GCLA.L Regulatory News (GCLA)

GRUPO CLARÍN S.A.

2011 ANNUAL REPORT

To the Shareholders of

Grupo Clarín S.A.

We hereby submit for your consideration the Annual Report and Exhibit, the Balance Sheet, the Statement of Income, the Statement of Changes in Shareholders' Equity and the Statement of Cash Flows, Notes and Exhibits of Grupo Clarín S.A. (hereinafter, "the Company" or "Grupo Clarín") for fiscal year No. 13 ended December 31, 2011 and the Consolidated Financial Statements as of December 31, 2011.

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

2011 MACROECONOMIC ENVIRONMENT

In a year marked by global uncertainty, the world was undoubtedly distinguished by the dynamics emerging economies managed to sustain under a complex environment of ongoing crises of different kind that hit the developed countries (with peripheral Europe at the epicenter).

In fact, while during the year under analysis half of the world represented by the developed countries experienced, at best, anemic GDP growth in spite of the several incentives granted to them; the other half - the block of emerging countries led by China - preserved their dynamics which, on average, tripled that of the former. The world has continued to see growth at two different paces of structural trend, reflecting the operation of the new global accumulation mechanism focused on emerging economies.

In this context, the Argentine economy managed to sustain growth in its productive activity in 2011, in line with virtually all emerging countries. Such performance was driven by the vigorous terms of trade in the external arena, along with the typical expansionist bias of the economic policy in an electoral year and the favorable weather conditions for the agricultural sector on the domestic front.

However, unlike other emerging countries, this increase in productive activity was again paired with high inflation rates that prevented the country from fully capitalizing on the proceeds from such growth and from improving their distribution. In 2011, the Argentine economy experienced growth with inflation again. This fact, coupled with the currency board strategy implemented in order to moderate the inflationary impact of the strong drive generated by public policies, resulted in a new deterioration of the pillars that supported the recovery process after the 2001-2002 crisis.

In addition to this, the Argentine economy is operating under certain disturbing conditions, such as, increased primarization, a shortage of reproductive investments (noticeable mainly in the capital depletion of key strategic sectors) and the low level of foreign direct investment in relation to other countries in the region.

Therefore, in spite of its remarkable growth cycle, Argentina has yet to show any clear progress in its development. Poverty, which has remained almost unchanged since early 2007 and which, according to private estimates, still affects 9 million Argentine people, clearly reflects the latter.

According to private sources, Argentina's real GDP is estimated to have increased by approximately 7%, slightly below the 2010's figure; whereas inflation remained at virtually the same level as the previous year (around 23%). The Argentine economy continues to register an inflation rate three percentage points higher than the growth rate, a unique phenomenon in the region, except for Venezuela.

The three pillars that supported the economic recovery after the 2001-2002 crisis deteriorated in the year under analysis. The nominal exchange rate, which operates as an inflation buffer together with the virtually frozen utility tariff rates, did depreciate with respect to the US dollar throughout the year, but at a substantially lower rate than the price increases (slightly over 8% vs. 23% mentioned above). The significant adjustment of the real exchange rate that led to this gap continued to accelerate the loss of competitiveness.

The currency depreciation, coupled with the strong dynamics of the economic activity, exacerbated the growth of imports which, at the end of 2011, were higher than exports, thus deteriorating the balance of trade surplus (which showed an 11% decrease, from USD11.6 billion to USD10.3 million in absolute values).

For the first time in more than two decades, at the end of the year, Argentina's energy industry will have showed a negative trade balance (estimated in over USD2.5 billion). For the purposes of assessing the energy self-sufficiency loss, only four years ago, this sector's balance of trade showed surplus (approximately USD2.5 billion) and accounted for more than one quarter of the total external surplus.

The lower generation of foreign currency was worsened by a capital flight from the private sector which, in the year under analysis, almost doubled the previous year's figure and stood somewhere in the neighborhood of 2008's record high (USD23.8 billion). This resulted in a decrease in the Central Bank's international reserves which, by the end of the year, stood at almost USD6 billion below the USD52.1 billion recorded in December, 2010, in spite of stronger exchange controls.

Thus, deterioration on the fiscal front was more significant than on the external front. The national public sector showed a financial deficit in the year under analysis (as a result of the debt service) which jumped to almost two and a half point of GDP. In absolute values, this deficit (estimated in over Ps. 50 billion, without counting revenue distributions received from the BCRA and revenues of the ANSES derived from the ownership of government-issued securities) almost doubled that of 2010 and has become the most significant one since 2003 onwards. This deterioration, mostly funded by the issue of currency and intra-governmental indebtedness, took place in spite of record-high tax pressure (approximately 35% of GDP).

Perspectives for the Upcoming Year

During the last weeks, the growing uncertainty over the recovery pace of the developed countries' economic activity and employment resulted in overall downward growth perspectives for 2012.

The virtual stagnation or expansion below potential experienced by these countries, in general, and peripheral Europe, in particular, became an actual threat to the world's economy, where one of the key concerns is the extent of the impact of this external shock on the current emerging catalysts.

In the light of this new international crisis, the Argentine economy has less scope for action. In fact and unlike 2008, the Argentine economy no longer has fiscal, exchange or energy buffers. Actually, unlike the last years, the local economy lacks strong dollar reserves.

In perspective, the energetic situation is seen as the main responsible for the deterioration of the external and fiscal accounts. Accordingly, the growing public expenditure to sustain tariff rates and import energy compromised public accounts so badly that it accounts for a significant portion of the last years' fiscal deterioration. The scheduled elimination of subsidies seeks to streamline a structure that was unequal and that could no longer be genuinely funded.

In addition, the macro and microeconomic consequences of the recently implemented controls on imports to preserve the trade surplus are difficult to foresee as of the date of this annual report.

The truth is that insofar as the government continues to pretend to use the exchange rate to anchor inflation by minimizing the Argentine currency nominal devaluation rate, the expansive economic policies - so far focused on boosting GDP growth and import growth indirectly - will be clearly limited in their scope.

The implementation of measures to moderate the growth pace of variables, such as, public spending, salaries and monetary aggregates, shall be understood within the framework of this growth moderating strategy adopted in the face of a certainly less favorable environment.

To make matters worse in this already complex environment, the drought caused by "La Niña" compelled to dramatically reduce agricultural projections (which stood somewhere in the neighborhood of 110 million tons and have been now cut to approximately 100 million tons) and, therefore, the sector's exports (by approximately 10% compared to 2011).

As a result of all the above mentioned, the Argentine economy's growth rate would slow down significantly in 2012. However, inflation would remain at current levels, since the increases in the utility tariff rates resulting from the overall elimination of subsidies are expected to considerably offset the lower dynamics of aggregate demand. Thus, high inflation would continue to hinder significant improvements in social indicators and in the distribution of income among the Argentine people.

The conditions described above clearly show that Argentina has less macroeconomic tools to face this new international crisis. In spite of its dynamics and low indebtedness level, the current economy systematically expels local capital and repels foreign capital. In other words, the current modus operandi of the local economy does not provide a reasonable level of confidence to the Argentine people (who prefer to invest their savings abroad, rather than domestically) as well as to foreigners (who channel a low level of their regional productive investments in our country).

THE YEAR 2011 AND THE MEDIA SECTOR IN ARGENTINA

In 2011, the global media industry - undoubtedly, one of the most seriously hit by the 2009's financial crisis, experienced certain weakening in its business volume, as a result of the sudden slowdown of the global economic activity and, particularly, of the developed countries. As a matter of fact and due to their inherent differences, the slowdown was not homogenous at all among countries, segments and companies.

The uncertainty over the pace of recovery of consumption, productive activity and employment in the developed countries represented an additional risk focus for this industry, which was already facing several challenges arising from the ongoing emergence of new technologies and the changes in the new generations' media consumption patterns.

However, such uncertainty did not affect at all the migration of audiences, content and advertisers towards the digital ecosystem. This main trend the industry has been developing over the last years managed to preserve its carryover effect, primarily supported by the broadband revolution.

2011 was a year of genuine growth for the economy and the local media industry. In fact, according to estimates, GDP and consumption would have increased by around 7% by the end of the year, driven by the expansionist bias of the economic policy and the prevailing favorable terms of trade. However, this strong expansion of local productive activity was again accompanied by an inflationary upsurge that prevented the country from fully capitalizing on the fruits of growth and improving their distribution.

Even so, the re-emergence of aggregate demand along with certain specific events, such as the presidential elections, paved the way for a macroeconomic environment favorable to the industry. A good example of this is the good performance of the industry's main sources of financing.

In fact, advertising investment increased again this year by slightly more than 20%, mostly driven by government's advertising spending in an electoral year, oriented to finance a matrix with a greater share of publicly-owned media. Concerning consumer prices, the increase in the consolidated advertising pie of the several industry segments was virtually similar to the annual 22-23% inflation rate estimated by the public sector. This shows that even though advertising is growing, it does so at lower pace than the economy as a whole (measured in GDP terms), which in 2001 increased by more than 30% in nominal values. Therefore, the traditional multiplier effect it used to have some years ago seems to have vanished.

Unlike most countries in the region, newspapers continued to attract the largest share of advertising in the local market, followed by broadcast TV. The paid television and Internet segments, which in 2010 recovered from the stagnated levels in 2009, expanded again in 2011 in accordance with their potential, even though Argentina's penetration rates are among the highest in the region.

Thus, during 2011 the paid television subscriber base grew at a rate of almost 5%, slightly less than the previous year, reaching approximately 7.6 million users at year-end. Leverage in the growing penetration of additional services (incorporation of high-definition signals to the grid and VOD, among others), which permitted a high level of investment in the expansion of network capacity, had a key role in such performance. It is worth noting that the government's launch of Digital Terrestrial Television did not have a significant impact on the annual net capture of this industry.

Broadband demand grew for the second consecutive year at rates of approximately 20%, becoming increasingly ubiquitous. In fact, by year-end, residential fixed broadband Internet access reached a new record high of over 5 million subscribers in a fiercely competitive environment noted for the promotional offers of its main market players. At the same time, the existence of more than 1.3 million mobile broadband subscribers and the implementation of combined voice and data subscriptions by cell phone companies evidence the complementariness that this technology provides to the market.

In this regard, an emerging and curious phenomenon is the users' ongoing demand for higher speed, mostly as a result of the predominance of video traffic over other traffic and, to a lesser extent, as a result of the increasing number of devices connected to the Internet at home. Naturally, this increased demand for bandwidth per client compels providers to add new capabilities to their networks on an ongoing basis, thus putting the current business models under pressure.

The new media consumption patterns continue to gain ground as new technologies are adopted much faster than projected. In fact, the number of visits to websites with content development continued to increase, particularly news sites, with the newspapers in the top ranks. As a logical consequence, the increased number of readers of digital newspapers, together with the increased offering of news signals on television, helped to reinforce the downward structural trend in the volume of newspaper copies in paper format, also showing that demand for content remains strong, unlike preference for paper format newspapers.

Notwithstanding the above, it is worth noting the current exponential growth of and massive access to social networks, not only as sources of entertainment, but also as sources of multimedia content and recommended information.

Regulatory framework and conditions for the journalistic and media activity during 2011

In addition to the aforementioned and to the comments under Note 15 to the Parent Company Only Financial Statements, during 2011 private media in general and Grupo Clarín in particular continued to face an escalating level of harassment. Such harassment was executed through the official and para-official apparatus, with the clear intention of damaging the media's reputation and directly and indirectly limiting its journalistic activities.

In the framework of this escalation, the government reinforced certain actions that threaten and distort the full effectiveness of freedom of speech and information, such as the exponential increase and discriminatory distribution of official advertising used to create and sustain like-minded media; the discretionary use of public funds and media to generate content and programs related to political propaganda; and the several obstacles and discriminatory conduct in the access to public information.

This discrediting and defamatory strategy was painfully reflected in street banner and graffiti campaigns, banners, balloons, packaging and clothing, in persecution, espionage and phone-tapping actions against media, editors and journalists, and went so far as to include the financing of soccer hooligans arranging banners against the media and members of the judicial branch to be displayed in soccer stadiums and the advertising to be broadcast during the games.

Other tools to exert editorial pressure consisted of abuse of bureaucratic controls or controls by public agencies which took the form of administrative persecutions, groundless arbitrary resolutions, disproportionate tax controls and recurring audits. In this scenario, the government did not hesitate to exert pressure on entities such as the National Antitrust Commission, AFSCA, the Argentine Securities Commission and the Financial Information Unit.

In the audiovisual sector, this offensive against the media (against both, its editorial freedom and its economic sustainability, which guarantees its independence) had as its utmost expression the enactment of the controversial Audiovisual Communication Services Law and its increasingly challenged implementing regulations which clearly exceed the regulatory framework, since they grant powers to the regulatory agency which are not provided for by the law. Some examples of this are: i) the power to intervene in the affairs of the audiovisual broadcasting services on a discretionary basis: whether by revoking licenses or through simple summary proceedings, and ii) by ruling the organization and mandatory content of the programming grid of subscription cable TV services, whereby Cablevisión was imposed over 500 penalties throughout 2011 which are now suspended by a court decision.

