a controlling interest, are accounted for by the equity method. Intercompany accounts and transactions between consolidated entities have been eliminated in consolidation. The following chart includes the most significant consolidated subsidiaries as of each closing date (percentages show direct and indirect interest held by the Company).

	2008		2007
Cablevisión	59.9%		60.0%
Multicanal	(1)		59.1%
Teledigital	(1)		60.0%
PRIMA	59.7%		59.1%
AGEA	100.0%		100.0%
AGR	100.0%		100.0%
CIMECO	100.0%		50.0%	(2)
ARTEAR	99.2%		99.2%
Pol-Ka	55.0%		-	(3)
IESA	100.0%		100.0%
Radio Mitre	100.0%		100.0%
GCGC	100.0%		100.0%
CMD	100.0%		100.0%
Clarín Global	100.0%		100.0%
GC Services	100.0%		100.0%
GCSA Investments	100.0%		-

(1) Companies merged into Cablevisión as from October 1, 2008 (see Note 6).

(2) As explained in Note 6, CIMECO's balances as of December 31, 2007 and transactions from August 23, 2007 until year-end have been consolidated.

(3) As of December 31, 2007 Pol-Ka was accounted at the equity method since Grupo Clarín had an 30% ownership.

  Use of estimates

US GAAP requires management to make estimates that affect the reported amounts of assets and liabilities, and the reported amounts of revenues and expenses. The Company evaluates its estimates, including those related to tangible and intangible assets, doubtful accounts, inventories, provisions and income taxes, on an ongoing basis. The Company bases its estimates on historical experience and on various other assumptions that management believes to be reasonable under the circumstances. These estimates form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. 

Cash and cash equivalents

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Cash and cash equivalents are carried at cost, which approximates fair value.

Cash in foreign currency is converted into Ps. at the exchange rate prevailing as of each year end.

Concentration of cash and credit risk

Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash, cash equivalents, accounts receivable, and short-term investments. The Company maintains cash and cash equivalents and other financial investments with various high credit quality financial institutions, in order to mitigate the amount of credit exposure to any one institution. The Company has not experienced any significant losses in such accounts. The Company does not depend on any single customer. 

The Company maintains reserves for potential credit losses based on impaired accounts, historical charge-off patterns and management judgment; historically such losses have not been significant and have been within management's expectations.

Allowance for doubtful accounts

The Company reviews its doubtful accounts on a monthly basis for estimated losses resulting from the inability of its customers to make required payments. The customer base in the cable television and Internet access segment is primarily residential in nature while the customer base of the publishing, printing and broadcast television operations involves a wide range of companies and, to a lesser extent individuals. Generally, the Company does not require collateral from its customers, although it does require that all advertising agencies, receiver agencies and direct advertisers that are granted financing to sell advertisement in its print media, provide AGEA security with respect to at least 70% of the payment obligations, in general by means of a mortgage or bank guaranty.

The Company invoices most of its cable television and Internet access subscribers in advance. A majority of Argentine cable television subscribers pay their invoices in cash, and it encourages them to pay their monthly invoices by automatic credit card or bank account debits. The Company enforces a strict disconnection policy.

In determining the adequacy of allowances for doubtful accounts, the Company analyzes, among other things, historic bad debt experience, customer credit worthiness, current economic trends in Argentina and customer payment history.

Inventories 

Inventories are valued at lower of cost (standards approximating the first-in, first out method) or market. Costs included in inventories are based on invoiced cost and/or production costs, as applicable. Included in production costs are material, direct labor and allocated overhead. The Company writes down inventories for the difference between the carrying value of the inventories and their estimated market value. If actual market conditions are less favorable than those projected by management, additional write-downs may be required.

  Investment in unconsolidated affiliates

Investments in companies in which the Company has significant influence, but less than a controlling voting interest, are accounted for using the equity method. This is generally presumed to exist when the Company owns between 20% and 50% of the investee.

Property, plant and equipment, net

Property, plant and equipment are stated at cost. The cost of additions and substantial improvements to property, plant and equipment is capitalized. The cost of maintenance and repairs of property, plant and equipment is charged to operating expenses. Borrowing costs were capitalized as part of the cost of property, plant and equipment when such assets necessarily took a substantial period of time to get ready for its intended use. Other materials and equipment consisting mainly in networking infrastructure not related to additions or improvements are charged to profit or loss as consumed. Property, plant and equipment are depreciated using straight-line methods over their estimated economic lives.

Goodwill and Intangible assets, net

Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired in a business combination. Such fair values are determined by using primarily internal valuations, including discounted cash flows, external market values and others. Goodwill is not subject to amortization, but is subject to at least an annual assessment for impairment, applying a fair-value based test.

Intangible assets resulting from the acquisitions of entities accounted for using the purchase method of accounting are estimated by management based on the fair value of assets received. Identifiable intangible assets are mainly comprised of subscriber portfolio acquired, which is amortized over its useful life determined on the basis of the churn rate of such acquired portfolio. These useful lives range from approximately 7 to 10 years. 

Impairment of Long-Lived Assets and Goodwill

The Company reviews long-lived assets for impairments whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to undiscounted future net cash flows expected to be generated by the asset. If such assets are considered to be impaired on this basis, the impairment loss to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets.

Goodwill is reviewed at least annually for impairment. Impairment of goodwill is tested at the reporting unit level by comparing the reporting unit's carrying amount, including goodwill, to the fair value of the reporting unit. The fair values of the reporting units are estimated using a combination of the income or discounted cash flows approach and the market approach, which utilizes comparable companies' data. If the carrying amount of the reporting unit exceeds its fair value, goodwill is considered impaired and a second step is performed to measure the amount of impairment loss, if any. 

Upon execution of certain agreements entered into by CPGB during 2007, the Company has reviewed the carrying value of the goodwill related to this subsidiary, and accounted for an impairment of approximately  Ps. 15 million. No additional impairment was considered as of December 31, 2008 as the fair value of CPGB exceeded its book value including goodwill.

Revenue recognition 

Revenue is recognized when persuasive evidence of an arrangement exists, the fees are fixed or determinable, the product or service has been delivered and collectability is reasonably assured. The Company considers the terms of each arrangement to determine the appropriate accounting treatment.

  Revenues for each of the business segments identified by the Company are recognized when the following conditions are met.

Subscriber fees and internet services are recognized as revenue in the period that the service is provided. Advertising revenues for cable television are recognized when the advertisement is aired and online advertising revenues are recognized over the period in which the advertisements are displayed.

Advertising sales are determined by the prices achieved per single column centimeter (the advertising yield) and the number of advertising centimeters sold (advertising lineage) in the relevant period. Circulation sales include the price received from the sale of newspapers, magazines and other publications. Printing services sales consists mainly of fees received from the printing of magazines, books, supermarket leaflets and related products. 

Advertising sales from newspapers and magazines is recognized when the advertisements are published. Revenues from the sale of newspaper and magazines are recognized upon passing control to the buyer. The Company records the estimated impact of residual returns as a deduction from revenues. In determining the estimate of the sales to be returned as of the end of each fiscal year, the Company uses historical return trends to calculate the amount. Revenues from printing services are recognized upon completion of the services and delivery of the related product and customer acceptance. 

Advertising revenues for television and radio stations are recognized when the advertisement is aired. Revenues from programming and distribution of television content for broadcast channels are recognized when the programming service is provided.

The Company believes that its revenue recognition policies conform to Staff Accounting Bulletin No. 104, "Revenue Recognition".

Barter transactions

The Company enters into transactions that either exchange advertising for advertising ("Advertising Barter") or advertising for other products and services ("Non-advertising Barter"). Advertising Barter transactions are recorded at the estimated fair value of the advertising given in accordance with the provisions of EITF Issue No. 99-17, Accounting for Advertising Barter Transactions. Revenue from barter transactions is recognized when advertising is provided, and services received are charged to expense when used. Revenues for Non-advertising Barter transactions are recognized at the estimated fair value when the product is available for telecast and the advertising spots received under such contracts are either used or sold to third parties. Revenue from barter transactions is not material to the Company's consolidated statement of income for any of the fiscal years presented herein.

Advertising cost

Advertising costs are expensed as incurred. Advertising expenses in 2008 and 2007 totaled approximately Ps. 128.0 and Ps. 103.8 million, respectively.

  Other Comprehensive (Loss) Income 

Other Comprehensive (Loss) Income is reported on the accompanying consolidated statement of shareholders' equity and other comprehensive (loss) income and consists of (loss) income and other gains and losses affecting shareholders' equity that, under US GAAP, are excluded from net income. For the Company, such item includes the cumulative translation adjustment relating to the translation of the financial statements of the Company's foreign subsidiaries.

Fair value of financial instruments

The carrying amounts of cash, accounts receivable and short-term obligations approximate their fair value, because of the short-term maturities of these instruments. 

The fair value of non-current long-term debt and sellers financing was estimated based on the current rates available to the Company for the debt of similar remaining maturities. Fair value of derivative financial instruments represents the estimated amount that would have been required to terminate the contracts. The estimated fair values of financial instruments (amounts stated in millions of Ps.) are as follows, except for those financial instruments noted above for which the carrying values approximated fair values:

		2008				2007
		Carrying amount		Fair value		Carrying amount		Fair value
Long-term debt		2,284		1,447		2,238		1,784
Sellers financing		551		445		703		713

Foreign Currency Translation

Management has determined that for all of the Company's foreign operations the local currency is their functional currency. Accordingly, these foreign subsidiaries translate assets and liabilities from their local currencies to Ps. using year end exchange rates while income and expense accounts are translated at the average rates in effect during the year. The resulting translation adjustment is recorded as part of Other Comprehensive (Loss) Income, a component of shareholders' equity. Gains and losses resulting from transactions denominated in non-functional currencies are recognized in earnings. Net foreign currency transaction (losses) gains are included in the consolidated statements of income under the caption "Financial results, net" and amounted to Ps. (248,9) and Ps. (84,2) million for the years ended December 31, 2008 and 2007, respectively.

Derivative financial instruments

The Company uses derivative instruments, including interest rate swap and foreign exchange contracts to manage its exposure to interest rate and foreign exchange rate risks. The Company accounts for its derivatives in accordance with SFAS No. 133 "Accounting for Derivative Instruments and Hedging Activities" as amended by SFAS No. 138 "Accounting for Certain Derivative Instruments and Certain Hedging Activities" and SFAS No. 149 "Amendment of Statement 133 on Derivative Instruments and Hedging Activities". The Company does not hold or issue financial instruments for speculative or trading purposes. Refer to Note 17 for additional information.

  Fair value measurements

The following table summarizes the Company's financial assets and liabilities measured at fair value on a recurring basis in accordance with SFAS No. 157, "Fair Value Measurements" ("SFAS 157") as of December 31, 2008:

Description		Balances as of December 31, 2008		Significant other observable inputs (Level 2)
Assets
Other receivables, net
Foreign exchange future contracts		12,785,000		12,785,000
Interest rate swaps		26,595,885		26,595,885
Liabilities
Other liabilities
Interest rate swaps		760,000		760,000

Financial assets and liabilities are valued using readily-available pricing sources for comparable instruments (Level 2). Level 2 instrument valuations are obtained from readily-available pricing sources for comparable instruments. As of December 31, 2008, the Company did not have any assets or liabilities with valuations obtained from real-time quotes for transactions in active exchange markets involving identical assets (level 1 assets), or without observable market values that would require a high level of judgment to determine fair value (level 3 assets).

Derivative financial instruments are valued using pricing models. Pricing models take into account the contract terms as well as multiple inputs where applicable, such as equity prices, interest rate yield curve, option volatility and currency rates. 

As of December 31, 2008, the carrying value of cash and cash equivalents approximated their fair value and it was held primarily in bank deposits and money market funds. The Company held no direct investments in auction rate securities, collateralized debt obligations, structured investment vehicles or mortgage-backed securities.

