US GAAP Financial Statements

30th Jun 2008 07:00



GRUPO CLARIN S.A.

CONSOLIDATED FINANCIAL STATEMENTS

As of and for the years ended December 31, 2007 and 2006

CONSOLIDATED BALANCE SHEETS

(In Argentine Pesos ("Ps.") - unless otherwise stated)

 

	As of December 31,
	2007		2006
ASSETS
Current assets
Cash and cash equivalents	527,619,476		326,926,096
Trade receivables, net	538,523,073		410,586,773
Other receivables, net	302,105,840		321,623,061
Inventories	141,210,463		125,953,459
Other assets	12,230,059		2,633,079
Total Current assets	1,521,688,911		1,187,722,468
Trade receivables, net	2,664,875		256,791
Other receivables, net	286,993,480		280,624,182
Inventories	24,809,136		19,693,806
Investments in unconsolidated affiliates	231,723,592		235,739,725
Other long-term investments	4,690,405		3,253,123
Property, plant and equipment, net	1,421,696,123		1,025,303,658
Intangible assets, net	535,369,416		577,635,998
Goodwill	3,134,595,616		2,909,035,200
Total Assets	7,164,231,554		6,239,264,951
LIABILITIES
Current liabilities
Accounts payable	499,108,121		404,856,453
Short-term debt and current portion of long-term debt	278,466,754		432,292,273
Salaries and social security payable	156,111,728		110,341,780
Taxes payable	237,134,696		168,876,436
Other liabilities	111,675,861		120,585,068
Total Current liabilities	1,282,497,160		1,236,952,010
Accounts payable	10,547,274		10,640,522
Long-term debt	2,238,001,179		2,359,962,873
Taxes payable	16,762,210		14,461,838
Other liabilities	886,789,555		988,384,168
Provisions	125,385,922		99,385,136
Minority interest	987,100,718	(1)	669,465,068
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		-
Common shares Class A common shares Ps.1 par value per share, 70,880,304 shares authorized, issued and outstanding. Class B common shares Ps.1 par value per share, 133,006,887 shares authorized, issued and outstanding. Class C common shares Ps.1 par value per share, 25,112,689 shares authorized, issued and outstanding.	-		228,999,880
Preferred shares Class A preferred shares Ps.1 par value per share, 20,630,822 shares authorized, issued and outstanding. Class B preferred shares Ps.1 par value per share, 20,630,822 shares authorized, issued and outstanding.	-		41,261,644
Additional paid-in capital	1,358,001,994		901,082,526
Accumulated deficit	(31,948,182)		(297,126,532)
Accumulated other comprehensive income (loss)	3,675,140		(14,204,182)
Total Shareholders' Equity	1,617,147,536		860,013,336
Total Liabilities and Shareholders' Equity	7,164,231,554		6,239,264,951

Includes Ps. 201,496,567 corresponding to minority interest in Compañía Inversora de Medios de Comunicación S.A. ("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 Argentine Pesos ("Ps.") - unless otherwise stated)

	For the years ended December 31,
	2007		2006
Net sales	4,235,724,233		2,560,522,755
Cost of sales (excluding depreciation and amortization)	(2,055,691,923)		(1,309,617,925)
Selling expenses (excluding depreciation and amortization)	(430,741,916)		(275,383,422)
Administrative expenses (excluding depreciation and amortization)	(442,653,415)		(294,070,104)
Depreciation of property, plant and equipment	(236,253,265)		(112,760,310)
Amortization of intangible assets	(83,153,581)		(23,770,439)
Depreciation of other investments	(65,776)		(242,995)
Goodwill impairment	(14,980,978)		-
Operating income	972,183,379		544,677,560
Financial results, net	(432,233,498)		939,110,120
Equity in earnings from unconsolidated affiliates	33,709,347		31,983,506
Gain on sale of subsidiaries, net	-		6,024,839
Income before income tax, tax on assets and minority interest	573,659,228		1,521,796,025
Income tax and tax on assets	(196,549,609)		(174,643,299)
Minority interest	(105,009,000)		(38,412,648)
Net income	272,100,619		1,308,740,078

Net income per common share:
Basic	1.13		5.56
Diluted	-		4.84
Weighted average number of common shares outstanding:
Basic	240,684,109		228,999,880
Diluted	-		270,261,524

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

  CONSOLIDATED STATEMENT OF CASH FLOWS

(In Argentine Pesos ("Ps.") - unless otherwise stated)

	For the years ended December 31,
	2007		2006
Operating activities:
Net income	272,100,619		1,308,740,078
Adjustments for non-cash and non-operating items:
Income tax and tax on assets	196,549,609		174,643,299
Accrued interest	266,278,481		237,205,543
Adjustments to reconcile net income to cash provided by operating activities
Depreciation of property, plant and equipment	236,253,265		112,760,310
Amortization of intangible assets	83,153,581		23,770,439
Depreciation of other investments	65,776		242,995
Goodwill impairment	14,980,978		-
Allowances for doubtful accounts	23,995,651		(3,046,460)
Setting up of provision for contingencies	12,433,329		11,450,165
Equity in earnings from unconsolidated affiliates	(33,709,347)		(31,983,506)
Gain on sale of subsidiaries, net	-		(6,024,839)
Minority interest	105,009,000		38,412,648
Gain from troubled debt restructuring and other financial results	96,829,340		(1,234,919,198)
Gain on sale of property, plant and equipment	(442,174)		(685,731)
Others	(1,542,122)		287,393
Changes in assets and liabilities
Trade receivables	(101,684,855)		(122,194,340)
Other receivables	(27,375,512)		(110,362,961)
Inventories	(8,581,174)		(7,053,687)
Other assets	1,050,690		11,463,493
Accounts payable	75,377,704		45,468,872
Salaries and social security payable	40,690,974		15,524,732
Taxes payable	(27,954,918)		55,939,037
Other liabilities	(2,998,948)		136,908,608
Provisions	(13,161,186)		(17,068,783)
Payment of interest	(227,491,555)		(196,601,744)
Collection of interest	8,321,711		369,001
Collection of dividends	13,324,478		9,065,306
Income tax and tax on assets payments	(84,721,257)		(109,816,418)
Cash provided by operating activities	916,752,138		342,494,252
Investing activities:
Payment for the acquisition of property, plant and equipment	(574,461,658)		(243,969,782)
Payment for the acquisition of subsidiaries and unconsolidated affiliates, net of cash acquired	(63,256,287)		15,945,485
Payment for the acquisition of other investments	-		(14,719,018)
Payment for the acquisition of intangible assets	(20,533,216)		(2,877,476)
Proceeds from sale of property, plant and equipment and other investments	5,668,642		106,060
Restricted cash	(18,960,000)		45,750,000
Cash used in investing activities	(671,542,519)		(199,764,731)
Financing activities:
Loans obtained	6,120,607		473,069,121
Repayment of loans - Principal	(348,529,307)		(703,934,201)
Net payments for financial instruments	788,984		(9,431,983)
Payments of sellers financing	(170,546,495)		-
Payments of dividens	(18,000,000)		-
Payments to minority interest	(4,545,370)		(1,256,381)
Cash received from initial public offering of shares, net of related expenses	470,808,308		-
Payment of fees on bank and financial debt restructuring	-		(32,670,018)
Cash used in financing activities	(63,903,273)		(274,223,462)
EFFECT OF EXCHANGE RATE ON CASH AND CASH EQUIVALENTS	19,387,034		9,051,088
Increase (Decrease) in cash and cash equivalents	200,693,380		(122,442,853)
Cash and cash equivalents at the beginning of the year	326,926,096		449,368,949
Cash and cash equivalents at the end of the year	527,619,476		326,926,096

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

  CONSOLIDATED STATEMENT OF CASH FLOWS

(In Argentine Pesos ("Ps.") - unless otherwise stated)