The law that gave rise to this unconstitutional implementing regulation continues to be challenged by the judiciary, condemned for infringing constitutional rights, granting broad and discretionary powers over media and content to the Executive Branch, favoring official voices and affecting the sustainability of private media, promoting the elimination of independent signals and establishing dangerous indirect censorship criteria through the arbitrary granting of licenses and the application of penalties, among other controversial aspects.

Since its enactment in October 2009, several court decisions upheld preliminary injunctions which are currently effective, providing for the suspension of the main sections of the broadcasting law; including, but not limited to, section 161 which refers to the conforming regime that sets forth the mandatory divestiture in the term of one year. In spite of the existence and full effectiveness of said court decisions against the law, the government sought to move forward with the implementation thereof in an authoritarian and overwhelming manner. This ratifies all the warnings about the potential danger of editorial control by an enforcement authority that is not independent.

On the other hand, and concerning SECOM's administrative resolution issued in 2010 whereby Fibertel's license was revoked, there are two effective preliminary injunctions that suspend the application of the resolution and challenge its legality.

At the same time, in 2011, the offensive against independent media and free journalism continued to take very diverse forms, including the measures adopted by trade unions related to the government, which repeatedly tried to prevent newspaper and magazine distribution by blockading printing facilities. Several official agencies also sought to control paper, the basic input for newspaper production.

The government's attempt to gain control of the paper industry has intensified, through several administrative and legislative measures that systematically sought to hinder the management of Papel Prensa (Papel Prensa supplies approximately 95% of the Argentine newspapers and the Company indirectly holds a 49% equity interest in that company). The government has tried to interfere with Papel Prensa's business practices and bring legal and administrative actions against it in a threatening and violent environment.

For example, the government filed several motions with the CNV to have Papel Prensa's resolutions declared void for administrative purposes. The CNV also brought several summary proceedings against the Company, its directors and members of the supervisory committee.

On the legislative front, the Congress enacted Law 26,736 which declared a matter of public interest the production and sale of newsprint, violating several constitutional rights and guarantees. The bill was drafted by the National Government with the clear intent of controlling the production and import of this key input for the press, as pointed out and stated by national and regional journalistic associations, opposition leaders and several business sectors. Among other things, the Law created a registry where all newsprint producers, sellers and buyers shall be registered and set limits and established conditions applicable to Papel Prensa for the production and sale of newsprint. This law also contains a series of temporary clauses, specifically and exclusively addressed to Papel Prensa, whereby Papel Prensa is forced to make investments to meet the total national newsprint demand - excluding from this requirement the other existing company that operates in the country with installed capacity to produce this input. The Law also provides for the capitalization of the funds eventually contributed by the Government to finance these investments, contravening public order regulations contained in the Argentine Business Associations Law (Law 19,550), in order to dilute the equity interest of Papel Prensa's private shareholders.

These and other deplorable actions that are not in line with the expected attitude of a democratic government towards the press were part of the challenging scenario in which private and independent media operated in 2011.

THE COMPANY. ORIGIN, EVOLUTION AND PROFILE

Grupo Clarín is the most prominent and diversified media group in Argentina and one of the most important in the Spanish-speaking world. The Company is organized and operates in Argentina and its controlling shareholders and management are Argentine. Grupo Clarín is present in the Argentine printed media, radio, broadcast and cable television, audiovisual production, the printing industry and Internet access. Its leadership in the different media is a competitive advantage that enables Grupo Clarín to generate significant synergies and expand into new markets. Substantially all of Grupo Clarín's assets, operations and clients are located in Argentina, where it generates most of its revenues. The Company also carries out operations at a regional level.

Grupo Clarín and its subsidiaries have 17,200 employees and, by the end of 2011, reached annual consolidated revenues of Ps. 9,753 million.

Grupo Clarín's history dates back to 1945, the year in which Roberto Noble founded the newspaper Clarín of Buenos Aires ("Diario Clarín"), with the goal of becoming a mass-distribution and quality newspaper, privileging information and committing to the comprehensive development of the country. Since 1969, Diario Clarín has been led by his wife, Ernestina Herrera de Noble. It became the flagship national newspaper and has consolidated its position throughout the years thanks to the work of its journalists and the loyalty of its readers. Diario Clarín is now one of the Spanish-language newspapers with the highest circulation in the world.

Grupo Clarín has been one of the main actors in the changes undergone by the media worldwide. It has incorporated new and varied printing activities and decided to embrace technological developments, investing to reach its audiences through new platforms and channels and through new audiovisual and digital languages.

In this way, Grupo Clarín entered the radio and television sectors. Today, it is the owner of one of the two leading broadcast television channels in Argentina (ARTEAR/Canal Trece) and of AM/FM broadcast radio stations. Along with the newspaper, these media are recognized as the most credible and considered leaders of Argentine journalism in one of the most diverse media markets in the world. For example, in Buenos Aires alone, the Company's media compete in a market that has 5 broadcast television stations, 550 radios, and 12 national newspapers.

Grupo Clarín also publishes Olé, the first and only sports daily in Argentina; the free newspaper La Razón and the magazines Ñ, Genios, Jardín de Genios, Pymes and Elle, among other publications. Through CIMECO, the Company holds equity interests in the newspapers La Voz del Interior, Día a Día and Los Andes, in a market of approximately 200 regional and local newspapers. The Company also holds an equity interest in a national news agency (DyN). In the audiovisual arena, the Company also produces one of the 5 cable news signals (Todo Noticias), and the cable television networks Volver and Magazine, among others, sports channels and events (TyC Sports), television series and motion pictures (through Pol-ka, Ideas del Sur and Patagonik).

Another strength lies in its strategic stake in the content distribution sector, through cable television and Internet access. Since the beginning of Multicanal's operations in 1992 and after the recent acquisition of a majority interest in Cablevisión, Grupo Clarín has created one of the largest cable television systems in Latin America in terms of subscribers. In Argentina, Cablevisión is the first among 700 operators and always competes with other cable or satellite options. Also, through Fibertel, it provides high-speed Internet services and has one of the largest subscriber bases in a highly competitive market. In line with the global trend, Grupo Clarín has committed itself to expanding digital content production. Grupo Clarín's Internet portals and sites receive more than half of the visits to Argentine websites.

In 1999 Grupo Clarín was incorporated as an Argentine sociedad anónima, a corporation with limited liability. It gradually opened its capital to other participants and, since October 2007, it is listed on the Buenos Aires Stock Exchange and on the London Stock Exchange. It takes pride in having grown in Argentina, in being a source of influence on a local level in an increasingly transnational market with a size that enables it to compete without losing strength among large international players.

Grupo Clarín's investments in Argentina in the last 20 years have been very significant, always focused on: journalism and the mass media. Its activities have contributed to the creation of an important Argentine cultural industry and generate qualified and genuine employment. Its vision and business model focus on investing, producing, informing and entertaining, preserving Argentine values and identity, and preserving business independence in order to ensure journalistic independence.

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

GRUPO CLARÍN AND ITS BUSINESS SEGMENTS IN 2011

In terms of results, Grupo Clarín and its business segments grew again in 2011 in a highly challenging context. During this year the Company consolidated the positive economic and financial performance trends of the previous years.

Net consolidated sales increased by 27.8%, from Ps. 7,632 million to Ps. 9,753 million. The growth in cable modem Internet access subscribers played a key role in the performance of subscription revenues. Sales of the remainder of the Company's products and services also increased.

By the end of 2011, Grupo Clarín's gross consolidated financial debt (including sellers financing, accrued interest and fair value adjustments) was approximately Ps. 3,217.8 million, while net consolidated debt was approximately Ps. 2,306.4 million, representing an increase of 34.1% and 31.2%, respectively.

The following is a description of the most significant events related to the situation and management of each of Grupo Clarín's business segments during 2011.

CABLE TELEVISION AND INTERNET ACCESS

Grupo Clarín operates, through Cablevisión, one of the main regional integrated cable television and broadband systems. This segment's revenues mainly derive from monthly subscriptions to basic cable television service and high-speed Internet access. To a lesser extent, its revenues also derive from connection and advertising charges, sales of premium and pay-per-view programming, digital packages, DVR, and high definition signal packages (HD) and sales of the magazine "Miradas".

Out of Grupo Clarín's total sales in 2011, the Cable television and Internet access segment was the Company's main revenue driver, with sales of Ps. 6,337 million, taking into consideration intersegment sales.

Regarding the geographic availability of Grupo Clarín's services, by the end of 2011, its network reached approximately 7.3 million Argentine households. Grupo Clarín provides services in the City of Buenos Aires and suburban areas, as well as in the provinces of Buenos Aires, Santa Fe, Entre Ríos, Córdoba, Corrientes, Formosa, Misiones, Salta, Chaco, Neuquén and Río Negro. Regionally, Grupo Clarín also operates in Uruguay and Paraguay.

In terms of subscribers, by the end of the year, the Company's cable television systems had approximately 3,490,300 subscribers in Argentina, Paraguay and Uruguay, and 1,351,107 Internet service subscribers in Argentina and abroad.

Cablevisión's network's backbone consists entirely of fiber optic cable. The bi-directional service network's architecture and the new networks rely on a fiber to service area ("FSA") design, which combines cable network fiber trunks with coaxial cable extensions and permits bi-directional transmission.

By the end of 2011, most of the total homes in Cablevisión's network were passed by its 750Mhz bi-directional broadband. Cablevisión's 750MHz networks enable it to offer services and products that generate additional revenues, such as access to Internet, digital services and premium channels.

Programming, Cable Television and Internet Services

Cablevisión offers subscribers a basic service plan which includes the main programming signals, depending on the capacity of the local network. It offers basic and premium programming from more than 25 providers and broadcast television stations of the City of Buenos Aires. Most of the programming contracts include pricing terms denominated in Argentine Pesos generally linked to the number of subscribers.

By paying an additional fee and renting a digital set-top box, Cablevisión subscribers receive premium packages and pay-per-view programming that include additional movie channels and adult programming, among other products.

Cablevisión is also offering digital services to its subscribers that include a basic digital package, as well as Premium and High Definition (HD) services. Such products are offered in the City of Buenos Aires and its surrounding areas (the "AMBA Region"), in the province of Buenos Aires, Córdoba, Rosario, Mar del Plata, Santa Fe and other cities in the provinces.

Cablevisión has recently launched a high definition signal package (HD) as well as Cablevisión Max HD, state-of-the-art digital set-top units with digital video recorder (DVR). By the end of 2011, Cablevisión had 24 HD signals comprising different genres in order to enhance this product's offering.

In order to increase its brand equity, move forward with innovation and content production to meet client's demands and continue with the development of the digital products launched during 2007, Cablevisión is developing a VOD (Video On Demand) product that allows subscribers to access several content from their TV on demand that features video functions (pause, fast-forward, rewind).

As of December 31, 2011, there were approximately 1,982,400 digital set-top units for Premium service in all of Cablevisión's operational regions (including Uruguay and Paraguay), resulting in a penetration rate of approximately 31% of all subscribers to its basic cable service provided through its digital network. Cablevisión also offers Cablevisión Flex, an optional social service of digital paid television with a reduced subscription, to approximately 500,000 inhabitants of low income neighborhoods.

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

Fibertel is undoubtedly the broadband service that offers the highest speed in the market widely and at competitive prices. One of the main differentiating features of Fibertel's connectivity service lies in the great broadband potential of its services compared to the more limited ADSL connectivity service offered by its main competitors. In September 2011, it launched the 30-mega downstream and 3 mega upstream speed product, Fibertel Evolution, becoming the first Internet provider in the country in selling a product of the new Wideband generation: a new technology that allows clients to surf the web at substantially higher speeds.

As of December 31, 2011, Cablevisión had 1,100,700 subscribers to cable modem Internet access in Argentina and abroad through its own networks, 9,300 subscribers to the dial-up system and 1,600 subscribers to other broadband technologies. Even though Cablevisión has these 3 technologies, its main focus and differentiating feature is cable modem, in which market it has a leading position under the brand Fibertel, being a clear benchmark in its category.

Commercialization and Customer Service

Cablevisión uses several market positioning mechanisms, including promotions, customer service centre locations, newsletters about the company, institutional information and programming through its websites. It advertises in the printing media and over its own broadcasting signals. Cablevisión also publishes a free monthly guide distributed to most of its cable television service subscribers and a monthly magazine called "Miradas", which is sold to a portion of its subscriber base.

Customer service is provided through an integrated service center offering round-the-clock support, with the aim of optimizing the customer relationship. In this regard, it launched Sucursal Virtual, a website that enables its subscribers to interact with the company to follow procedures that were previously carried out through a telephone call or even in person. During 2011, it launched the mobile version allowing access from several web-enabled devices which do not require a PC. This new tool is available in the AMBA region and will become available in new locations in 2012.

Subscriber base turnover rate for the year ended December 31, 2011 was 15.1%, compared to 14.3% recorded in the previous year. During the year ended December 31, 2011, Cablevisión added 132,400 subscribers to its base compared to 164,900 added in 2010.