Income taxes

The Company accounts for income tax following the liability method of accounting which requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. Deferred tax assets are also recognized for tax loss carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets or liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recorded when, based on the available evidence, it is more likely than not that all or a portion of the Company's deferred tax assets will not be realized. The Company's income tax expense consists of taxes currently payable, if any, plus the change during the period in the Company's deferred tax assets and liabilities.

Tax on assets is supplementary to income tax. While income tax is levied on the taxable income for the year, tax on assets is imposed on the potential income from certain productive assets at the rate of 1%. Therefore, the Company's tax liability shall be equal to the higher of both taxes. However, if tax on assets exceeds income tax in any given fiscal year, the excess may be creditable against any excess of income tax over tax on assets in any of the following ten years.

Tax on assets balance has been capitalized under the caption Other non-current receivables, since the Company has estimated, based on its current business plans, that the outstanding balance will be recoverable within the statute of limitations.

Uncertainty in Income Taxes

On January 1, 2007 the Company adopted Interpretation No. 48, "Accounting for Uncertainty in Income Taxes - An Interpretation of FASB Statement No. 109" ("FIN 48"). This interpretation clarifies the accounting for uncertain tax positions recognized in a company's financial statements in accordance with Statement 109. FIN 48 prescribes a more likely than not recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on de-recognition, classification of a liability for unrecognized tax benefits, accounting for interest and penalties, accounting in interim periods, and expanded income tax disclosures. The adoption of FIN 48 had no significant impact on the Company's consolidated financial statements. 

As of December 31, 2008, income tax filings corresponding to fiscal years 2003 through 2007 could be subject to examination by the AFIP.

Troubled debt restructurings

The Company accounts for debt restructurings, in accordance with SFAS No. 15, "Accounting for Debtors and Creditors for Troubled Debt Restructurings". The statement requires that a debtor should (a) recognize a gain or loss by reducing the carrying amount of the debt by the fair value of the assets or equity interest transferred, and (b) account for the remainder of the restructuring as a modification of debt terms. When the terms of a debt are adjusted in a troubled-debt restructuring, the total amount of the future cash payments should be determined. If the carrying amount of debt is less than the aggregate future cash payments required by the new debt term, the debtor should amortize the difference over the life of the new debt as interest expense using the effective interest method. No gain or loss is recognized in the period of extinguishments. If the carrying amount of debt is greater than the aggregate future cash payments required by the new debt term, the debtor should reduce the carrying value of debt to an amount equal to the total future cash payments and recognize the reduction an extraordinary gain. No interest expense should be recorded.

Recent Accounting Pronouncements

Business Combinations 

In December 2007, the FASB issued SFAS No. 141 (revised 2007), "Business Combinations" ("SFAS 141 R"). SFAS 141 R replaces SFAS No. 141, "Business Combinations" ("SFAS 141"). SFAS 141 R retains the fundamental requirements in SFAS 141 that the acquisition method of accounting (which SFAS 141 called the purchase method) be used for all business combinations. SFAS 141 R defines the acquirer as the entity that obtains control of one or more businesses in the business combination and establishes the acquisition date as the date that the acquirer achieves control. SFAS 141 did not define the acquirer, although it included guidance on identifying the acquirer, as does SFAS 141 R. SFAS 141 R's scope is broader than that of SFAS 141, which applied only to business combinations in which control was obtained by transferring consideration. 

SFAS 141 R applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. An entity may not apply it before that date. 

Noncontrolling Interests in Consolidated Financial Statements

 

In December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interests in Consolidated Financial Statements-an amendment of ARB No. 51" ("SFAS 160"). SFAS 160 amends ARB No. 51 to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. This Statement is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. Earlier adoption is prohibited. 

  Determination of the useful life of intangible assets 

In April 2008, the FASB issued FASB Staff Position 142-3, "Determination of the Useful Life of Intangible" ("FSP 142-3"). Under FSP 142-3, for renewable intangible assets acquired in fiscal years beginning after December 15, 2008, an entity should consider its own historical experience in renewing or extending similar arrangements when developing its assumptions about renewals or extensions used to determine the useful life of an intangible asset; however, these assumptions should be adjusted for the entity specific factors in paragraph 11 of FAS 142. In the absence of that experience, an entity should consider the assumptions that market participants would use about renewals or extensions (consistent with the highest and best use of the asset by market participants), adjusted for the entity specific factors in paragraph 11 of SFAS 142. The Company does not expect that the adoption of FSP 142-3 will result in a material impact on its financial position or results of operations.

Fair Value measurements

In September 2006, the FASB issued SFAS 157. SFAS 157 addresses the need for increased consistency in fair value measurements, defining fair value, establishing a framework for measuring fair value and expanding disclosure requirements. SFAS 157 was to be effective in its entirety for fiscal years beginning after November 15, 2007, however in February 2008, the FASB issued FASB Staff Position No. 157-2 "Effective Date of FASB Statement No. 157" ("FSP 157-2") which allows application of SFAS 157 to be deferred until fiscal years beginning after November 15, 2008 for nonfinancial assets and liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis. The Company adopted those parts of SFAS 157 not deferred by FSP 157-2 on January 1, 2008 and the Company does not expect that the adoption of the remaining requirements will result in a material impact on its financial position or results of operations.

Determination of the fair value of financial assets 

In October 2008, the FASB issued FASB Staff Position No. 157-3, "Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active" ("FSP 157-3"). FSP 157-3 clarified the application of FAS 157. FSP 157-3 demonstrated how the fair value of a financial asset is determined when the market for that financial asset is inactive. FSP 157-3 was effective upon issuance, including prior periods for which financial statements had not been issued. The implementation of this standard did not have an impact on the Company's consolidated financial statements. 

Hierarchy of Generally Accepted Accounting Principles 

In May 2008, the FASB issued SFAS No.162, "The Hierarchy of Generally Accepted Accounting Principles". This Statement identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in US GAAP  (the "US GAAP hierarchy"). The Board believes that the US GAAP hierarchy should be directed to entities because it is the entity that is responsible for selecting accounting principles for financial statements that are presented in conformity with US GAAP. Accordingly, the Board concluded that the US GAAP hierarchy should reside in the accounting literature established by the FASB and is issuing this Statement to achieve that result. This Statement is effective 60 days following the SEC's approval of the Public Company Accounting Oversight Board amendments to AU Section 411, The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles. 

Equity Method Investment Accounting Considerations

In November 2008, the FASB ratified the EITF consensus on Issue No. 08-6, "Equity Method Investment Accounting Considerations" ("EITF 08-6") which addresses certain effects of SFAS 141R and SFAS 160 on an entity's accounting for equity-method investments. The consensus indicates, among other things, that transaction costs for an investment should be included in the cost of the equity-method investment (and not expensed) and shares subsequently issued by the equity-method investee that reduce the investor's ownership percentage should be accounted for as if the investor had sold a proportionate share of its investment, with gains or losses recorded through earnings. EITF 08-6 is effective for transactions occurring after December 31, 2008. The Company estimates that the adoption of this standard will not have a material impact on its financial condition or results of operations.

Accounting for Defensive Intangible Assets

In November 2008, the FASB ratified the EITF consensus on Issue No. 08-7, "Accounting for Defensive Intangible Assets" ("EITF 08-7"). The consensus addresses the accounting for an intangible asset acquired in a business combination or asset acquisition that an entity does not intend to use or intends to hold to prevent others from obtaining access (a defensive intangible asset). Under EITF 08-7, a defensive intangible asset would need to be accounted as a separate unit of accounting and would be assigned a useful life based on the period over which the asset diminishes in value. EITF 08-7 is effective for transactions occurring after December 31, 2008. The Company does not expect that the adoption of this standard will have a material impact on its financial condition or results of operations.

Note 3. earnings per share

Basic income per share for the Company's common shares is computed by dividing net income available to common shareholders attributable to common shares for the year by the weighted average number of common shares outstanding during the year.

Net income per common share for the years ended December 31, 2008 and 2007 is as follows:

		Year ended December 31,
		2008		2007
Numerator
Net income available to common shareholders for Basic earnings per share		270,897,946		272,100,619
Denominator:
Weighted average of common shares outstanding for Basic earnings per share		287,418,584		240,684,109
Basic net income per share		0.94		1.13

Note 4. Breakdown of certain balance sheet accounts

Investments in unconsolidated affiliates
		As of December 31,
		2008		2007
Papel Prensa		131,145,407		128,816,730
Impripost		8,905,866		8,046,053
Ideas del Sur		19,130,334		19,445,269
Pol-Ka		-		10,572,975
TRISA		39,656,709		23,021,284
TSC		10,001,461		6,133,716
Ver TV S.A.		15,897,054		8,827,998
Dineromail		10,948,000		6,298,000
TPO		10,822,223		-
Other investments		24,922,763		20,561,567
		271,429,817		231,723,592

  

				Interest in capital and votes
Unconsolidated affiliates		Main activity		2008		2007
Papel Prensa		Paper manufacture		49.00%		43.00%
Impripost		Printer		50.00%		50.00%
Ideas del Sur		Production of television programmes		30.00%		30.00%
Pol-Ka		Production of television programmes		(1)		30.00%
TRISA		Production and exploitation of sports events		50.00%		50.00%
TSC		Exploitation of transmission rights of sports events		50.00%		50.00%

(1) Consolidated as of December 31, 2008 (see Note 6).

Trade receivables, net

Trade receivables, net consist of:

		As of December 31,
		2008		2007
Current
Trade receivables		697,802,158		613,625,776
Less: Allowance for doubtful accounts		(85,824,456)		(75,102,703)
		611,977,702		538,523,073
Non Current
Trade receivables		3,692,540		2,664,875
		3,692,540		2,664,875

Other receivables, net

Other receivables, net consist of:

		As of December 31,
		2008		2007
Current
Reserve account		34,084,790		24,037,362
Net deferred tax assets		45,904,707		124,533,485
Tax credits		69,984,990		34,283,700
Court-ordered and guarantee deposits		8,690,033		25,343,229
Prepaid expenses		14,590,120		12,301,982
Advance payments		32,731,009		15,509,592
Related parties		13,368,225		20,899,840
Dividends receivable		447,691		5,439,858
Derivatives		12,785,000		-
Other receivables		22,105,908		20,316,737
Others		39,962,327		21,195,417
Subtotal		294,654,800		303,861,202
Less: Allowance for other doubtful accounts		(1,591,719)		(1,755,362)
		293,063,081		302,105,840
Non Current
Net deferred tax assets		101,077,649		168,879,101
Tax credits		42,887,933		99,788,498
Guarantee deposits		745,027		117,548
Prepaid expenses		802,742		4,903,003
Advances to personnel		1,210,689		887,277
Derivatives		26,595,885		4,482,640
Others		13,523,187		8,780,620
Subtotal		186,843,112		287,838,687
Less: Allowance for other doubtful accounts		(1,193,405)		(845,207)
		185,649,707		286,993,480

  Inventories

Inventories consist of:

		As of December 31,
		2008		2007
Current
Film products and rights		51,831,891		29,574,204
Finished goods		11,434,074		9,744,350
Products in process		1,010,503		1,830,044
Raw materials and supplies		127,525,923		90,293,770
Other		381,818		340,517
Subtotal		192,184,209		131,782,885
Advances to suppliers		8,184,525		9,427,578
		200,368,734		141,210,463
Non Current
Film products and rights		18,109,721		24,809,136
Subtotal		18,109,721		24,809,136
Advances to suppliers		8,100,000		-
		26,209,721		24,809,136

Accounts payable

Accounts payable consist of:

		As of December 31,
		2008		2007
Current
Suppliers		507,807,040		466,887,193
Related parties		52,995,167		32,220,928
		560,802,207		499,108,121
Non Current
Suppliers		14,373,232		10,547,274
		14,373,232		10,547,274

Other liabilities

Other liabilities consist of:

		As of December 31,
		2008		2007
Current
Advances from clients		42,336,451		38,901,680
Related parties		208,714		-
Dividends payable		189,043		4,372,239
Derivatives		760,000		-
Other		31,914,697		37,193,777
		75,408,905		80,467,696
Non Current
Net deferred tax liabilities		158,892,663		169,034,231
Guarantee deposits		1,882,505		4,999
Derivatives		-		11,215,770
Other		3,946,659		3,274,422
		164,721,827		183,529,422

  Note 5. Goodwill and Intangible assets, net

The breakdown of Goodwill is as follows:

		As of December 31, 2007		Acquisitions, dispositions and other adjustments		As of December 31, 2008
Cablevisión (1)		2,867,366,518		(825,857)		2,866,540,661
PRIMA		1,835,769		-		1,835,769
CIMECO and subsidiaries		234,169,393		-		234,169,393
CPGB		4,932,060		-		4,932,060
Telecor		18,854,954		-		18,854,954
Grupo Carburando		-		13,069,775		13,069,775
Pol-ka		-		8,975,764		8,975,764
Telba		1,929,235		-		1,929,235
Bariloche TV		1,844,621		-		1,844,621
Other		3,663,066		6,838,460		10,501,526
		3,134,595,616		28,058,142		3,162,653,758

		As of December 31, 2006		Acquisitions, dispositions and other adjustments		As of December 31, 2007
Cablevisión (1)		2,865,275,220		2,091,298		2,867,366,518
PRIMA		1,835,769		-		1,835,769
CIMECO and subsidiaries		-		234,169,393		234,169,393
CPGB		19,947,800		(15,015,740)	(2)	4,932,060
Telecor		18,854,954		-		18,854,954
Telba		1,929,235		-		1,929,235
Bariloche TV		-		1,844,621		1,844,621
Other		1,192,222		2,470,844		3,663,066
		2,909,035,200		225,560,416		3,134,595,616

(1) Includes goodwill corresponding to Multicanal and Teledigital, companies merged into Cablevisión as of October 1, 2008.