	For the years ended December 31,
	2007		2006
Supplemental cash flow information
Acquisition of subsidiaries (see Note 6)
Cash and cash equivalents	24,570,339		156,189,444
Trade receivables	51,658,144		48,291,078
Other receivables	18,745,569		165,927,808
Inventories	10,111,195		-
Other assets	881,477		68,281,032
Investments in unconsolidated affiliates	38,636,722		16,784
Property, plant and equipment, net	72,416,947		450,130,263
Accounts payable	(22,013,592)		(113,492,152)
Borrowings	(23,683,521)		(1,205,607,360)
Salaries and social security payable	(5,475,566)		(21,046,989)
Taxes payable	(7,835,828)		(48,708,047)
Other liabilities	(23,800,446)		(32,218,925)
Provisions	(15,918,164)		(60,452,467)
Minority interest	(12,210,523)		12,908,635
Net value of assets consolidated	106,082,753		(579,780,896)
Subscriber portfolio acquired (net of related deferred income tax)	-		317,144,763
Other intangible assets (net of related deferred income tax)	6,630,527		59,288,055
Goodwill	231,651,128		1,854,664,790
Investments in unconsolidated affiliates	(67,807,686)		(248,740,050)
Minority interest on net assets consolidated	290,141		(711,851,982)
Purchase price	276,846,863		690,724,680
Cash and cash equivalents acquired	(24,570,339)		(156,189,444)
Sellers financing and minority interest subject to put option	(206,242,247)		(570,380,882)
Payment for the acquisition of subsidiaries, net of cash acquired	46,034,277		(35,845,646)
Significant non cash investing and financing activities
Minority interest in CIMECO subject to put option	201,496,567		-
Interests paid with reserve account	51,001,569		-
Capitalization of long-term debt	-		423,261,248
Purchase of Cablevisión S.A. ("Cablevisión") with sellers financing	-		570,380,882

CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT) AND

OTHER COMPREHENSIVE (loss) INCOME

(In Argentine Pesos ("Ps.") - unless otherwise stated)

		Common Shares		Preferred Shares		Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive (Loss) Income		Total Shareholders' Equity (Deficit)
		Shares	Amount	Shares	Amount
Balance at December 31, 2005		228,999,880	228,999,880	41,261,644	41,261,644	901,082,526		(1,605,866,610)		3,429,660		(431,092,900)
Foreign currency translation adjustments		-	-	-	-	-		-		(17,633,842)		(17,633,842)
Net income for the year		-	-	-	-	-		1,308,740,078		-		1,308,740,078
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

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

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 (in Argentine Pesos ("Ps.") - unless otherwise stated)

Note 1. Description of the business

Grupo Clarín S.A. ("Grupo Clarín" or "the Company") 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 joint ventures, 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 accounting principles generally accepted in the United States of America ("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 accounting principles generally accepted in Argentina ("Argentine GAAP") and in accordance with the rules of the Argentine Securities Commission ("CNV" for its Spanish acronym).

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).

	2007		2006
Cablevisión	60.0%		60.0%
Multicanal S.A. ("Multicanal")	59.1%		59.1%
Teledigital Cable S.A. ("Teledigital")	60.0%		60.0%
Primera Red Interactiva de Medios Argentinos S.A. ("PRIMA")	59.1%		59.1%
Arte Gráfico Editorial Argentino S.A. ("AGEA")	100.0%		100.0%
Artes Gráficas Rioplatense ("AGR")	100.0%		100.0%
Editorial La Razón S.A. ("La Razón")	(1)		100.0%
CIMECO (2)	50.0%		- -
Arte Radiotelevisivo Argentino S.A. ("ARTEAR")	99.2%		99.2%
Inversora de Eventos S.A. ("IESA")	100.0%		100.0%
Radio Mitre S.A. ("Radio Mitre")	100.0%		100.0%
Compañía de Medios Digitales S.A. ("CMD"), formerly Primera Red Interactiva de Medios Americanos (PRIMA) Internacional S.A.	100.0%		100.0%
Clarín Global S.A. ("Clarín Global")	100.0%		100.0%
GC Gestión Compartida S.A. ("GCGC")	100.0%		100.0%
Grupo Clarín Services LLC ("GC Services")	100.0%		100.0%
Vistone LLC ("Vistone")	100.0%		100.0%

(1) Company merged with AGEA as from January 1, 2007.

(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.

  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 market 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. 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 Comercializadora de Produtos Gráficos Brasileiros Ltda. ("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.

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.

  Cable television and Internet access

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.

Printing and Publishing

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. 

Broadcasting and Programming

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 Emerging Issues Task Force ("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 2007 and 2006 totaled approximately  Ps. 103.8 and Ps. 77.7 million, respectively.

Other Comprehensive (Loss) Income 

Other Comprehensive (Loss) Income is reported on the accompanying consolidated statement of shareholders' equity (deficit) and other comprehensive (loss) income and consists of (loss) income and other gains and losses affecting shareholders' equity (deficit) 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:

		2007				2006
		Carrying amount		Fair value		Carrying amount		Fair value
Long-term debt		2,238		1,784		2,360		2,041
Sellers financing		703		713		851		798

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 (deficit). 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. (95.5) and Ps. 4.2 million for the years ended December 31, 2007 and 2006, 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 Statement of Financial Accounting Standards ("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 16 for additional information.

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 amounts paid for this tax 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 condensed consolidated financial statements. 

As of December 31, 2007, income tax filings corresponding to fiscal years 2002 through 2006 could be subject to examination by the Argentine Tax Authority ("AFIP" for its Spanish acronym).

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

Fair Value Measurements 

 

In September 2006, the Financial Accounting Standards Board ("FASB") issued SFAS No. 157, "Fair Value Measurements" ("SFAS 157"). SFAS 157 establishes a single authoritative definition of fair value, sets out a framework for measuring fair value and expands on required disclosures about fair value measurement. Certain provisions of SFAS 157 related to financial assets and liabilities as well as other assets and liabilities carried at fair value on a recurring basis became effective for Grupo Clarín on January 1, 2008 and are being applied prospectively. These provisions of SFAS 157 are not expected to have any impact on the Company's consolidated financial statements. The provisions of SFAS 157 related to other nonfinancial assets and liabilities will be effective for Grupo Clarín on January 1, 2009, and will be applied prospectively. The Company is currently evaluating the impact the provisions of SFAS 157 will have on the its consolidated financial statements as it relates to other nonfinancial assets and liabilities. 

  Business Combinations 

In December 2007, the FASB issued SFAS No. 141 (revised 2007), "Business Combinations" ("SFAS 141R"). SFAS 141R establishes principles and requirements for how an acquirer in a business combination (i) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree, (ii) recognizes and measures the goodwill acquired in a business combination or a gain from a bargain purchase, and (iii) determines what information to disclose to enable users of financial statements to evaluate the nature and financial effects of the business combination. SFAS 141R will be applied prospectively to business combinations that have an acquisition date on or after January 1, 2009. The provisions of SFAS 141R will not impact the Company's consolidated financial statements for prior periods.

Noncontrolling Interests 

In December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interests in Consolidated Financial Statements - an amendment of ARB No. 51" ("SFAS 160"). The provisions of SFAS 160 establish accounting and reporting standards for the noncontrolling interest in a subsidiary, including the accounting treatment upon the deconsolidation of a subsidiary. The provisions of SFAS 160 are effective for Grupo Clarín on January 1, 2009 and will be applied prospectively, except for the presentation of the noncontrolling interests, which for all prior periods would be reclassified to equity in the consolidated balance sheet and adjusted out of net income in the consolidated statement of income. The Company is currently evaluating the impact the provisions of SFAS 160 will have on the Company's consolidated financial statements. 