Competition

Cablevisión competes in the cable television segment against other cable television operators and providers of other television services, including direct, satellite and broadcast services. Given the fact that licenses are granted on a non-exclusive basis, Cablevisión's systems have been frequently subject to overlapping of one or multiple competing cable networks; in addition to the satellite service which is available throughout its extent. Free broadcasting services are currently available to Argentina; in the AMBA region, these services primarily include four private television signals (one of them is controlled by Grupo Clarín) and its local subsidiaries and a national state-owned television signal. Additionally, under a project aimed at implementing the Argentine Terrestrial Digital TV System, the National Government handed out digital set-top units among certain sectors of society that allow free access to certain signals.

The Argentine cable television industry has more than 700 operators. The most significant competitors are Telecentro S.A located in the AMBA region and DIRECTV (DTH technology). Both companies compete against Cablevisión nationwide.

Cablevisión can effectively compete against other providers of cable television services on the basis of a competitive price, a higher number of quality programs and the customer service it renders through its call-center. It also seeks to capture and retain subscribers through customer-service oriented policies.

Two major competitors (Arnet and Speedy) are identified in the high-speed Internet access segment; each of them related to one of the country's two fixed telephony providers. These companies also render 3G services through their brands Personal and Movistar, respectively. Claro, which had already been selling 3G technology, started to offer high-speed Internet services through fiber optics. Therefore, the Internet access segment faces fierce competition comprised by several providers in an ever-growing market.

Strategy

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

PRINTING AND PUBLISHING

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

Out of Grupo Clarín's total sales in 2011, the printing and publishing segment accounted for Ps. 2,159 million, taking into consideration intersegment sales. This segment derives revenues primarily from the sale of advertising, copies of newspapers and magazines and optional products.

Arte Gráfico Editorial Argentino

AGEA publishes Clarín, the flagship Argentine newspaper and one of the most important in terms of circulation in the Spanish-speaking world, Olé, founded in 1996, the first and only sports newspaper of its kind in the Argentine market, the free newspaper La Razón and the newspaper MUY launched in 2011. It also publishes the magazines Genios and Jardín de Genios with a high penetration rate in the schoolchildren's segment; the magazine Elle; Ñ, a cultural magazine that reflects all cultural news and trends; Revista Pymes, aimed at small and medium-sized entrepreneurs; and Diario de Arquitectura, aimed at the construction sector, architects and designers.

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

AGEA leads the online classified advertising market through its vertical sites: Autos, Inmuebles, Empleos, and has a leading position in the Internet content market through its websites Clarin.com, Olé.com.ar, revistaenie.clarin.com, and ieco.com, among others. Through its subsidiary and controlled company, Tinta Fresca Ediciones S.A., the Company is engaged in the textbook editorial market.

Diario Clarín

With a long-standing journalistic and commercial leadership consolidated in its 65-year track-record, Clarín is the most prominent Argentine newspaper in terms of outreach, influence, circulation and advertising.

The success of its prestigious editorial line lies in its identification with the needs and emotions of its audience through a plural and independent journalistic style that enables the most diverse opinions. Clarín's approach to reality is in tune with its audience, supporting this bond with the responsibility and credibility that characterizes its journalists. Its extensive and thorough investigations, approaches and analyses are conveyed in clear and direct language, providing its readers with easy access to the different sections and issues.

During 2011, its daily circulation reached almost 288,000 copies, a volume 1.7 times higher than its closest competitor. On Sundays, over 595,000 copies are sold, which places it among the major Sunday newspapers of the world. According to the Newspaper and Magazine Circulation Verification Institute ("IVC"), in 2011, Clarín had a 44% share of the newspaper market in the City of Buenos Aires and the province of Buenos Aires and an 11% share in the provinces. On a national level, it had a 27% market share.

Given its broad circulation and reach to all social classes, Dario Clarín leads the print media market. It is ranked first in terms of advertising revenues, sold advertising space and also leads in all advertising categories (display, special section and classified ads). In 2011 Diario Clarín's advertising sales reached Ps. 858 million, a 10% increase compared to the previous year.

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

Also this year, Grupo Clarín's journalists and media once again received prestigious awards and acknowledgments. In 2011, Clarín.com received again the Rey de España award, the most important recognition to the Spanish-speaking press. In the category "best approach over the Internet", in the same way as in 2010 Clarín.com won the Rey de España award for "Ruta 66", a multimedia special production by Maria Arce and Paula Lugones, this year the price was awarded to an interactive infographic on the historical trial referred to as Juicio a las Juntas (the legal action brought against the first three military junta). A team led by Pablo Loscri, from Clarín's Arts and Infographics Department, did an amazing job in reconstructing each and every instance of the historical trial against the military junta in a multimedia special site at Clarín.com.

In 2011, Diario Clarín offered outstanding promotions that increased interaction with readers, among them, the sixth edition of the game "El Gran DT". With over 8 million unique users, more than 40 million visits, almost 500 million page views, an average time on site of 10:21 minutes and visits from over 140 countries, www.grandt.com.ar continues to be a massive and one of the most important pieces of entertainment in Argentina. Among the year's milestones, in April 2011, the economic supplement iEco launched the second optional "Series Pocket Mentor", a collectible product, jointly with the Harvard Business Review. Diario de Arquitectura continued to launch high-quality collectible products, such as, "Nueva Arquitectura Argentina" and "Maquetas de Arquitectura". During the year, Clarín announced the latest winners of the ARQ award which recognizes the best Argentine architectural work of the last five years on a regional basis. The contest awards the best architectural projects in each region and will have a final winner nationwide.

The Company continued to offer 10 regional supplements which are published every Thursday at an additional per copy price of Ps. 0.50, with almost full coverage in the Province of Buenos Aires. The Company also published two regional supplements on a monthly basis (Pilar and Moreno-Luján-Gral. Rodriguez) distributed for free. In December, the company launched "Anuario 2011", a special edition featuring the most important events of the year in the regional newspapers. In April 2011, the Company introduced the sports regional supplements Norte, Oeste and Sur which are published on a weekly basis.

As to sports, in addition to the game El Gran DT, in 2011 special supplements were published covering prominent events such as the Dakar Rally, the America Cup, the Davis Cup, the ATP de Buenos Aires Tournament and the Rugby World Cup in New Zealand. Diario Clarín also published the traditional products and special football tournament guides. Diario Clarín's newsroom continued to work closely with the newsroom of Clarin.com Deportes, producing multimedia content and sharing knowledge, which enriched news coverage and content.

Diario Clarín also continued to build upon the achievements attained by the cultural magazine Ñ, reaching average sales of 41,000 copies per issue. During the year, several initiatives were carried out, aimed at engaging readers through the launching of collectible products, the creation and sponsorship of forums comprising different cultural issues and involvement in and sponsorship of major cultural events. "Biblioteca Patricia Highsmith", "El boom antes del boom" and "Grandes maestros del jazz" are the most outstanding collectible products. On June 25, Revista Ñ distributed "Sábato textual" together with its monthly issue. This is a free supplement which, on occasion of the newspaper's 100th anniversary, makes a historical account of its lines of thought, through columns, articles and interviews published at Clarín throughout the decades.

In its seventh year, Revista Pymes, continued to strengthen its growth. During 2012, it published the collectible product "Comunicación y ventas".

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

The highlights were: Aventuras de Películas de Disney; Superman; Los secretos del gran asador 2011; Libros bilingües Inglés -Español; Prehistoria; Enciclopedia Clarín del Estudiante Mundo Actual; El gran libro Clarín del Tejido; Libros Imprescindibles para el colegio; Grandes Fotógrafos de National Geographic; Historia de las elecciones Argentinas; Grandes pinturas del Museo Nacional de Bellas Artes; Enciclopedia de los animales y la naturaleza National Geographic; Activity Disney; Novela Gráfica; Colección Messi; El gran libro Clarín de la Moda; El gran libro Clarín de las Pizzas; Crochet; El gran Libro Clarín del Embarazo; El Gran Libro de la Belleza Clarín 2011; Viaje al corazón y viaje al cerebro; Cocina familiar rica y divertida por Jimena Monteverde; Las aventuras de Hijitus; Animales en acción; Grandes Museos de Europa; El Gran libro Clarín de la Decoración 2011; Guía para conocerte más y mejor.

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

Clarín organized new editions of its renowned Clarín Awards, honoring its strong commitment to the promotion of Argentina's best in the cultural and sports fields. To this effect, the 13th consecutive "Premio Clarín de Novela" ceremony was held, where Luis Lozano was awarded for his novel "Lloverá sobre nosotros". The novel was published by Clarín-Alfaguara and the author won Ps. 150,000.

Clarin.com is a news and opinion portal with updates in real time and free access on a 365/24/7 basis, which has been online since 1996. In addition to the full version of the printed newspaper and its archive, Clarin.com features ongoing updates of news produced and published by its own journalists. During 2011, Clarin.com received a total of 138 million unique visits, with a monthly average of 11.5 million. During 2011, Ole.com received an average of 7.7million unique visits.

Other Newspapers

La Razón, the first-ever free distribution newspaper, is distributed in all subway and train lines in the City of Buenos Aires, as well as in bars and in highway tollbooths within Buenos Aires. Building upon the concept that "La Razón is a travelling companion", as it does every summer, the newspaper sent copies throughout the season to Mar del Plata, Pinamar and Villa Gesell.

After thirteen years of existence and with an average daily circulation of 45,000 copies, Olé, the first and only Argentine sports newspaper, continues to consolidate its market positioning. It is the fourth largest newspaper in Buenos Aires in terms of circulation. Since its inception, it has revolutionized reading habits and managed to attract not only sports fans, but also a new generation of young readers, offering advertisers an opportunity to reach a specific market.

During 2011, La Razón discontinued Neuquén's and Saturday's editions. It also launched the 8-page weekly supplement "Suplemento Semanal Cultural de la Ciudad".

In May, Clarín launched MUY, a dynamic, visually designed and entertaining newspaper, which features news in addition to regional pages and sports and show business sections. With a "TV-format" design, the newspaper summarizes the most resounding police cases and breaking news on soccer clubs and celebrities.

Magazines

In 2011 the Company continued to issue the magazine Genios, which has 13 years in the Argentine market. With the children and school in mind, this magazine was created with the aim of integrating content for children, parents, school and society, combining education with entertainment. Since it was launched in March 1998, it has led the children's magazine segment. Its editorial offering is always updated at the beginning of each academic year, presenting new sections, updated school materials and collectible books prepared by experts. During 2011, Genios consolidated its efforts in the website genios.com.ar and collectible products, such as, Mis proyectos escolares and Aventuras de película de Disney, among others.

Jardín de Genios is the monthly publication aimed not only at pre-school children and those attending the first years of primary school, but also at parents and teachers. In its annual launch, it published the magazine "Edición de Oro", with more pages and a square-shaped spine, and the supplement "Guía para Padres", that came with a free kindergarten backpack. The magazine also presented the first book of the new collectible "La Casa de Mickey Mouse", which became a best-seller.

During 2011, "Tiki Tiki", a magazine aimed at children aged 8 through 14 and adolescents, continued to strengthen its position. In April, the magazine launched special editions, such as, Soy leyenda, XL del fútbol Argentino con anteojos 3D and collectible products, such as, Figus Virtuales and Tikifigus, among others.

The magazine Elle reaffirmed its leadership in the high-end advertisers segment. In 2011, its circulation reached a monthly average of 32,000 copies. In May and October, the company also published the magazine Elle Decoración.

The bi-monthly magazine Clarín Rural Revista continued to strengthen its position as a management tool for the productive sector with all the solutions and technologies aimed at agricultural businesses.

Also in 2011 the company continued to publish the monthly magazine-catalogue, Shop & Co, which includes discount coupons on important brands.

Tinta Fresca

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

In 2011, Tinta Fresca continued to improve its market position. Tinta Fresca strengthened its editorial offering with the launch of the series "Colorín Colorado 1, 2 y 3"; and the series "Matemática 1, 2, 3 y 7" featuring Sendra's drawings, which completed the series "Matemática 4, 5 y 6" launched in 2008. In line with school manuals, Tinta Fresca launched the series "Quiero aprender 4, 5 y 6" which features the character Gaturro created by caricaturist Nik. It also launched collectible products, such as, "Efemérides" and "El gran libro de la práctica docente", among several other value added projects.

As an outstanding and special contribution to society, the Company made available at Clarín.com a digital and free version of "Diccionario integral del español de la Argentina", released in April 2011. Users may easily check the full educational and cultural quality content of the dictionary.

Artes Gráficas Rioplantense

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

In 2011, AGR retained its leading position in the sector with net sales of Ps. 266 million. The company continued to exploit one of its main strengths: its participation in the entire value chain of the printing industry, which enables it to offer comprehensive customer service, including drafting, prepress, variable printing, offset printing, finishing and distribution. AGR strengthened its presence in the foreign market, where sales reached Ps. 6.5 million.