(2) Includes approximately Ps. 15 million corresponding to goodwill impairment.

The components of Goodwill by segments are as follow:

		As of December 31,
		2008		2007
Cable television and Internet access		2,868,376,430		2,869,202,287
Printing and publishing		246,525,299		241,024,238
Broadcasting and programming		44,674,349		22,628,810
Digital content and others		3,077,680		1,740,281
		3,162,653,758		3,134,595,616

  The breakdown of Intangible assets, net is as follows:

		As of December 31, 2008
		Gross		Accumulated amortization		Net
Editing / exploitation rights		59,090,014		(15,323,357)		43,766,657
Subscriber portfolio acquired		597,779,076		(176,479,720)		421,299,356
Trademarks and patents		15,974,376		(4,872,118)		11,102,258
Others		54,294,946		(34,737,811)		19,557,135
		727,138,412		(231,413,006)		495,725,406

		As of December 31, 2007
		Gross		Accumulated amortization		Net
Editing / exploitation rights		34,791,010		(11,205,180)		23,585,830
Subscriber portfolio acquired		597,779,076		(109,469,148)		488,309,928
Trademarks and patents		15,670,019		(4,441,791)		11,228,228
Others		34,797,271		(22,551,841)		12,245,430
		683,037,376		(147,667,960)		535,369,416

The amortization expense is estimated in approximately Ps. 74.0, Ps. 73.2, Ps. 72.4, Ps. 71.8 and Ps. 68.7 for fiscal years 2009 through 2013, respectively.

Note 6. Business combinations

CIMECO

On August 23, 2007, AGEA executed call and put options for an additional interest in CIMECO's capital stock. On August 24, 2007, AGEA paid US$ 6 million as guarantee for the put option.

On August 27, 2007, AGEA directly and indirectly increased its participation in CIMECO from 33.3% to 50.0%, for approximately US$ 18 million in cash. 

On August 28, 2007, AGEA acquired from S.A. La Nación irrevocable contributions made to CIMECO in the amount of US$ 6 million; thus, indirectly increasing through CIMECO its interest in Papel Prensa by 6%.

As a result of the abovementioned transactions, CIMECO has been identified as a VIE ("variable interest entity") following the provisions of FIN 46 (R) "Consolidation of Variable Interest Entities", the Company being its primary beneficiary. As such, CIMECO has been consolidated as from August 23, 2007. 

On April 3, 2008, AGEA partially assigned the rights and obligations arising from the call option mentioned above to its subsidiary AGR and the Company. On the same date, AGEA, AGR and the Company exercised such call option, increasing, directly and indirectly, the Company's equity interest in CIMECO and Papel Prensa to 100% and 49%, respectively. The total amount paid for the above transaction amounted to  US$ 61.6 million.

On April 10, 2008, the Company and the parties to the above-mentioned transaction notified CNDC of such transaction and on May 12, 2008 filed form F-1 to the CNDC. Subsequently, the CNDC requested additional information, which was duly submitted. As of the date of these financial statements, the above transaction is subject to administrative approvals.

  Other acquisitions

AGEA incorporated Autos Virtuales on June 26, 2007, holding 51% interest in a capital stock of Ps. 12,000. Such company acquired a classified advertisements Internet portal dedicated to the purchase and sale of automobiles and motorcycles. Subsequently, on November 30, 2007, AGEA acquired the remaining 49% interest in Autos Virtuales. On February 29, 2008, AGEA transferred 5% of the shares of Autos Virtuales to OSA. 

On July 4, 2007 ARTEAR acquired 100% of the capital stock of Bariloche TV, the licensee of a broadcast television channel in the city of Bariloche, for approximately US$ 1.1 million.

On September 18, 2007, CMD acquired 9.1% of Dineromail's capital stock. Such company is engaged in providing an online payment platform. On August 29, 2008, CMD acquired an additional interest in such company, increasing its equity interest to 13.7%. Furthermore, on September 24, 2007, CMD acquired 31.6% of Interpatagonia S.A., a company mainly engaged in the development of Internet content and business. Subsequently, CMD made additional contributions to Interpatagonia S.A. which, once capitalized, increased CMD's interest in that company to 60%. Also on September 24, 2007, CMD and the sellers granted each other reciprocal call and put options on all of the shares owned by each of the parties. The price of the shares varies depending on the party exercising the options, which shall be effective from August 1, 2011 until July 31, 2012. Additionally, on October 25, 2007, CMD acquired the brand Imagena.com and the www.imagena.com domain and portal. Such domain is a site that together with the portal allows its users to register and access several online tools. Finally, on September 22, 2008, CMD entered into a purchase agreement for 100 % of NITS S.A.'s capital stock. The latter is engaged in the development of Internet content and IT services. The total cost of the above transactions amounted to approximately Ps. 16.2 million.

 

On October 23, 2007, IESA executed a stock option agreement for 51% of the capital stock and votes of AD 2000, a company mainly engaged in the organization of sporting events and the commercialization of broadcasting rights. IESA paid US$ 250,000 as consideration. On December 18, 2007, IESA exercised the option and executed the share transfer agreement. The price of the transaction, including settlement of the above-mentioned option, amounted to approximately US$ 1.7 million.

On January 11, 2008, IESA acquired the controlling interest of a group of companies mainly engaged in sports journalism, production and commercialization of shows, and the production of motor racing television broadcasting. The price paid for such acquisitions amounted to approximately US$ 9.5 million. The share purchase agreement sets forth certain objectives to be met by such group of companies. In case of breach of such provision, the sellers shall have to pay an indemnification that may be deducted from the outstanding balance of the purchase price. This transaction is subject to administrative approvals.

During 2008, Cablevisión acquired a total of 5,564,580 Class C book-entry shares of Multicanal (merged into Cablevisión effective October 1, 2008). As a result of such acquisition, Cablevisión increased its interest in such company to 99.4%.

On September 2, 2008, ARTEAR increased its equity interest in Pol-Ka and SB Producciones S.A. by 25% to 55% of such companies' capital stock and votes, thus acquiring a controlling interest in both companies, in which it previously exercised common control. The total price for the above transaction was US$ 2.5 million. These transactions are subject to administrative approvals.

On October 2, 2008, ARTEAR acquired additional shares of Canal Rural, increasing its equity interest to 25.0% in the capital stock and votes of such company.

Mergers

On December 29, 2006, Cablevisión and its subsidiary Cablevisión Federal S.A. approved a merger, whereby Cablevisión would absorb Cablevisión Federal S.A. and continue its operations. The above merger became effective on January 1, 2007. As of the date of these financial statements, such merger is pending administrative approval from the CNV.

On September 25, 2008, OSA, Mercoprop and Autos Virtuales approved a merger whereby OSA would absorb Mercoprop and Autos Virtuales and continue their operations. The merger was made effective as of July 1, 2008. As of the date of these financial statements, registration of this merger with the IGJ is still pending.

On December 15, 2008, Cablevisión's shareholders approved the merger of Multicanal, Holding Teledigital Cable S.A., Teledigital, Televisora La Plata Sociedad Anónima, Delta Cable S.A., Pampa TV S.A., Construred S.A. and Cablepost S.A. into Cablevisión, whereby, effective October 1, 2008, Cablevisión, in its capacity as surviving company, became the universal successor to all of the assets, rights and obligations of the merged companies. The merger commitment was executed on February 12, 2009, upon expiration of the legal term for creditors to challenge said merger and after having waited the additional 20-day period provided under the Argentine Business Associations Law. The merger commitment has been filed with the CNV pursuant to applicable regulations that require administrative approval. As of the date of these financial statements, the CNV has still not ruled on the merger.

On December 30, 2008, CMD purchased all the shares of Clarín Global from AGEA, GC Minor and the Company. Furthermore, on December 30, 2008, the Boards of Directors of CMD, Clarín Global and Nits S.A. approved the initiation of a procedure to merge such companies effective January 1, 2009. CMD will be the surviving company and universal successor of the assets, rights and obligations of Clarín Global and Nits S.A., the merged companies, which will, accordingly, be wound up without liquidation.

Note 7. Property, plant and equipment, NET

The breakdown of Property, plant and equipment, net is as follows:

		As of December 31,				Estimated useful lives (years)
		2008		2007
Land and buildings		323,839,056		307,617,482		50
Furniture and fixture		67,510,261		59,159,965		10
Telecommunication, audio and video equipment		93,243,393		115,883,668		3
External network and broadcasting equipment		1,750,850,665		1,452,889,252		14
Computer equipment and software		282,395,391		195,286,613		4
Technical equipment		60,685,413		47,904,253		10
Workshop machinery		280,948,612		252,566,827		10
Tools		29,696,670		23,394,413		4
Spare parts		17,776,704		16,072,058		5
Installations		274,705,008		250,920,594		10
Vehicles		102,318,043		76,761,152		5
Plots		10,037,331		9,210,645		5
Leased assets		127,336		283,239		5
Leasehold improvements		12,678,907		10,170,927		3
Other materials and equipment		464,326,453		277,878,966		-
Construction in progress		227,531,907		113,848,440		-
Advances to suppliers		14,042,091		85,443,360		-
Subtotals		4,012,713,241		3,295,291,854
Less accumulated depreciation		(2,030,911,008)		(1,873,595,731)
		1,981,802,233		1,421,696,123

  Note 8. financial RESULTS, NET  

Financial results, net, consist of:

		Year ended December 31,
		2008		2007
Interest income		17,224,264		24,014,709
Interest expense		(256,728,944)		(290,293,190)
Exchange difference		(248,930,869)		(84,214,372)
Others		(75,284,860)		(82,182,819)
		(563,720,409)		(432,675,672)

Note 9. Comprehensive Income

The following represents the components of Other Comprehensive Income, net of taxes, for the years ended December 31:

		2008		2007
Net income		270,897,946		272,100,619
Other comprehensive income, net:
Foreign currency translation adjustments		8,332,642		17,879,322
Total Comprehensive income, net		279,230,588		289,979,941

Note 10. Segment information

SFAS No. 131 "Disclosure about Segments of an Enterprise and Related Information" requires that a public business enterprise report financial and descriptive information about its reportable operating segments. Operating segments are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.