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. As of December 31, 2006, net income available to common shareholders was computed by deducting from net income accretion of preferred shares.

As of December 31, 2006, diluted net income per common share was computed based on the average number of common shares outstanding and, when dilutive, potential common shares from preferred shares using the if converted method.

Net income per common share for the years ended December 31, 2007 and 2006 is as follows:

		Year ended December 31,
		2007		2006
Numerator
Net income		272,100,619		1,308,740,078
Adjustment for preferred shares		-		(35,000,000)
Net income available to common shareholders for Basic earnings per share		272,100,619		1,273,740,078
Adjustment for preferred shares				35,000,000
Net income available to common shareholders for Diluted earnings per share				1,308,740,078

  

		Year ended December 31,
		2007		2006
Denominator:
Weighted average of common shares outstanding for Basic earnings per share		240,684,109		228,999,880
Adjustment for Preferred shares				41,261,644
Adjusted weighted average of common shares outstanding for Diluted earnings per share		-		270,261,524
Basic net income per share		1.13		5.56
Diluted net income per share		-		4.84

Note 4. Breakdown of certain balance sheet accounts

Investments in unconsolidated affiliates
		As of December 31,
		2007		2006
Papel Prensa S.A.I.C.F. y de M. ("Papel Prensa")		128,816,730		92,733,318
CIMECO (1)		-		64,419,417
Impripost Tecnologías S.A. ("Impripost")		8,046,053		6,562,859
Ideas del Sur S.A. ("Ideas del Sur")		19,445,269		18,308,253
Pol-Ka Producciones S.A. ("Pol-Ka")		10,572,975		9,023,770
Tele Red Imagen S.A. ("TRISA")		23,021,284		15,134,927
Televisión Satelital Codificada S.A. ("TSC")		6,133,716		14,605,482
Ver TV S.A.		8,827,998		3,112,328
Dineromail LLC ("Dineromail")		6,298,000		-
Advances for future acquisitions of investments		-		5,992,007
Other investments		20,561,567		5,847,364
		231,723,592		235,739,725

(1) Consolidated as of December 31, 2007 (see Note 6).

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

Trade receivables, net

Trade receivables, net consist of

		As of December 31,
		2007		2006
Current
Trade receivables		613,625,776		477,292,739
Less: Allowance for doubtful accounts		(75,102,703)		(66,705,966)
		538,523,073		410,586,773
Non Current
Trade receivables		2,664,875		271,791
Less: Allowance for doubtful accounts		-		(15,000)
		2,664,875		256,791

Other receivables, net

Other receivables, net consist of:

Current
Reserve account		24,037,362		56,838,603
Net deferred tax assets		124,533,485		127,280,250
Tax credits		34,283,700		24,799,537
Court-ordered and guarantee deposits		25,343,229		8,159,912
Prepaid expenses		12,301,982		7,973,629
Advance payments		15,509,592		20,333,070
Related parties		20,899,840		39,176,503
Dividends receivable		5,439,858		4,787,355
Other receivables		20,316,737		6,261,508
Others		21,195,417		27,398,715
Subtotal		303,861,202		323,009,082
Less: Allowance for other doubtful accounts		(1,755,362)		(1,386,021)
		302,105,840		321,623,061
Non Current
Net deferred tax assets		168,879,101		177,504,658
Tax credits		99,788,498		84,738,696
Guarantee deposits		117,548		178,194
Prepaid expenses		4,903,003		3,811,809
Advances to personnel		887,277		524,281
Derivatives		4,482,640		6,963,398
Others		8,780,620		8,686,294
Subtotal		287,838,687		282,407,330
Less: Allowance for other doubtful accounts		(845,207)		(1,783,148)
		286,993,480		280,624,182

Inventories

Inventories consist of:

		As of December 31,
		2007		2006
Current
Film products and rights		29,574,204		29,796,856
Finished goods		9,744,350		6,965,689
Products in process		1,830,044		1,671,961
Raw materials and supplies		90,293,770		79,052,585
Other		340,517		3,756,722
Subtotal		131,782,885		121,243,813
Advances to suppliers		9,427,578		4,709,646
		141,210,463		125,953,459
Non Current
Film products and rights		24,809,136		19,693,806
		24,809,136		19,693,806

  Accounts payable

Accounts payable consist of:

Current
Suppliers		466,887,193		374,028,414
Related parties		32,220,928		30,828,039
		499,108,121		404,856,453
Non Current
Suppliers		10,547,274		10,640,522
		10,547,274		10,640,522

Other liabilities

Other liabilities consist of:

Current
Related parties		-		3,003,757
Sellers financing (1)		31,208,165		41,171,557
Dividends payable		4,372,239		15,026,649
Advances from clients		38,901,680		29,773,507
Other		37,193,777		31,609,598
		111,675,861		120,585,068
Non Current
Sellers financing (1)		703,260,133		850,590,278
Net deferred tax liabilities		169,034,231		136,372,019
Guarantee deposits		4,999		-
Derivatives		11,215,770		-
Other		3,274,422		1,421,871
		886,789,555		988,384,168

(1) Sellers financing includes the amounts arising from the acquisition of Cablevisión and related transactions in 2006 (refer to Note 6). Additionally it includes the outstanding balances originated in the acquisitions of Ideas del Sur and Telecor S.A.C.I. ("Telecor").

Note 5. Goodwill and Intangible assets, net

The breakdown of Goodwill is as follows:

		As of December 31, 2006		Acquisitions, dispositions and other adjustments		As of December 31, 2007
CPGB		19,947,800		(15,015,740)	(1)	4,932,060
Telecor		18,854,954		-		18,854,954
Teledifusora Bahiense S.A. ("Telba")		1,929,235		-		1,929,235
Bariloche TV S.A. ("Bariloche TV")		-		1,844,621		1,844,621
Cablevisión		1,652,754,542		(7,079,394)		1,645,675,148
Teledigital		201,910,249		-		201,910,249
Multicanal and subsidiaries		1,010,610,429		9,170,692		1,019,781,121
PRIMA		1,835,769		-		1,835,769
CIMECO and subsidiaries		-		234,169,393		234,169,393
Other		1,192,222		2,470,844		3,663,066
		2,909,035,200		225,560,416		3,134,595,616

Includes approximately Ps. 15 million corresponding to goodwill impairment.

  

		As of December 31, 2005		Acquisitions, dispositions and other adjustments		As of December 31, 2006
CPGB		-		19,947,800		19,947,800
Telecor		18,854,954		-		18,854,954
Telba		1,929,235		-		1,929,235
Cablevisión		-		1,652,754,542		1,652,754,542
Teledigital		-		201,910,249		201,910,249
Multicanal and subsidiaries		1,132,761,628		(122,151,199)		1,010,610,429
PRIMA		1,835,769		-		1,835,769
Other		1,192,222		-		1,192,222
		1,156,573,808		1,752,461,392		2,909,035,200

The components of Goodwill by segments are as follow:

		As of December 31,
		2007		2006
Cable television and Internet access		2,869,202,287		2,867,110,989
Printing and publishing		241,024,238		21,140,022
Broadcasting and programming		22,628,811		20,784,189
Digital content and others		1,740,280		-
		3,134,595,616		2,909,035,200

The breakdown of Intangible assets, net is as follows:

		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

		As of December 31, 2006
		Gross		Accumulated amortization		Net
Editing / exploitation rights		8,154,389		(3,817,074)		4,337,315
Subscriber portfolio acquired		597,236,297		(43,606,861)		553,629,436
Trademarks and patents		14,061,092		(699,020)		13,362,072
Others		46,062,032		(39,754,857)		6,307,175
		665,513,810		(87,877,812)		577,635,998

The amortization expense for each of the five succeeding fiscal years is estimated in approximately Ps. 64 million.