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

UNIR S.A. ("Unir") is a company engaged in wholesale mail reception, classification, transportation, distribution and delivery services. As from August 25, 2008, AGEA holds a 93.41 % direct controlling interest in Unir. In 2011, Unir totaled sales of Ps. 60 million, a 39% increase compared to the previous year.

During the year and as stated in Note 9.1.f to the Financial Statements, the Company acquired an equity interest in Cúspide Libros S.A. through AGR. Through this acquisition, it launched Librocity.com, the on-line book store of Grupo Clarín, in partnership with the retail bookstore chain Cúspide. The book store features a broad and assorted catalogue and an advanced search engine. The site offers several payment methods and payment against delivery.

CIMECO

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

Diario Los Andes was able to maintain its leadership in the province with special publications, events and special supplements. It continued to develop its loyalty program Los Andes Pass, retaining a 62% of the province's newspaper circulation and gaining a42% share in the total advertising market of the province.

La Voz del Interior, a 106-year old newspaper, has a strong presence in the province of Cordoba. Its circulation levels remained steady during 2011, with a remarkable increase in the sale of optional products and very good revenues performance in the Internet and other digital businesses. Also during the year, CIMECO launched "La Voz 365", a subscription and loyalty plan that offers a reward card for subscribers. In editorial terms, CIMECO continued to move forward with the convergence process started in 2008. The progress made translated into a significant increase in the number of unique users in La Voz network, which by the end of 2011 exceeded the 3 million mark per month, whereas the site VOS.com.ar hit the 1 million users mark in January 2012. The opening to social networks and, in general terms, to a dialogue with the audiences were other important highlights.

During 2011, Comercializadora De Medios Del Interior SA (CMI), a subsidiary engaged in the sale of advertising, consolidated its digital business units and increased to 24 the number of commercialized web sites and strengthened its share in the total advertising pie.

After more than eight years in the market, the magazine Rumbos has remained the Sunday's magazine with strongest presence in the provinces and is distributed together with the main newspapers, including, La Voz del Interior, Diario Los Andes, El Diario de Paraná, Época de Corrientes and El Liberal de Santiago del Estero.

Papel Prensa

Papel Prensa is the first producer of newsprint that is wholly owned by Argentine capital. It began its operations in 1978 and is currently the largest Argentine producer of newsprint, with an annual production capacity of approximately 170,000 tons. As of December 31, 2011, the shareholders of Papel Prensa were AGEA (37%), CIMECO (12%), S.A. La Nación (22.5%), the Argentine federal government (27.5%), and other minor investors (1%).

Papel Prensa has implemented production policies based on the procurement of strategic inputs without contributing to the depletion of natural resources. To this end, the paper mill recovers raw materials from the recycling of returned newspapers, instead of using virgin fiber. In 2011, Papel Prensa sold 167,265 tons of newsprint.

Ferias y Exposiciones Argentinas

One of the main activities of Ferias y Exposiciones Argentinas is the organization of Caminos y Sabores, an exhibition intended to foster Argentina's gastronomy and handicrafts and promoting the region's most important tourist destinations. In 2011, Caminos y Sabores partnered with 80 small producers from different regions of the country who introduced their products in the city of Mar del Plata, thus becoming the first exhibition held out of the city Buenos Aires. This achievement coupled with the results from previous editions encouraged the company to double the site surface where the traditional exhibition is held in Buenos Aires to 18,000 square meters, with 400 expositors and 100,000 visitors. After the 5-day event held in September, Caminos y Sabores consolidated as Argentina's largest fair exhibiting typical food, crafts and tourism.

In 2010, the Company also held the seminar ADMITE in Venado Tuerto, province of Santa Fe, and offered courses given by renowned professors of the agricultural sector, with training in technology and machinery.

In 2007, AGEA entered into an agreement with S.A. La Nación for the organization of Expoagro, a new agro-industrial fair, improving the results that had been obtained until then by Feriagro, and achieving a record-high number of exhibitors. In 2011, the exhibition, held from March 2 through March 5 in Corredor Productivo Baradero - San Pedro, was a success and received more than 123,000 visitors.

BROADCASTING AND PROGRAMMING

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

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

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

Out of Grupo Clarín's total sales in 2011, the broadcasting and programming segment accounted for Ps. 1,464 million, taking into consideration intersegment sales.

Artear

Amidst a scenario marked by industry challenges and strong competition, Artear was able to achieve its goals in 2011. Its share of the traditional advertising market of broadcast television reached 33%.

In 2011, Canal Trece was the leading channel overall in broadcast TV. Since 2006 Canal Trece had been leading only the Prime Time, where most advertising revenues are concentrated. It achieved such leadership with 10.5 rating points from Monday through Sunday from 12:00 PM through 12:00 AM, against 9.5 rating points achieved by its closest competitor. Canal Trece had an overall average of 16% and a share of over 40% at Prime Time. Its professionalism, artistic quality, innovative proposals and technological developments continue to distinguish it as the most prominent audiovisual medium in the market.

As far as its programming is concerned, during 2011 Canal Trece combined fiction, information and entertainment in a diversified offering which places it not only as the general audience leader, but also as leader at high and middle socioeconomic levels, allowing it to reach highly demanded targets and, therefore, to lead the advertising market.

"Herederos de una Venganza", "Show Match", "Los Unicos" and "El Puntero" led audience ratings. As regards news programs, "Arriba Argentinos" continued to consolidate its morning audience rating. Canal Trece's news programs -"El Noticiero de Santo", "Telenoche" and "En Síntesis"- further validated their already existing recognition and credibility with audience ratings that led their respective time slots.

With respect to cable television channels, TN achieved the highest audience share throughout the year across all time slots. On several occasions, it outperformed broadcast stations. Several talk shows stood out, such as "El Juego Limpio", "Palabras más, Palabras menos", "Código Político", "Desde el Llano", "Argentina para Armar", "Otro tema" and "A Dos Voces".

Artear further strengthened its TV slots, seeking to offer diverse options in terms of information and entertainment.  TheSpanish language music channel "Quiero Música en mi Idioma" was quick to lead audience ratings in the music genre. "Volver" continued to offer the best of classic and vintage Argentine films and television shows and reaffirmed its role as a 100% national channel that preserves our history with the highest technology. Magazine and Metro, general interest cable channels, continued to develop their programming criteria through thematic modules and standardized broadcasting. Canal Trece Satelital, Canal Trece de Buenos Aires channel, continued to focus on local productions and on including a significant number of in-house national productions in its programming.

During 2011, the most prominent show business and general interest events were broadcast, such as, U2, Alejandro Sanz, Shakira, Joaquín Sabina, Justin Bieber and Rod Stewart concerts, among others; as well as the 20th edition of the traditional campaign "Un Sol para los chicos, aimed at raising funds for UNICEF, held at Luna Park.

Committed to being always at the frontline and with a view to permanently improve quality image, on May 16, 2011, Canal Trece started to broadcast in High Definition through "El Trece HD" (Signal 619 in Cablevisión's grid), and has since become the first broadcast signal in producing all of its content in High Definition. This success is the result of intensive investment in equipment and professional training. El Trece had been the first signal in piloting a high-definition system since September 25, 1998 and used it uninterruptedly since 2000 through 2009.

Artear continued to produce fictional content for TV series and motion pictures through Pol-Ka, Ideas del Sur and Patagonik Film Group. "Herederos de una Venganza", "Los únicos" and "El puntero" are the highlights in fiction production that led audience rating. Pol-ka became the first national producer in producing all of its programming in high definition (HD).

In addition, the Company focused significant efforts aimed at developing activities related to the commercialization, organization and broadcast of sports events through TyC Sports, mainly football and motor racing.

Radio Mitre

In 2011, AM Mitre 790 reaffirmed its track record and consolidated its second place in the ranking of audience share during the entire year, reaching an audience share of 18 points.

The radio talk show "Primera Mañana", hosted by Nelson Castro with a group of prestigious columnists, stood out among Radio Mitre's programming. "Hola Chiche", hosted by Chiche Gelblung, continued to renew the morning slot with a lineup that combines journalism, general news coverage and enjoyable and smart humor.

In the afternoon slot, Radio Mitre continued with programs that have strong journalistic content, such as "El Club de la tarde" hosted by Ernesto Tenembaum, "La Otra Pata", hosted by Marcelo Zlotogwiazda, and "Lo que queda del día", hosted by Horacio Caride.

La 100 consolidates its leadership in the FM radio segment, with an entertaining, smart and innovative proposal based on programs led by famous artists and good music. By year-end, La 100 led the audience share with growth in almost all of its programs. In 2011, the shows "El Show de la Noticia", hosted by Roberto Pettinato in his eighth season, and "Lalo por hecho", hosted by Lalo Mir, stood out once again. To further consolidate its bond with listeners, the radio station continued to organize acoustic concerts and on-location broadcasts from its mobile studio, featuring highly-acclaimed national and international artists.

Finally, of remarkable note is the growth experienced by Cienradios.com.ar, a site that was conceived as an extension of our brands to the web that now stand on their own. It entails the development of an infinite concept of the dial and is unique in Latin America. The user may choose among a wide offering of broadcast radio stations and other stations, specially designed for the Internet with segmentations of singers, bands, music from different decades, the music presented by the FM radio station hosts, folklore, tango, romantic music and other rhythms.

During 2011, the presence of Mitre AM 810 was also consolidated in the province of Córdoba as the second radio with the highest audience share. With a permanent staff in the city and its own news service, Mitre AM 810 developed comprehensive coverage of news comprising Córdoba, Argentina and the world.

DIGITAL CONTENT AND OTHER

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

Out of Grupo Clarín's total sales in 2011, this segment accounted for Ps. 283 million, taking into consideration intersegment sales.

Digital Content

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

Given the fact that, in line with the corporate strategy, the exploitation of Clarín and Ole websites that were previously operated by Grupo Clarín was transferred to another company, goals have been redefined in order to strengthen the positioning of other sites, such as, Todo Noticias, Cienradios, Ciudad and EltreceTV in terms of traffic and revenues.

TN.com.ar, the website of Todo Noticias developed by CMD, registered amazing audience share growth at year-end. The site consolidated as the most visited website related to a TV signal and was also the news site that experienced strongest growth. One of the turning points was the overall redesign of the site in May 2011.

During the year, Interpatagonia SA, a company where CMD holds an 80% equity interest, managed to consolidate its website Welcomeargentina.com, winner of the Mate.ar golden award to the best website in 2011.

At the same time, Club Cupón, the on-line discount site completed its first year of operation. The Company also operated other e-business sites, such as, Confronte and Mas Oportunidades, and contextual adverting sites under the iAvisos brand.

Also in 2011, through Clawi SA, a company where CMD holds a 51% equity interest, Grupo Clarín managed to enter the Spanish market with the on-line game Mundo Gaturro, and moved forward with its international expansion process. Mundo Gaturro already has 3 million registered users.

Concerning launches, CMD entered the direct sale market through its brand Mr. Sale and experienced sustained growth throughout the year, both in terms of variety of items for sale and sales volume. Through its brand Yuisy, CMD launched Rolling Ranch, the first videogame fully developed by CMD that features 80 levels and HD imaging, and is supported by Iphone, Ipad and Ipod. CMD also launched the videogame Halloween Hunter, available for all Apple mobile devices.

Other Services

Through GCGC, Grupo Clarín renders specialized-process outsourcing services to medium and large companies. The services rendered, which include payroll management and processing and implementation of related processes, as well as human resources management, are oriented to optimize quality and provide innovative management tools.

During 2011, total sales increased by 20% compared to the previous year. The company continues to bolster the services offered, increasingly focusing on a customer-driven approach, as well as on strengthening improvement processes.

GRUPO CLARÍN AND ITS CORPORATE SOCIAL RESPONSIBILITY

OUR COMMITMENT

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

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

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

TRANSPARENCY, STANDARDS AND GUIDELINES

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

Grupo Clarín also participates in several groups and organizations, which gather other Argentine, Latin-American and global media players and stakeholders to share experiences, identify best practices, and foster cooperation on the specific issues that media companies address as part of their social responsibility strategies. During 2011, the Noble Foundation renewed its presence in the "Grupo de Fundaciones y Empresas", a space to share knowledge and set standards in the field of strategic social investment.

During the period of 2009-2012, Grupo Clarín committed its participation and contributed to the multi-stakeholder development of the Media Sector Supplement for the Global Reporting Initiative. The GRI guidelines act as a reference for an extensive process, currently underway at the Company, to further consolidate, identify and report relevant information regarding the environmental and social impacts, while establishing new goals to strengthen its related initiatives and strategy.

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

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

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

As the previous years, 2011 proved to be a specially challenging year for freedom of expression in Argentina. The Company supported numerous initiatives to create awareness on the subject and demonstrated its sustained commitment to defending and promoting it.

Presently, most media in Argentina are either state-owned or a significant portion of their income directly depends on the increasing government advertising expenditure. Those are adverse conditions that can often pose a threat for journalistic independence, freedom of expression, access to information and plurality of voices, all vital conditions for a sustainable and democratic society. Therefore, the Company pays special attention to guaranteeing its economic independence by pursuing a sustainable business model with diversified sources of income.