The Company is mainly engaged in media and entertainment activities, which are carried out through the companies in which it holds a participating interest. Therefore, the following business segments have been identified:

Cable Television and Internet Access: it is basically comprised of the operations of its subsidiary Cablevisión (surviving company after its merger with Multicanal and Teledigital) together with its subsidiaries, mainly PRIMA.

Printing and publishing: it is basically comprised of the operations of its subsidiary AGEA and its subsidiaries AGR, Tinta Fresca and CIMECO and its subsidiaries, and its equity investment in Papel Prensa.

Broadcasting and programming: it is basically comprised of the operations of its subsidiaries ARTEAR, IESA and Radio Mitre, and their respective subsidiaries, including Telecor, Telba, Radio Televisión Río Negro, Pol-ka, AD 2000, Grupo Carburando, and their equity investments in Ideas del Sur, TRISA and TSC.

Additionally, the Company is engaged in other segments, in some cases through other companies, which are included under "Digital content and others". This segment includes, basically, transactions related to digital content production developed by its (directly and indirectly) controlled companies CMD and subsidiaries, Clarín Global (currently in the process of being merged with CMD) and OSA, among others, the Company's own transactions (typical of a holding company) and those carried out by its controlled company GCGC.

  The following tables summarize the information as of December 31, 2008 and 2007 for each of the businesses segments identified by the Company:

	Cable television and Internet access		Printing and publishing		Broadcasting and programming		Digital content and others		Eliminations		Total
INFORMATION ARISING FROM CONSOLIDATED STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 31, 2008
Net sales to third parties	3,413,556,991		1,336,919,931		576,536,069		51,063,168		-		5,378,076,159
Intersegment net sales	5,028,736		88,777,200		46,345,477		114,825,809		(254,977,222)		-
Net sales	3,418,585,727		1,425,697,131		622,881,546		165,888,977		(254,977,222)		5,378,076,159
Cost of sales (excluding depreciation and amortization)	(1,461,329,412)		(742,830,490)		(383,372,506)		(72,985,067)		83,960,983		(2,576,556,492)
Selling expenses (excluding depreciation and amortization)	(381,806,862)		(209,636,244)		(50,089,733)		(36,456,122)		81,828,234		(596,160,727)
Administrative expenses (excluding depreciation and amortization)	(385,626,312)		(161,661,633)		(91,581,387)		(65,499,806)		89,188,005		(615,181,133)
Depreciation of property, plant and equipment	(253,692,972)		(26,041,954)		(12,254,068)		(3,852,045)		-		(295,841,039)
Amortization of intangible assets	(71,349,832)		(2,937,136)		(1,092,282)		(1,995,391)		-		(77,374,641)
Depreciation of other investments	-		(67,873)		-		-		-		(67,873)
Other results, net	7,541,244		-		-		-		-		7,541,244
Operating Income (loss)	872,321,581		282,521,801		84,491,570		(14,899,454)		-		1,224,435,498
Financial results, net	(445,659,240)		(69,668,860)		(33,360,337)		(15,031,972)		-		(563,720,409)
Equity in earning from unconsolidated affiliates	8,348,286		4,229,393		32,212,784		(728,347)		-		44,062,116
Income (loss) before income tax, tax on assets and minority interest	435,010,627		217,082,334		83,344,017		(30,659,773)		-		704,777,205
Income tax and tax on assets	(165,282,602)		(79,923,976)		(20,228,575)		(27,074,807)		-		(292,509,960)
Minority interest	(128,099,988)		(5,555,500)		(7,629,258)		(84,553)		-		(141,369,299)
Net income (loss)	141,628,037		131,602,858		55,486,184		(57,819,133)		-		270,897,946

INFORMATION ARISING FROM CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2008
Total Assets	5,621,417,740		1,258,490,760		632,374,034		591,964,997		(471,994,332)		7,632,253,199
Investments in unconsolidated affiliates	27,110,302		151,460,317		80,365,983		12,493,215		-		271,429,817
Total Liabilities	3,531,512,862		792,037,878		379,742,936		644,816,059		(471,994,332)		4,876,115,403
ADDITIONAL CONSOLIDATED INFORMATION AS OF DECEMBER 31, 2008
Acquisition of property, plant and equipment	746,264,611		46,646,147		25,365,204		9,883,247		-		828,159,209
Acquisition of intangible assets	1,014,584		3,331,211		-		3,331,976		-		7,677,771
Non-cash expenses	(47,776,449)		(5,952,889)		(6,286,621)		(2,037,544)		-		(62,053,503)

  

	Cable television and Internet access		Printing and publishing		Broadcasting and programming		Digital content and others		Eliminations		Total
INFORMATION ARISING FROM CONSOLIDATED STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 31, 2007
Net sales to third parties	2,612,103,788		1,072,057,306		520,787,937		30,775,202		-		4,235,724,233
Intersegment net sales	2,104,890		58,677,627		42,667,538		107,299,785		(210,749,840)		-
Net sales	2,614,208,678		1,130,734,933		563,455,475		138,074,987		(210,749,840)		4,235,724,233
Cost of sales (excluding depreciation and amortization)	(1,123,561,543)		(560,526,986)		(353,075,264)		(48,012,424)		29,484,294		(2,055,691,923)
Selling expenses (excluding depreciation and amortization)	(305,084,393)		(165,708,845)		(37,569,335)		(17,568,511)		95,189,168		(430,741,916)
Administrative expenses (excluding depreciation and amortization)	(294,169,688)		(121,664,143)		(65,622,677)		(47,273,285)		86,076,378		(442,653,415)
Depreciation of property, plant and equipment	(207,080,303)		(16,875,066)		(10,328,380)		(1,969,516)		-		(236,253,265)
Amortization of intangible assets	(76,133,155)		(2,024,662)		(4,889,926)		(105,838)		-		(83,153,581)
Depreciation of other investments	-		(65,776)		-		-		-		(65,776)
Goodwill impairment	-		(14,980,978)		-		-		-		(14,980,978)
Other results, net	442.174		-		-		-		-		442.174
Operating Income	608,621,770		248,888,477		91,969,893		23,145,413		-		972,625,553
Financial results, net	(329,762,338)		(23,521,902)		(14,122,481)		(65,268,951)		-		(432,675,672)
Equity in earning (losses) from unconsolidated affiliates	11,532,363		5,351,308		16,825,676		-		-		33,709,347
Income (loss) before income tax, tax on assets and minority interest	290,391,795		230,717,883		94,673,088		(42,123,538)		-		573,659,228
Income tax and tax on assets	(77,598,681)		(84,099,274)		(28,447,849)		(6,403,805)		-		(196,549,609)
Minority interest	(101,440,269)		(1,647,160)		(1,921,571)		-		-		(105,009,000)
Net income (loss)	111,352,845		144,971,449		64,303,668		(48,527,343)		-		272,100,619
INFORMATION ARISING FROM CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2007
Total Assets	5,235,769,618		1,319,341,593		490,170,208		640,715,830		(521,765,695)		7,164,231,554
Investments in unconsolidated affiliates	9,218,145		146,944,697		69,262,750		6,298,000		-		231,723,592
Total Liabilities	3,409,315,307		804,278,860		276,531,741		591,623,087		(521,765,695)		4,559,983,300
ADDITIONAL CONSOLIDATED INFORMATION AS OF DECEMBER 31, 2007
Acquisition of property, plant and equipment	511,040,166		41,056,011		18,280,644		4,084,837		-		574,461,658
Acquisition of intangible assets	12,756,693		7,342,669		99,368		334,486		-		20,533,216
Non-cash expenses	(26,446,302)		(2,997,248)		(5,643,776)		(1,341,654)		-		(36,428,980)

  NOTE 11. SHAREHOLDER'S EQUITY AND INITIAL PUBLIC OFFERING

On July 16, 2007 the Company approved the conversion of 5,100,000 Class B common shares with nominal value of Ps. 1 each and entitled to 1 vote per share into 5,100,000 Class A common shares with nominal value of Ps. 1 each and entitled to 5 votes per share.

On July 20, 2007, the shareholders of Grupo Clarín decided:

To authorize the Company's public offering and request the authorization of the public offering of all of its capital stock in Argentina and in foreign markets, and the listing in the BCBA and/or in foreign stock exchanges and/or self-regulated markets.

To increase its capital by up to Ps. 30,000,000, by issuing up to 30,000,000 Class B common shares, with nominal value of Ps. 1 each and entitled to 1 vote per share, to be offered through public subscription in Argentina and foreign markets, empowering the Board of Directors to determine the subscription price of the new shares to be issued, as well as the exact amount of the capital increase. 

To amend and restate its by-laws, which came into effect as from the date of the resolution authorizing the Company's public offering and listing, after conversion of all preferred shares. Such changes contemplated, among other things, changes in the structure and election of the directors and supervisory committee and the creation of an audit committee. 

The amendments to the by-laws referred to above were registered with the Public Registry of Commerce on August 30, 2007.

During the third quarter of 2007, the Company requested the authorization of the public offering of its shares by the CNV; the listing of its shares in the BCBA and the listing of GDSs in the LSE. Each GDS represents two of the Company's Class B common shares. The GDSs are issued by JPM, in its capacity as depositary bank, pursuant to a deposit agreement among the Company, JPM and the holders of GDSs dated as of October 23, 2007.

On October 5, 2007, the CNV issued Resolution No. 15,745, authorizing the Company's admission to the public offering regime of the Company's capital stock for a nominal amount of Ps. 270,261,524 and the public offering of Class B common shares for up to a nominal amount of Ps. 30,000,000. Such authorization was subject to certain conditions, including but not limited to the following: the filing of the final prospectus pursuant to CNV's rules, the holding of a Shareholders' meeting in order to amend the Company's by-laws and its subsequent registration with the Public Registry of Commerce. 

The Shareholders' Meeting held on October 8, 2007 approved the amendment to the by-laws as amended on July 20, 2007. These amendments were registered with the Public Registry of Commerce on October 10, 2007. Among other things, they include the correction of a cross-reference in the by-laws that had been approved on such date (at the request of the BCBA), certain clarifications requested by the CNV and the decision to incorporate a "participation right in a change of control operation".

At such Meeting, the shareholders also appointed the directors who took office on the date the Company actually made the public offering of its shares and reallocated the special appropriation of the paid-in capital of Class A and Class B Preferred Shares in the amount of Ps. 333,636,239 to a common reserve (without special appropriation) for the benefit of all holders of common shares of the Company.

The CNV's conditions were lifted on October 11, 2007, date on which the Company issued the final Spanish language prospectus. On that same date, the BCBA notified its approval of the public offering of Class B book-entry common shares, with nominal value of Ps. 1 each and entitled to 1 vote per share, for a nominal amount of up to Ps. 167,850,791 and registered non-endorsable Class C common shares, for up to a nominal amount of Ps. 43,680,429.

  On October 11, 2007, 11,500,000 Class B common shares were offered in Argentina and 38,500,000 Class B common shares (in the form of GDSs) were offered abroad, in compliance with applicable legislation. The Company offered 15,000,000 new shares and the selling shareholders offered 35,000,000 of their own shares. The Company and certain selling shareholders granted an over-allotment option for up to 7,500,000 Class B common shares.

The subscription period ended on October 18, 2007. The Company's Board of Directors, in exercise of the powers granted by the shareholders and pursuant to the respective subscription instructions, set the subscription price at Ps. 29.14 per Class B common share and US$ 18.50 per GDS. Such price was informed to investors on October 19, 2007. An English language prospectus was authorized by authorities of the United Kingdom on October 19, 2007 and the listing of GDSs in the LSE was approved on October 23, 2007.

The Board of Directors at the meeting held on October 18, 2007, decided:

To convert all Class A preferred shares into 18,567,740 registered non-endorsable Class C common shares and 2,063,082 registered non-endorsable Class B common shares; and to convert all Class B preferred shares into 20,630,822 registered non-endorsable Class B common shares.

To convert all registered non-endorsable Class B common shares into book-entry Class B common shares.