  Note 6. Business combinations

Cablevisión

On September 26, 2006, through a series of related transactions, the Company and Fintech Media LLC, an affiliate of Fintech Advisory, Inc. (together with all of its affiliates, "Fintech"), increased their holdings of Cablevisión's share capital to approximately 60% and 40%, respectively. Grupo Clarín incurred US$157.8 million of seller financing, maturing on September 26, 2009 and accruing interest payable every six month as from March 26, 2007, at 6-month LIBOR plus a 3.75% spread. The original maturity of these securities may be extended until September 26, 2010 or September 26, 2011, under certain circumstances. 

In a simultaneous transaction, Cablevisión acquired 100% of the capital stock of Holding Teledigital Cable S.A. ("Holding Teledigital") from one of the prior shareholders of Cablevisión. Cablevisión made irrevocable capital contributions to Holding Teledigital of approximately Ps. 76.4 million to permit the immediate prepayment of outstanding bank debt and seller financing debt of Holding Teledigital. 

Additionally, Multicanal acquired 100% of the capital stock of PRIMA from CMD incurring in Ps. 77.5 million of seller financing, maturing on September 26, 2009 and accruing interest payable every six month as from March 26, 2007, at a variable rate established by the BADLAR plus a fixed 6% spread, subject to certain ceilings. Furthermore, Cablevisión acquired 98.5% of the shares of common stock of Multicanal, from the Company, AGEA and Fintech, incurring in Ps. 824.8 million of sellers financing, maturing on September 26, 2009 and accruing interest payable every six month as from March 26, 2007, at a variable rate established by the BADLAR plus a fixed 6% spread, subject to certain ceilings. The previously mentioned transactions performed between the Company and its subsidiaries have been eliminated for consolidation purposes. 

See Note 13 for a description of the administrative authorizations required for these transactions and their current status.

The transaction was accounted for under the purchase method of accounting. The application of the purchase method of accounting requires that the total purchase price be allocated to the fair value of assets acquired and liabilities assumed based on their fair values at the acquisition date, with amounts exceeding the fair values being recorded as goodwill. The allocation process requires an analysis of acquired property, plant and equipment, contracts, subscriber portfolio, contractual commitments, legal contingencies and brand value to identify and record the fair value of all assets acquired and liabilities assumed. 

The following table summarizes the fair values of the Cablevisión assets acquired and liabilities assumed and related deferred income taxes as of acquisition date (amounts stated in millions of Ps.).

Property, plant and equipment, net		162.6
Intangible assets, net		376.4
Goodwill		645,0
Other assets		159.0
Total assets acquired		1,343.0
Long-term debt		(426.7)
Deferred tax liabilities generated by fair value valuation		(142.2)
Other liabilities		(95.4)
Total liabilities assumed		(664.3)
Minority interest		13.9
Net assets acquired		692.6

The Ps. 376.4 million of acquired intangible assets were assigned to subscriber portfolio, subject to an amortization over a useful life ranging from approximately 7 to 10 years.

  The following unaudited pro forma condensed consolidated statement of income has been compiled to show what the financial results of the Company for the year ended December 31, 2006 might have been had the following been in place on January 1, 2006:

• the increase of ownership interest in Cablevisión to 60% of total capital and the related incurrence of seller financing;

• the acquisition by Cablevisión of 100% of the share capital of Teledigital;

• the pre-payment by Teledigital of Ps. 77.5 million under an outstanding loan in connection with its acquisition by Cablevisión;

• the acquisition by Multicanal of 100% of the share capital of PRIMA; and

• the acquisition by Cablevisión of 98.5% of the share capital of Multicanal and the related incurrence of seller financing.

This unaudited pro forma consolidated statement of income is furnished for informational purposes only and does not purport to reflect the results of operations that would have actually resulted had each of the transactions and other adjustments above been effected on the dates indicated. Further, these pro forma results of operations are not necessarily indicative of the results of operations that may be obtained in the future. Amounts are stated in millions of Ps. 

Net sales	3,414.1
Net income	1,222.8
Net income per common share:
- Basic (See Note 3)	5.19
- Diluted	4.52

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 transferred US$ 6 million as collateral for the put option. 

Contemporaneously, 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 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. 

Other acquisitions

AGEA established Autos Virtuales S.A. on June 26, 2007, contributing 51% of total capital represented by 12,000 shares. Autos Virtuales S.A. acquired a classified advertisements Internet portal dedicated to the purchase and sale of cars and motorcycles. Subsequently, on November 30, 2007, AGEA acquired the remaining 49% interest in Autos Virtuales S.A. 

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 the capital stock of Dineromail. Dineromail manages an online payment platform. 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 of the 31.6% interest in Interpatagonia S.A. granted each other reciprocal call and put options on all of the shares of Interpatagonia S.A. 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. Finally, 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. The total cost of the abovementioned transactions amounted to approximately Ps. 11 million.

On October 23, 2007, IESA executed a stock option agreement for 51% of the capital stock and votes of Automóviles Deportivos 2000 S.A., 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 abovementioned option, amounted to approximately US$ 1.7 million.

On December 17, 2007, Cablevisión acquired a 30% interest in Televisora La Plata S.A., increasing its ownership to 100% of total capital.

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)
		2007		2006
Real property		307,617,482		279,499,215		50
Furniture and fixture		59,159,965		63,735,021		10
Telecommunication, audio and video equipment		115,883,668		217,396,092		3
External network and broadcasting equipment		1,452,889,252		2,390,223,287		14
Computer equipment and software		195,286,613		284,851,376		4
Technical equipment		47,904,253		9,869,366		10
Workshop machinery		252,566,827		224,488,828		10
Tools		23,394,413		26,950,757		4
Spare parts		16,072,058		14,059,725		5
Installations		250,920,594		37,714,783		10
Vehicles		76,761,152		77,361,394		5
Plots		9,210,645		8,261,144		5
Leased assets		283,239		73,854		5
Leasehold improvements		10,170,927		34,794,973		3
Other materials and equipment		277,878,966		159,068,026		-
Works in progress		113,848,440		59,211,523		-
Advances to suppliers		85,443,360		1,102,178		-
Subtotals		3,295,291,854		3,888,661,542
Less accumulated depreciation		(1,873,595,731)		(2,863,357,884)
		1,421,696,123		1,025,303,658

  Note 8. Additional financial information

Financial results, net, consist of:

		Year ended December 31,
		2007		2006
Interest income		24,014,709		25,145,382
Interest expense		(290,293,190)		(262,350,925)
Exchange difference		(84,214,372)		4,172,689
Gain from troubled debt restructuring		-		1,222,055,813	(1)
Others		(81,740,645)		(49,912,839)
		(432,233,498)		939,110,120

(1) Includes the result from the dilution of the Company's ownership in Multicanal as a result of its troubled debt restructuring (see Note 15).

Note 9. Comprehensive (LOSS) Income

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

		2007		2006
Net income		272,100,619		1,308,740,078
Other comprehensive (loss) income, net:
Foreign currency translation adjustments		17,879,322		(17,633,842)
Total Comprehensive income, net		289,979,941		1,291,106,236

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 together with its subsidiaries, mainly Multicanal, Teledigital and PRIMA.