During this period, as historically, Grupo Clarín's revenues from government advertising have only represented around 1% of the Company's total income.

In furtherance of transparency, the following table, included in the Company's 4Q & 2011 Earnings Release, shows the sales breakdown by source of revenue as a total figure and by business segment.

Sales breakdown by source of revenue - December 2011

(In millions of Ps.)

PEOPLE'S VOICES

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

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

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

The Company also pays special attention to giving voice to small or underserved communities and providing for the development of local content. Cablevisión and Artear are working together to gradually renew local TV channels and newscasts in several cities in Argentina. The program takes into consideration access to local information and culture, while providing them with state-of-the-art technology and training.

SOCIAL AND SUSTAINABILITY COVERAGE

To better assess the influence the media can have on different audiences, Grupo Clarín establishes goals to ensure the quality and pluralism of its content. Grupo Clarín's newspapers and television newscasts have a long and highly praised record in investigative reporting, and provide comprehensive news coverage and insightful pieces on relevant social and environmental issues. Reflecting the diversity of society through its news coverage and entertainment content lies in the core of its unique capacity to engage with audiences and readers.

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

During 2011, the Company´s media paid special attention to issues related to climate change and the environment.

Radio Mitre, its main broadcasting radio station, combined 24 hour coverage of these issues through an environment specialized journalist and a campaign to promote people's involvement.

The newspaper La Razón launched the monthly supplement Gestión Sustentable (Sustainable Management) to promote awareness about the most prominent issues of the sustainable development global agenda and to report on social and environmental responsibility actions carried out by companies and organizations of the civil society.

Among the most significant initiatives, the Company started to work in association with Vida Silvestre, Farn, Greenpeace and other 7 environmental organizations from Argentina or with active presence in the country to develop a collectible named Salvemos Nuestra Tierra (Let's save our planet) published together with Diario Clarín in March 2012. The product seeks to raise awareness on major environmental issues and their potential solutions, while offering a guide to learn how to help the planet and activities to work at school or at home.

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

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

During 2011, NGO Periodismo Social and Austral University produced an independent report on television news coverage regarding childhood in Argentina. Telenoche, the Company's main newscast and leader in terms of audience, was identified as the one that allocated more space to news and information regarding children and youth, reaching 32,4% of their total coverage. Also, the report concluded that more than 54% of the sources referred were children and their families.

This relates to an initiative that the Company launched in 2009 by which is breaking new ground in Argentina: an ambitious training program oriented to audiovisual journalists, that seeks to achieve excellence and raise awareness of the particular features of the main social topics in order to promote responsible coverage in the news. In its initial stages, the project involved training for journalists who work on newscasts related to Cablevisión and Artear, mainly in the interior of the country and reaching most coverage areas.

Recognizing the importance of reflecting diversity, promoting social justice, protecting youth, encouraging minority recognition and preventing racial and gender discrimination, the company is already moving ahead in its goal for the next period to continue to offer training for its journalists. During the first semester of 2012, several workshops are being held directed at journalists, editors, anchors, cameramen and other television professionals from the Company's main air and cable TV channels to improve coverage and create awareness on these issues.

PROMOTING INVOLVEMENT

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

Grupo Clarín's different media companies also endorse several initiatives promoting people's involvement in democracy and responsible citizen control of their representatives' acts and decisions.

Through Artear, the Company set out once more to promote values such as solidarity and community involvement. Thus, it created "Abanderados de la Argentina Solidaria", an award that recognizes the otherwise silent labor of social entrepreneurs and community leaders, by divulging valuable and replicable initiatives that advance social transformation. The initiative is supported by Ashoka and a remarkable panel comprised by outstanding people from the social, academic and cultural sectors. In its second edition in 2011, the award was granted to Leila Abdala, president of Minka foundation, an organization dedicated to the inclusion of people with disabilities in the province of Tucumán. Also, during the year, special news reports and tributes were aired regarding late Sigfrido Moroder, a catholic priest that transformed the lives of the aboriginal community of Quebrada del Toro, in the province of Salta, and that had won the first award.

In 2011, Clarín supported the first edition of Expo Solidaria, an event that under the motto "helping the helpers" convened more than 170 NGOs from different regions of the country, and showed the public the daily efforts made by thousands of persons committed to helping children and teenagers.

In May, Genios magazine launched "Te Abrigo", its first institutional campaign aimed at restoring the value of collective construction. The magazine invited families and homes from the country to knit square woolen pieces that were then assembled by Red Solidaria volunteers and distributed among the homeless. The families donated more than 60,000 woolen squares that were used to make 1,400 blankets.

During 2011, Clarín renewed its partnership with Missing Children and Red Solidaria to publish photographs of missing children in La Razón newspaper and raise awareness about the role of the community in dealing with this problem. The Company also helped to broadcast the events held to remember and create awareness in relation to the anniversary of the terrorist bombing of the AMIA.

Grupo Clarín also provided renewed support to the traditional campaign "Un sol para los chicos", together with Artear and UNICEF. The campaign reached in 2011 its 20th edition, and promotes private social investment -still lower in Argentina and Latin America compared to the US and Europe- and is one of the key sources of income for UNICEF in the country.

COMMUNITY ENGAGEMENT AND SOCIAL ADVERTISING

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

In terms of social advertising, during 2011, through the Noble Foundation and several of its media companies, Grupo Clarín contributed with advertising time and space to promote social, civic and environment related causes, through its own programs or within strategic alliances with renowned NGOs. During 2011, the amount of air time in broadcast television and radio donated reached 278 thousand seconds, which represents a figure of more than Ps.15 million.

The impact made by these and other specific contributions to projects and campaigns by other subsidiaries can be added to the 2.2 million pesos budget of the Noble Foundation for the 10/11 period, and the 3,2 million pesos represented by the donations of connectivity services. Nevertheless, the total figure cannot be yet estimated at a group level since information collection systems are being set in place to be able to provide detail.

As well as contributing with its own funding, knowhow and expertise, Grupo Clarín aims to leverage support from others by seeking matching funding and regular donations from individuals and partner organizations for supported initiatives.

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

During 2011, the Company strived to further contribute to the improvement of social advertising and communication skills in civil society organizations. One of the ways to engage this issue involved increasing the scale and impact of "Segundos para Todos", an advertising contest for NGOs organized by Cablevisión, which combined broadcasting spots with coaching sessions in Buenos Aires, Córdoba, Santa Fe, Salta and Neuquén. During 2011, the company continued to invest in the TV program "Segundos para todos TV", that reflected their outreach to the community and focused on public interest topics.

An additional issue in which Grupo Clarín has a sustained and strategic commitment is in reducing the digital divide and promoting digital inclusion. This is addressed by raising awareness through news coverage and TV programs in different media outlets. Also during 2011, Cablevisión extended its free cable TV and Internet access connections program to a growing number of schools, hospitals and other institutions, reaching almost 19 thousand connections by the end of the year. This represents an annual contribution of approximately Ps.3.2 million, and is completed with specific programs such as a "social fee" for low income neighborhoods.

FOSTERING EDUCATION AND CULTURE

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

Also, the company created Voz Activa, a publishing house that recently launched the first Dictionary ever published that is entirely focused in the Spanish language spoken in Argentina. This historic contribution to culture and education was widely acknowledged by academics and society in general.

For the eleventh consecutive year, the Company successfully organized the campaign entitled "Digamos Presente", an initiative focused on education involvement and rural education, together with APAER, Red Solidaria, Cimientos Foundation and in alliance with Telecom.

Among the main alliances are specific initiatives such as the public-private project entitled "Escuelas del Bicentenario" (Bicentennial Schools). This project seeks to assist public elementary schools to which children in vulnerable social circumstances attend throughout the country, and to contribute to public policy, by developing scalable, sustainable and replicable school improvement mechanisms. Another alliance is the program "Potenciar Comunidades Rurales" (Empowering Rural Communities) carried out to support several local development projects in certain provincial communities.

One of the most important initiatives generated from a collective effort is the "Premio Clarín-Zurich a la Educación" (Education Awards). The third edition recognized the best projects aimed at improving the quality of natural sciences teaching. For the next period it will select the best project in the field of mathematics.

During this period, through the Noble Foundation, the Company continued to offer donations of bibliographical material, and renewed its long time support of several schools which carry the name of the Clarín's founder, Roberto Noble ('Escuelas Roberto Noble').

Noble Foundations' educational donations

2011 2010 2009 YoY

Books 53,406 63,542 40,589 -15.95%

Magazines 6,625 4,160 7,066 59.25%

Booklets 260 550 837 -52.73%

Again this year, the Company sponsored the annual Maratón de Lectura (Reading Marathon) initiative, organized by Fundación Leer with the participation of 3,500,000 children. The event received the donation of books published by Clarín and the initiative was promoted through a wide range advertising campaign.

Likewise, the cultural commitment was renewed through several sponsorships, reaffirming Grupo Clarín and its subsidiaries' presence in important events, such as the National Book Fair, Expo Trastiendas, Arte Clásica, Fundación PROA, Arte BA, Teatro Colón, Festival de Otoño, Usuahia's Festival of classical music, the World Tango Festival, the Mozart Fest and Festivalito, among others. Grupo Clarín also supported the presentations of Iñaki Urlezaga and Trío Argentino, the theater performance of "Arturo Illia", a play starred by Luis Brandoni, as well as the launch of Teatro Maipo's season presenting "El último tour" by Eleonora Cassano and the play "The War of the Roses" and motion pictures such as "El gato desaparece", "Viudas" and "Vaquero".

The Company also supported the annual award "Premio Clarín de Novela" and "Premio Clarín de Cuentos" and the first edition of the literature program "Primavera Independiente" at Victoria Ocampo's residence in San Isidro.

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

MEDIA LITERACY AND PROTECTION OF YOUNG AUDIENCES

Media has an increasing role in society and especially in the lives of young people. Through several programs, the Company encourages them to develop tools to access media through critical analysis and to take advantage of opportunities presented by media to explore their identities, creatively express their thoughts and opinions, and amplify their voices.

Media Literacy is generally defined as the ability to access, analyze, critically respond and benefit from the different type of media. Grupo Clarín´s main tool for fostering media literacy is "Los medios de comunicación y la educación" ('Education and Media'), a leading and recognized program that has been in place for nearly 30 years. One of the main activities of the Noble Foundation in 2011 was that of renewing the program, which consists of workshops and booklets for teachers and students to promote a critical approach to the media and to utilize them as complementary resources in education.

"Education and the Media" Program

2011 2010 2009 YoY

Teachers' workshops: 100 169 111 -40.83%

Students' workshops: 525 581 553 -9.64%

These programs are supplemented through other initiatives regarding the promotion of responsible content consumption. Through the Noble Foundation, Grupo Clarín renewed the presence and coordination of the media section at the "Museo de los Niños" (Children's Museum), and continued to promote visits to its printing facilities. During 2011, 13,452 people (mainly students) had the opportunity to see firsthand what goes on behind the news production and distribution process.

Within its Cable TV and Internet access segment, the Company contributes with the protection of young vulnerable audiences, providing tools for parents to keep children from accessing sensitive or age inappropriate programming. This includes several parental control options in Cable TV service and equipment, in addition to guidance tips, awareness campaigns and tools for web access restrictions.

On the other side of the screen, children artistic participation in television and films also requires a responsible approach. The Company complies with all regulations and self-imposed guidelines by setting limited time schedules and engaging with parents and tutors.

EXCELLENCE IN JOURNALISM

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

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

In this sense, the Company sponsored the achievements (both at the institutional level and through journalistic content) of the Graduate Course in Scientific, Medical and Environmental Communication. This program is organized by the University Pompeu Fabra in Barcelona, together with the Leloir Institute and the cable station Todo Noticias (TN).

Another highlight in this area was the launch during 2011 of the Graduate Program in Digital Journalism organized by the University Pompeu Fabra and TN.com.ar.

OUR PEOPLE

Grupo Clarín's success and leadership is mostly the result of the efforts, talent, professionalism and creativity of its people.

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

Total Employees 2011 2010 2009 YoY

17,200 16,277 15,522 5.67%

Distribution of company

employees by category: 2011 2010 2009 YoY 

Management 248 280 246 -11.43%

Middle management 2,403 2,132 2,075 12.71%

Junior management,

administration and commercial 2,513 3,706 3,538 -32.19%*

Qualified technical personnel 6,988 6,782 6,174 3.04%

Journalists 1,357 N/A* N/A* N/A*

Others 3, 691 3,377 3,489 N/A*

*Note: 2011 figures reflect a new employee category breakdown, identifying journalists as a specific part of the total workforce. Therefore, comparative analysis with previous years -that included a different breakdown- cannot be shown.

The Company possesses a special make-up in terms of age and gender diversity among its employees. When it comes to gender, the higher proportion of male employees is significantly explained by the large number of technical personnel, which in Argentina is predominantly male, working in the printing facilities and in the Cable TV and Internet access segment. The gender composition in other companies of the Group is balanced, especially regarding content related activities, such as journalism and audiovisual production, where the workforce is diverse.