To convert 16,181,880 registered non-endorsable Class C common shares into the same number of book-entry Class B common shares; and to convert an additional amount of up to 2,442,574 registered non-endorsable Class C common shares into the same number of book-entry Class B common shares, to the extent the over-allotment option was exercised on such shares.

To increase the capital stock by up to Ps. 17,250,000, as follows: up to Ps. 15,000,000 through the issuance of 15,000,000 book-entry Class B common shares, with nominal value of Ps. 1 each and entitled to 1 vote per share; with the difference between the subscription price and the nominal value of each share, net of expenses, to be appropriated to paid-in capital; and up to Ps. 2,250,000 through the issuence of 2,250,000 additional shares to cover the over-allotment option, if exercised.

On October 23, 2007, the BCBA authorized the conversion of 16,181,880 registered non-endorsable Class C common shares into the same number of book-entry Class B common shares. Therefore, the capital stock authorized for listing by such entity was represented by 184,032,671 book-entry Class B common shares and 27,498,549 registered non-endorsable Class C common shares.

The over-allotment option was exercised in part. Therefore, the Board of Directors at the meeting held on November 14, 2007, decided:

To convert 2,341,680 registered non-endorsable Class C common shares into the same number of book-entry Class B common shares.

To issue 2,157,060 book-entry Class B common shares with nominal value of Ps. 1 each and entitled to 1 vote per share, setting also the final amount of the capital stock increase at Ps. 17,157,060.

Accordingly, the Company's capital stock was set at Ps. 287,418,584, represented by:

75,980,304 registered non-endorsable Class A common shares, with nominal value of Ps. 1 each and entitled to 5 votes per share.

186,281,411 book-entry Class B common shares, with nominal value of Ps. 1 each and entitled to 1 vote per share.

25,156,869 registered non-endorsable Class C common shares, with nominal value of Ps. 1 each and entitled to 1 vote per share.

The Company's prospectus dated October 11, 2007 sets forth that up to US$ 80 million of the net proceeds from the subscription of new shares would be used to make a contribution to one of its subsidiaries for the repayment of all of its financial debt, which was made in December 2007, and the balance to develop its business activities.

The difference between the nominal value of the new shares issued and the amount contributed, net of the expenses related to the issuance, has been allocated to Additional Paid-In Capital in the Consolidated Statement of Shareholders' Equity and Other Comprehensive Income (Loss) as of December 31, 2007.

Note 12. Income tax 

Current and deferred income taxes provided are as follows (amounts stated in thousands of Ps.): For the years ended December 31, 2008 2007 Current (128,397) (146,824) Deferred (135,259) (49,711) Income tax (263,656) (196,535) Tax on assets (28,854) (15) Total (292,510) (196,550) For the years ended December 31, 2008 and 2007 total income tax and tax on assets include charges of income tax expense of Ps. 263.7 million and Ps. 196.5 million respectively, and valuation allowance over tax on assets for Ps. 28.9 million and Ps. 15.0 thousands respectively.

The following table summarizes the reconciliation between the income tax charged to statement of income for the years ended December 31, 2008 and 2007 and the income tax liability that would result from applying the current tax rate on income before income tax and tax on assets and the income tax liability assessed for each year (amounts stated in thousands of Ps.):

	For the years ended December 31,
	2008		2007
Income tax assessed at the current tax rate (35%) on income before income taxes, tax on assets and minority interest	(246,672)		(200,781)
Permanent differences:
Equity in earnings from unconsolidated affiliates	15,422		11,798
Non-taxable income / expense	(12,891)		(16,128)
Others	(17,073)		(22,609)
Expiration of tax loss carryforward	-		(2,914)
Effect of changes in the allowance of deferred tax asset and tax loss carryforward	(2,442)		34,099
Income tax	(263,656)		(196,535)

  The following table shows the breakdown of net deferred tax position as of December 31, 2008 and 2007, respectively (amounts stated in thousands of Ps.):

	As of December 31,
	2008		2007
Deferred Assets (Liabilities)
Tax loss carryforward	50,665		174,783
Trade receivables	32,457		21,960
Property, plant and equipment	(39,156)		(23,219)
Intangible assets	(136,228)		(148,113)
Other assets	(1,973)		(1,138)
Other investments	8,194		8,370
Short and long-term debt	60,295		60,666
Provisions	35,866		80,463
Others	14,412		6,629
Subtotal	24,532		180,401
Allowance for deferred tax asset	(36,442)		(56,022)
Net deferred tax position	(11,910)		124,379

As of December 31, 2008 and 2007, the Company presents current deferred tax assets of Ps. 45.9 million and Ps. 124.5 million, respectively and non-current deferred tax assets of Ps. 101.1 million and Ps. 168.9 million, respectively. The Company also presents non-current deferred tax liabilities of Ps.158.9 million and  Ps. 169.0 millon as of December 31, 2008 and 2007, respectively.

The Company has assessed the recoverability of its deferred tax assets as of December 31, 2008 and believes that it is more likely than not that the deferred tax assets, net of the valuation allowance, will be realized through future taxable income.

As of December 31, 2008, the Company's accumulated tax losses amount to approximately Ps. 144.8 million, which calculated at the current tax rate, represent deferred tax assets in the amount of approximately  Ps. 50.7 million. There follows the statute of limitations of the accumulated tax losses (amounts stated in thousands of Ps.): 

Year of expiry		Tax loss carryforward
2009		80,371
2010		10,989
2011		10,591
2012		17,714
2013		25,091
		144,756

Note 13. Commitments and Contingencies

Restrictions, surety and guarantees

The Company has executed guarantees with the banks involved in the swap agreements specified in Note 17 in order to fully, unconditionally and irrevocably guarantee the timely payment of all obligations arising from said contracts.

The Company assigned the proceeds, if any, of some of the foreign currency forward contracts mentioned in Note 17 for a nominal value of US$ 30 million as guarantee to secure the fulfillment of certain obligations arising from the swap agreements mentioned in the above paragraph.

  

Note 15 sets forth certain restrictions to which the Company, Cablevisión (by itself and as the surviving company and successor of Multicanal's operations after the merger) and AGEA are subject under their respective financial obligations described in such note.

Under a loan held by TRISA, a company in which IESA holds a 50% interest, IESA has undertaken certain commitments, such as refraining from merging, attaching certain assets or paying dividends, without the lender bank's prior consent. Additionally, all of TRISA's shares and 75% of Torneos y Competencias S.A.'s (Uruguay) shares are pledged as guarantee for this loan.

On December 27, 2005, pursuant to the terms and conditions of its new Notes, Cablevisión set up a reserve account and transferred US$ 18.0 million to such account. In the event of a failure by Cablevisión to make an interest payment when due, in part or in full, on any of the new Notes, the trustee shall promptly draw on any funds that may be on deposit in the reserve account to the extent required to cover such payment shortfall, pro rata among the new Notes entitled to benefit from the reserve account with respect to which an interest payment was not made when due. To the extent Cablevisión has not defaulted on its obligations, it may instruct the trustee to transfer amounts deposited for the sole purpose of applying them to service debt or to pay the purchase or redemption price of the new Notes acquired in the over-the-counter market or redeemed directly by Cablevisión or through any agent or broker in accordance with the terms and conditions for the issuance of such Notes. The drawing by the trustee on the reserve account will not give rise to a Default or an Event of Default under the terms and conditions of the new Notes. As of December 31, 2008 the amount deposited in the reserve account totaled Ps. 1,272.

Pursuant to the terms and conditions of the Notes originally issued by Multicanal, Cablevisión (successor of Multicanal's operations after the merger) set up a reserve account, which had a balance of Ps. 34,083,518 at year-end. Such funds are restricted to the payment of interest and principal under the Notes issued under the Multicanal APE.

IESA is subject to contractual restrictions on the transfer of its equity interest in TRISA and Tele Net Image Corp.

Broadcasting licenses

Broadcasting licenses are granted for an initial period of 15 years, allowing for a one-time extension of 10 years. Applicable legislation sets forth that the COMFER shall grant the extension, provided it can be proved that the licensee has complied with the effective applicable legislation, bidding terms and conditions and undertakings in their proposals during the first period of the license in question.

On May 24, 2005, Decree 527/05 provided for a 10-year-suspension of the terms then effective of broadcasting licenses or its extensions. Calculation of the terms shall be automatically resumed upon expiration of the suspension term, subject to certain conditions. The Decree requires that companies seeking to rely on the extension subject to it submit for the COMFER's approval, within 2 years of the date of the Decree, programming proposals, contributing to the preservation of the national culture and the education of the population and a technology investment project to be implemented during the suspension term. COMFER's Resolution 214/07 regulated the obligations established by Decree 527/05 in order to enjoy such suspension.

All the broadcasting services licensee subsidiaries have submitted both projects in due time and form. ARTEAR and its subsidiaries Telecor, Telba and Bariloche TV, as well as Radio Mitre, Cablevisión and Multicanal (merged into Cablevisión), have obtained the COMFER's approval of their respective projects.

Additionally, in June 2003, the COMFER notified Televisora La Plata S.A., which merged into Cablevisión, of an alleged breach of the terms and conditions of its broadcasting license. The COMFER indicated that it may impose penalties, including fines or even the revocation of such broadcasting license. Although no assurance can be given as to the final outcome of this matter, the subsidiary and its legal counsel consider that, based on currently available information, it would not have a significant impact on Cablevisión's financial-economic situation.

Cablevisión has requested the COMFER's approval of several transactions, including certain company reorganizations and share transfers. Said approvals are still pending. Furthermore, the elimination of certain headends is subject to the COMFER's approval.

The requests for transfer of licenses filed in favor of Cablevisión related to certain acquisitions of Multicanal and Hicks LLC (Teledigital) are also pending approval by the COMFER. 

While the subsidiaries expect to obtain such approvals, no assurance can be given that the COMFER will grant them.

Antitrust regulations

a) Pursuant to the Antitrust Law and to the Broadcasting Law, the transactions carried out on September 26, 2006 that resulted in an increase in the indirect interest the Company held in Cablevisión to 60%, Cablevisión's acquisition of 98.5% of Multicanal and 100% of Holding Teledigital and Multicanal's acquisition of PRIMA (from PRIMA Internacional (now CMD)) required the authorization of the CNDC (validated by the SCI), the COMFER and the SECOM. On October 4, 2006, the Company, Vistone, Fintech, VLG and Cablevisión, as purchasers, and AMI CV Holdings LLC, AMI Cable Holdings Ltd. and HMTF-LA Teledigital Cable Partners LP, as sellers, filed for the approval of the acquisition. After several requests for information, the SCI issued Resolution No. 257/07, validating the CNDC's approval of the above-mentioned transactions. The Company was served notice in this respect on December 7, 2007. Such resolution has been appealed by five entities. As of the date of these financial statements, the CNDC has dismissed the five appeals filed against the above-mentioned resolution. Four of the entities filed appeals before the judicial branch. Two of such appeals were dismissed and the other two are still pending resolution. Cablevisión believes this appeal is very unlikely to be admitted based on its legal counsel's opinion and on CNDC's stance to date.

b) On June 11, 2008, Cablevisión was served with a decision of the Federal Commercial and Civil Court of Appeals revoking a decision rendered by the CNDC on September 13, 2007, whereby such agency had dismissed a claim filed by Gigacable S.A. prior to the December 7, 2007 decision referred to above. The Argentine Court of Appeals revoked the CNDC's decision only with respect to matters relating to the conduct of Cablevisión and Multicanal prior to the CNDC's authorization of the September 26, 2006 transactions, and ordered an investigation to determine whether a fine should be imposed on Cablevisión and Multicanal due to such conduct. As of the date of these financial statements, Cablevisión has filed its response.

c) Cablevisión, by itself and as successor of Multicanal's operations after the merger, is a party to several administrative proceedings under the Antitrust Law, facing charges of anticompetitive conduct, including territorial division of markets, price discrimination, abuse of dominant position, refusal to deal and predatory pricing, as well as a proceeding filed by the Cámara de Cableoperadores Independientes (Chamber of Independent Cable Operators), challenging the transactions consummated on September 26, 2006. All of these proceedings are still pending resolution. While Cablevisión believes that its conduct and that of Multicanal before the merger have always been within the bounds of the Argentine Antitrust Law and regulations and that their positions in each of these proceedings are reasonably grounded, it can give no assurance that any of these cases will be resolved in their favor.