Printing and publishing: it is basically comprised of the operations of its subsidiary AGEA and its subsidiaries AGR, Tinta Fresca Ediciones S.A. ("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 Sociedad del Estado LU 92 Canal 10 - UTE, and their equity investments in Pol-Ka, 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 and Autos Virtuales S.A., 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, 2007 and 2006 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, 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)
Operating Income	608,179,596		248,888,477		91,969,893		23,145,413		-		972,183,379
Financial results, net	(329,320,164)		(23,521,902)		(14,122,481)		(65,268,951)		-		(432,233,498)
Equity in earning 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 expense	(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)

  

	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, 2006
Net sales to third parties	1,226,309,460		887,698,980		367,683,112		78,831,203		-		2,560,522,755
Intersegment net sales	48,474,550		42,111,043		98,032,425		24,117,553		(212,735,571)		-
Net sales	1,274,784,010		929,810,023		465,715,537		102,948,756		(212,735,571)		2,560,522,755
Cost of sales (excluding depreciation and amortization)	(578,088,781)		(486,268,111)		(313,655,685)		(23,003,950)		91,398,602		(1,309,617,925)
Selling expenses (excluding depreciation and amortization)	(179,900,029)		(100,306,220)		(35,693,768)		(8,225,007)		48,741,602		(275,383,422)
Administrative expenses (excluding depreciation and amortization)	(172,591,310)		(100,862,748)		(59,321,800)		(34,059,554)		72,765,308		(294,070,104)
Depreciation of property, plant and equipment	(83,711,579)		(15,238,888)		(12,333,866)		(1,475,977)		-		(112,760,310)
Amortization of intangible assets	(21,774,751)		(1,507,432)		(390,845)		(97,411)		-		(23,770,439)
Depreciation of other investments	-		(70,981)		-		(172,014)		-		(242,995)
Operating Income	238,717,560		225,555,643		44,319,573		35,914,843		169,941		544,677,560
Financial results, net	994,251,879		(19,621,593)		(12,069,922)		(23,280,303)		(169,941)		939,110,120
Equity in earning (losses) from unconsolidated affiliates	34,119,928		(14,302,068)		16,115,213		(3,949,567)		-		31,983,506
Gain on sale of subsidiaries, net	6,024,839		-		-		-		-		6,024,839
Income before income tax, tax on assets and minority interest	1,273,114,206		191,631,982		48,364,864		8,684,973		-		1,521,796,025
Income tax and tax on assets (expense) benefit	(130,083,030)		(72,755,335)		(11,444,819)		39,639,885		-		(174,643,299)
Minority interest	(37,495,122)		68,428		(1,198,066)		212,112		-		(38,412,648)
Net income	1,105,536,054		118,945,075		35,721,979		48,536,970		-		1,308,740,078
INFORMATION ARISING FROM CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2006
Total Assets	5,079,617,111		827,215,614		428,098,212		433,739,817		(529,405,803)		6,239,264,951
Investments in unconsolidated affiliates	9,744,387		164,176,662		61,818,676		-		-		235,739,725
Total Liabilities	3,403,714,859		637,993,174		249,512,742		947,971,575		(529,405,803)		4,709,786,547
ADDITIONAL CONSOLIDATED INFORMATION AS OF DECEMBER 31, 2006
Acquisition of property, plant and equipment	224,430,307		38,524,738		13,637,688		1,529,705		(34,152,656)		243,969,782
Acquisition of intangible assets	202,646		2,674,830		-		-		-		2,877,476
Non-cash expenses	(20,809,065)		12,510,114		(88,560)		(16,194)		-		(8,403,705)

  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 Buenos Aires Stock Exchange ("BCBA" for its Spanish acronym) 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 Global Depositary Shares ("GDSs") in the London Stock Exchange ("LSE"). Each GDS represents two of the Company's Class B common shares. The GDSs are issued by JP Morgan Chase Bank, N.A. ("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 authorized, by means of Resolution No. 15,745, the Company's public offering of the shares comprising all of its 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 in line with the guidelines of said organism, the holding of a Shareholders' meeting in order to amend the Company's by-laws and subsequent registration of such amended by-laws 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.

  Preferred shares

Among the main terms and conditions of the preferred shares outstanding prior to their conversion as detailed above in this Note, were the waiver by the holders of preferred shares of their right to collect any and all preferred dividends accrued before January 1, 2005; the suspension of dividends between that date and June 30, 2008; and the mandatory conversion of preferred shares into common shares without computing the suspended dividends; provided the Initial Public Offering took place on or before June 30, 2008. As a result of the Initial Public Offering described above, preferred shares have been converted into common shares and preferred dividends, the accrual of which had been suspended, were not included in the calculation of such conversion.

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, 2007 2006 Current (37,921) (39,612) Deferred (158,614) (135,031) Total (196,535) (174,643)

The following table summarizes the reconciliation between the income tax charged to statement of income for the years ended December 31, 2007 and 2006 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,
	2007		2006
Income tax assessed at the current tax rate (35%) on income before income taxes, tax on assets and minority interest	(200,781)		(532,629)
Permanent differences:
Equity in earnings from unconsolidated affiliates	11,798		11,194
Net gain on sale of investments	-		20,918
Non-taxable gain on troubled debt restructuring	-		48,009
Non-taxable income / expense	(16,127)		(551)
Others	5,084		11,863
Expiration of tax loss carryforward	(2,914)		(24,151)
Effect of changes in the allowance of deferred tax asset and tax loss carryforward	6,405		290,704
Income tax	(196,535)		(174,643)

  The following table shows the breakdown of net deferred tax position as of December 31, 2007 and 2006, respectively (amounts stated in thousands of Ps.):

	As of December 31,
	2007		2006
Deferred Assets (Liabilities)
Tax loss carryforward	174,783		319,744
Trade receivables	21,960		22,012
Property, plant and equipment	2,502		(10,235)
Intangible assets	(173,834)		(176,406)
Other assets	(1,138)		(1,714)
Other investments	8,370		8,633
Short and long-term debt	60,666		52,641
Provisions	80,463		70,482
Others	6,629		(486)
Subtotal	180,401		284,671
Allowance for deferred tax asset	(56,022)		(116,258)
Net deferred tax position	124,379		168,413

As of December 31, 2007 and 2006, the Company presents current deferred tax assets of Ps. 124.5 million and Ps. 127.3 million, respectively and non-current deferred tax assets of Ps. 168.9 million and Ps. 177.5 million, respectively. The Company also presents non-current deferred tax liabilities of Ps.169 million and  Ps. 136.4 millon as of December 31, 2007 and 2006, respectively.

The Company has assessed the recoverability of its deferred tax assets as of December 31, 2007 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, 2007, the Company's accumulated tax losses amount to approximately Ps. 499 million, which calculated at the current tax rate, represent deferred tax assets in the amount of approximately  Ps. 174.8 million. There follows the statute of limitations of the accumulated tax losses (amounts stated in thousands of Ps.): 

Year of expiry		Tax loss carryforward
2008		84,457
2009		141,326
2010		236,134
2011		19,120
2012		18,342
		499,379

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 16 in order to fully, unconditionally and irrevocably guarantee the timely payment of all obligations arising from said contracts. 

Note 15 sets forth certain restrictions to which the Company, Cablevisión, Multicanal and AGEA are subject under their respective financial obligations described in such note. At December 31, 2007, the Company and its subsidiaries were in compliance with all such covenants.

  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, 2007 the amount deposited in the reserve account totaled Ps. 9,388,015.

Pursuant to the terms and conditions of the Notes issued by Multicanal, such subsidiary also set up a reserve account, which had a balance of Ps. 14,649,347 at year-end. Such funds are restricted to the payment of interest and principal under the new Notes issued under the Multicanal out-of-court restructuring agreement ("APE" for its Spanish acronym).

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 Federal Broadcasting Committee ("COMFER" for its Spanish acronym) shall grant the extension if the licensee has complied with the effective applicable legislation, bidding terms and conditions and undertakings in its 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 must submit for the COMFER's approval, within 2 years of the date of the Decree, programming proposals that contribute to the preservation of the national culture and the education of the population, and a technology investment project to be implemented during the suspension term. COMFER's Resolution 214/07 regulated the obligations established by Decree 527/05 in order to benefit from such suspension.

All of the Company´s 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, have obtained the COMFER's approval of their respective projects.

In June 2003, the COMFER notified Televisora La Plata S.A., a subsidiary of 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, the probability that it will have a significant impact on Cablevisión's financial-economic situation is remote.

  Pending authorizations from the COMFER

Multicanal 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, Muse, Tate & Furst, LA Argentina Cable Company, LLC (Teledigital) mentioned in Note 6 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 Law No. 25,156, as amended (the Antitrust Law), and Law No. 22,285 and its regulations (the Broadcasting Law), the transactions carried out on September 26, 2006 described in Note 6 required the authorization of the National Antitrust Commission (validated by the Secretariat of Domestic Trade), the Argentine Secretariat of Communications ("CNDC", "SCI" and "SECOM" for their Spanish acronyms, respectively), and the COMFER. On October 4, 2006, the Company, Vistone, Fintech, VLG Argentina LLC 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 abovementioned transactions. The Company was served notice in this respect on December 7, 2007. As of the date of these financial statements, four of the five appeals filed against the abovementioned resolution have been dismissed by the CNDC, with one 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.

Additionally, on June 11, 2008 Cablevisión was served with a decision of the Commercial Court of Appeals revoking the resolution issued by the CNDC on September 13, 2007, whereby the CNDC had dismissed a claim filed by Gigacable S.A. prior to the CNDC's resolution of December 7, 2007. The Commercial Court of Appeals revoked the CNDC's resolution only to the extent it referred to events that occurred prior to the CNDC's approval of the acquisition, and ordered an investigation to determine whether the conduct of Cablevisión and Multicanal prior to such approval should be penalized with a fine. On June 26, 2008, Cablevisión forwarded its pleadings to the CNDC, explaining that its conduct was in compliance with antitrust laws and regulations.

(b) Cablevisión and Multicanal are a party to 13 administrative proceedings under the Antitrust Law. Both Cablevisión and Multicanal face 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 Chamber of Independent Cable Operators, challenging the transactions consummated on September 26, 2006. All of these proceedings are still pending resolution. While Cablevisión and Multicanal believe that their conduct has always been within the bounds of the Argentine Antitrust Law and regulations and that their positions in each of these proceedings are reasonably grounded, they 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 were served with an injunction issued by a provincial court in the province of San Luis at the request of Grupo Radio Noticias S.R.L. ("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, which were 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 resolution, Grupo Radio Noticias filed an extraordinary appeal, which as of the date of these financial statements has still not been granted. While the Company can give no assurance that it will prevail against Grupo Radio Noticias, it believes that their claims are unfounded.

b) On September 5, 2007, the Argentine Cable Television Association, Cablevisión, Multicanal and Telecentro S.A. (another cable television operator) filed a claim before a federal court requesting (i) a declaratory judgment that would, among other things, grant full certitude to their rights as broadcasting licensees and declare that public telecommunication service providers may not interfere with such rights and that the state must grant adequate protection to broadcasting licensees against potential distortions to market competition that would result from allowing public telecommunication service providers to also provide broadcasting and cable television services, and (ii) an injunction preventing certain providers of fixed and mobile telephony from obtaining broadcasting licenses and providing broadcasting and cable television services, also preventing the COMFER from granting any such licenses, or the National Communications Commission ("CNC" for irs Spanish acronym) or the SECOM from allowing the provision of such services by way of interpretation and application of telecommunications regulations. On September 6, 2007, the federal court granted the injunction with respect to the COMFER, the CNC and the SECOM, and on September 7, 2007 it granted the injunction with respect to the fixed and mobile telephony providers. Such injunction was appealed by the defendants and was confirmed by the Federal Administrative Court, Clerk's Office No. 3, through the decision rendered on November 8, 2007. Even though the Company believes that the legal and regulatory framework that does not allow providers of basic telephony to be broadcasting licensees and prevents such companies from offering triple play will remain in place in the short and medium term, the Company cannot assure that the Argentine government will maintain such legal and regulatory frameworks.

c) In January 2006, the Government of the City of Buenos Aires enacted Law 1,877, 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". 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. 9,163, governing the installation of cable television networks. Such ordinance was amended and restated by Ordinance No. 15,981 dated February 26, 2004, giving cable companies until December 31, 2007 to convert their cable networks. 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.

  Claims brought by the COMFER

Cablevisión

The COMFER has notified Cablevisión of 469 administrative summary proceedings for alleged infringements of the Broadcasting Law, occurring between November 1, 2002 and December 31, 2007. Cablevisión responded to all such proceedings. The COMFER has rendered decisions in more than 274 of these summary proceedings, imposing fines in the amount of approximately Ps. 0.3 million. Accordingly, a provision has been made for such amount. Cablevisión appealed such penalties and the rest of the summary proceedings are pending resolution.

Multicanal

As of the date of these financial statements and as from November 1, 2002, the COMFER has initiated 522 summary administrative proceedings against Multicanal for alleged infringements of regulations regarding the content of programming. The COMFER has ruled on 320 of these summary proceedings and, as of the date of these financial statements, it has imposed fines for an aggregate amount of approximately Ps. 0.4 million, which are still outstanding and may not be challenged. Accordingly, a provision has been made for such amount. As regards the rest of the summary proceedings, Multicanal has presented its defense and appealed those fines that are not yet final. 

ARTEAR

As of December 31, 2007, ARTEAR recorded a provision in the amount of approximately Ps. 0.9 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.

Commitments to make capital contributions to subsidiaries

Fintelco S.A. reported a negative balance in its shareholders' equity as of November 30, 2006. Under Law 19,550, the Argentine Corporate Law, this event could bring about its dissolution due to loss of capital, unless the shareholders agree to its total or partial recomposition or a capital increase. Cablevisión and Multicanal each hold 50% each of Fintelco S.A.'s capital stock. In March 2007, both companies made irrevocable contributions to Fintelco S.A. in the amount of Ps. 12.4 million each, thus restoring the financial position of such company.

Lawsuits and /or Claims

Cablevisión

In April 2005, Cablevisión was served notice of a ruling from the National Tax Court, which confirmed the AFIP's official assessment concerning the alleged failure to pay Value Added Tax ("VAT") on sales of advertising in magazines for certain periods of the years 1996 through 1998. As of December 31, 2007, the restated amounts are estimated at approximately Ps. 13 million. Accordingly, a provision has been made for such amount. Cablevisión appealed such ruling before the Federal Administrative Court of Appeals. On June 6, 2006, Cablevisión obtained a preliminary injunction pursuant to which the AFIP shall refrain from claiming the VAT payment mentioned above. On October 3, 2007, the Federal Administrative Court, Clerk's Office No. 5 issued a resolution confirming the National Tax Court's ruling. Cablevisión filed an appeal with the Supreme Court of Argentina against such decision. Cablevisión and its legal counsel consider that it has sound grounds to obtain a revocation of the decision from the Supreme Court of Argentina.

  Multicanal

On December 12, 2001, Supercanal Holdings S.A. filed a claim against Multicanal for damages as a result of the enforcement of a preliminary injunction brought by Multicanal against Supercanal Holdings S.A. 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.

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 for offsetting taxable income in subsequent years. If AFIP's position prevails, CIMECO's contingency as of December 31, 2007 would amount to approximately Ps. 12.3 million principal amount and Ps. 7.1 interest. 

CIMECO filed a response, which was dismissed by the tax authorities. The AFIP issued an official assessment and imposed penalties. CIMECO appealed such 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, 2007.

ARTEAR

During 2005, the National Customs Administration ("ANA" for its Spanish acronym) 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 Ps. 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 the Company 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. The Company understands that if ANA's interpretation were to prevail, the Company would be entitled to recover the other taxes paid in excess. Even though the Company believes ARTEAR's interpretation of customs legislation has reasonable legal grounds, it cannot assure that the matter will be resolved in its favor. The Company 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.