Employees by sex 2011 2010 2009 YoY

Men 13,375 12,698 11,554 5.33%

Women 3,825 3,579 3,968 6.87%

Employees by groups of age 2011 2010 2009 YoY

31-50 9,920 9,464 9,558 4.93%

>51 2,038 1,938 1,614 5.16%

In 2011, employee turnover remained at 8%. This figure shows the number of employees that left the Company or its subsidiaries voluntarily or due to dismissal, retirement or death.

Turnover by Sex and Age

(As a percentage of total employees)

2011 2010 2009 YoY

Men 5.32% 5.42% 5.33% -0.10%

Women 2.63% 2.64% 2.44% -0.01%

31-50 3.64% 3.50% 3.18% 0.14%

>51 0.84% 0.88% 1.16% -0.04%

In addition to strictly abiding by the laws, the Company sets higher than standard conditions for its employees. Of Grupo Clarín's total workforce, more than 76% of employees are covered by collective agreements. For those who are not, the Company's policy is to apply the conditions established by the best existing agreement.

Taking care of the work environment and conditions, health and job safety and offering training to improve employees' professional skills and techniques are some of the actions aimed at consolidating the sense of integration and achievement of organizational goals. One of the key ways of obtaining feedback on the Company's performance is via the global staff survey, carried out every two years.

In 2011, the Company created and launched the in-house Volunteer Program of Grupo Clarín and its subsidiaries. Named "Vos también" (You Too), the program included the design and implementation of several actions to engage volunteers with the community. The program was implemented in 9 business units, including the corporate area, with impact on 12 provinces. According to its main indicators, volunteers dedicated 5,373 hours of work (3,354 during working hours), with a global engagement rate of 13.35%, representing 1,466 volunteers. Work was done in association with social organizations; 35 entities that have partnered the several initiatives that helped 1,656 people.

Through these initiatives, volunteers had an opportunity to help in a variety of areas, including building emergency homes, organizing employability workshops, collecting toys and food and organizing blood donation efforts, among others. The program had a high satisfaction level among participants: 97% of them stated that they would participate again.

Grupo Clarín has paid special attention to the multiple internal communication tools, such as the magazine Nuestro Medio, the Corporate Intranet with participation spaces and forums, the digital newsletter Nuestro Resumen, and the digital newsletters of the Corporate Training Program and the Company Climate Management Program, as well as internal communication spaces and notice boards. Year after year, Grupo Clarín increases its efforts to implement and streamline the information channels on benefit programs, policies and relevant organizational changes, and news concerning the daily development of activities.

Benefits and career development

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

During 2011, corporate and business units' human resources departments have continued to implement different programs to identify internal talent for career development. Also, Grupo Clarín's and Cablevision's Young Professionals Program was renewed, creating opportunities for professionals that are taking their first steps in their career paths.

In order to develop new skills and build up existing strengths, people need encouragement and support. In addition to increasing the number and variety of training options, during 2011, the Company continued efforts to extend and enhance the employee performance appraisal program in different categories.

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

One of the main initiatives in this respect is the 'Corporate Training Program' which includes a wide variety of courses. A relevant aspect among current training options is that the Company pays special attention to training on new tools and technology developments, in order to properly prepare its workforce for the challenges the media sector is facing.

In addition, throughout the business units, there have been seminars and programs on quitting smoking, diseases, and other relevant topics, as well as special action campaigns regarding health and medical check-ups, with special focus on the preemptive measures against seasonal deceases. Also, the Group carries our several different activities designed to prevent job related accidents.

Grupo Clarín continued to explore alternatives of interaction or joint approach to common interest issues at the various levels of its value chain. Grupo Clarín focused on the implementation of systems and procedures aimed at the application of best practices for purchases, hiring, and contracting with suppliers, within a framework of supervision and transparency.

ENVIRONMENT

It is widely recognized that the media industry has a lower impact than most other industrial processes. Within the framework of an environmental management policy aimed at improving eco-efficiency, the Company and its subsidiaries primarily consume energy, wood, newsprint, cable and water and generate waste.

During 2011, the Company continued to take steps towards the measurement, planning and improvement of manufacturing processes to optimize results and address possible impacts. Progress was made in achieving the period's goals by introducing sustainable methods to obtain and use resources; implementing policies for investment in equipment and raising awareness for the adequate use of technology.

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

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

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

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

The present report reflects the global impact of the different subsidiaries where the Group has controlling or minority stakes, while indicating some specific effects with regards to the nature of the different business activities.

Consumption. Wood, Newsprint and Energy

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

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

In 2011, Papel Prensa, the paper mill in which Grupo Clarín owns a minority stake, consumed 340.076 tons of fresh fiber and 13.725 tons of recovered paper. The figure for recovered paper was significantly increased in over 55% in relation to the amount reported in 2010. The type of fiber source (Poplar, and Willow) depends upon the availability of materials, as well as economic considerations such as the minimization of transport distances and costs, which is a relevant economic and environmental consideration.

Nevertheless, it is important to mention that fresh fiber comes entirely from sustainable plantations. This means that no native forests are involved or endangered. This is combined with continuing research on Salicaceae, related to their genetic improvement and also to ecologic and silvicultural aspects, done by means of agreements made with universities, research centers and experts, with the objective of increasing productivity, reducing costs and assuring the sustainability of the ecosystem.

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

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

At the printing plants, paper and ink constitute the main material consumed. Most of the newsprint supply comes from Papel Prensa. The Company also follows established guidelines to ensure the provision of other materials, such as inks and other specific inputs, at quality levels compatible with international standards. In terms of types of inks used, although different printed products require different resources, as an example, the main printing plant usage of vegetable oil based coldset ink reaches almost 60%. Vegetable oil based coldest is environmentally friendlier than other types of ink and allows reducing ink usage by approximately 10% or 15%. This can also be achieved by printing techniques; at the Company's printing sites the stochastic printing style introduced in 2008 continues to be applied as a way of optimizing ink usage.

2011 2010 2009 YoY

Paper 112,290 Tn 111,656 Tn 112,400 Tn 0.57%

Ink 2,735 Tn 2,412 Tn 2,335 Tn 13.39%

Aluminum plates 236 Tn 272 Tn 233 Tn -13.24%

Company qualified teams continuously strive to reduce consumption by identifying and adopting increasingly eco-efficient processes. During this period, the paper consumption increased partially due to higher circulation figures related to new products. The introduction of adjustments on the dimensions of newspapers made in previous years continues to shows its benefits in the use of paper and other materials.

The percentage of polybagging in the Company's newspapers and magazines continues to be of minor significance, although the use of polypropylene in some parts of the dispatching process is regularly assessed.

The primary resource used by Grupo Clarín and its subsidiaries is energy. Grupo Clarín's consumption comes from both direct and indirect sources; the indirect consumption comes from electricity taken from the grid. 

Direct and Indirect energy consumption by primary source:

2011 2010 2009 YoY

Electricity 431,326 MWh 419.563 MWh 442,670 MWh 2.80%

Natural Gas 25,825,636 m3 29.898426 m3 33,688,892 m3 -13.62%

Gasoline 29,399 GJ 24.676 GJ 20,550 GJ 19,14%

Fuel Oil 159,091 GJ 172.219 GJ 84,593 GJ -7,62%

Gasoil 64,509 GJ 76.043 GJ 72,387 GJ -15.17%

LP Gas 2,449 GJ 2563 GJ 2,887 GJ -4.45%

Energy consumption is significant in the paper related and printing activities and, to a lesser extent, in the business units which operate with technology, such as cable television and Internet services, broadcasting, etc. In this area, some initiatives developed by Artear include the introduction of cold lighting in all new and renovated television studios, in order to obtain 5 times less than the regular consumption. During this period, the company continued to invest in equipment -manufactured within environmentally friendly parameters- in order to meet the needs of the generation and distribution of content in High Definition. Also, in addition to reaching the goal of replacing 100% of Artear's live unit vehicles for low consumption vehicles, thus considerable reducing emissions, this business unit focused on a multiple stage scheme to replace other lighting materials.

Emissions and discharges

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

2011 2010 2009 YoY

CO2 direct emissions 70,090 Tn 79,954 Tn 79,866 Tn -12.34%

Indirect emissions arising from electricity usage can only be calculated based on Argentina's energy matrix.

The primary strategies available to reduce greenhouse gas emissions are reducing the consumption or changing the energy sources. Increased use of renewable forms of fuel and bioenergy is a positive strategy. During 2009, Papel Prensa purchased a bark boiler allowing the Company to set a goal of making additional savings in GHG emissions, while better managing waste. 

Each Grupo Clarín subsidiary and related company identifies and manages waste production and disposal. In 2011, this management included the recycling of 13,725 tons of recuperated paper and cardboard, 14.9 tons of ink and the reuse of nearly 235 thousand cable modem units.

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

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

Hazardous waste is carefully handled and handed over to authorized waste management companies. During 2011 the Company reduced the amount of this type of waste by nearly 21%

2011 2010 2009 YoY

Urban or non-hazardous waste 54,291 Tn 53,219 Tn 54,115 Tn 2.01%

Hazardous waste 492.3 Tn 622 Tn 619Tn -20.85%

Special care is also maintained regarding the handling of liquid effluents resulting from development processes, subjecting them to rigorous treatments and measurements before disposal. The main water usage, recycling and discharges are related to the paper mill. Since the beginning of its operations in 1978, Papel Prensa's investments have allowed it to reduce its water usage in more than 40%. Strict procedures are set in place to permanently asses and manage the quality of discharges. Routine testing validates compliance with nationwide regulation in terms of toxicity of the discharges.

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

BUSINESS PROJECTIONS AND PLANNING

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

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

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

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

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

In the hostile environment created by the current government towards the media, Grupo Clarín ratifies its determination to bring the necessary legal and administrative actions to safeguard its rights and those of its shareholders, while reinforcing once again its commitment towards its readers, audiences and the country. In its daily work, Grupo Clarín undertakes to assume with strength and responsibility the role the media are called to play through independent journalism and through the defense and promotion of universal and fundamental rights, such as freedom of speech, since these are pillars that extol the quality of democracy and the welfare of the Argentine society as a whole.

RISKS FACTORS

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

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

Argentina's economic environment

Substantially all of our operations are conducted in Argentina, and are therefore affected by changes in Argentina's economic environment. After six years of sustained economic growth, the Argentine economy slowed down in the second half of 2008 and throughout 2009, affected by the international crisis as well as internal political developments. Although the trend was later again reversed, Argentina's growth may not be sustainable in the future. Sustainable economic growth depends on a variety of factors, including international demand for Argentine commodities, stability and competitiveness of the Peso against foreign currencies, confidence of consumers and local and foreign investors and a low rate of inflation. A downturn in economic activity is likely to result in increased subscriber churn as well as decreased advertising revenues.

We seek to address the cycles affecting the Argentine economy by diversifying the scope of our business and managing our foreign currency liabilities.

Political and Economic Uncertainties

Our financial condition and results of operations depend to a significant extent on macroeconomic and political conditions prevailing in Argentina. The Argentine government's actions impacting the economy, including those in connection with inflation, interest rates, price control, exchange control and taxes, have affected and could continue to affect Argentine companies like ours.

Inflation, which stood at 9.5% for 2011 (INDEC information, although private estimates of inflation rates largely exceed those published by the INDEC) may continue to rise. A recent rise in public expenditure could further accelerate inflation, as could an adjustment of public service and utility rates. This may affect adversely the Argentine long-term credit markets as well as the Argentine economy generally. A contraction of the economy would also adversely affect our financial condition and results of operations.

The country's economy may be adversely and lengthily affected by economic developments in other markets. Furthermore, to date Argentina's ability to obtain financing from international markets remains limited.

Certain of our costs, including a significant portion of our financial expenses, are dollar denominated. Currency fluctuations, such as a considerable devaluation of the Peso against the U.S. dollar are likely to affect adversely the Argentine economy and will impact negatively on our financial condition.

Legislation and Regulation

In October 2009, the Argentine Congress passed a new Audiovisual Communication Services Law that is intended to replace the general legal framework under which the audiovisual media industry operated in Argentina for practically three decades. The new Audiovisual Communication Services Law has been challenged by us and other parties in interest on several grounds, including its encroachment upon constitutional rights, the broad and discretionary powers over media and content granted to the Executive Branch, for favoring state-owned and sponsored media and affecting the sustainability of privately-owned media, promoting the elimination of independent signals and enabling a pervasive and questionable censorship system anchored upon the discretional power to grant licenses and the application of penalties, among other controversial aspects. Since its enactment in October, 2009, several court rulings have been issued enjoining the application of the statute in its entirety in certain cases, or of certain of its provisions, in other cases. Some of these rulings have been reversed by the Supreme Court of Argentina and a court of appeals, but injunctions that suspend specific sections of the law are still in effect.

If ultimately upheld by the judiciary, the application of the new legal and regulatory environment to our cable television, telecommunications and Internet and digital content operations may be disadvantageous to us, and will affect the manner in which we operate our business. Failure or delay in renewing our licenses or obtaining regulatory approvals may also influence the availability of our services to our customers.