Other regulatory matters

a) In January 2007, Cablevisión and Multicanal (merged into Cablevisión) were served with an injunction issued by a provincial court in the province of San Luis at the request of Grupo Radio Noticias, a company alleging to own a broadcast radio station that would presumably be harmed by the transactions involving Cablevisión, Multicanal, Holding Teledigital and Prima that the Company consummated in September 2006, and approved by SCI Resolution No. 257/07 dated December 7, 2007.

Among other measures, the injunction directed Cablevisión, Multicanal and its controlling shareholders and subsidiaries to refrain from a number of transactions, including mergers, acquisitions and the issuance of securities. The injunction was inconsistent with an order issued by a Federal Court in the City of Buenos Aires in 2005, to the effect that the CNDC had jurisdiction to determine the legality of the Company's acquisition of an ownership interest in Cablevisión without prior judicial intervention. Accordingly, the Company took action to have the case initiated by Grupo Radio Noticias removed from the San Luis court and transferred to the Federal Court of the City of Buenos Aires. The Supreme Court of Argentina resolved the Company's petition in its favor in June 2007. The Company's petition to reverse the injunction issued by a provincial court in the province of San Luis was approved by a Federal Court of the City of Buenos Aires on September 11, 2007, rendering such injunction null and void. Grupo Radio Noticias appealed such resolution and the Federal Court later confirmed the reversal of the injunction. In view of such decision, Grupo Radio Noticias filed an extraordinary appeal and Cablevisión was served notice of such appeal. On July 25, 2008, Cablevisión and Multicanal were served with the dismissal of the extraordinary appeal filed by Grupo Radio Noticias.

b) In January 2006, the Government of the City of Buenos Aires enacted Law 1,877, effective as from December 2007, which provides for a 15-year-term to regularize the authorization to install cable television networks in the thoroughfare on a single-column. It also provides for a one-year-term in order to remove posts in the area known as the "historical part of town". In January 2009, the Government of the City of Buenos Aires granted the corresponding permits to commence works. Finally, the new Law sets forth a 3-year-term for regularizing on a single column basis the avenues of the City of Buenos Aires. The related works have already been scheduled and budgeted to be executed in the forthcoming years.

The Government of the City of Mar del Plata enacted Ordinance No. 9163, governing the installation of cable television networks. Such ordinance was amended and restated by Ordinance No. 15981 dated February 26, 2004, giving cable companies until December 31, 2007 to adapt their cable networks to the new municipal requirements. The Executive Department of the Municipality of General Pueyrredón has submitted to the Municipal Council a proposed ordinance extending the term provided for the replacement of aerial cable television networks with underground networks until December 31, 2010. Even though the ordinance provides for certain penalties that may be imposed, including the suspension of the right to use airspace, the city has not generally imposed such penalties to cable systems not complying with such ordinance. However, the Municipal Small Claims Court of the City of Mar del Plata may impose fines in case the new extension is not approved by the Executive Department of the Municipality of General Pueyrredón or if Multicanal does not meet the deadline eventually approved.

c) On April 16, 2008 the Secretaría de Medios de Comunicación (Media Secretariat) issued Resolution 181/08, regulating Decree No. 1914/06, and set the royalties that, among others, TV broadcasters and cable operators shall pay SAGAI for the exploitation, use, interactive availability or communication to the public, within the national territory, of audiovisual interpretations performed by Argentine and foreign actors and/or dancers taped or recorded through other digital support.

In December 2008, Cablevisión and ARTEAR agreed with SAGAI on the terms governing the royalty, setting the appropriate percentages applicable to monthly exploitation revenues up to and including 2022. The royalties arising from such calculation shall accrue on a monthly basis. The amounts accrued under this royalty as of December 31, 2008 have been recorded in these financial statements.

Cablevisión and ARTEAR may deem the agreement void should any broadcast television station or cable operator obtain a court's final decision declaring the unconstitutionality of Decree No. 1914/06 and/or its supplementary or regulatory resolutions.

Once royalties have been paid in accordance with the agreement, SAGAI will have no further right to claim such royalties from Cablevisión or ARTEAR.

d) On June 26, 2008 Cablevisión and Multicanal (merged into Cablevisión) were served with a claim brought against them by Gigacable S.A. alleging that the merger of such companies was an anti-competitive practice. The claim was dismissed in limine and the Court of Appeals having jurisdiction over the case ordered an investigation as to the existence of an asymmetric treatment regarding the provision of content with the other cable television operators. A defense was filed and the summary proceedings have not been initiated.

e) Pursuant to a notarial certificate issued on September 19, 2008, AGEA and the Company were served with a legal action brought by an entity of consumers and those financially affected against AGEA, the Company and six natural persons claiming damages suffered by noteholders -non-investment professional natural persons or consumers- derived from Multicanal's APE. The lawsuit brings to bear the new Consumer Defense Law which, in general terms, provides for an ambiguous and strict procedure against the defendant. 

The Company and AGEA, the only ones served with this action as of the date of these financial statements, have responded and brought to bear the failure to comply with mediation and requested that the proceeding be pending as ordinary (since it is currently pending as a specially expedited summary proceeding). Furthermore, the term set out for the statute of limitations was brought forward and the postponement of the proceeding has been requested, all of which is currently being substantiated. Notwithstanding the foregoing, the Company and AGEA have succeeded in postponing the term for responding to the claim until the judge decides on the request for the proceeding to be pending as ordinary and the request for mediation in view of the above irregularities. The Company's legal counsel believes that there are grounds for the judge to approve the request for the proceeding to be pending as ordinary and the request for mediation. 

Claims brought by the COMFER

Cablevisión

As from November 1, 2002 and until December 31, 2008, the COMFER initiated summary administrative proceedings against Cablevisión and Multicanal (merged into Cablevisión) for infringements of regulations regarding the content of programming. Administrative summary proceedings on which the COMFER has already issued a ruling have resulted in fines for an aggregate amount of approximately Ps. 4.5 million. The COMFER has brought several judicial summary proceedings in order to collect such fines. As of December 31, 2008, certain summary proceedings brought by the COMFER in this regard are still pending for an aggregate amount of approximately Ps. 2.1 million. A provision has been set up for such amount. As of December 31, 2008, out of the total fines imposed, approximately Ps. 1.2 million has been paid. Approximately Ps. 1.3 million of imposed fines is pending settlement.

Although no assurance can be given as to the final outcome of this matter, Cablevisión and its legal counsel believe it will not have a significant impact on its financial-economic situation.

ARTEAR

As of December 31, 2008, ARTEAR recorded a provision in the amount of approximately Ps. 1.6 million for fines imposed by the COMFER, which have been appealed and are pending resolution.

Radio Mitre

As of the date of these financial statements, Radio Mitre records an outstanding balance to be settled with advertising in favor of TELAM, arising from fines imposed by the COMFER. Such situation would not affect the Company in any material aspect.

  Lawsuits and /or Claims

Cablevisión

On December 12, 2001, Supercanal Holdings S.A. filed a claim against Multicanal (merged into Cablevisión) for damages as a result of the enforcement of a preliminary injunction brought by Multicanal against Supercanal. Multicanal responded to such claim denying any liability. Based on de jure and de facto records of the case, Multicanal believes that the claim filed should be rejected in its entirety, and the legal costs should be borne by the plaintiff. As of the date of these financial statements, the proceeding is at the discovery stage. The court of first instance has dismissed Supercanal Holdings S.A.'s request that it be allowed to sue without paying court fees or costs.

AGEA

On April 29, 2008, AGEA was served with a decision rendered by the National Court of First Instance (the "Civil Court") ordering AGEA to pay damages to Editorial Atlántida in the amount of Ps. 28.5 million plus interest accrued from March 2, 1998 to the payment date. On May 2, 2008, AGEA filed an appeal against such ruling and on September 5, 2008 it submitted its legal brief.

The decision was rendered in connection with a claim filed by Editorial Atlántida against AGEA in February 2000, alleging plagiarism and unlawful competition in connection with the publication of Genios magazine, and requesting damages. In April 2006, Editorial Atlántida brought criminal charges against several parties (including AGEA) on the same grounds. All criminal charges were dismissed. In the appeal of the above mentioned decision served on April 29, 2008, AGEA brought to bear the result of such criminal proceedings and the evidence gathered in the civil claim, which, in AGEA's opinion, support its arguments. 

Both Editorial Atlántida and AGEA appealed the decision rendered in the First Instance, and each was served with a response.

On October 31, 2008, the Court of Appeals decided that the case was ready for resolution. The draw to establish the voting order of such Court's judges has not yet been carried out.

AGEA and its legal counsel consider that there are solid grounds to dismiss the Civil Court's decision. Therefore, no provision has been recorded in these financial statements. Notwithstanding the foregoing, AGEA cannot assure that the final ruling to be issued in the civil proceeding will be favorable to such subsidiary.

CIMECO

The AFIP served CIMECO with a notice challenging its income tax assessment for the fiscal periods 2000, 2001 and 2002. In such notice, the AFIP challenged mainly the deduction of interest and exchange differences in the tax returns filed for those years. Even though reversing such deductions would not generate final tax liabilities for the above periods, the Company would have to reduce the accumulated tax loss carry-forward amounts that were used to offset taxable income in subsequent years. If AFIP's position prevails, CIMECO's contingency as of December 31, 2008 would amount to approximately Ps. 12.3 million principal amount and Ps. 10.0 interest. 

CIMECO filed a response, which was dismissed by the tax authorities. The tax authorities issued their own official assessment and imposed penalties. CIMECO appealed the tax authorities' resolution before the National Tax Court on August 15, 2007.

CIMECO and its legal and tax advisors believe CIMECO has strong grounds to defend its position, and that the National Tax Court will decide in its favor. Accordingly, CIMECO has not booked an allowance as of December 31, 2008.

  ARTEAR

During 2005, the ANA brought a claim against all holders of broadcast and cable television licenses for the payment of tariffs and customs taxes applicable to the importation of films. According to ANA, television licensees are liable for customs duties, VAT, and income taxes over the total Peso value of imports. The ANA alleges that the import value of films includes the value of the intellectual property rights related to such films. Based on the criterion followed by broadcast television stations, which ARTEAR and its legal counsel believe to be reasonably grounded, ARTEAR has paid other taxes during the period covered by ANA's claim that would not have been payable had ANA's interpretation been applied. ARTEAR understands that if ANA's interpretation were to prevail, ARTEAR would be entitled to recover the other taxes paid in excess. Even though ARTEAR believes that the interpretation of customs legislation has reasonable legal grounds, it cannot assure that the matter will be resolved in its favor. ARTEAR would not expect an adverse decision, however, to have a material adverse effect on its financial condition or the results of its operations. Accordingly, no allowance was recorded to this effect.

GCGC

During the year ended December 31, 2005, GCGC recorded a provision amounting to approximately Ps. 2.3 million based on a potential claim that could arise from different interpretations made by the AFIP of Labor Reform Law No. 25,250 and the cases in which such law applies.

Although GCGC and its legal counsel considered that the original interpretation was technically correct and duly supported, following a conservative criterion, such subsidiary decided to set up a provision. During the year ended December 31, 2006, the subsidiary voluntarily paid Ps. 2.3 million for differences between its original calculations and the various interpretations of the AFIP of Law No. 25,250, plus the related interest and fines. GCGC reserves the right to claim a refund of amounts paid.

Other undertakings

ARTEAR

Pursuant to ARTEAR's acquisition of 85.2% of its subsidiary Telecor's capital stock in 2000, Telecor's sellers have an irrevocable put option of the remaining 755,565 common, registered, non-endorsable shares, representing 14.8% of the capital stock and votes of Telecor, for a 16-year term as from March 16, 2010 at a price of US$ 3 million and ARTEAR has an irrevocable call option for such shares for a term of 26 years as from March 16, 2000 at a price of approximately US$ 4.8 million, which will be adjusted at a 5% nominal annual rate as from April 16, 2016.