TRISA

The Argentine Association of Songwriters and Composers ("SADAIC" for its Spanish acronym) filed a claim against TRISA, a company in which IESA holds a 50% interest, for the payment of royalties on musical works used in TyC Sports programs, which are broadcast nationwide via satellite.

The claim is equivalent to 1% of TRISA's gross sales since 1993. In August 2006, TRISA reached a settlement with SADAIC with respect to the claim. The agreement contemplates a payment of a 0.3% royalty over TRISA's gross sales as from June 2006, payable monthly. The parties also agreed on the payment of a lump sum to discharge any and all amounts allegedly owed by TRISA through May 2006. 

  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 Law No. 25,250 (relating to employment) 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

As part of ARTEAR's acquisition of its subsidiary Telecor in 2000, Telecor's sellers have an irrevocable put option of 755,565 common, registered, non-endorsable shares, representing 14.815% 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 nominal annual rate of 5% 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, 2007, the Company reported retained earnings of Ps. 208.2 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, 2007
					As of December 31,
			Maturities		2007		2006
Current
Bank overdraft	15.8%		2008		4,762,977		1,500,000
Financial loans	6.6%		2008		86,591,716		294,921,498
Negotiable obligations	8.3%		2008		134,873,600		78,024,846
Related parties	12.0%		2008		969,698		5,000,000
Accrued interests			2008		51,268,763		52,845,929
					278,466,754		432,292,273
Non Current
Financial loans	6.6%		2009-2010		77,934,182		163,678,782
Negotiable obligations	8.3%		2009-2018		2,159,380,801		2,196,284,091
Others					686,196		-
					2,238,001,179		2,359,962,873

  Scheduled maturities of the long-term debt for the next years (excluding current portion), as of December 31, 2007, are as follows:

2009		222,055,152
2010		250,119,971
2011		261,518,690
2012		289,000,902
2013 - 2018		1,215,306,464
		2,238,001,179

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 shall accrue 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. 

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 fourth installment, the pledge over one third of the new pledged shares was lifted automatically and as a matter of law. Upon payment of the fifth installment and the related interest, the pledge over the remaining new pledged shares shall be lifted automatically and as a matter of law.

As of December 31, 2007 the Company owed aggregate principal and interest amounts of Ps. 18,900,000 and Ps. 352,007, respectively.

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

b) On July 26, 2001, the subsidiary Raven Media Investmens LLC ("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 DirecTV Latin America LLC ("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.

As of December 31, 2007, the Company owed aggregate principal and interest amounts of Ps. 100,800,000 and Ps. 597,079, respectively.

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

Radio Mitre

As of December 31, 2007, Radio Mitre holds loans and bank overdraft, having an outstanding aggregate principal amount of approximately Ps. 5.3 million, out of which Ps. 4.8 million correspond to bank overdraft. Radio Mitre's loans accrue interest at an average annual fixed rate of 15.4%.

Negotiable Obligations

Cablevisión

On October 7, 2005, before being acquired by the Company, Cablevisión completed the restructuring ofUS$ 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, issuingUS$ 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 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 APE filed for judicial confirmation on May 14, 2004 and confirmed in the first instance on July 5, 2005.

  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, out of which, as of June 11 and October 8, 2007, it repaid an original principal amount of Ps. 17.5 million, restated applying the reference stabilization index ("CER" for its Spanish acronym), plus interest accrued as of repayment date.

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 Cablevision'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. 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 National Commercial Court of Appeals, Clerk's Office D, issued a resolution dismissing the appeals filed and ratifying the confirmation of the APE. By virtue of APE's judicial confirmation, Cablevisión has instructed HSBC in its capacity as exchange agent to distribute the consideration under the terms established by the APE to the creditors that did not execute any Exchange Agreements.

Out of the total amount of Negotiable Obligations described above, as of December 31, 2007, Short-Term and Long-Term Negotiable Obligations totaling US$ 860,760 and US$ 14,931,191, 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 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. Cablevisión requested the suspension of (i) the continuation of certain legal actions brought against Cablevisión 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 or its assets, aimed at collecting or recovering on its debt in the United States or that may prevent Cablevisión 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 December 13, 2007, the Bankruptcy Court extended the Temporary Restraining Order under similar terms and conditions, effective until June 16, 2008.

On October 7, 2005 and September 29, 2006, in accordance with the general terms and conditions of the APE, Cablevisión repaid US$ 6,732,569 and US$ 28,084,054 of the Short-Term Negotiable Obligations, respectively. On October 8, 2007, in accordance with the general terms and conditions of the APE, Cablevisión repaid US$ 912,065 of the Short-Term Negotiable Obligations.

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

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 Cablevisión. In addition, Cablevisión is required to repay Negotiable Obligations in advance with any excess cash. 

  If Cablevisión 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 restructured its financial obligations by means of an APE. The Multicanal APE was confirmed by the Argentine Commercial Court No. 4, Secretariat No. 8 (the "Argentine Court") and ratified by the Argentine Court of Appeals, Clerk's Office A on October 4, 2004. In April 2005, the Argentine Supreme Court dismissed all further appeals to the Multicanal APE. Pursuant to the Multicanal APE, Multicanal (i) increased its capital stock by Ps. 15,000,000, which were fully paid in by the Company; (ii) subsequently increased its capital stock again from Ps. 386,635,103 to Ps. 594,911,263. Such capital increase was paid by capitalizing part of the notes issued to creditors of Multicanal that had chosen the "combined option" under the Multicanal APE (7-Year Notes and Class C Shares of Multicanal). As a result the Company's interest in Multicanal decreased from 100% to 65%. Pursuant to the capital increase, Multicanal issued 208,276,160 Class C common, book-entry shares, with a nominal value of Ps.1 and entitled to one vote per share; (iii) issued the 10-Year Notes (for creditors entitled to the par option) and the 7-Year Notes (each as defined below), which were delivered to JPM as exchange agent, for it to deliver them, in turn, to the creditors subject to the Multicanal APE that were entitled to receive them; and (iv) delivered to JPM an amount corresponding to interest accrued under the 10-Year Notes and the 7-Year Notes as of June 19, 2006 for payment to creditors entitled to the par option and the combined option, and an amount in cash corresponding to principal and interest due as of July 19, 2006 for payment to creditors entitled to the cash option under Multicanal's APE.

The Notes issued pursuant to the Multicanal APE have the following characteristics: 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, b) Series B Notes with a principal amount of US$ 139,869,850 (7-year fixed-rate Notes), accruing interest at an annual nominal rate of 7% and c) Series B Notes with a principal amount of US$ 3,096,625 (7-year floating-rate Notes and together with the 7-year fixed rate Notes, the "7-year Notes"), accruing interest at three-month LIBOR plus a 1.325% margin.

Effective as of July 20, 2006, after the notes were delivered and the cash payment was made as set forth in the Multicanal APE, all of Multicanal's debt subject to the APE was extinguished and settled. On October 13, 2006, the Argentine Court ruled that the Multicanal APE had been completed pursuant to section 59, penultimate paragraph, Law No. 24,522. Multicanal provided evidence to the Argentine Courts of the publication of notices instructed by it in its APE fulfillment resolution.

The following table summarizes the troubled debt restructuring made by Multicanal. The gain includes the result from restructuring and dilution derived from troubled debt restructuring, as explained above in this Note. It does not include the related effects on deferred income tax.

	Date of restructuring		Amount of debt before restructuring		Amount of debt after restructuring		Gain on troubled debt restructuring
	July 2006		2,668,229,817		1,060,860,892		1,157,407,587

As a result of the issuance of the 10-Year Notes and the 7-Year Notes, Multicanal undertook certain commitments. 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. 