In addition, since 2009 the Argentine government took measures intended to rescind the authorization granted unanimously by the National Antitrust Commission in 2007 to the purchase by the Company and Fintech of shares representing Cablevision's capital stock, and Cablevision's purchase of interests in certain of our subsidiaries. The Argentine government has also taken measures to revoke the license under which Cablevision's renders internet services, and to set the price of its pay-television service according to a pricing formula, among others. Such measures, which we have challenged judicially, if upheld would materially adversely affect our business. We have obtained preliminary injunctions that have enjoined the government action, and will continue to make every effort to defend ourselves by taking all actions necessary to safeguard our rights. However, we cannot assure that such efforts ultimately will prove successful.

In Argentina, the legal system, including the Constitution, shields journalistic activities from regulation with the purpose of protecting the independence of the free press. As a media company, we are vigilant as to the menaces that might arise in this respect and widely cooperate with journalistic associations and other NGOs that advocate for the protection of fundamental constitutional rights such as freedom of speech and freedom of the press.

Sector Development and Competition

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

While our analysis may not always be accurate, the Company devotes significant resources to analyzing emerging trends and has vast experience and a solid track record in reading consumer demands and successfully developing new products and services, adapting its business model in time.

Programming and Personnel

We may not be able to renew our rights to certain programming and our results of operations may be adversely affected by the loss of key personnel. In addition, under the new Audiovisual Communication Services Law we may be forced to divest or cease to broadcast certain signals.

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

Liquidity and Funding

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

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

CORPORATE GOVERNANCE, ORGANIZATION AND INTERNAL CONTROL SYSTEM

Grupo Clarín's Board of Directors is responsible for the Company's management and approves its policies and overall strategies. According to the Company's By-laws, the Board has ten permanent members and ten alternate members, appointed on an annual basis at the Regular Shareholders' Meeting. The By-laws also provide for the appointment of four independent directors, two permanent members and two alternate members, appointed in accordance with the requirements of National Securities Commission ("CNV").

Day-to-day decisions relating to Grupo Clarín's businesses are taken by an Executive Committee formed by three members, appointed and supervised by the Board of Directors.

Members of the Board of Directors

At year-end, the Board of Directors of Grupo Clarín S.A. was comprised as follows:

Héctor Horacio Magnetto Chairman

José Antonio Aranda Vice Chairman

Lucio Rafael Pagliaro Director

Alejandro Alberto Urricelqui Director

Jorge Carlos Rendo Director

Pablo César Casey Director

Muneer Satter Director

David Castelblanco Director

Lorenzo Calcagno Independent Director

Alberto César José Menzani Independent Director

Subsequent to year-end, the Company was notified of and accepted the resignation to the position of Permanent Director designated by Class C shareholders of Mr. Muneer Satter and Mr. David Castelblanco, as well as the resignation of Mr. Luis María Blaquier. The Board of Directors decided to call for an Extraordinary Class C Shareholder's Meeting to be held on March 26, 2012, in order to appoint a Permanent Director and two Alternate Directors and a Permanent and an Alternate Member of the Supervisory Committee. The meeting was not held due to lack of a quorum, therefore the Directors and Members for the mentioned positions were elected by the Annual General Meeting on April 26, 2012.

Executive Committee

Héctor Horacio Magnetto; José Antonio Aranda; Lucio Rafael Pagliaro.

Grupo Clarín also has a Supervisory Committee comprised of 3 permanent members and 3 alternate members, who are also appointed on an annual basis at the Regular Shareholders' Meeting. The Board of Directors, through an Audit Committee, is in charge of the ongoing oversight of all matters related to control information systems and risk management, and issues an annual report on these topics. The members of the Company's Audit Committee may be nominated by any member of the Board of Directors and a majority of its members must meet the independence requirement set forth by the CNV.

Audit Committee

At year-end, the Audit Committee was comprised as follows:

Lorenzo Calcagno Independent Director

Alberto César José Menzani Independent Director

Alejandro Alberto Urricelqui Director

Supervisory Committee

At year-end, the Supervisory Committee was comprised as follows:

Raúl Antonio Morán Independent Permanent Member

Carlos A. P. Di Candia Independent Permanent Member

Alberto López Carnabucci Independent Permanent Member

Hugo Ernesto López Independent Alternate Member

Martín Guillermo Ríos Alternate Member

Pablo Tonina Independent Alternate Member

Subsequent to year-end, the Company was notified of and accepted the resignation to the position of Permanent and Alternate Member of the Supervisory Committee designated by Class C shareholders of Mr. Alberto López Carnabucci and Mr. Pablo Tonina. As mentioned above, the Board of Directors decided to call for an Extraordinary Class C Shareholder's Meeting in order to appoint a Permanent Director and two Alternate Directors and a Permanent and an Alternate Member of the Supervisory Committee. The meeting was not held due to lack of a quorum, therefore the Directors and Members for the mentioned positions were elected by the Annual General Meeting on April 26, 2012.

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

The overall criteria used to appoint managers are based on the background and experience in the position and the industry, companies they have worked for, age, professional and moral aptitude, etc. The professional experience and background of the main managers are disclosed to the general public upon their appointment.

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

Compensation of the members of the Board of Directors and senior management

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

Grupo Clarín has compensation arrangements with all of its officers in executive and managerial positions, which contemplate a fixed and variable remuneration scheme. Fixed compensation is tied to the level of responsibility attached to each position and prevailing market salaries. The variable component is tied to performance during the fiscal year based on the objectives set at the beginning of the year. Grupo Clarín does not have any stock option plans in place for its personnel.

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

Stock Information and Shareholder Structure

Grupo Clarín is listed in the Buenos Aires Stock Exchange where it trades its shares, and in the London Stock Exchanges, where it trades its shares in the form of GDS.

London Stock Eschange (LSE) - Ticker: GCLA

Bolsa de Comercio de Buenos Aires (BCBA) - Ticker: GCLA

GCLA (BCBA)

Price per share, December 30, 2011

Ps. 8.90

GCLA (LSE)

Price per GDS, December 30, 2011

US$ 5.00

Total Shares 287.418.584

Total GDS 143.709.292

Shareholder Structure

70.99% Controlling Shareholders

19.90% Free float

9.11% Goldman Sachs

Annual Shareholders' Meeting

On April 28, 2011, Grupo Clarín held the fourth Annual Regular Shareholders' Meeting since the Initial Public Offering of its shares. On this occasion, the shareholders reviewed and approved the accounting records for fiscal year No. 12 ended on December 31, 2010 and the performance and compensation of the members of the Board of Directors, the Supervisory Committee and the Audit Committee. Among other things, they reelected the permanent members and alternate members of the Board of Directors and said committees for the year 2011. The Company distributed dividends for an aggregate amount of Ps. 120 million, representing 41.751% of its nominal capital and Ps. 0.41751 per share.

Dividend Policy

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

Code of Corporate Governance

In addition to the aforementioned and in conformity with the CNV's decisions concerning the filing of the Code of Corporate Governance report (Resolution No. 516/07), Grupo Clarín prepared the report for the year under analysis, which is attached as an exhibit to this annual report.

Supplementary Financial Information

The information included in the Supplementary Financial Information is an integral part of this Annual Report and, therefore, should be read in conjunction with same.

SETTING UP OF RESERVES

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

FINANCIAL POSITION AND RESULTS OF ITS OPERATIONS

During this year, the main changes in the Company's financial position and results of its operations were the following:

Working capital (current assets minus current liabilities) at year-end increased by Ps. 33.1 million compared to the previous year, from (negative) Ps. 79.4 million to (negative) Ps. 46.3 million. This increase is basically evidenced in the Ps 16.1 million increase in the Company's funds (the items Cash and Banks and Other Current Investments), and in the increase in Other receivables from related parties, net of the increase in current liabilities, mainly generated by new borrowings.

With respect to non-current items, the most significant variation was recorded under Investments, due to the results obtained by Grupo Clarín's subsidiaries, mainly Cablevisión S.A. (indirectly), Arte Gráfico Editorial Argentino S.A. and Arte Radiotelevisivo Argentino S.A.

The Statement of Operations as of December 31, 2011 recorded a net income of Ps. 522.3 million. Such income is basically derived from earnings of Ps. 556.9 million resulting from equity investments in affiliates and subsidiaries.

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

BOARD OF DIRECTORS' PROPOSAL

On November 1, 2011, the CNV issued Resolution No. 593, which provides that shareholders' meetings considering financial statements must expressly decide whether to distribute retained earnings as dividends, to capitalize them and issue shares, appropriate them to set up reserves other than legal reserves, or a combination of the above. As of December 31, 2011, Retained Earnings, including net income for the year, amounted to Ps. 1,540,313,089. Therefore, the Board of Directors proposes at the Ordinary Shareholders' Meeting that the total balance of Retained Earnings (including Ps. 522,279,377 attributable to net income for the year) be distributed as follows:

To the Legal Reserve Ps. 23,912,434

To the Court-Ordered Reserve for the Distribution of

Future Dividends Ps. 387,028,756

Distribution of Cash Dividends Ps. 135,000,000

To the Optional Reserve for Future Dividends Ps. 300,000,000

To the Optional Reserve for Illiquidity of Results Ps. 694,371,899

Total Ps.1,540,313,089

Below is a summary of the main criteria on which the above allocation proposed by the Board of Directors is based:

- Legal reserve: the legal reserve was estimated according to Section 70 of Law No. 19,550 and the CNV's resolutions, considering 5% of the net income for the year, minus previous years' adjustments until reaching 20% of the capital stock, plus the balance of the Inflation Adjustment on Capital Stock account.

- Court-Ordered Reserve for the Distribution of Future Dividends: as mentioned in Note 11.2 to the parent company only financial statements, on September 1, 2011 the Company was served with a preliminary injunction in re "National Social Security Administration v/ Grupo Clarín S.A. on/ ordinary" whereby the Company may not in any way dispose, in part or in whole, of the Ps. 387,028,756 currently recorded under the retained earnings account, other than to distribute dividends to the shareholders. Therefore, the Board of Directors proposes that the amount established in the above indicated preliminary injunction be appropriated to a Court-Ordered Reserve for the Distribution of Future Dividends.

- Optional Reserve for Future Dividends:this proposal is based on the estimated liquidity available for the Company, considering the distribution of dividends proposed by each Board of Directors of Grupo Clarín's subsidiaries and the expected future cash flows from operating and financing activities. Therefore, the proposal to set up this reserve is reasonable from every point of view in furtherance of a prudent management.

- Optional Reserve for Illiquidity of Results: given the fact that Grupo Clarín is a holding company where individual operations, as disclosed in the Statement of Cash Flows included in the Company's financial statements, do not generate but rather use funds, the liquidity of results depends on the distribution of cash dividends generated by investments and/or on the eventual funding such investments may purport to the Company, after meeting its financial commitments, among other things. Given the fact that the companies in which Grupo Clarín has equity interests invested heavily in their respective operations and, like the Company, applied funds to settle their financial commitments, the Company is unlike to have remaining liquidity to distribute additional dividends, other than those already paid and/or proposed. Therefore, the Board of Directors proposes that a Reserve for Illiquidity of Results be set up until such results become liquid and a decision is made as to the allocation of such results to purposes other than those set forth in Law No. 19,550 at a Shareholder's Meeting. Therefore, in the light of its nature, setting up this reserve is a reasonable decision in furtherance of a prudent management

Subsequently to the end of the period, on April 26, 2012, Grupo Clarín held its fifth General Annual Ordinary Shareholders Meeting. On that occasion, the shareholders considered and approved the 2011 Financial Statements and other related documentation and the performance and compensation of Directors, Supervisory Committee and Audit Committee. Also, they elected members of the Board of Directors and mentioned committees for fiscal year 2012, along with an external auditor. The Shareholders Meeting also approved the distribution of Ps.135 million as dividend paymen (equivalent to Ps 0.47 per share or to Ps 0.94 per GDS).

DIRECTORS' RESPONSIBILITY STATEMENT

We confirm that to the best of our knowledge:

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

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

On behalf of the Board,

Alejandro Urricelqui

Chief Financial Officer

Grupo Clarín

Grupo Clarín S.A.

Exhibit to the Annual Report for fiscal year ended December 31, 2011. General Resolution No. 516/07 issued by the "Comisión Nacional de Valores" ("CNV", the Argentine Securities Commission) - Code of Corporate Governance.

This exhibit to the Annual Report outlines the corporate governance practices that Grupo Clarín S.A. ("the Company") maintains or has adopted, in line with its commitment to transparency towards investors and shareholders.

In the following sections, the Board of Directors explains its views and, in some cases, the views of the Company's main shareholders on several aspects of corporate governance. It is the Board of Directors' intention that the Company's corporate governance practices not only meet legal requirements, but also conform to corporate governance recommendations that seek to combine effectively the desire to achieve results with compliance with the corporate governance guidelines set by the Board.

For ease of interpretation and analysis of this exhibit, it is recommended that the order set forth under the abovementioned Resolution be followed.