Note 14. restrictions on profit distributions

The Company may declare dividends only out of the Company's retained earnings stated in the Company's financial statements, prepared in accordance with Argentine GAAP and CNV regulations and approved by the shareholders. As of December 31, 2008, the Company reported retained earnings of Ps. 412.5 million in its financial statements prepared in accordance with Argentine GAAP and CNV regulations. 

As required by the Argentine Corporate Law and the Company's amended by-laws, effective as described in Note 11, realized and liquid profits shall be appropriated as follows: (i) 5% to the Company's legal reserve until such reserve equals 20% of the Company's capital stock; and (ii) the balance, in whole or in part, to the payment of the fees of the members of the Board of Directors and the Supervisory Committee, to dividends on common shares, voluntary reserves, provisions, a new account, or as otherwise determined by the shareholders.

  

Note 15. borrowings

	Weighted Average Interest Rate at December 31, 2008
					As of December 31,
			Maturities		2008		2007
Current
Bank overdraft	19.7%		2009		8,272,356		4,762,977
Financial loans	7.4%		2009		136,476,739		86,591,716
Negotiable obligations	7.6%		2009		185,903,749		134,873,600
Related parties	15.0%		2009		25,000,000		969,698
Accrued interests			2009		62,021,261		51,268,763
					417,674,105		278,466,754
Non Current
Financial loans	7.4%		2010-2017		49,389,393		77,934,182
Negotiable obligations	7.6%		2010-2016		2,210,903,739		2,159,380,801
Equipment purchases	5.9%		2010-2011		22,022,465		-
Others					1,343,852		686,196
					2,283,659,449		2,238,001,179

Scheduled maturities of the long-term debt for the next years (excluding current portion), as of December 31, 2008, are as follows:

2010		273,264,566
2011		296,357,155
2012		278,247,878
2013		443,883,841
2014 - 2017		991,906,009
		2,283,659,449

Financial loans

Grupo Clarín

a) The Company owed Telefónica Internacional de España S.A. a principal amount of US$ 89,027,741, plus contractual interest. On November 21, 2000, Telefónica Internacional de España S.A. notified the Company of the assignment of such receivable to Telefónica Media S.A.

On September 29, 2003, the parties agreed upon a fair adjustment of such indebtedness under Section 8 of Decree 214/02, setting the total outstanding amount at US$ 36 million (including principal, interest and any other amounts due). Out of that amount, US$ 6 million was paid within 7 days of execution of the settlement agreement. The balance of US$ 30 million would be paid in 5 annual, consecutive and equal installments of US$ 6 million each, payable on August 31, 2004, 2005, 2006, 2007 and 2008, respectively. Outstanding amounts accrued interest payable on a semi-annual basis. Such interest is calculated at (a) a rate of 3.5% per annum or (b) LIBOR + a 0.75% annual spread, whichever is higher at the beginning of each interest period. 

As of December 31, 2007, the Company owed an aggregate principal amount of Ps. 18,900,000 and interest thereon in the amount of Ps. 352,007. Such debt was originally secured by a pledge on Multicanal's common shares. On September 26, 2006, the Company agreed with Telefónica de Contenidos S.A. Unipersonal (successor to Telefónica Media S.A.) to replace the existing pledge with a new pledge over 49,828 common shares of IESA, which are owned by the Company. Upon payment of the fifth installment and the related interest, the above pledge was lifted automatically and as a matter of law.

As of the date of these financial statements, the Company has fully repaid this debt. 

b) On July 26, 2001, the subsidiary Raven executed a loan agreement with JPM for a principal amount of US$ 194.8 million. 

During fiscal year 2004, JPM assigned to the Company its rights under the loan agreement executed with Raven for up to US$ 75 million, as a result of the settlement of certain guarantees.

Furthermore, in February 2004, Raven and DTVLA, among other companies, executed an agreement whereby Raven received US$ 56 million as payment of the receivable arising from the acceleration of a put option under a certain "Put Agreement". Subsequently, Raven settled part of its debts with JPM and the Company. Thus, the unpaid balances amounted to US$ 40 million and US$ 54 million, respectively.

In May 2004, JPM transferred its receivable with Raven, assigning to the Company the balance of such receivable in exchange for the payment of an equivalent amount.

The balances of US$ 54 and US$ 40 million that Raven owed to the Company were condoned by means of the agreements dated February 6 and May 4, 2004, respectively.

Subsequently the Company, as the only shareholder of Raven, decided to wind up and liquidate that company at the Board meeting held on July 31, 2004.

The remaining balance of the price referred to above (US$ 40 million) was refinanced through an agreement between the Company and JPM on May 3, 2004. Such refinancing was obtained at an interest rate of LIBOR plus a 2% spread, payable quarterly. Principal was to be cancelled in annual installments.

In March 2006, the Company paid the first installment of the loan for US$ 4 million.

In August 2006, the Company executed an addendum to such refinancing agreement, whereby JPM reimbursed the US$ 4 million paid by the Company and the repayment of principal was rescheduled as follows:

Payment date		Repayment of principal
March 17, 2007		US$	8 million
March 17, 2008		US$	16 million
March 17, 2009		US$	16 million

The addendum sets forth several commitments and restrictions, including but not limited to restrictions on borrowings, creation of encumbrances, mergers, sale of significant assets, liquidations, dissolution and winding-up and effective changes of control, as well as the maintenance of a reserve account for an amount at least equal to the aggregate amount payable under this loan on the next interest payment date. Under a new addendum to the refinancing agreement dated August 20, 2007, the original guarantees granted by the Company's shareholders have ceased to be in effect.

In March 2008, the Company executed a new addendum to such refinancing agreement, whereby the repayment of outstanding principal was rescheduled as follows:

Payment date		Repayment of principal
March 17, 2008		US$	4 million
September 17, 2008		US$	7 million
March 17, 2009		US$	7 million
September 17, 2009		US$	7 million
March 17, 2010		US$	7 million

The interest rate to be accrued was changed to LIBOR plus a 3% margin as from March 17, 2008, and LIBOR plus a 4% margin as from March 17, 2009.

As of December 31, 2008 and 2007, the Company owed aggregate principal amounts of Ps. 72,450,000 and Ps. 100,800,000, and interest thereon of Ps. 160,915 and Ps. 597,079, respectively.

As of the date of these financial statements, the Company has made all payments when due.

GCSA Investments

As of December 31, 2008, GCSA Investments held short-term financial debts for an aggregate principal amount of US$ 20 million, accruing interest at a 10% nominal annual rate. GCSA Investments' bank overdraft was of US$ 2.0 million, out of which US$ 1.5 million was repaid subsequent to the closing date of these financial statements.

Negotiable Obligations

Cablevisión

On October 7, 2005, before being acquired by the Company, Cablevisión completed the restructuring of  US$ 754.6 million (aggregate principal amount of its financial debt), out of a final total debt subject to restructuring of US$ 796.4 million, by paying approximately US$ 142.8 million in cash, issuing US$ 150,077,436 principal amount of Notes due 2012, divided into two Series: a First Series or Series "A" and a Second Series or Series "B", with a 6% interest rate for the first five years and 7% for the remaining two years; and US$ 235,121,316 aggregate principal amount of Notes due 2015, divided into three Series called First Series or Series "A", Second Series or Series "B" and Third Series or Series "C", payable in three equal annual installments as from the eighth year, with an interest rate increasing from 3% to 12%, and authorizing a Ps. 39,465,500 capital increase and the issuance of 39,465,500 Class "B" shares, in consideration for the full, total, and final settlement of all the claims and rights of any nature on and against Cablevisión or its assets by those creditors taking part in the restructuring. 

The terms of Cablevisión's debt restructuring are set forth in an out-of-court settlement (APE) filed for judicial confirmation on May 14, 2004 and confirmed in the first instance on July 5, 2005.

In accordance with CNV effective regulations, the Company informed that the funds related to the issuance of the new notes were used to settle pre-existing indebtedness.

Before being acquired by the Company, Cablevisión also completed the restructuring of certain debts held with public sector banks for a total amount of approximately Ps. 40 million.

After October 7, 2005, and as of the closing date of these financial statements, holders of approximately  US$ 21.0 million principal amount of Cablevisión's financial debt, in accordance with the terms of Cablevisión's APE, executed agreements ("Exchange Agreements") accepting the terms of the restructuring of Cablevisión and received cash, new negotiable obligations and/or Class B shares of Cablevisión as consideration for the full and final discharge of the Company's obligations.

Cablevisión has been a party to significant lawsuits with respect to its APE. However, more than 97% of Cablevisión's creditors included under the APE voluntarily and irrevocably accepted the terms and conditions of Cablevisión's debt restructuring. The claims by creditors that did not voluntarily accept the terms of the restructuring as of December 31, 2008 account for an aggregate principal amount of Ps. 70,904,400 and interest thereon of Ps. 83,159,733. Final approval of the APE would reduce such debt by approximately US$ 24 million.

Cablevisión was able to carry out the restructuring of its financial debt, though the final court approval of the APE was still pending. On March 31, 2008, the Argentine Commercial Court of Appeals, Clerk's Office D, issued a resolution dismissing the appeals filed and ratifying the confirmation of the Cablevisión's APE.

Four extraordinary appeals have been filed against the decision rendered on March 31, 2008, one by the government's attorney before the Commercial Court of Appeals and the other three in a sole filing by certain creditors challenging Cablevisión's APE's judicial confirmation. Cablevisión responded to the extraordinary appeals.

On June 25, 2008, Cablevisión was served with a ruling rendered by the Argentine Commercial Court of Appeals, Clerk's Office "D", on May 30, 2008, whereby it decided to: i) dismiss the extraordinary appeals of two of the appellants and ii) grant, in part, the extraordinary appeals filed by the government's attorney before the Court of Appeals and one of the appellants. The partial granting of the two extraordinary appeals is only applicable to the interpretation of federal law relating mainly to Cablevisión's capital structure. The Argentine Commercial Court of Appeals decided against the admissibility of these extraordinary appeals with respect to the relevant aspects that served as a basis for the judicial confirmation of Cablevisión's APE, which are not matters of federal law and are therefore outside the scope of an extraordinary review. On July 22, 2008, the case file was brought before the Supreme Court of Argentina and is under the analysis of such court, which may decide upon the substance of the extraordinary appeal and the petitions for denied appeals or decide that the matter should first be submitted to the Attorney General's consideration.

Out of the total amount of Negotiable Obligations described in the first paragraph of this Note, as of December 31, 2008, Short-Term and Long-Term Negotiable Obligations totaling US$ 811,847 and US$ 14,854,561, respectively, have been considered as consideration under the APE for the creditors who did not execute any Exchange Agreements as of such date. 

On September 1, 2004, Cablevisión S.A. filed ancillary legal proceedings in US Bankruptcy Courts in the Southern District of New York seeking recognition of its main APE procedure, under section 304, Chapter 11, of the US Federal Code. The Company requested the suspension of (i) the continuation of certain legal actions brought against Cablevisión S.A. in the United States, in particular a legal action filed by SHL Company LLC, and (ii) the commencement of any procedures similar to such legal actions or other procedures against Cablevisión S.A. or its assets, aimed at collecting or recovering on its debt in the United States or that may prevent Cablevisión S.A. from continuing and concluding the restructuring pursuant to the APE procedure. 

On November 5, 2004, SHL Company LLC withdrew the above mentioned claims under "SHL Company LLC v. Cablevisión S.A". (Case No. 04 Civ 2424-WJM) filed originally with the court of New Jersey, USA and, on November 9, 2004, the Bankruptcy Court granted a Temporary Restraining Order to suspend any action filed against Cablevisión in the United States. On October 16, 2008, the Bankruptcy Court extended the Temporary Restraining Order under similar terms and conditions for an additional period of six months.

Between October 2005 and October 2007, in accordance with the general terms and conditions of the APE, Cablevisión repaid US$ 35,728,688 of the Short-Term Negotiable Obligations, leaving an outstanding balance US$ 114,348,748.

The outstanding Notes of Cablevisión impose restrictions on certain operations by Cablevisión and its subsidiaries for so long as they remain outstanding, such as: Selling, transferring or otherwise disposing of all or part of its operations or properties, imposing encumbrances or guarantees on its assets, financial indebtedness, amounts to be invested in property, plant and equipment, certain payments (including payments of dividends), corporate reorganization transactions and disposal of licenses, franchises and other rights owned by the Company. In addition, Cablevisión is required to repay Negotiable Obligations in advance with any excess cash.

If the Company is unable to comply with the above mentioned restrictions, the holders of such Negotiable Obligations and other financial creditors may declare an event of default and accelerate repayment of the outstanding financial indebtedness.

Multicanal

Multicanal's Notes effective as of December 31, 2008, issued under Multicanal's APE, which was confirmed and ratified on October 4, 2004 by the Argentine Commercial Court of Appeals, Clerk's Office A, comprise: a) Series A Step Up Notes with a principal amount of US$ 80,325,000 (the "10-year Notes"), accruing interest at an annual nominal rate of 2.5% from December 10, 2003 to the fourth anniversary of their issue date, 3.5% from the fourth to the eighth anniversary, and 4.5% thereafter until maturity, and b) Series B Notes with a principal amount of US$ 105,725,569 (the "7-year Notes"), accruing interest at an annual nominal rate of 7%.

Under the 10-year Notes and the 7-year Notes, Cablevisión, as surviving company pursuant to its merger with Multicanal, will assume certain covenants. These include: (i) limitation on the issuance of guarantees by subsidiaries; (ii) limitations on mergers, consolidations, and sale of assets under certain conditions, (iii) limitation on incurring debt above certain approved ratios, (iv) limitation on capital expenditure exceeding certain amount, (v) excess cash sweeps to prepay outstanding 7-year Notes, (vi) limitation on transactions with shareholders and affiliates under certain conditions, (vii) limitation on the issuance and sale of significant subsidiaries' shares with certain exceptions. 

Some of the covenants originally undertaken by Multicanal under such Notes were amended at extraordinary noteholders' meetings. The amendments proposed by Multicanal were approved at each such meetings, resulting in the execution of the Third, Fourth and Sixth Supplemental Indentures.

In connection with Multicanal's merger into Cablevisión, as described in Note 6, and in order to harmonize the terms and conditions of the notes issued by Multicanal with those of the notes issued by Cablevisión, an extraordinary noteholders' meeting was held by the holders of 7-year Notes in which the amendment of such terms and conditions was approved. As of the date of these financial statements, the noteholders' meeting regarding the approval of the amendments to the terms and conditions of the 10-year Notes proposed by Multicanal has not yet been held.

Amendments to the 7-year Notes will become binding and effective as of October 1, 2008 upon the effectiveness of the final merger commitment dated February 12, 2009.

AGEA

On January 28, 2004, AGEA issued US$ 30.6 million aggregate principal amount (Series C Notes due 2014), which accrue interest at an incremental fixed rate (2% from December 17, 2003 to January 28, 2008; 3% from January 29, 2008 to January 28, 2012; and 4% from January 29, 2012 up to the maturity), payable semiannually. Principal will be repaid in a lump sum on January 28, 2014.

On January 26, 2006, AGEA issued Ps. 300 million aggregate principal amount (Series D Notes due 2014), which accrue interest at a variable rate equal to the CER variation for the period, plus a 4.25% margin, payable semiannually commencing on June 15, 2006. Principal will be repaid in 8 equal and consecutive semiannual installments beginning on June 15, 2008.

The Series C Notes due 2014 and the Series D Notes include certain covenants and restrictions, including but not limited to, restrictions on borrowings, creation of encumbrances, mergers, disposition of significant assets, transactions with affiliates (including the Company) and payment of dividends or other payments to shareholders (including the payment of management fees to the Company), if certain ratios are not met or if certain amounts are exceeded. 

On June 16 and on December 12, 2008, AGEA paid the first two installments of the Series D Notes of Ps. 37.5 million principal amount each, plus interest accrued thereon. 

  Note 16. Sellers financing

	Weighted Average Interest Rate at December 31, 2008
					As of December 31,
			Maturities		2008		2007
Current
Principal	12.76%		2009		50,726,478		8,043,674
Accrued Interests			2009		12,610,982		23,164,491
					63,337,460		31,208,165
Non Current
Principal	12.76%		2010-2013		551,170,669		703,260,133
					551,170,669		703,260,133

Scheduled maturities of the sellers financing for the next years (excluding current portion), as of December 31, 2008, are as follows:

2010		549,412,184
2011		781,549
2012		781,549
2013		195,387
		551,170,669

Grupo Clarín

In connection with the transactions carried out in September 2006 resulting in an increase in the Company's indirect interest in Cablevisión to 60%, the Company issued a US$ 157.8 million promissory note, maturing on September 26, 2009 and accruing interest at 6-month LIBOR plus a 3.50% spread payable on a semi-annual basis as from March 26, 2007. In the event the Company decides to capitalize such interest, such spread may increase by 0.25% under certain circumstances. The maturity of this promissory note may be extended until September 26, 2010 or September 26, 2011, under certain circumstances. During the year 2007 and 2008, Grupo Clarín prepaid principal amounts of US$ 29 million and US$ 27 million, respectively, plus interest thereon. The outstanding balance of this promissory note was classified as current and non-current based on the Company's intentions and contractual obligations.

Cablevisión

As a result of Cablevisión's acquisition of Multicanal, Cablevisión issued debt held by unrelated parties and Grupo Clarín, which, after certain transfers by Grupo Clarín and Cablevisión's prepayment of Ps. 68.9 million in December 2007, is now held entirely by unrelated parties and totals Ps. 292.0 million. The total amount of this debt accrues interest at a variable rate equal to BADLAR plus a fixed 6% spread, subject to certain caps and payable semi-annually as from March 26, 2007. In the event Cablevisión decides to capitalize such interest, such spread may rise to 8% under certain circumstances. Principal would be repaid in a lump sum on September 26, 2009.

On June 1, 2008, a new promissory note was issued replacing the previous one, whereby the term was extended until December 31, 2010, at a 21% interest rate until December 31, 2008, and 18.75% interest rate from such date until its maturity.

Between September and December 2008, Cablevisión prepaid a principal aggregate amount of Ps. 97.9 million of such debt, plus interest thereon.

On December 1, 2008, the Company assigned to unrelated parties a principal amount of Ps. 40.4 million of this debt as prepayment of the promissory note mentioned above. This increased the total amount of this debt held by unrelated parties to a principal amount of Ps. 234.5 million.

  This debt is subordinated to the payment of the Notes issued by Cablevisión in October 2005.

Note 17. Derivative financial instruments

The Company enters into derivative instruments only to the extent considered necessary to ensure future debt cash flows at a fixed-rate in US dollars. It does not enter into derivative contracts for speculative purposes.

Receivables and liabilities generated by derivatives have been valued at their estimated fair value. Changes in fair value have been recognized as result for the year.

Under Other Current Receivables, these financial statements include Ps. 12.8 million representing the net amounts of foreign currency forward contracts executed by the Company for a nominal aggregate amount of US$ 42 million, due between March and September 2009.

Under the consolidated item Other non-current receivables, these financial statements include Ps. 26.6 million representing the net amounts of certain outstanding interest rate and exchange rates swap agreements, relating to a nominal value of approximately Ps. 114.1 million, whereby one of the Company's subsidiaries transfers to or receives from the financial entities that are party to such agreements, the net position resulting from swapping the obligation to pay interest at a variable rate in pesos for the obligation to pay interest at a fixed rate in US dollars. The swap agreements, executed in January 2006, are effective until December 2011.

During October 2008, certain amendments were executed to the swap agreements mentioned in the previous paragraph, which involved the prepayment of certain outstanding amounts denominated in US$ due in 2010 and 2011 in the amount of US$ 13.5 million.

Under the consolidated item Other current liabilities, these financial statements include Ps. 0.8 million, representing the net amounts of certain foreign currency forward contracts executed by a subsidiary of the Company for a nominal value of approximately US$ 15.7 million due on March 31 and June 19, 2009.

These transactions related to derivatives generated a gain of Ps. 16.3 million for the year ended December 31, 2008, and are included in the consolidated statements of income under the caption "Financial results, net". 

Note 18. Related parties 

The Company has entered into certain transactions in the ordinary course of business with unconsolidated affiliates accounted for under the equity method. These transactions have been executed on terms comparable to those of unrelated third parties and primarily include:

		Year ended December, 31
		2008		2007
		Income (Expense)
Advertising sales		50,155,326		35,775,898
Cable television signals sales		19,478,120		14,855,048
Other sales		10,870,255		5,627,417
Financial interest		1,522,926		644,939
		82,026,627		56,903,302
Cost of sales		(562,353,015)		(415,721,490)
Selling expenses		(5,739,863)		(15,883,832)
Administrative expenses		(632,311)		(1,063,840)
Financial Interest		(83,345)		(63,464)
		(568,808,534)		(432,732,626)

  NOTE 19. AGREEMENTS EXECUTED WITH THE ARGENTINE FOOTBALL ASSOCIATION

On June 22, 2007 TRISA and TSC executed supplements to their agreements with AFA, applicable from the 2007/2008 until the 2013/2014 soccer seasons, for the broadcasting of the Argentine soccer first division official tournament matches (in the case of TSC) and National B and Metropolitan first B categories (in the case of TRISA). Under such agreements, TRISA and TSC expand their services in exchange for a new programming schedule that allows the live broadcasting of all soccer matches of each season.

Note 20. PALP

During the last quarter of 2007, the Company, together with its subsidiaries, began to implement a PALP for certain executives (directors and managers comprising the "executive payroll"), which became effective in January 2008. Executives who adhere to such plan will undertake to contribute regularly a portion of their salary (variable within a certain range, at the employee's option) to a fund that will allow them to strengthen their savings capacity. Furthermore, each company of the Group where such executives render services will match the sum contributed by such executives. This matching contribution will be added to the fund raised by the employees. Under certain conditions, the employees may access such funds upon retirement or upon termination of their jobs with the Group. 

Likewise, the PALP provides for certain special conditions for those managers who were in the "executive payroll" before January 1, 2007. Such conditions consist of supplementary contributions made by each company to the PALP related to the executive's years of service with the Group.

The amount charged to income as a result of the application of this plan for all those executives who, upon enrolling in the plan, have met all the requirements established thereby for its effectiveness is of approximately Ps. 18.4 million, out of which approximately Ps. 7.6 million belongs to its initial implementation.

Note 21. Subsequent events

a) During Febraury and March 2009, Grupo Clarín prepaid principal amounts of US$ 14.8 million of the promissory note described in Note 16, plus interest thereon.

b) Grupo Clarín cancelled the principal amount due on March 17, 2009 under the loan described in Note 15.

c) During January and March 2009, Cablevisión prepaid principal amounts of Ps. 35.1 million of the sellers financing described in Note 16, plus interest thereon.

d) During April 2009, Cablevisión repaid US$ 14.3 million of its Short-Term Negotiable Obligations, leaving an outstanding balance of US$ 100.0 million.

e) At the Company's Annual Regular Shareholders' Meeting held on April 23, 2009, the shareholders of the Company decided, among other things, to appropriate the earnings for the year ended December 31, 2008 as follows: i) Ps. 13,137,065 to the legal reserve (5% of the net income for the year); and ii) the balance of Ps. 249,604,231 to retained earnings.

f) During April 2009, the Company and its subsidiaries have decided to adhere to Law 26,476, which establishes a regime for the regularization and financing of tax contingencies. The effects of these presentations have been considered in preparing the Company financial statements as of and for the year ended December 31, 2008.

ENDFR FGGFDMGLGLZZ

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