On March 30, 2007, under Section 9.7 of the Indenture relating to the 7-Year Notes, which allows Multicanal to amend ambiguities and/or inconsistencies without the holders' consent, subject to authorization of the Board of Directors and the trustee, Multicanal's Board of Directors approved the amendment of Sections 4.2 and 4.3 of the Second Supplemental Indenture as amended by the Third Supplemental Indenture, thereby executing the Fifth Supplemental Indenture. 

  On September 20, 2006, Multicanal made a voluntary prepayment of all Series "B" Notes (7-year floating rate Notes) for US$ 3,096,625 plus interest accrued to that date. In addition, on September 27 and 28, 2006, Multicanal repurchased Series "B" Notes (7-year fixed-rate Notes) for a principal amount of US$ 34,144,281 plus interest accrued to each such date, booking a gain of US$ 104,278.

On September 20, 2006, December 18, 2006 and December 21, 2007, three extraordinary noteholders' meetings were held by the holders of 7-year fixed-rate Notes to consider certain amendments to the covenants originally assumed by Multicanal under such Notes. The amendments proposed by Multicanal were all approved. 

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 US$ 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.

Note 16. 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.

The amounts of Ps. 4.5 million and Ps. 11.2 million are included under Other non-current receivables and Other non-current liabilities, respectively. These figures represent the net amounts of certain outstanding interest rate and exchange rates swap agreements, relating to a nominal value of approximately Ps. 152 million, whereby one of the Company's subsidiaries transfers to or receives from the counterparts the net position resulting from swapping a Ps. 152 million payment obligation accruing interest at a variable Ps. rate into a US$ obligation accruing interest at a fixed rate.

These transactions generated a loss of PS. 13.7 million for 2007. The swap agreements, executed in January 2006, are effective until December 2011.

  Note 17. 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
		2007		2006
		Income (Expense)
Advertising sales		35,775,898		7,858,057
Cable television signals sales		14,855,048		10,494,075
Other sales		5,627,417		7,070,927
Financial interest		644,939		-
		56,903,302		25,423,059
Cost of sales		(415,721,490)		(176,206,910)
Selling expenses		(15,883,832)		(4,647,634)
Administrative expenses		(1,063,840)		(723,854)
Financial Interest		(63,464)		(229,086)
		(432,732,626)		(181,807,484)

NOTE 18. AGREEMENTS EXECUTED WITH THE ARGENTINE FOOTBALL ASSOCIATION

On June 22, 2007 TRISA and TSC executed supplements to their agreements with the Argentine Football Association ("AFA" for its Spanish acronym), applicable from the 2007/2008 until the 2013/2014 soccer seasons, for the broadcasting of the Argentine soccer First Division A official tournament matches (in the case of TSC) and National B and Metropolitan First Division 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 19. Subsequent events

(a) During the last quarter of 2007, the Company, together with its subsidiaries, began to implement a long-term savings plan ("PALP" for its Spanish acronym) for certain eligible executives (directors and managers comprising the "executive payroll"), which became effective as from 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 funds 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 estimated consolidated amount to be charged to income for next fiscal year in connection with the PALP will depend on a number of factors, including but not limited to, the number of executives enrolling in the plan on a permanent basis and their turnover and salary increases in the next fiscal year. Nevertheless, the Company estimates that the amount to be charged to income to such effect for the year ended December 31, 2008 will be of approximately Ps. 20 million, out of which approximately Ps. 9 million corresponds to the initial implementation of the plan.

  (b) On January 11, 2008, IESA acquired the controlling interest of a group of companies mainly engaged in sports journalism, production and commercialization of shows, and the production of motor racing television broadcasting. The amount paid for such acquisitions amounted to approximately US$ 10.0 million, out of which US$ 2.4 million were settled in cash. 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.

On February 20, 2008, IESA filed for the approval of the abovementioned transaction with the CNDC (form F-1), and on April 29, 2008, it submitted additional information. As of the date of these financial statements, the transaction is subject to administrative approvals.

(c) On March 17, 2008, Cablevisión exercised a call option on 6,969 registered non-endorsable common shares of Teledigital, each with nominal value of Ps. 1 and entitled to one vote per share.

(d) In March 2008, the Company executed a new addendum to the refinancing agreement with JPM described in Note 15 above, 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.

(e) On April 3, 2008, AGEA partially assigned the rights and obligations arising from the call option mentioned in Note 6 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.

On April 10, 2008, the Company and the parties to the abovementioned transaction notified the CNDC of such transaction, and on May 12, 2008 they filed for its approval (form F-1). On June 2, 2008 the CNDC requested additional information. As of the date of these financial statements, the transaction is subject to administrative approvals.

(f) On April 16, 2008 the SCI issued Resolution 181/08, regulating Decree No. 1914/06, and set the royalties that, among others, TV broadcasters and cable operators shall pay the Argentine Association of Actors and Performers ("SAGAI" for its Spanish acronym) 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.

The royalty was set at 2% of the monthly exploitation revenues. In the case of cable operators, such revenues comprise revenues arising from subscribers, premium, pay per view or any other services, traditional advertising revenues, barter transactions, sponsorship and subsidies. In the case of TV broadcasters, such revenues comprise advertising revenues of all kinds (non-traditional advertising, sponsorship, barter transactions, etc.), and any other revenues arising from the exploitation of the television business, excluding financial income and income obtained from the sale of programming.

Cablevisión brought a legal action challenging this regulation, in respect of which a preliminary injunction was issued in its favor suspending the effects of Decree No. 1914/06. Therefore, neither the Decree, nor its regulations or Resolution 181/08 are applicable to Cablevisión as long as such injunction is not reversed. ARTEAR has, in its name and through the Association of Argentine Broadcasters, filed administrative claims and legal actions challenging the constitutionality of such regulations.

  (g) On April 21, 2008, Cablevisión acquired from third parties 1,977,175 Class C book-entry shares of Multicanal, increasing its interest to 98.8%.

(h) On April 25 and April 30, 2008, Cablevisión was served notice of the filing of two extraordinary appeals against the resolution issued by the Argentine Court of Appeals on March 31, 2008 ratifying the confirmation of the APE.

(i) At the Company's Annual Regular Shareholders' Meeting held on April 24, 2008, the shareholders of the Company decided, among other things, to appropriate the earnings for the year ended December 31, 2007 as follows: i) Ps. 1,366,307 to absorb the accumulated deficit balance after the absorption decided upon at the Regular and Extraordinary Shareholders' Meeting held on July 13, 2007; ii) Ps. 10,410,117 to the legal reserve (5% of the net income for the year after absorbing the accumulated deficit at the beginning of the year); iii) Ps. 48,000,000 to cash dividends; and iv) the balance of Ps. 149,792,217 to retained earnings.

(j) 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 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. 

In February 2000, Editorial Atlántida filed a claim against AGEA, 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 its appeal against the Civil Court's decision, AGEA will bring to bear the result of such criminal proceedings and evidence gathered in the civil claim, which, in AGEA's opinion, support its arguments.

AGEA and its legal counsel consider that there are sound grounds to support the dismissal of the Civil Court's decision, for which 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 it.

(k) On June 12, 2008, a subsidiary of the Company obtained a loan from Credit Suisse International forUS$ 20.000.000, accruing interest at an annual nominal rate of 10%. Principal and interests are payable on June 12, 2009.

  Report of Independent Auditors

To the Shareholders, President and Directors of

Grupo Clarín S.A.

We have audited the accompanying consolidated balance sheets of Grupo Clarín S.A. and its subsidiaries at December 31, 2006 and 2007 and the related consolidated statements of income, of shareholders' equity and comprehensive income and of cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Grupo Clarín S.A. and its subsidiaries at December 31, 2006 and 2007 and the results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

City of Buenos Aires,

June 26th, 2008

Price Waterhouse & Co. S.R.L.

(Partner)

_____________________________________

Carlos A. Rebay

ENDFR ZKLFLVQBEBBZ

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