Scope of application of the Code

1) Grupo Clarín S.A. does not customarily carry out transactions with the Company's shareholders or directors. The transactions carried out with affiliates, related companies, shareholders and directors are disclosed on the quarterly and annual financial statements, in accordance with accounting standards in force.

2) The Company's By-laws include the corporate governance provisions required by effective legislation (such as the audit committee and the public offering regime). The Board of Directors is responsible for the adoption of general policies and strategies, which are updated based on the evolution of local and international trends. No provision included in the Company's By-laws contradicts the existing recommendations on corporate governance. Regarding conflicts of interest, the Company fully conforms to the Argentine Business Associations Law and other applicable legislation.

General Information About the Board of Directors

3), 4) and 5) The Board of Directors is responsible for the Company's management and approves its overall policies and strategies. The daily decisions related to the Company's businesses, including the approval of specific policies set forth by General Resolution No. 516/07 and the verification of the implementation thereof, are the responsibility of an Executive Committee comprised of three members appointed by the Board from among its own members. The Executive Committee acts under the oversight of the Board of Directors.

The Board of Directors, through its Audit Committee, is in charge of the ongoing oversight of all matters related to control information systems and risk management, and issues an annual report on these topics. The Executive Committee oversees the control tasks carried out by the Corporate Control Division, an area in charge of the independent control of the Company's operating management.

6) The members of the Company's Audit Committee may be nominated by any member of the Board of Directors and a majority of its members must meet the independence requirement set forth by the CNV. The members of the Audit Committee have experience in finance and operating management.

7) The Company's By-laws provide for the election of ten permanent directors and ten alternate directors. The main shareholders have considered that this number is adequate considering the Company's size, the structure of its capital stock and the complexity inherent in its decision-making processes. According to the By-laws, four independent directors, two permanent directors and two alternate directors shall be included in the Audit committee to guarantee compliance with applicable legislation. However, the Company's directors and main shareholders regularly review the number of independent directors and the creation of committees in addition to the Audit and the Executive Committees. To date, there is no plan in place to change the Board's structure in the short term. If the Board of Directors decides to increase the number of Board committees, the Company will take precautions to include the necessary number of independent directors.

8) In the Board of Directors' view, it is not particularly convenient for the Company to include former executives among its members, though the Company's main shareholders regularly review this alternative.

9) Certain members of the Board of Directors and the Supervisory Committee carry out functions in other companies. In practice, the performance of such other functions, particularly in companies which are not related to the Company, has not been found to cause inconveniences in the due compliance with the functions of such bodies. Should any inconvenience occur, the respective member of the Board or Supervisory Committee would not be reelected.

10) Given that the Board of Directors discloses its main activities and in view of the information made available to the shareholders on a regular basis, the Board considers that shareholders have all the elements necessary to approve or reject its performance at the meetings held on an informed basis, with no additional written self-assessment being necessary.

11) The Company's Human Resources Division, at the request of the Board, plans for and manages the training activities for the Board's members that also carry out executive functions in the Company, as well as the training activities for the top tier managers. Such training includes the attendance by these officers to conferences and lectures related to the Company's businesses.

Directors' Independence

12) The Company has four independent directors, two permanent directors and two alternate directors, appointed in compliance with the CNV's rules and regulations.

At the time of appointment of such directors at the Shareholders' Meeting, the Board established compliance with the legal requirements, without the need for additional statements or representations by the proponents.

13) The overall criteria used to appoint managers are based on the background and experience in the position and the industry, companies they have worked for, age, professional and moral aptitude, etc. The professional experience and background of the main managers are disclosed to the general public upon their appointment.

14) According to the By-laws, two permanent directors and two alternate directors must meet the independence requirements set forth by the CNV to guarantee that the majority of the Audit committee is comprised of independent directors. Independent directors are identified at the time of their appointment and on subsequent communications from the Company. In appointing directors at the Shareholder's Meeting, it should be indicated whether they are executives or not.

15) Independent directors may hold exclusive meetings during the exercise of their functions in the Audit committee. To date, the Board of Directors has not delegated the preparation of the agenda to an independent member.

Relationship with Shareholders

16) The Company maintains communication channels with the minority shareholders through the disclosure of relevant information in the stock exchanges where its shares and GDSs are listed and through information disclosed in the Company's web site. The Company also communicates with its investors through its executives in charge of market relations and through regular informational meetings and conferences. The Company calls for shareholders' meetings, as set forth by the Argentine Business Associations Law.

17) The Company's management is in charge of the relationship with investors and shareholders and addresses their questions and concerns. It also provides public financial and operating information, provided such disclosure conforms to the law and does not affect the Company's strategy and forward-looking plans. Management issues quarterly reports and holds regular conference calls to discuss further information requested by investors and shareholders. These reports and files can be found on the Company's web site.

18) The Company encourages the participation of minority shareholders at the meetings. It calls the meeting and distributes the agenda with sufficient anticipation, translated into English for shareholders domiciled abroad, through the GDS's depositary institution. The Company complies with the publication requirements set forth under current legislation (publication in the Official Gazette, a newspaper with high circulation and the bulletin of the Buenos Aires Stock Exchange) and with publication on the Company's web site.

19) As contemplated in the Company's By-laws, the Company opted out of the mandatory tender offer rules set forth in Decree No. 677/01. However, the By-laws set forth mechanisms to protect the minority shareholders' interests against certain scenarios involving the acquisition of the Company's shares. The Company also abides by current legislation in the event of a voluntary delisting or tender offer.

20) The Company has not adopted a fixed dividend policy establishing the amount and payment of dividends or other distributions. Four months after each year-end, the Company's Board of Directors submits the financial statements for approval at the Annual Shareholders' Meeting, where the allocation of the net income for the year is decided upon.

Relationship with the Community

21) The Company has a website with sufficient and updated information, which may be easily accessed from multiple channels. The website includes contact information as well as several forms and mechanisms to gather concerns from the various users.

22) The Company's website guarantees the confidentiality and integrity of the information contained therein. The site is hosted by the Company's own and exclusive Windows-based server, with restricted access. It has a 24-hour monitored firewall and the information integrity is secured through the safest measures available and through regular safety updates and audits. Content updates are made through a secured application with restricted access to authorized and trained personnel.

Committees

23) In the Board's view, the president of the Audit committee does not necessarily have to be an independent director to secure compliance with the goals to be achieved by such committee. According to effective legislation and the Company's By-laws, a majority of the Audit Committee's members must be independent, even if the president of the committee is not. Therefore, the independent directors may make all relevant decisions.

24) In the Company's view, it is not necessary to have a specific policy in place concerning the rotation of the Supervisory Committee's members. As regards the rotation of the partner of the external audit firm, the Company follows the CNV's guidelines. In line with international practices, the Board of Directors does not require the rotation of the external audit firms. The Audit Committee periodically evaluates external auditors in terms of independence, know-how and performance, among other issues.

25) The members of the Company's Supervisory Committee are not involved in the external audit and do not belong to the firm rendering these services.

26) Certain members of the Board of Directors who also carry out managerial functions, along with the Company's executives, set forth the Company's compensation and benefit policies, following criteria in line with the expected results and goals, as well as conventional and legal limitations.

27) The Company's main shareholders regularly review the convenience of creating an Appointment and Corporate Governance Committee. The shareholders particularly review the extent to which the implementation of such committee would lead to a more favorable opinion on the Company's governance from the investors' standpoint, since its creation would entail a significant change in the current way of operating.

28) In line with its policies, the Company ensured that the appointment of the Board's members was free of any form of discrimination.

GRUPO CLARIN S.A.

CONSOLIDATED

FINANCIAL STATEMENTS

As of and for the years ended

December 31, 2011 and 2010

GLOSSARY OF SELECTED TERMS

CONSOLIDATED BALANCE SHEETS

(In Ps. - unless otherwise stated)

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

CONSOLIDATED STATEMENTS OF INCOME

(In Ps. - unless otherwise stated)

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

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Ps. - unless otherwise stated)

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

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Ps. - unless otherwise stated)

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND

OTHER COMPREHENSIVE INCOME

(In Ps. - unless otherwise stated)

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

Note 1. Description of the business

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

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

Note 2. Summary of Significant Accounting Policies

Basis of presentation

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

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

The consolidated financial statements include 100% of the assets, liabilities, revenues, expenses and cash flows of Grupo Clarín and all entities in which the Company has a controlling voting interest ("subsidiaries") required to be consolidated in accordance with US GAAP. When Grupo Clarín consolidates entities, the ownership interests of any minority parties are reflected as non-controlling interests, and investment in entities in which the Company has 20% to 50% ownership, but not a controlling interest, are accounted for under 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).

(1) Includes Multicanal and Teledigital, which were merged into Cablevisión effective as of October 1, 2008 (see Note 12.2.c).

(2) % in votes amounts to 99.7%.

As a result of the situation described in Note 12.7.a), among other things, as of the date of these consolidated financial statements Papel Prensa has not issued its annual financial statements as of December 31, 2011. To calculate the equity value of its investment in Papel Prensa, the Company has relied on the latest financial statements as of September 30, 2011 approved by Papel Prensa's Board of Directors and on AGEA's estimate of the October-December 2011 results for that company. However, the Company considers that any deviation between its estimates and the financial statements as of December 31, 2011 ultimately approved by Papel Prensa's Board of Directors will not have a material effect on these consolidated financial statements.

Non-controlling Interests in Consolidated Financial Statements

On January 1, 2009, the Company adopted a new accounting guidance for non-controlling interests in subsidiaries as issued by the FASB. The new accounting guidance establishes accounting and reporting standards for the non-controlling interests in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a non-controlling interests in a subsidiary, which is sometimes referred to as a minority interest, is a third-party ownership interest in the consolidated entity that should be reported as a component of equity in the consolidated financial statements. Among other requirements, the new guidance requires the consolidated statement of income to be reported at amounts that include the amounts attributable to both the parent and the non-controlling interest. The guidance also requires disclosure on the face of the consolidated statement of income of the amounts of consolidated net income attributable to the parent and to the non-controlling interest. The Company's consolidated financial statements were updated to reflect the reporting and disclosure requirements.

Consolidated Variable Interest Entities

The Company, through one of its indirect subsidiaries, has executed agreements with other non-related companies, for the purposes of rendering on behalf of and by order of such companies subscriber selling and installation services, collections, administration of subscribers, marketing and financial technical advising, and general business advising, with respect to cable television and Internet access activities in Uruguay. In accordance with ASC 810-10, these consolidated financial statements as of December, 31, 2011 and 2010 include the assets, liabilities and results of these companies, disclosing the net effect in the items "Equity attributable to non-controlling interests", and "Net income attributable to non-controlling interests".

Use of estimates

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

Cash and cash equivalents

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

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

Concentration of cash and credit risk

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

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

Allowance for doubtful accounts

The Company reviews its doubtful accounts on a monthly basis for estimated losses resulting from the inability of its customers to make required payments. The customer base in the cable television and Internet access segment is primarily residential in nature while the customer base of the publishing, printing and broadcast television operations involves a wide range of companies and, to a lesser extent, individuals.

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.

Investments in unconsolidated affiliates

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

Property, plant and equipment, net

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

Goodwill and Intangible assets, net

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

The goodwill generated by recent acquisitions is a preliminary estimate until a final estimate is made of the fair market value of assets and liabilities identifiable at the time of acquisition. Therefore, these values may be modified in the future, as permitted by the prevailing accounting standards.

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 acquired subscriber portfolio, 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 impairment 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.

The book value of these assets does not exceed their estimated recoverable value. Nevertheless, as mentioned in Note 20, theses estimations could be affected by the final outcome of the circumstances described in such note.

During 2011, the Company has accounted for an impairment of approximately Ps. 12 million of the carrying value of the goodwill related to Grupo Carburando, based on the situation described in Note 23.a.

Other assets

Deferred charges have been valued at the amounts actually disbursed.

The other assets included in this item have been valued at acquisition cost, except for those assets with an agreed-upon sale price fixed under a contract, which have been valued at net realizable value. Where applicable, the value of improvements has been added, net of the related accumulated depreciation calculated on a straight-line basis, considering the estimated useful life of the asset. The asset value does not exceed its estimated recoverable value.

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 main 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.

Revenues from transactions that include multiple elements, in connection with the agreement described under Note 22, have been recognized separately to the extent they have commercial substance on their own. The amount of revenues allocated to each item is based on its fair value, which is assessed or estimated at market value.

Revenues from the sale of assets are recognized only when the risks and benefits arising from the use of the disposed assets have been transferred, when the amount of revenues may be fairly estimated, and when economic benefits are likely to be obtained.

Installment sales are recognized at the value of future income discounted at a market rate assessed at the beginning of the transaction.

·; 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.

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. 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 2011 and 2010 totaled approximately Ps. 290.5 and Ps. 198.8 million, respectively.

Other Comprehensive Income

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

Fair value of financial instruments

The carrying amounts of cash, accounts receivable and short-term obligations approximate their fair values, 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 approximate their fair values: