GCLA.L Regulatory News (GCLA)

GRUPO CLARÍN S.A.

Annual Report and Consolidated Financial Statements

for the year ended December 31, 2014,

presented on a comparative basis

GRUPO CLARIN S.A.

ANNUAL REPORT FOR FISCAL YEAR No. 16 ENDED DECEMBER 31, 2014

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 S.A. (PRIMA), Compañía 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.

2014 MACROECONOMIC ENVIRONMENT

The growth rate of the world economy in 2014 (+3.3%) was virtually similar to the previous biennium according to recent figures published by the International Monetary Fund. This year's general slowdown of the emerging economies, particularly and more markedly of Latin-American economies, was offset by the better performance of the main developed countries.

In fact, while the group of emerging economies led by China and Russia once again registered above-average growth-though lower than in 2013 (+4.4%, i.e. 0.3 percentage points below the level of the previous year)-growth in developed countries (+1.8%) remained below average but showed a marked improvement against the previous year (0.5 percentage points above the level of 2013).

The world economy continued to grow at two different paces, below average for developed countries and above average for emerging countries, reflecting the structural nature of the global accumulation process, centered on emerging economies.

Of particular note is the sharp slowdown of Latin-American economies, which during the last three years have recorded growth rates below the global average, with a growing gap. The poor growth rate registered in 2014 by this group of countries, of only 1.2% (compared to +2,8% in 2013) is the lowest in the last five years (excluding the contraction attributable to the 2008/2009 crisis) and is a consequence of the stagnation of its most important member (Brazil).

In this global framework, in 2014 the Argentine economy faced its most complex year in the last decade. The contraction of exports and of economic activity, though lower in both cases than those of 2009, were in this case coupled with inflationary acceleration, the loss of purchasing power and a decrease in employment.

This scenario was affected to a large extent by the negative side effects of the early devaluation of the Argentine peso implemented by the end of January 2014, when the Central Bank of Argentina ("BCRA", for its Spanish acronym) decided to adjust the official Ps./USD exchange rate by +23% compared to the preceding month. The decision not to return to the voluntary international debt market also contributed to this scenario, but to a lesser extent.

The abovementioned devaluation of the Argentine peso per se, together with an adjustment in interest rates aimed at stabilizing the demand for local currency, allowed the Government to stop the drain on international reserves suffered by the BCRA in spite of the implementation of foreign exchange controls. Devaluation also caused an inflationary acceleration that gave rise to a considerable drop in the purchasing power of people's income (in pesos and especially in US dollars), and rapidly offset the competitiveness gained through such devaluation. Consequently, and despite the expansive trend of fiscal policy, in 2014 the Argentine economy registered a sharp contraction in consumption and in the level of economic activity, compared to 2013.

Despite this recessive environment and the slowdown in prices recorded in the last part of the year as a consequence of BCRA's decision to anchor the exchange rate, there was a sharp rise in inflation levels during 2014. The price index surveyed by the consulting company ECOLATINA closed the year at +37.7%, i.e. approximately 10.5 percentage points above the level of the previous year. This increase is the highest since 2002, and contrasts with the single-digit levels registered by all other countries in the region, except for Venezuela.

These annual price dynamics exceeded of the increase in the official Ps./USD exchange rate (by approximately 6 percentage points). Consequently, by the end of 2014, the real Ps./USD exchange rate (taking into account the inflation rate differential between Argentina and the United States) stood below the rate registered in December 2013, a month before the devaluation.

This complex scenario, marked by decreases in both consumption and economic activity coupled with high inflation, was also marked by a decrease in exports that exacerbated the scarcity of foreign currency. During 2014, export values decreased by almost 12% year-on-year, equivalent to USD9.7 billion. This new decrease of the main source of foreign currency for the Argentine economy, confirmed that it is impossible to continue to finance economic activity with by depleting currency reserves, and that the size of the economy needs to be adjusted to the decrease in the availability of foreign currency.

The drop in imports mitigated to a large extent the decrease in exports, which gave rise to a new decline in the annual trade balance surplus (USD6.7 billion, a record low since 2001), although the decline was of only USD1.3 billion, compared to 2013.

In spite of this reduced trade surplus, and despite the fact that the Government lifted restrictions on the purchase of foreign currency by individuals for the purpose of saving, subject to a 20% tax advance, to be credited against future income tax (referred to in Argentina as 'savings' dollars), the level of BCRA's reserves at year-end (USD31.4 billion) stood slightly above the level registered in 2013 (+USD0.8 billion), after dropping below USD27.0 billion in early April.

The significant increase in the level of reserves during the last months of the year is mainly due to the fact that Argentina received the first tranches of the currency swap executed with the Central Bank of the People's Republic of China (approximately USD2.7 billion out of an agreed aggregate of USD11.0 billion).

A material portion of the imbalances faced by the Argentine economy is attributable to fiscal and monetary issues. The national public accounts have been deteriorating uninterruptedly since 2005 (when the primary fiscal surplus reached its record high, accounting for 3.9% of GDP). The national primary fiscal imbalance worsened significantly throughout 2014 and was increasingly financed with the printing of currency. 

In 2014, the monetary authority issued a record high amount of pesos in order to aid the National Treasury (approximately Ps. 160.0 billion, a 70% increase, compared to the amount issued the previous year). However, the year-on-year growth of the monetary base (+22.5%) was lower than the increase in 2013, mainly due to the aggressive treasury bill placement policy implemented by the monetary authority. The aggregate amount of outstanding treasury bills (Ps. 260.5 billion as of December 2014) more than doubled the figures recorded in 2013. Said financing in local currency was coupled with the aid to the National Treasury in foreign currency for approximately USD11 billion, which were used to honor interest payments on the country's sovereign debt held by private creditors and international agencies. The National Treasury's debt with the Central Bank currently stands at more than USD50 billion.

Without counting remittances from the National Social Security Administration (ANSES, for its Spanish acronym) and the Central Bank, the national primary deficit rose to Ps. 159.7 billion (approximately 3.7% of nominal GDP) during the year, almost doubling the figure for 2013. The financial deficit (i.e. deficit after payments of interest on public debt) climbed to Ps. 230.9 billion (approximately 5.3% of GDP) in the year under analysis. Both figures are record highs since 2003, both in absolute and in relative terms.

Such fiscal deterioration took place in spite of the last decade's increasing increase in the tax pressure (a current record high for the three governmental levels [(national, provincial and municipal)] on a consolidated basis).

Of particular note are the results of the recently published Annual Survey of Urban Households, which reveal the magnitude of the impact of recession on employment rates in the Argentine economy. According to such survey, total employment (private and public) experienced a year-on-year drop of 2.5% as of the 3rd quarter of 2014, which accounts for almost 400,000 fewer employed workers than in 2013. Such loss of employment was not reflected in higher unemployment rates due to the drop in activity and employment rates.

Perspectives for the Upcoming Year

Latin-American emerging economies are adapting to the new global scenario marked by the strengthening of the US dollar with respect to the rest of the currencies and the fall in the prices of oil and most agricultural and non-agricultural commodities. Adjustment includes, in general, a depreciation of their currencies in real terms aimed at adjusting their imports to the lower generation of dollars (commercial and financial. This, in turn, leads to a greater or lesser extent to the slowdown of these countries' growth rates (and decrease of their nominal GDP in US-dollar terms).

In the case of the Argentine economy in particular, this new external scenario, which is clearly less favorable than that of previous years, is coupled with the fact that the stagnation of the Brazilian economy is expected to continue.

In this framework, the short-term performance of the Argentine economy will depend mostly on the country's ability to generate sufficient foreign currency to honor interest payments on its foreign debt and to finance the necessary imports to recover the growth of productive activity, in order not to add more pressure on the BCRA's reserves.

The new projected decline in export values, both as a result of the fall in the terms of exchange and the expected decrease in exports of industrial products, mainly to Brazil, is a factor that conditions the performance of the Argentine economy in 2015.

Should the current course of the economic policies extend throughout the remainder of the term of the current administration, the country's economic imbalances, far from being corrected, will deepen. Faced with the needs of an election year, the Government is likely to focus its economic policy, to a larger extent, on boosting the economy within the shortest term possible. To that end, the Government is likely to continue to delay the adjustment of the Ps./USD exchange rate to curb inflationary pressures, and to consider the possibility of resorting to external borrowing in an attempt to offset the projected lower real generation of foreign currency. Notwithstanding the foregoing, even if progress is made in this respect, the weight that such a boost to the economic activity level in due time and form would have in an election year as a result of the above-mentioned strategy, is uncertain. In summary, the considerations raised above reflect the complex scenario that the Argentine economy will have to face during 2015, taking into account the limited room for maneuver that the economic policy makers will have as a result of the macroeconomic imbalances brewed in the high fase of the cycle. The return of the historical external constraint on growth, has given rise to budgetary constraints to which economic policy makers are little accustomed, but with which they will necessarily have to cope during their remaining months in office.

THE YEAR 2014 AND THE MEDIA SECTOR IN ARGENTINA AND THE WORLD

During 2014, the performance of the global media sector maintained the rate of growth registered in previous years, according to the 2014-2018 Global Perspectives Report, for the Entertainment and Media Sectors recently published by Price Waterhouse & Co. The report analyses the current situation of the main segments of the sector in 54 countries and makes five-year forecasts. This sector's consolidated revenues closed the year under analysis with a rise similar to the one recorded in 2013 (approximately 5%), once again above that recorded by the world GDP.

Argentina and Brazil are two of the nine countries which entertainment and media industries have the highest growth potential through 2018, according to such report. Driven by a growing middle class, China, Brazil, Russia, India, Mexico, South Africa, Turkey, Argentina and Indonesia will represent as a whole approximately 20% of the global media and entertainment industry's revenues in 2018.

The growth of digital revenues (+14% compared to 2013, according to this same report) again stood out among the abovementioned revenue evolution, because they continued to increase at a rate that was significantly above average. As a result, digital revenues already account for a little less than 10% of the aggregate industry revenues (this percentage rises a little above 25% considering advertising revenues only).

Behind this trend there is an unprecedented digital revolution. The recurring emergence of new technologies is transforming the way in which we carry out our day-to-day activities and is leading to a deep change in the conduct of our societies, in relevant aspects, such as the ways in which we communicate, generate knowledge or consume the media.

Digital natives and nomads are the key drivers of this cultural change. The flexibility, user-friendliness and above all mobility of digital devices, in particular mobile smartphones, are among the key drivers of this revolution. Lastly, the accelerated migration of content, audiences and advertisers towards the digital ecosystem represents the main consequence of this process.

Hence, technological innovation allows for the generation of increasingly powerful devices with increasingly lower purchase prices. The new generations of networks, increasingly faster and with greater storage capacity, drive the growing penetration of the broadband.

The foregoing promotes a growing consumption of the media, with well-defined characteristics, to wit: Mainly audiovisual and increasingly multi-platform and participative (media as producers and "socializers" of content). At the same time as this notable change in the way people use media, there is also a change in people's purchasing patterns that is reflected in the high growth of e-commerce, based on the emergence of new channels and the possibility of customized offerings.

At a corporate level, the speed of the changes in the digital ecosystem has outstripped by far companies' capacity to adapt to such changes. The digital revolution has transformed the business ecosystems of many industries, forcing companies to reorganize themselves as fast as possible. Hence, it is increasingly important for media companies to consider digital technology in their strategic design, in the training of their resources and in the development of business plans. In this search for new business models, the data collection and subsequent intelligent data analysis is becoming increasingly important, not only as a technology to be used in audience management but also as a business generating factor in itself.

The printing industry is undergoing a strong transformation and restructuring on a global basis. In the main developed countries, where there is a strong technological disruption, new business models such as paywalls, subscription plans, membership clubs, discounts, etc. are constantly being analyzed to engage new generations that are reading more content in multiple devices.

One of the main sources of revenues for traditional media companies, advertising, is facing major challenges in this complex scenario. The first of those challenges is how to disseminate mass messages in an environment that is becoming increasingly customized. To this end, many of the new technologies allow companies to identify consumer preferences in detail and thus offer them only what may be of interest to them. However, there are great difficulties, many of them as a result of the great variety of devices with which consumers are in contact. This segmentation of content and audiences poses one of the greatest challenges for traditional, mass and multitarget media in this new paradigm.

Another great challenge is to face the disintermediation typical of this accelerated migration, and the consequent loss of revenues for traditional businesses in favor of native and consolidated intermediaries of the digital ecosystem, such as Google and Facebook.

All of the above poses a great challenge and at the same time represents an opportunity for each of the different segments of the media industry, which in the face of this changing reality are bound to reformulate their strategies and business models.

For the local media industry, 2014 was marked by slow dynamics, because even though revenue generation was higher than in the previous year, the corresponding growth was lower than the average inflation rate measured by private consulting companies. In fact, as mentioned above under the heading "2014 Macroeconomic Environment", the recession coupled with accelerated inflation that characterized the Argentine economy throughout the year was an additional source of stress for this industry.

In addition to the macroeconomic trends, at a micro level, the National Government once again escalated its attacks against the press with the clear purpose of colonizing the media and weakening independent media in general, and Grupo Clarín in particular. The regulatory tools devised to increase governmental intervention and affect private media sustainability, the discrediting campaigns and attacks against journalists and directors from media that are critical of the current administration, the arbitrary allocation of official advertising, the use of publicly-owned media as promotional tools for the government, and the expansion of pro-government media (sustained only by the official advertising allocated to them) are good examples of such escalation. In this complex environment, both at a macro and microeconomic level, the figures corresponding to the main sources of revenue of the industry were modest, to say the least, and heterogeneous. In fact, the paid television segment continued to expand at above-average rates, at higher nominal rates than those observed in previous years as a consequence of the inflationary acceleration. The new subscribers gained in the months preceding the FIFA World Cup mitigated the relatively slower growth observed during the rest of the year. The incorporation of new technologies allowed the industry to offer supplementary services focused on the customization of consumption patterns, thus creating products that are more appealing to consumers.

The demand for broadband maintained the same dynamics observed in the last years, although it grew at lower rates as a result of its high penetration at a local level (among the highest in Latin America). The strong growth of Internet access from mobile platforms, caused by the massification of new technologies applied to new mobile devices, is a highlight of the year under analysis. However, there is still a long way to go to in connection with the necessary investments required to improve both the networks and their speed.

In this respect, we note that both at the international and local levels there is a widespread demand by consumers for higher connection speed, especially taking into consideration the growing consumption of streaming content. The emergence of new players that do not have proprietary networks and instead leverage third-party networks to reach users, creates more demand from users, but also increases the cost of infrastructure and technology necessary to meet such demand at affordable prices, thus causing new tensions in this segment of the industry.

During 2014, according to the Company's own estimates, total advertising investment recorded a year-on-year increase of approximately 25% in nominal terms, virtually similar to that observed in the previous year despite the above-mentioned inflationary acceleration. This increase was mostly driven by government advertising expenditures, directed to continue to finance a matrix with a growing share of publicly-owned and other pro-government media.

Of particular note is the performance of digital advertising, which continued to increase its share in total advertising revenues and is expected to continue to grow well above average over the next years.

In turn, the advertising pie of broadcast television in 2014 continued to widen the gap in terms of which sector attracts the largest share of advertising in the local market. Broadcast television advertising outperformed the printed media, mainly due to the lower dynamism that these media have been experiencing year after year as a consequence of the emergence of new trends and platforms.

Finally, printed newspaper circulation has continued to show the downward structural trend specific to this segment of the industry, strongly influenced by new technologies and consumption patterns. In contrast, it is worth noting the exponential, sustained increase in the number of visits to social networks and websites that create content, mainly news sites, with newspapers at the top of the rankings.

The foregoing poses a challenge for printed newspaper companies, but at the same time it represents an opportunity in a highly changing ecosystem in which consumers are increasingly interested. Within the framework of this ecosystem, deriving profitability from digital newspapers by generating revenues in line with their growing number of readers is still the main challenge faced by newspaper publishers from an economic-financial standpoint.

REGULATORY FRAMEWORK AND CONDITIONS FOR THE JOURNALISTIC AND MEDIA ACTIVITY DURING 2014

In addition to the above, during 2014 Grupo Clarín continued to face an escalating level of harassment. Such harassment was executed through official and para-official structures, with the clear intention of dismantling the group, compromising its sustainability, undermining its credibility, and directly and indirectly limiting its journalistic activities.

The Government continued to use tools to exert pressure through abuse of bureaucratic controls or controls by public agencies that took the form of administrative persecutions, discriminatory resolutions, disproportionate tax controls, and recurring audits. In this scenario, Grupo Clarín faced administrative persecutions from several agencies of the National Government throughout 2014.

In the audiovisual sector, this offensive against the media was expressed through the selective application of the Audiovisual Communication Services Law No. 26,522 (LSCA, for its Spanish acronym). Its controversial implementing regulations clearly exceed the legal framework by granting powers to the enforcement agency that are not vested in that agency by the law.

With respect to AFSCA, in 2014 the persecution against Grupo Clarín reached its peak with that agency's new attempt (later suspended by court) to terminate arbitrarily the procedures proposed by the Company and some of its subsidiaries to conform to the provisions of the LSCA. Such proposal had been duly filed by the Company and approved by AFSCA in February 2014. However, AFSCA resumed the ex-officio divestiture process, thus confirming all the red flags that pointed at the risk of arbitrary enforcement by a non-independent authority.

When the Company was served with the Supreme Court's decision that declared that sections of the LSCA that had been challenged by the Company were constitutional, and faced with the de-facto proceedings that sought to dispossess the Company of its licenses and assets through an ex-officio procedure, on November 4, 2013 the Company submitted to AFSCA and to the Supreme Court of Argentina a voluntary proposal to conform to the LSCA pursuant to section 161 of the LSCA. The proposal had been approved by Board of Directors of Grupo Clarín at a meeting held on November 1, 2013, which was adjourned and resumed on November 3, 2013. With the proposal, the Board sought to avoid the forced divestiture of the Company's assets by AFSCA.

The filing of the proposal resulted in the enactment of AFSCA Resolution No. 1,471/AFSCA/2013, whereby AFSCA suspended its first attempt to enforce the ex-officio divestiture procedure, initiated pursuant to Resolution No. 2,276/AFSCA/2012. Pursuant to Resolution No. 1,471/AFSCA/2013, AFSCA stated its intention to refrain from pursuing any administrative proceeding under Resolution No. 2,276/AFSCA/2012.

The voluntary proposal-which does not interrupt any of the judicial actions brought by the Company and its subsidiaries, among others, to defend their rights- was submitted together with a request that the decision rendered by the Supreme Court of Argentina be complied with in full. That is, that the government guarantee that the enforcement authority will be independent and unbiased, and will have technical expertise, so as to ensure a transparent and egalitarian treatment in the application of the law.

The Company's proposal consisted in a division of Grupo Clarín's current structure into six independent corporate units, whose respective owners will be defined as the implementation process progresses. This way, each unit will conform individually to the provisions of Sections 45 and 46 of the LSCA and its implementing regulations, and will be divided according to the following detail:

(i) Unit I: composed by (a) ARTEAR, owner of the signal of Canal 13 of Buenos Aires and the news signal TN (Todo Noticias). ARTEAR will also maintain its interest in (i) Telecor, holder of the license of Canal 12 of Córdoba and (ii) Bariloche TV, holder of the license of Canal 6 of Bariloche. (b) Radio Mitre, which will maintain the frequencies AM 790 and FM 100 in Buenos Aires, AM 810 and FM 102.9 in Córdoba, and FM 100.3 in Mendoza; and (c) certain assets, liabilities, rights and obligations to be spun off from Cablevisión ("Cablevisión Spinoff 1"), which will include 24 local licenses for physical link subscription television services and 2 licenses for radio-electric link subscription television services, in cities where there is no incompatibility with broadcast TV.

(ii) Unit II: Composed by the surviving Cablevisión, which will continue to carry out the business activities and operations of Cablevisión with all the assets, liabilities, rights and obligations that are not spun off from Cablevisión, including the registered title of METRO as its own signal for the City of Buenos Aires and as a signal to be exploited in the provinces. It will include 24 licenses for physical link subscription television services and 10 licenses for radio-electric link subscription television services.

(iii) Unit III: composed by Cablevisión Spinoff 2, which will include assets, rights and obligations to be spun off from Cablevisión, including 22 licenses for physical link subscription television services and 10 licenses for radio-electric link subscription television services.

(iv) Unit IV: (a) composed by IESA, owner of the signals TyC Sports and TyC Max; (b) the signals El 13 Satelital, Magazine, Volver, Quiero Música en mi Idioma, and an equity interest in Canal Rural S.A., owner of the signal Canal Rural.

(v) Unit V: to be owned by one or more individuals or legal entities that will not maintain a corporate relationship with Radio Mitre, its controlling companies, subsidiaries and/or controlled companies in order not to infringe the current multiple license regime, and which will own: (a) one sound frequency modulation broadcasting service for the City of San Miguel de Tucumán-FM 99.5, (b) one sound frequency modulation broadcasting service for the City of San Carlos de Bariloche-FM 92.1, (c) one sound frequency modulation broadcasting service for the City of Santa Fe-FM 99.3, and (d) one sound frequency modulation broadcasting service for the City of Bahía Blanca-FM 96.5.

(vi) Unit VI: to be owned by one or more individuals or legal entities that will not maintain a corporate relationship with ARTEAR, its controlling companies, subsidiaries and/or controlled companies in order not to infringe the current multiple license regime, and which shall hold one broadcast television license for the City of Bahía Blanca, Province of Buenos Aires-LU81 TV Canal 7-and an equity interest in Cuyo Televisión S.A., holder of one broadcast television license in Mendoza-LV83 TV Canal 9 Mendoza-.

The proposal contemplates that the Company will continue to own, directly or indirectly, only one of the audiovisual communication service Units (among those defined as Unit I and Unit II) of the six that were described above.

The implementation of the proposal submitted by the Company required the approval of AFSCA, the intervention of other governmental and oversight agencies and the approval of the shareholders at the respective Shareholders' Meetings in order to carry out the restructuring and the transfer of licenses, assets, liabilities and operations to third parties.

On February 18, 2014, the AFSCA declared the admissibility of said proposal and granted the Company a term of 180 calendar days for its implementation. On February 18, 2014, the Company's Board of Directors decided to call for an Extraordinary Shareholders' Meeting to be held on March 20, 2014 in order to consider AFSCA Resolution No. 193/2014 and to instruct the Board of Directors to begin implementation of the proposal.

As from that moment, the Company and its subsidiaries have devoted a great deal of effort to implementing in due time and form the Proposal approved by AFSCA and by their shareholders at the respective Shareholders' Meetings.

On August 19, 2014 and within the 180-day term, Grupo Clarín, ARTEAR, Radio Mitre and Cablevisión made a filing with AFSCA in order to inform and certify that they had duly completed all actions required of those companies and necessary to implement the Proposal in the terms in which it had been approved pursuant to Resolution No. 193/AFSCA/2014. The companies also requested (i) that certain inapplicable orders issued AFSCA be deemed responded, and that the agency order and carry out any prior actions necessary to complete the process, as requested in each of the filings made by the Company, including the granting of an extension of the term to implement the Proposal, for as long as it takes that Agency to analyze and instrument such prior actions, and (ii) that AFSCA compel the other government agencies that must necessarily intervene in this procedure (CNV, IGJ, AFIP, SECOM, etc.) to issue the corresponding authorizations that are required prior to the final completion of the process.

Inexplicably, AFSCA intensified the persecution and hostility to which the Company and its subsidiaries had been subjected by issuing resolutions with new requirements. Even though the Company filed responses in due time and form, these resolutions were intended to lay the legal foundations for a new attempt to enforce the arbitrary and unconstitutional ex-officio divestiture procedure.

On October 9, 2014, AFSCA notified the Company, ARTEAR, Radio Mitre and Cablevisión of AFSCA Resolution No. 1,121/2014, whereby, on false and arbitrary grounds, AFSCA decided to reject the reorganization proposed by the Company, the reorganization proposed by Cablevisión, the formation of the foreign trusts required for the implementation of such reorganizations and the transfers proposed by the Company, ARTEAR, Radio Mitre and Cablevisión, and to resume the ex-officio transfer procedures pursuant to Section 1, subsection a) of Annex I of AFSCA Resolution No. 2,206/2012.

The Company understands that it has executed the Proposal that was declared formally admissible pursuant to Resolution No. 193, fully in accordance with the commitment undertaken by the Company and in compliance with the applicable regulatory framework, and considers that Resolution No. 1,121/AFSCA/2014 is evidently arbitrary and inapplicable and infringes the constitutional guarantees of due process and defense in court. The procedure to approve such Resolution had serious irregularities and gross and malicious errors relating to the interpretation and application of effective legislation, inevitably rendering such Resolution null and void. For those reasons, the affected companies requested the Resolution's nullification before an administrative court in order to implement satisfactorily the Proposal to which they had committed.

In view of the serious irregularities mentioned above, upon a request made by the Company, ARTEAR and RADIO MITRE in re "GRUPO CLARÍN S.A. and Other v. National Government and Other on Merely Declarative Action on Motion for appeal" (File 7,263/2013/1), the National Court of First Instance on Federal Civil and Commercial Matters No. 1, Clerk's Office No. 1, granted, on December 9, 2014, a preliminary injunction whereby it suspended the effects of Resolution No. 1,121/AFSCA/2014 for a term of six months. The injunction was issued within the framework of a claim brought by the Company, requesting that the ex-officio divestiture procedure be declared unconstitutional. The injunction was ratified by a decision of the Court of Appeals, which was served on the Company on February 20, 2015.

Finally, we refer to Resolution No. 1,329/AFSCA/2014, which amends Resolution No. 1,047/AFSCA/2014, whereby the AFSCA approved the National Standard for Terrestrial and Broadcast Digital Television Audiovisual Communication Services, and to Decree No. 2,456/2014, which approves the National Digital Audiovisual Communication Services Plan. Both the Resolution and the Decree are manifestly contrary to Law No. 26,522, which has higher hierarchy, because they contradict the rights of the current licensees of broadcast television services, including ARTEAR and the subsidiaries that exploit broadcast television services.

Through this legal framework, which was subsequently supplemented by Resolution No. 24/AFSCA/2015, which approved the Technical Plan for Terrestrial Digital Television Frequencies for important areas of the national territory, and Resolution No. 35/AFSCA/2015 (among others), which allocated a digital television station on a permanent basis to the current licensees of analog broadcast stations in order to develop their transition to digital technology, the rights of the current broadcast television licensees are evidently infringed. These rights should be preserved intact as established in Law No. 26,522, which has higher hierarchy.

The main effect of these regulations, among other identifiable technical effects, is that the rights of the current broadcast television licensees that obtained their licenses pursuant to Law No. 22,285 will be infringed by, among other things: i) the imposition of new charges and obligations, such as the obligation to multiplex and broadcast other broadcast television stations under their own responsibility, incurring liability for the costs derived from such obligation; ii) the illegal assignment of the category "licensee operator" discriminating against them with respect to "authorized licensees" and/or new licensees (non-operators) with respect to the responsibilities and obligations involved, generating a clear competitive disadvantage in the advertising market; iii) the change in their service category, which may have an impact on their broadcast coverage area; and iv) the restriction on the direct access to the exploitation of "One Seg", which entails a restriction to exploit the mobile television service.

ARTEAR and/or its subsidiaries affected by these regulations will bring all legal, administrative and/or judicial actions, as appropriate, to preserve their rights intact as direct or indirect licensees for the exploitation of broadcast television services.

During 2014, the Company and its subsidiaries were also subject to other administrative maneuvers. The effects of Resolution No. 50/2010 of the Secretariat of Domestic Trade and subsequent resolutions issued in connection thereto, which arbitrarily and discriminatorily sought to fix Cablevisión S.A.'s monthly basic subscription price, are still suspended by the decision rendered by the Federal Court of the City of Mar del Plata in response to a claim filed by the Argentine Cable Television Association. The federal court of Bahía Blanca has recently rendered a decision ordering the nullification of such Resolution No. 50 on the grounds that there are no shortages in the cable television industry.

On September 17, 2014, Congress enacted Law No. 26,991, amending Supply Law No. 20,680, which served as a basis for the issuance of Resolution No. 50/2010. The constitutionality of the new law has been challenged on grounds as the challenges against Law No. 20,680. In fact, none of the amendments introduced by Law No. 26,991 address the law's failure to comply with the requirements of Section 76 of the Argentine National Constitution in connection with the delegation of legislative powers. The law grants wider, permanent powers to the Executive Branch, represented by the Secretariat of Domestic Trade. These powers contravene property rights, the right to trade and the right to engage in any lawful business, and also violate the right to freedom of the press when applied to media companies.

Additionally, in connection with an administrative resolution issued by SECOM in 2010, whereby Fibertel's license was revoked, there are preliminary injunctions still in effect that suspend the application of the resolution and challenge its legality.

In this framework, also during 2014 the government continued with the discriminatory allocation of official advertising used to create and sustain pro-government media, and to retaliate against critical media, as a tool to condition the press.

In this regard, the Supreme Court of Justice confirmed that since 2009 there has been a discriminatory allocation of official advertising in connection with Arte Radiotelevisivo Argentino S.A., which in early 2012 reached the point of receiving practically no official advertising. The court confirmed the decision rendered by Chamber No. 4 of the National Court of Appeals on Federal Administrative Matters in re "Arte Radiotelevisivo Argentino S.A. (ARTEAR) vs. EN-JGM-SMC on Claim for the protection of constitutional rights ("acción de amparo", Law 16,986)", and ordered the national government to allocate official advertising among América TV S.A., Telearte S.A. (Canal 9), Teledifusora Federal (Canal 11), Arte Radiotelevisivo Argentino (Canal 13) and SNMP S.E. y RTA S.E. (Canal 7) on an equal and proportional basis, and that it implement allocation mechanisms with a reasonable jurisdictional equilibrium that will for an adequate judicial control of any illegality or unreasonableness in governmental action or failure to act with respect to the allocation of public funds to official advertising.

Thus, the Supreme Court of Justice confirmed the existence of discriminatory conduct in the allocation of official advertising towards one of the companies of Grupo Clarín. Such discriminatory conduct was also extended to the other companies of the Group, in particular to Arte Gráfico Editorial Argentino S.A. and Radio Mitre S.A. These cases are similar to ARTEAR's. The ARTEAR case is based on the precedents of Editorial Perfil and Editorial Rio Negro, and the court held that because it had already rendered judgment about the matter of allocation of official advertising in those cases, it could not now disregard its own doctrine. This decision rendered by the Supreme Court of Argentina has not been complied with during 2014. Therefore, the Government continued to discriminate against ARTEAR in its allocation of official advertising.

This situation had already worsened in the previous year, when in addition to the discretionary allocation of official advertising as an indirect censorship tool, the Secretary of Domestic Trade put unprecedented pressure on advertisers of several industries and threatened them with fines if they advertised their products or services on certain media. This virtual boycott of private advertising, which affected directly the economic sustainability of independent media, lasted approximately until May, when the situation started gradually to revert. However, the current level of private advertising is below that recorded before the boycott.

The government also continued to use public funds and media on a discretionary basis to generate content and shows devoted to political propaganda and to the stigmatization of dissenting opinions; placing a number obstacles and discriminating against non-partisan media in the access to public information and escalating government attacks against such media to compromise their economic sustainability and credibility.

In addition to those maneuvers, the attack against independent media also includes continued actions by several official agencies to seek control of newsprint, the basic input for newspaper production. The government's attempt to gain control of the paper industry has intensified, through several measures that seek 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. On the legislative front, in 2011 Congress enacted Law No. 26,736 whereby the production and sale of newsprint was declared a matter of public interest. Said law is still effective and so are the limits on production and import of newsprint and the price per newsprint ton.

Additionally, under the Capital Markets Law, which was regulated by the Executive in 2013, the Argentine Securities Exchange Commission was vested with additional, discretionary powers to intervene in the governance of publicly traded companies. The CNV moved forward with certain administrative proceedings concerning the companies of Grupo Clarín that may lead to the application of the most controversial aspects of the Capital Markets Law. In fact, in July 2013, the CNV issued Resolution No. 17,131 whereby the General Ordinary Shareholders' Meeting of Grupo Clarín S.A. held on April 25, 2013 was declared null and void. The effects of this decision were suspended pursuant to a decision rendered by Chamber V of the National Court on Federal Administrative Matters in re "GRUPO CLARIN S.A vs. CNV RESOL. 17,131/13 (FILE 737/13)" File No. 29,563/13. Grupo Clarín S.A. was also served notice of an injunction issued on August 12, 2013 by Chamber A of the Federal Court of Appeals on Commercial Matters in re "SZWARC RUBEN MARIO vs. NATIONAL GOVERNMENT AND OTHERS on Injunction", a claim brought by one of the Company's minority shareholders. The injunction provided for the suspension of the effects of Section 20 of Law No. 26,831 in connection with Grupo Clarín S.A.

The regulatory framework of the Argentine telecommunications sector is undergoing a process of change. In December 2014, the Argentine Congress passed Law No. 27,078, known as the "Digital Argentina Act", which partially repealed National Telecommunications Law No. 19,798. The new law subjects the effectiveness of Decree No. 764/00, which deregulated the telecommunications market, to the enactment of four new sets of rules that will govern the License, Interconnection, Universal Service and Radio-electric Spectrum regimes. Law No. 27,078 also repeals or amends certain key aspects of the Audiovisual Communication Services Law, in particular, it repeals or eases the restrictions on telephone companies to render audiovisual services, thus generating unfair competition with the companies in the sector.

The new law maintains the single country-wide license scheme and the individual registration of the services to be rendered, but replaces the name telecommunication services with Information and Communications Technology Services ("TIC Services", for their Spanish acronym). Notwithstanding the foregoing, the scope of the licenses originally granted to the Company's subsidiary, its merged and related companies, and their respective registrations of services, remain unaltered.

The licenses will be called "Licencia Única Argentina Digital" and will allow licensees to render any telecommunication services to the public, be they fixed or mobile, wired or wireless, national or international, with or without the licensee's own infrastructure. The TIC Services registered with the Argentine Secretariat of Communications under the name of the Company's subsidiary, its merged and/or related companies are the following: Data Transmission, Paging, Videoconference, Community Retransmission, Transport of Broadcast Signals, Value-Added, Radio-Electric Trunking, Internet Access, Public Telephony, Local Telephony and National and International Long-Distance Telephony.

The law created a new enforcement and oversight Authority as a decentralized agency under the jurisdiction of the Executive Branch: the Information and Communications Technology Federal Enforcement Authority (AFTIC, for its Spanish acronym). The creation of this agency provided by the new law has been challenged due to the fact that it will entail its dependence on the Executive Branch and jurisdictional conflicts with other governmental agencies.

The new law maintained the obligation to contribute 1% of telecommunication service revenues, net of taxes and charges, to be used for Universal Service investments (this obligation had been imposed by Decree No. 764/00 on all service providers as from January 1, 2001), but the Universal Service Trust Fund was placed under State control.

Another innovation of the recently enacted legislation is the creation of a new public service under the name "Public and Strategic Infrastructure Access and Use Service for and among Providers". The right of access includes "providers having to make available to other providers their network elements, associated facilities or services to render TIC services, even when such elements are used to render audiovisual content services." Under this scheme, the government seeks to put private companies that were created and developed in competition on an equal footing with other companies that enjoyed privileges derived from its exclusive concessions.

The foregoing applies to any provider that has its own infrastructure or networks, because the term Associated facilities is defined as physical infrastructures, systems, devices, associated services or other facilities or elements associated with a telecommunications network or with Information and Communications Technology (TIC) Services that enable or support the provision of services using that network or service, or that have the potential to do so; and will include, inter alia, buildings or building entrances, building wiring, antennas, towers and other supporting constructions, ducts, masts, manholes, and cabinets.

Implementing regulations for Law No. 27,078 are still pending. Therefore, the economic and operational impact that the creation of this public service may have on licensees cannot be ascertained. The government has taken no action to apply the new law because the AFTIC has yet to be organized.

THE COMPANY. ORIGIN, EVOLUTION AND PROFILE

Grupo Clarín is Argentina's most prominent and diversified media group 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.

The companies that comprise Grupo Clarín employ around 16,000 people and, as of year-end, reported annual net sales of Ps. 19.616 billion.

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/El 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, 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 newspaper 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 signals Volver and Magazine, among others. It also produces sports channels and events (TyC Sports), television contents and motion pictures (Pol-ka and Patagonik Film Group).

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. Cablevisión is the first cable operator in Argentina among 700 operators and always competes with other cable or satellite options. Through Fibertel, it also 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 with the same central focus: Journalism and the 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, develops initiatives that arise from discussions with different stakeholders, and works for sustainability.

GRUPO CLARÍN AND ITS BUSINESS SEGMENTS IN 2014

In terms of results, Grupo Clarín and its business segments grew again in 2014 in a highly challenging context. During this year the Company consolidated the positive economic and financial performance trends of the previous years in terms of revenues.

Net consolidated sales increased by 39.1%, from Ps. 14,100 to Ps. 19.616 billion. 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 2014, Grupo Clarín's gross consolidated financial indebtedness (including sellers financing, accrued interest and fair value adjustments) was approximately Ps. 4.593 billion, while net consolidated indebtedness was approximately Ps. 2.875 billion, representing an increase of 10.9% and 15.4%, respectively, compared to the previous year. This was mostly due to the fact that approximately 85% of the Company's indebtedness as of December 31, 2014 is denominated in US dollars and that the Argentine Peso depreciated by 31.2% in 2014, from Ps. 6.52 = USD 1 as of December 31, 2013 to Ps. 8.55 = USD 1 as of December 31, 2014.

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 2014.

CABLE TELEVISION AND INTERNET ACCESS

Grupo Clarín operates, through Cablevisión, one of the main regional cable television and broadband systems. This segment's revenues mainly derive from monthly subscriptions to cable television service and high-speed Internet access. Its revenues also derive from connection and advertising charges, sales of premium and pay-per-view programming, digital packages, DVR, high definition (HD) signal packages, VOD (Video On Demand) services and the magazine.

Out of Grupo Clarín's total sales in 2014 the Cable TV and Internet access segment was the Company's main revenue driver, with sales of Ps. 14.226 billion, considering intersegment sales.

In terms of geographic availability of Grupo Clarín's services, by the end of 2014, its network reached approximately 7.5 million Argentine households. Grupo Clarín provides services in the City of Buenos Aires and suburban areas, as well as in the cities of Buenos Aires, Santa Fe, Entre Ríos, Córdoba, Corrientes, Formosa, Misiones, Salta, Chaco, Neuquén and Río Negro. Regionally, Grupo Clarín also operates in Uruguay.

As of December 31, 2014, it had approximately 3,359,100 paid TV subscribers in Argentina, 131,900 in Uruguay and 1,837,700 Internet subscribers in Argentina.

By the end of 2014, most of the 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 that includes the main programming signals, depending on the capacity of local networks. It offers basic and premium programming from more than 25 providers and broadcast television stations of the City of Buenos Aires.

Cablevisión's subscribers may purchase premium packages in addition to the basic service for an additional fee. These packages or services have a number of signals additional to those offered in the basic package, with a unique content differentiated by film genre, adult programming, sports or a combination of these options.

Cablevisión is also offering digital services to its subscribers that include a basic digital package, as well as Premium and High Definition (HD) services and Video On Demand ("VOD") programming. The digital service reaches the City of Buenos Aires and its surrounding areas (the "AMBA Region"), the city of La Plata and the major markets of the provinces (for instance, Córdoba, Rosario, Santa Fe, etc.). This digital service enables to broaden the signal offering and features an on-screen programming guide.

Cablevisión offers a high definition signal package (Cablevisión Digital HD) as well as the Cablevisión Max HD product in locations with the necessary technology to broadcast under this format. During 2014 and through the HD platform, Cablevisión broadcast events in 3D for customers subscribed to the Premium HD service.

Since 2012, Cablevisión has been offering a Video On Demand (VOD) platform that allows subscribers to buy programs or event packages on demand through a programming library and that features video functions (pause, fast-forward, rewind). The VOD content has signals, such as, Wobi TV, HBO, Discovery, ARTEAR, among others.

During 2014, Cablevisión launched "Cablevisión Play", a service that offers subscribers access on demand to a library with 7,000 titles, from any device inside and outside the subscriber's home. The new online platform offers movies, series and live sports events. That company also launched Cablevisión Store, a new function for Cablevisión HD and Cablevisión Max HD subscribers that allows them to buy Premium packages from their remote control.

Cablevisión also offers Cablevisión Flex, an optional social service of digital paid television with a reduced subscription, to approximately 500,000 neighbors of low-income areas. This service, which seeks to enhance "digital inclusion", includes the installation of digital set-top units and allows clients to buy a service with fewer signals for half the price and gradually buy additional signal packages until completing a full basic product.

As to Internet access services, Cablevisión has been offering high-speed cable modem Internet access through its networks under the Fibertel brand since September 1997. Cablevisión's Internet access products are specially customized to the needs of each residential or corporate user, providing specific solutions, such as, virtual private network or "VPN" services, traditional Internet Protocol ("IP") connections and corporate products that include additional services.

Cablevisión provides high-speed Internet services in the AMBA region, the cities of La Plata, Córdoba, Rosario, Campana, Río Cuarto, Posadas, Salta, Olavarría, Pergamino, Mar del Plata, Bahía Blanca, Santa Fe, and other cities of the provinces.

Fibertel is undoubtedly the broadband service that offers the best variety of speeds in the market, widely and at competitive prices. Since 2011, it has offered the Fibertel Evolution product, becoming the first Internet provider in the country in incorporating the new "Wideband" technology to its product portfolio. The launch of new products with higher speeds is one of the main objectives of the Company's business strategy, seeking to increase speed at households in order to meet the demand for higher bandwidth consumption.

As of December 31, 2014, Cablevisión provided Internet access in Argentina to 1,837,700 subscribers through its own networks.

Fibertel Zone is the first Argentine WI-FI circuit. This service, which reached 900 hotspots in 2014, allows users to surf the web for free at the highest speed at bars, restaurants, movie theaters, gyms and parks, among many other spots. It is available for Fibertel customers and non-customers. However, at the time of establishing the connection, customers obtain the following benefits: Higher speed, browsing priority and connection without time limits. In addition, Cablevisión entered into a commercial agreement that allowed customers to have 1,000 hotspots at Airports, Hotels, Malls and Beaches in the main cities of Brazil during the 2014 FIFA World cup.

Commercialization and Customer Service

Cablevisión uses several market positioning mechanisms, including promotions, customer service center locations, newsletters about the company, institutional information and programming through its websites. It advertises its services in the printed 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 that offers round-the-clock support, with the aim of optimizing customer relations. 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.

Even though most interactions take place over the phone, subscribers may also contact the customer service by e-mail, fax, chat, the web site and the social networks, mainly Facebook and Twitter. In 2014, Cablevisión was once again certified under the model of the COPC (Customer Operations Performance Center) standards, which foster improvements in the processing of customer's inquiries. Not only was this achieved by making changes in the procedures, but also by delivering results that boost customer's satisfaction. This high-performance management model is used by the world's leading service companies. In addition, Cablevisión included a solution called "Interaction Analytics" that provided further information to spot opportunities for improvement in customer service. The satisfaction indicators remained above the target of 85%, Top Two Box, confirming the excellence of the services provided by the Company.

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 are frequently subject to overlapping of one or multiple competing cable networks; in addition to the satellite service that is available throughout the company's entire coverage area. Free broadcasting services are currently available to the Argentine population. In the AMBA region, these services primarily include four private television signals (one of them is controlled by Grupo Clarín) and their local affiliates 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 the population 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 (satellite technology) that compete against Cablevisión nationwide. Cablevisión also considers as competitors Internet video streaming systems (Netflix, Arnet play and On Video) that compete against its services.

Cablevisión can effectively compete against other cable television providers on the basis of a competitive price, a higher number of quality programs and a wide range of additional services, and mainly the customer service it renders through its "Contact Center".

Two other 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 in certain areas of the country. During 2015, the three main mobile Internet providers are expected to start offering 4G services nationwide.

Therefore, the Internet access segment faces fierce competition from several providers in an ever-growing market.

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 2014, the Printing and Publishing segment accounted for Ps. 3.037 billion, considering intersegment sales. This segment derives revenues primarily from the sale of advertising, newspaper copies 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; Diario La Razón, a pioneer in the free newspaper segment; Diario Muy; and regional supplements. It also publishes Genios, a magazine with a high penetration rate in the schoolchildren's segment; Jardín de Genios, aimed at children between 2 and 5 years of age that comes with a supplement for parents; Ñ, a cultural magazine that reflects all cultural news and trends; Revista Pymes, aimed at small- and medium-sized businesses; and Diario de Arquitectura, aimed at the construction world, architects, designers and building contractors, among other products.

AGEA has a strong presence in the on-line classified ads segment through vertical sites, including Autos, Inmuebles y Empleos and in the Internet content market through its websites clarin.com, ole.com.ar, entremujeres.com and biencasero.com.

Diario Clarín

With a long-standing journalistic and commercial leadership consolidated in its 67-year track record, Clarín is the most prominent Argentine newspaper in terms of outreach, 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 includes 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 the year, in terms of recognitions, the designs of Diario Clarín obtained Golden and Silver medals at the Malofiej awards. In addition, the team of the Diario Clarín section "País" received an honorable mention at the Latin American Investigative Journalism Awards organized by Transparency International and the Press and Society Institute (IPYS, for its Spanish acronym) for the report called "La ruta del dinero K". The United Nations Correspondents Association (UNCA) recognized the journalist Marina Aizen from magazine Viva with the Prince Albert II of Monaco silver award for the best coverage of climate change for her article called "Hielo Ardiente" published in September 2013 in the magazine Viva. The award was delivered by the UN Secretary-General Ban Ki Moon, who gave special thanks to Clarín for its ongoing dedication to issues of global concern.

At a national level, Clarín journalist Matías Longoni was distinguished by the Forum for Argentine Journalism (FOPEA, for its Spanish acronym) in the category "written journalism", for his report on the inflated prices of rice exports. The Professional Council in Economic Sciences gave the 2013 economic-financial journalism award to Silvia Naishtat, editor of Clarín. In addition, four Clarín journalists received the "2014 ADEPA Journalism Awards" granted by the Association of Argentine Journalistic Entities (ADEPA, for its Spanish acronym): Gisele Sousa Dias, journalist of the "Society" section obtained the first prize in the Human Rights category for her work about gender-based violence; Alfredo Dillon, also a journalist of the "Society" section obtained the first prize in the Education category for his work entitled "El desafío de dar clases en escuelas hospitalarias"; Jordi Canta, editor of the regional newspaper of Avellaneda received the first prize in the Social Solidarity category for his work entitled "Unidas en el alma", published in the magazine Viva; and Miguel Ángel Vicente, a journalist of the Sports section received a special mention for his work entitled "De esta historia también nos sentimos protagonistas".

With an average daily circulation of 240,000 copies, Clarín's circulation is 1.5 times higher than its closest competitor, while Sunday's sales exceed 528,000 daily copies, placing Clarín among the major Sunday newspapers of the world. Clarín has a 38.7% share of the newspaper market in the City of Buenos Aires and the province of Buenos Aires and a 23.3% share at a national level.

Clarín 365, designed to build loyalty among readers and to reinforce its close bond with them, as well as to retain circulation, offers its over 342,000 subscribers a discount, promotion and benefit program they can use in over 1,600 brands and 5,700 stores nationwide. During 2014, the focus was on improving the service rendered to subscribers and readers, optimizing the performance of the benefits offered by the program, creating a more efficient communication channel with readers and redesigning graphic communication with new campaigns and an exclusive website.

AGEA leads the print media market with over Ps. 848 million in sales in 2014, ranking first in terms of advertising revenues and sold advertising space. AGEA also leads all advertising categories (display, special section and classified ads). During the year, on-line advertising sales rose to Ps. 124 million.

The Zepita facility, where Dario Clarín is printed, has a surface area of 35,000 m2 and capacity to store 12,000 tons of newsprint. It has five Goss Metrocolor rotary offset printing presses that enable it to print 300,000 copies of 80 full-color pages per hour. The entire production process is developed in accordance with leading industrial criteria -such as the "computer to plate" (CTP)- and environment preservation standards, such as, ISO 14001. Ongoing audits are conducted by companies that are engaged for that purpose.

For the last few years, Clarín has been engaged in a significant business transformation process. It started with the production of a single product - Diario Clarín - that reached its readers through the newsstands under a reading contract that was renewed every 24 hours. It had a direct relationship with advertisers or through agencies. In the last few years, the Company has maintained those standards and undertaken the challenge of adjusting its business environment to an increasingly complex environment for traditional media. Thanks to the proliferation of web sites, Clarín now maintains a direct link with millions of readers, where information is updated by the second, rather than every 24 hours.

Products

The basic offer of the newspaper is comprised by the main body and its supplements: Entertainment, Sports and Classified ads. Weekly supplements, such as, Rural, Countries, iEco, Autos, Mujer, Sí, Viajes, New York Times, and Ollas, make Diario Clarín one of the most comprehensive newspapers in the market.

The Company continued to offer 12 regional newspapers that maintain the concept of proximity and symmetry with readers. The product yielded considerable profitability for the fourth consecutive year and was a good support to the Thursday edition of Diario Clarín, with coverage in the following locations: Vicente López, San Isidro, Morón - Ituzaingó and Hurlingham, Lomas de Zamora, Avellaneda - Lanús, San Martín - Tres de Febrero, La Matanza, Tigre - San Fernando, San Miguel - Malvinas Argentinas - José C. Paz and Quilmes- Berazategui - Florencio Varela. The monthly supplements published for Pilar, Escobar, Zárate and Campana, and Moreno, Rodríguez and Luján are also part of the offering.

Like every year, the Sports Supplement of Diario Clarín covered the most prominent sports events through its usual and its special editions, such as the Rally Dakar and the Davis Cup editions. As usual, soccer had its preferential spot. Diario Clarín made a broad editorial coverage of the 2014 FIFA World Cup through the publication of a daily special supplement, in addition to the traditional Special Supplements for the Clausura and Inicial tournaments.

iEco is the economic supplement of Diario Clarín, and offers readers an in-depth economic review, the secrets of leading companies, personal finance, marketing and the labor market. The Rural supplement is a management tool for the production sector, embracing all the solutions and technologies for agricultural businesses. It is published on a weekly basis.

In order to continue to provide services and 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. The following are among the most prominent collectible products for the period: "Con Francisco a mi lado", "200 ideas prácticas para mejorar tu casa", "Los Autos que enamoran a los Argentinos", "Mi primera enciclopedia NatGeo", "El Gran Libro de Clarín del Crochet 2014", "Grandes Clásicos bilingües para chicos", "Libros del viajero National Geographic", "El Gran Libro del Tejido 2014", "A Game of Thrones", "Pichuco: Los 100 años de Anibal Troilo", "Los secretos del Gran Asador 2014", "El invencible Iroman", "Las 1000 preguntas que siempre te hiciste sobre sexo", "Intrigas que conmovieron al mundo", "La escuela en casa", among others.

Internet

With a strong share in all major social platforms, Clarín has been employing an innovative communication, dissemination and presence strategy in websites, thus consolidating itself as the undisputed benchmark in the "social media" journalistic category.

Clarín.com has been comprehensively renewed and features a new design that addresses the major changes derived from Internet in the way readers consume news and information. The website, with larger display of images, new sections and a structure that reorganizes the traditional news categories, is constantly updated through an integrated newsroom. Apart from renewing its main site, Clarin.com launched new versions for mobile devices through web applications that allow users of mobile phones and tablets with any operating system to access the site, such as the application Al Toque, to offer instant news on smartphones. These actions allowed Clarín.com to continue as the news site with the highest market share in Latin America, with 19,3 million unique visitors and more than 223 million page views per month.

With its sites "Deautos", "Argenprop" and "Empleos Clarín"; the company maintains its strong presence in the on-line classified ads for cars, real estate and jobs.

The most outstanding sites in the AGEA network are Vía Restó, Clarín's online restaurant guide; Biencasero.com, a site with practical solutions to enjoy the cooking experience; Entremujeres.com, which continued to grow in terms of unique visitors and consolidated itself as one of the most visited sites, with over 4 million unique visitors; and Extrashow, a site that keeps readers updated with the best information on movies, theater plays, TV shows, music and celebrities from Argentina and the rest of the world; and Todo Viajes.com which received 550,000 visits.

El Gran DT is another alternative among online products. Argentina's most popular game managed to engage more than 5 million participants since its launch at the 2008 Apertura Tournament. Each online edition of Gran DT engages more than 650,000 participants who have the chance to build their fantasy teams and win outstanding prizes.

Magazines

AGEA also continued to build upon the achievements attained by the cultural magazine Ñ. The 500th issue of magazine Ñ was published during the year. Several initiatives were carried out, aimed at engaging readers through the launching of collectible products and special editions, and the creation and sponsorship of forums comprising different cultural issues and involvement in and sponsorship of major cultural events, such as the Feria del Libro de Buenos Aires (Buenos Aires' Book Fair).

Revista ELLE is a high-end magazine for women mostly focused on fashion, beauty and news. In 2014, its circulation exceeded a monthly average of 24,900 copies. Revista Pymes continued to consolidate its position with a special offering that reflects the voice of entrepreneurs and the keys to their strategies.

In 2014, the Company continued to publish the magazines Genios and Jardín de Genios. With children and school in mind, these magazines were created with the aim of integrating content for children, parents, school and society, combining education with entertainment. The collective product "Maravillas de mi Argentina" was the illustrated publication that accompanied the magazine Genios during most of the year, with an average circulation of more than 50,000 copies; while the monthly issue of Jardín de Genios retained its leading position in the children's magazine segment, with over 68,000 copies sold. During 2014, "Tiki Tiki", a magazine aimed at children aged 7 through 14, continued to strengthen its position.

Also in 2014 the company continued to publish the monthly magazine-catalogue, Shop & Co, which includes discount coupons on important brands.

Other Newspapers

La Razón, which was added to Grupo Clarín in late 2000, is the pioneer among free-distribution newspapers. It is mainly distributed in the public transportation network of the City of Buenos Aires, including trains, subways and highways. La Razón is also distributed at certain bars and among a group of opinion leaders through an exclusive mailing program.

Diario Olé is the first and only sports newspaper in Argentina. Since 1996 and with an average annual historical circulation of 35,000 copies per day, Olé continues to lead the sports editorial market, and is one of the highest circulation newspapers in the city of Buenos Aires, including general interest newspapers. Among its editorial offering, it has the broadest and most comprehensive soccer and multi-sport coverage. Since its inception, it has drastically changed reading habits and managed to engage a new generation of young readers, avid for information and critical opinions. The editorial profile is fresh and complicit with an agile and informal style focused on photography, illustrations and infographics as communication tools, with a good design and modern and effective production technology. In a year marked by the FIFA World Cup, Olé published the most comprehensive guide, offering the most important information and views, together with the sports analysis.

In 2011, 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. During 2014, the newspaper MUY has continued to offer promotions, optional books and free collectibles.

Tinta Fresca

Founded in 2004, Tinta Fresca Ediciones S.A. is an Argentine publishing company focused on textbook publishing for all stages of the Argentine education system. Tinta Fresca seeks to place books at the heart of the teaching and learning processes and have teachers and students use them as an effective and updated learning tool. The company has been growing in many aspects over these years. In the editorial area, the company has learned from experience, and managed to improve the interaction among the different areas and to streamline the development of its products. In addition, it incorporated the participation of teams of teachers in the edition process. The editorial offering is considerably broad in publications aimed at teachers and learners, such as children and youth literature, dictionaries and reference books, and collectible products sold at newsstands. Since its foundation, Tinta Fresca has published more than 350 titles.

In 2014, the new materials added to the catalogue were: "Descubro las Ciencias 3", "Aprendo Matemática 4, 5, 6 y 7" and "Dame la palabra 4, 5 y 6", completing the series launched during the year. It developed the areas of natural and social sciences for 4th, 5th and 6th grade by publishing the series "Econaturaleza" and "Socialmente", all of them for primary education. For secondary education, it published "Mundo dos punto cero", "Historia 2" and "Geografía 2" as part of the series. During the period, it also published: "Nuevo Colorín 1, 2 y 3", "Descubro las Ciencias 1 y 2", which completed the series launched during the previous year. They will all be included in the 2015 catalogue. The company developed the areas of natural and social sciences by publishing "Aprender Ciencias 4, 5 y 6". In addition, it created a new concept with the product entitled "Equipo escolar Eureka". It includes a manual of the series Eureka, a map library (a set of maps of the world), a school dictionary, a literature book with the adaptation of two novels and a test (a set of questions and answers to review the contents of the manual at home).

Tinta Fresca executed an agreement with the National Agency for the Promotion of Science and Technology and the inter-university consortium ELSE, for the publication of a catalogue of books focused on teaching Spanish as a foreign language (ELE). The project was completed during 2014 and the books will be sold during 2015. Four books were developed.

The company also made headway in the Digital Development project that focuses on the several ways in which TIC services will be introduced in the education system. The special unit is in charge of updating the company's websites and it deals with the IT aspects of the editorial contents distributed online. The company started to develop a blog aimed at secondary school teachers, with digital resources to apply in the classroom, paving the way for virtual education. This unit permitted the development and launching of the first digital books for secondary education, which are sold at Bajalibros.com. The company also developed a new on-line sales channel for parents and teachers.

In 2014, and in spite of the good selection of Tinta Fresca's products, the company was not awarded any contract for the procurement of material by the National Government, while it did receive contracts from the city of Salta and the city of Buenos Aires.

Also during the period, the company continued to explore foreign markets, such as Chile and Uruguay. In 2014, Rios de Tinta, the Mexican-based operation, changed the promotion team and reinforced its work at private schools.

Artes Gráficas Rioplantense

AGR is a comprehensive printing production company that meets the special printing needs (magazines, optional and collectible products, among others) of Clarín and Olé, apart from producing large volumes of graphic material (books, advertising brochures, etc.) for other major editors in the region, which makes it the leading printing services company in Latin America.

In 2014, AGR retained its leading position in the sector with net sales of Ps. 287.3 million.

In addition to the progress made in improvement and control management of its production processes, during 2014 AGR continued to streamline the logistics of processes and the volume of goods in process. AGR purchased and installed a flatbed printer in order to meet higher quality standards and reduce the turnaround time of this type of products. During the period, AGR implemented the digital printing line for books and was able to produce books for different publishing companies. At year-end, 30% of its output was fully operating in line to obtain books in boxes in just one step, with the aim to increase this level to 70% in 2015.

AGR successfully completed the implementation of the FSC standard and ISO 14000, an internationally accepted standard that allows for the establishment of an effective Environmental Management System (EMS) to achieve a balance between maintaining profitability and reducing the environmental impact. On the other hand, AGR focused on ongoing improvements to reduce waste.

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.

During 2014, Impripost focused on business development. It was able to maintain its main customers, renew contracts and enhance its reach to new customers. It also made a significant renewal of its fleet of machines to be in line with the latest technological developments. In addition, it continued with its social investment programs and with the awareness and prevention campaigns and actions on health issues.

In 2011, the Company acquired an interest in the capital stock of Cúspide Libros S.A. through AGR. Cúspide Libros has two business areas: retail sales, with 25 branches located throughout the country; and wholesale distribution, which has approximately 1,500 customres. "Cuspide.com" leads the on-line bookstore market. During 2014, the company focused on a growth and expansion plan, whereby it opened 10 new branches in different provinces: two in the City of Buenos Aires, one in San Miguel, one in Ramos Mejía in the Province of Buenos Aires, two in the City of Rosario in the Province of Santa Fe, one in the City of Córdoba, one in the Province of Mendoza, and two in the Province of San Juan. Cúspide took part in the 2014 Buenos Aires' Book Fair and was recognized as the best stand of the Fair.

UNIR S.A. is a company engaged in wholesale mail reception, classification, scheduling, transportation, warehouse, logistics, distribution, and delivery services. As from August 25, 2008, AGEA holds a 93.41% direct controlling interest in Unir. During 2014, Unir's total sales increased by 23%. Such increase is attributable to readjustments in rates, while the company's sales volume decreased in line with the general decrease in activity. Also during the period, Unir expanded its logistics activities with the storage and final distribution of several products. Unir has certified its Quality Management System under ISO 9001.

CIMECO

CIMECO S.A. 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, without altering its editorial principles. CIMECO holds a majority interest in two of the three largest regional newspapers in Argentina: La Voz del Interior (Córdoba) and Los Andes (Mendoza).

Los Andes newspaper has been reporting Mendoza's news since 1882. In that year, the Calle family founded one of the oldest journalistic companies in the country. Los Andes is a benchmark brand in the market. In 2014, Los Andes was actively involved in all major provincial events and put special emphasis on driving the growth of the on-line version, positioning its loyalty program Los Andes Pass and subscriptions, which recorded a 17% year-on-year growth, and boosting the sale of optional products. Following the innovation trend in online products and footprint in networks, the audience of Los Andes digital version grew as compared to 2013, reaching 28 million page views and 3.5 million visitors in its best month. During the year, the newspaper's share in the provincial advertising market was 38%, despite the fact that it was not allocated any official advertising.

La Voz del Interior S.A. has again maintained its leadership position in the printed press and its position as an information and entertainment digital benchmark in the central region of the country. Its two printed newspapers, La Voz del Interior and Día a Día, have continued to maintain a significant market share in the province of Córdoba. In addition to this, the sectional directories and the sustained growth in the distribution of third party and in-house editorial products have contributed to an increase in contracts with clients. Its web sites position the newspaper as a leader in unique visits and page views in the provinces of Argentina, with a 37% year-on-year increase in advertising in this segment. During the year, the operation of its multi-platform newsroom was consolidated and increased subscription sales.

During 2014, Comercializadora de Medios del Interior S.A. (CMI) continued to consolidate its position as the most prominent advertising sales network in the provinces. It has relationships with 40 media companies, some of which are owned by the company and others by third parties. The company focused on key network development. Rumbos magazine, which celebrated its 11th anniversary in the market, is one of its remarkable products, and consolidated as the leading Sunday magazine in the provinces in terms of the volume and quality of units sold. In 2014, the magazine was distributed through 20 channels. In addition, as a result of the incorporation of the new optional business unit that allowed the company to achieve scale synergies, the products published in 2014 were distributed through 15 channels.

Papel Prensa

Papel Prensa S.A.I.C.F. y de M. is the first producer of newsprint that is wholly owned by Argentine capital. It started its operations in 1978 and is currently Argentina's major producer. As of December 31, 2014, 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%).

BROADCASTING AND PROGRAMMING

Grupo Clarín is also the leading company in the audiovisual broadcasting and programming segment. Through ARTEAR, it holds the license (LS85 TV Canal 13 Buenos Aires) to broadcast El Trece, one of the two largest broadcast television channels in Argentina, and segment leader 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), and Bariloche (Bariloche TV). Grupo Clarín also produces and sells some of the most popular cable television signals.

Its audiovisual broadcasting and programming array includes agreements and equity interests in the main television and film producers, such as Pol-ka Producciones, 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 Mitre AM 810 in the province of Córdoba. Grupo Clarín also has a strong stake in sports commercialization and broadcasting rights, directly and through joint ventures.

Out of Grupo Clarín's total sales in 2014, the Broadcasting and Programming segment accounted for Ps. 2.586 billion, taking into account intersegment sales.

During August 2014, and as mentioned in Note 9 to the Consolidated Financial Statements, the Company made headway in the restructuring of its businesses and media in accordance with the Proposal submitted by the Company and approved by AFSCA pursuant to Resolution No. 193/AFSCA/201. In order to concentrate in IESA all the assets and businesses in "Unit No. 4", ARTEAR transferred to IESA the ownership of the AFSCA registrations of the signals El Trece Satelital, Quiero Música en mi Idioma, Magazine and Volver, the ownership of the trademarks, a non-exclusive license for the use of the trademarks associated with El Trece Satelital, the personnel engaged in operations, the teams of each signal, and decoders delivered to cable operators under loans for use. As consideration, IESA paid to ARTEAR Ps. 50,000,000. In addition, in accordance with the Offer accepted for the transfer of shares of IESA, they agreed on the provision of some content that is currently broadcast by the above-mentioned signals so that they will maintain their current high level of programming themes and content quality under conditions similar to the current ones. To such end, an agreement was executed for the exclusive provision of contents for the signal El Trece Satelital for a term of 10 (ten) years, which will ensure the live broadcasting of Canal 13's programming as it occurred until the execution of the agreement. ARTEAR also transferred to IESA 24.99% of the capital stock and votes of Canal Rural Satelital S.A. As consideration, IESA paid to ARTEAR Ps. 5,000,000.

ARTEAR

In a scenario marked by industry challenges and strong competition, ARTEAR was able to achieve its goals in 2014. The main source of revenues of ARTEAR, broadcast television, recorded a 47% year-on-year increase, mainly driven by advertising. It share of the advertising marked was 37.4%. Its professionalism, artistic quality, innovative proposals and technological developments continue to distinguish it as one of the most prominent signals in the market.

El Trece ranked second in the broadcast TV audience rating with 7.6 points from 12 p.m. to 12 a.m., Mondays through Sundays. El Trece led the Prime Time with 11.3 rating points, with a very slight edge over its main competitor. Between the months of June and July, broadcast television featured the 2014 FIFA World Cup (TV Pública) with an average rating of 26.1 points. In addition, the highlights during 2014 were the return of Showmtach (El Trece) with an average rating of 20,5 points and the soap opera Avenida Brasil (Telefe) with an average rating of 17,5 points.

In terms of programming, El Trece combined fiction, news and entertainment embracing a varied offering. "Showmatch", "Guapas", "Mis amigos de siempre", "Los 8 escalones" and "A todo o nada" led audience ratings. "Periodismo para Todos" - a program hosted by Jorge Lanata - is a highlight in terms of journalistic and news programs. Furthermore, "Arriba Argentinos" continued to consolidate its morning audience rating. El Trece's news programs - "Noticiero Trece", "Telenoche" and "En Síntesis"- further validated their already existing recognition and credibility with audience ratings that led their respective time slots.

With respect to cable television signals, TN maintained the highest audience share in the ranking of cable signals, considering a total of 55 signals measured, with a 28% difference above the second signal in the ranking (C5N). Several programs particularly stood out, such as "El Juego Limpio", "Palabras más, Palabras menos", "Código Político", "Desde el Llano", "Argentina para Armar", "Otro tema", "A Dos Voces" and "TN Central".

ARTEAR further strengthened various television slots, seeking to offer diverse options in terms of information and entertainment. The Spanish 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 continued to develop its in-house programs and products with broadcast TV format and technology. It was the signal with the highest audience in the variety category.

Additionally in the production section, the most prominent show business and general interest events were broadcast, such as, the concerts of Ricky Martin, Joaquín Sabina, Metallica, Hugh Laurie, Alejandro Fernández, Marc Antony, David Bisbal, Tan Biónica, Lali Espósito, among others; as well as major events, such as, Lollapalooza, Personal Fest, Cirque du Soleil, Chantecler Tango, Martin Bossi, Piñón en Familia and Panam y Circo. ARTEAR also held a new edition of "Un Sol para los chicos" the traditional UNICEF fund-raising event at the Luna Park stadium and broadcast the ceremony of the "Abanderados de la Argentina Solidaria 2014" awards.

During 2014, ARTEAR sought to strengthen its position as technological market leader, after the successful launch of the signals El Trece HD and TN HD in 2011, when it became the first broadcast signal to produce all of its content in high definition.

During the period, certain investments were made to continue on this path of innovation and technological leadership. The need to update TN's programming, including an important shift in the production style that required and increasing the size and facilities of TN's F3 or Mirador Studio. TN added large-sized LED touch screen systems and activated and aired a virtual set system, offering a fully renewed and technological image for TN's news programs aired from the Mirador Studio. For the coverage of the 2014 FIFA World Cup, the company took unprecedented actions. It incorporated a studio inside the IBC, a studio overlooking the beach and the sea, an outside broadcast unit and acquired a flyaway unit, which can be carried in a backpack. This type of flyaway unit can be easily carried and allows the company to cover important events in any location of Argentina and the world. Within the framework of its plan to improve news coverage, it acquired an antenna that was placed in the terrace of the Mirador studio in order to optimize the reception of mobile satellite broadcast units. The company implemented the new optical disc archive (ODA) system for the management of content files used in ARTEAR's production programs. In general terms, the company continued to upgrade its facilities, adding infrastructure and acquiring equipment aimed at migrating as many signals as possible to HD.

ARTEAR continued to produce fictional content for TV series and motion pictures through Pol-Ka and Patagonik Film Group.

Pol-ka continued to produce "Guapas", a program starring several prominent actresses, such as Mercedes Morán, Araceli González, Florencia Bertotti, Carla Peterson and Isabel Macedo, and aired on El Trece during Prime Time. Towards the end of the year, Pol-ka started to produce the daily fiction "Noche & día junto a vos", a detective fiction starred by prominent actors and actresses, such as Facundo Arana, Romina Gaettani and Oscar Martinez, among others. In addition, during 2014 Pol-ka continued with the production of the third season of "Violetta". The show was a success among children and youth on a global basis. The show has become very popular among children and teens, with high audience levels both in cable and broadcast TV in Argentina and abroad.

During the year and as part of the strategy to produce motion pictures, several productions were launched through the Patagonik Film Group: "Aire Libre", a drama written and directed by Anahí Berneri and starring Leonardo Sbaraglia and Celeste Cid. This international co-production between Rizoma Films S.R.L., Patagonik Film Group S.A., BD Cine and Salado Media was premiered in May 2014. "Las Insoladas", a comedy written and directed by Gustavo Taretto also premiered in 2014. It was a co-production with Rizoma Films S.R.L., starring Carla Peterson, Luisiana Lopilato, Marina Bellati, Elisa Cariicajo, Maricel Álvarez and Violeta Urtizberea. "El amor y otras historias", a romantic comedy written and directed by Alejo Flah, starring Ernesto Alterio, Mónica Antonópulos, Marta Etura, Quim Gutierrez and Julieta Cardinale was also produced in 2014. It was a Spanish-Argentine co-production between Patagonik Film Group S.A., AZ Films, Icónica and La Zona. Patagonik Film Group also started to develop the following motion pictures: "Voley", "Sin Hijos", "Los Extraños" and "Me casé con un boludo", which are expected to premier the following year.

The Company also made significant efforts towards developing activities related to the commercialization, organization and broadcast of sports events through TyC Sports and Autosports, mainly football and motor racing. During 2014, the company worked on the restructuring and profitability of its sports businesses and the exploration of new local and regional businesses.

Radio Mitre

In 2014, Mitre AM 790 consolidated its leadership position in the raking of audience share of AM radios, with record-high audience shares.

The morning AM radio talk show "Cada Mañana", from 6 am to 10 am, hosted by Marcelo Longobardi and his team, has maintained its leadership since the first day and reached unprecedented peaks in audience share of 50 points. "Lanata sin Filtro", the show hosted by Jorge Lanata and a team of journalists from 10 am to 1 pm, also surpassed the 50 point mark. The show can also be watched in high-definition at mitrehd.com.ar. "Encendidos en la tarde", from 2 pm to 5 pm, hosted by María Isabel Sánchez, Rolo Villar and Tato Young, lead their segment with a fun afternoon show that combines humor, information, and interviews.

In 2014, Magdalena Ruiz Guiñazú returned to Mitre, co-hosting the show "Lanata sin Filtro" and hosting a show called "Esta Semana con Magdalena", which is aired on Saturdays from 10 am to 12 pm and offers a detailed and incisive summary of the political news that occurs during the week. In November, the prestigious journalist Pepe Eliaschev passed away, victim to a serious illness. During most of 2014, he hosted his show "Esto que Pasa", which stood out for his committed editorials and a thorough analysis of reality.

La 100 remained between the first and the second place in audience share of the FM market, with minimum differences, averaging 12,20 rating points. La 100 combines famous artists, and a mixture of music mix constant innovation, which consolidates its position among industry leaders. In 2014, La 100 incorporated in the first slot (from 6 am to 9 am), which had been hosted by Roberto Pettinato for the last 10 years, the show "No está todo dicho", hosted by Guido Kaczka and Claudia Fontán, with a different proposal that combines music, news and fun. In the second morning slot, Lalo Mir continued to host his show "Lalo por Hecho" (from 9 am to 1 pm), co-hosted by Maju Lozano. In the afternoon slot, Ronnie Arias hosts "Sarasa" (from 1 pm to 5 pm), Sergio Lapegüe and Rifle Varela host "Atardecer de un día agitado", a show that airs as listeners return home from work; and Chino Leunis with his successful show "Románticos", at night from 8 pm to 12 am. La 100 continued to host acoustic concerts with the most renowned musicians.

Cienradios offers the most prominent on-line radio and content menu in Latin America: more than 500 playlists of all the singers and genres, where users can choose their favorite music. It also recommends singers related to those chosen by users. It offers broadcast radio stations and has alliances with third parties. It offers a wide range of music, content, videos, interviews, shows, games and a premium sound quality. Mitre AM 810 consolidated itself in the province of Córdoba as the radio with the second highest audience share. With a permanent staff in the city and its own news service, also called "Mitre informa primero", Mitre AM 810 develops comprehensive coverage of news comprising Córdoba, Argentina and the world. Its programming includes prestigious hosts, such as, Jorge "Petete" Martínez, Rebeca Bortoletto, Juan A. Mateyko and Federico Tolchinsky, among others.

DIGITAL CONTENT AND OTHER

Revenues in this segment are derived from the sale of advertising on some 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 Compañía de Medios Digitales S.A. ("CMD").

Out of Grupo Clarín's total sales in 2014, this segment accounted for Ps. 614 million, taking into account intersegment sales.

Digital Content

Grupo Clarín is the leading producer of digital content. Through CMD, the Company developed the broadest network of portals and digital content in Argentina, covering news, entertainment, sports, classified advertisements, direct marketing, e-commerce, digital photography, video, blogs, chat rooms, music, mobile content (ringtones, SMS and games) and a browser. For reasons of corporate strategy, the exploitation of the websites Clarín, Ole, Club Cupón and Imagena was transferred to other companies of the same economic group. At the close of this year, the same happened with the websites Todo Noticias, Cienradios, Ciudad and ElTreceTV.

In addition, the Company continued to sell contextual advertising under the brand iAvisos. The company started to exploit the brand Guías Clarín with an individual business model. The website Todo Noticias registered a constant audience share growth at year-end. It won a silver award for excellence at the W3 Awards 2014 in the category news websites. Ciudad.com remained the most visited show-business web site in Argentina.

CMD maintained its 80% equity interest in Interwa S.A., a company dedicated to tourism web sites. In addition, through its 51% interest in Clawi S.A., it develops Mundo Gaturro, a successful on-line game, which has become the largest on-line community of children in Argentine history with more than 11.5 million registered users and more than 1 million children playing each month. It continued with its expansion process to other countries and increased traffic in Chile, Peru, Mexico, Colombia and Spain. In addition, CMD consolidated the third year of operations of Tecnología Digital S.A. (TECDIA S.A.), a company engaged in e-business development, in which CMD owns a 95% equity interest.

CMD also owns a 95% equity interest in QB9 S.A., a company engaged in the development of on-line games for different platforms, with important local and international customers. During the period, QB9 continued with its aim to enter into agreements with entertainment companies for the joint development of new games. In this sense, it continued to work with Lego on a new mobile project and resumed, together with Mattel, the development of HTML5 games.

CMD holds 100% of the capital stock of Fynbar S.A., a company domiciled in Uruguay. It is engaged in the commercialization of on-line games and the advertising intermediation between advertisers and on-line site networks. Electropuntonet S.A. is the most recent acquisition, in which CMD holds 25% of its capital stock. Its main activity is the sale of home appliances through its e-commerce platform.

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 2014, total sales increased by 34.3% compared to the previous year. Business growth was basically sustained by the Payroll Management and Processing service. Risk management service revenues showed a strong growth of 54.3%, after overcoming the inconveniences that arose as a result of the new regulation of the insurance market. The company generated new businesses for the provision of Supply, Logistics and General Services; Administration and Finance; Accounting and Financial Statements; Management of Collection Means and IT Consulting services.

In 2014, the company implemented changes to its structures, processes and working methodologies in the areas of IT and Improvement of Processes and Projects. Both of them are key areas for the support of several services and the creation of value for customers.

Ferias y Exposiciones Argentinas

Created in August 2002, Ferias y Exposiciones Argentinas S.A. is mainly engaged in the organization of events, conferences and fairs. Since 2007, Ferias y Exposiciones Argentinas has been mainly engaged in the organization of Caminos y Sabores, a fair intended to foster Argentina's gastronomy and handicrafts and to promote the region's major tourist destinations. Caminos y Sabores has consolidated itself as one of the fastest growing fairs and has boosted the development of all of its key participants: food producers, craftsmen and representatives of tourist destinations. This year, the tenth edition was held in July at La Rural with the participation of more than 400 stands, which made up the Rutas Gourmet. There were exhibitors from all over the country, a broad regional representation in the different categories. Caminos y Sabores became a new source of support for entrepreneurs for the production and commercialization of their products in direct contact with consumers. In September 2014, Caminos y Sabores was held for the first time in the City of Córdoba.

Expoagro, the annual outdoor agro-industrial fair is held through the FEASA- S.A. La Nación UTE (joint venture), gathering producers from Latin America. It is an outstanding event in which participants may engage in discussions and training, and learn about innovation and businesses in the agricultural sector. The fair is held in different agricultural areas with production potential. In the vicinity of the location at which the fair is held, hundreds of state-of-the-art agricultural machines and equipment used for different jobs are tested, such as: sowing, harvesting, spraying, grain bagging, swathing, rolling, which are extra attractions for visitors and people interested in this type of activities. In 2014, the 8th edition of this fair was organized in the City of Ramallo revalidating its position as the main Argentine agricultural exhibition in a natural environment.

CORPORATE RESPONSIBILITY AND SUSTAINABILITY

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. Grupo Clarín attaches special importance to the relationship with different audiences that acknowledge and validate its activities every day and, over the years, has established multiple communication and interaction channels with its stakeholders.

From the standpoint of its audiences, readers and society in general, Grupo Clarín's media and journalists work day after day towards fulfilling and consolidating the citizens' 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

Grupo Clarín seeks to intensify the values and principles that guide its daily work, especially insofar as labor, sustainable development, and human rights are concerned.

Grupo Clarín's adherence to these principles is also outlined in the Company's Code of Ethics and in the Guía para la Acción, a document that proposes models for management, organization and roles, and outlines Grupo Clarín's policies and procedures concerning labor, the environment and human rights.

During 2014, the Company put in place the main pillars of its Social Corporate Responsibility and Sustainability Policy in order to extend best practices and set common goals within the organization and its subsidiaries. The policy also embraces and fosters the adoption of related industry specific standards by its subsidiaries.

Since 2004, the Company has adhered to the United Nations Global Compact in order to systematically address the 10 guiding principles to sustainable management.

Grupo Clarín is also involved in several spaces, groups and organizations that gather global, Latin American and Argentine media players and stakeholders in order to share experiences, identify best practices and foster cooperation in specific issues addressed by the media, as part of their social responsibility strategies. During 2014, through its support to the Noble Foundation, the Company also renewed its presence in the "Grupo de Fundaciones y Empresas", a space to share strategic social investment knowledge and standards.

Since 2009, Grupo Clarín contributed to the development of the Global Reporting Initiative (GRI)'s Media Sector Supplement, together with multiple stakeholders worldwide. The GRI's global guidelines for the media, published in May 2012, serve as benchmark for a comprehensive process that is currently underway that seeks to further reinforce, identify and report relevant information on social and environmental performance, as well as to set new goals with the aim of strengthening the Company's sustainability initiatives and strategies. Additionally, in 2014, the Company was engaged in the global identification and validation process of materiality standards for the cable TV and media industry, organized by the SASB (Sustainability Accounting Standards Board), an entity that gives advice to the SEC (Securities and Exchange Commission) on transparency standards.

Freedom of speech and transparency are key values for the Company and its professionals. Both principles are particularly relevant in areas related to news services. At Grupo Clarín, each company undertakes a commitment to information and content quality, accuracy and transparency. The coverage of news and the news programs reflect the development of journalistic criteria inherent to each specific outlet and the professionals' commitment to reporting facts and events in a balanced fashion, while allowing the necessary time and space for experts, leaders and the parties involved to express their opinions.

Style guides, ethics manuals and news coverage guidelines, including internal rules and commitments to journalistic quality and journalist responsibility, are the guiding principles of the several activities developed by news and entertainment companies. In everyday practice, this does not mean that each issue is addressed as expected by audiences or in line with the stated goals. Hence, Grupo Clarín's media companies permanently work on the design of new tools and channels that enable interaction with readers and audiences in order to understand expectations, while fostering full adherence to its principles and values with the aim of reaching the highest standards of the industry.

As was the case with previous years, 2014 was also particularly challenging for the press and freedom of speech in Argentina. The Company carried out several initiatives to raise awareness on the matter and showed its firm commitment to defending and fostering such essential right.

Independence and transparency

Independence is a value. It is the strong foundation of the work done by journalists and the media that allows them to search for the truth without any conditioning factor.

Independence is at the core of Grupo Clarín as a guarantee of the freedom to exercise the journalistic role of its media in the Argentine democracy. Independence is also an assumed responsibility, a way of exercising and guaranteeing rights, a view of sustainability from the Company's standpoint, a daily commitment.

Independence requires transparency. Hence, the information about Grupo Clarín and its subsidiaries, media, shareholders, activities, revenues and investments is public and is available at its web site, at the web site of the Argentine Securities Commission, and at multiple and diverse communication channels with the public, audiences and readers. In this regard, the Company stands out as a pioneer in an environment where most Argentine media companies fail to publicly disclose their financial statements and sources of their revenues and, often times, fail to reveal the identity of their respective owners.

Advertising is one of the sources of revenues of the media. Governments are major advertisers and often seek to influence media content through the allocation of official advertising. This circumstance has become commonplace in Argentina, where more than 80% of the country's audiovisual media directly or indirectly depend on the government or its advertising funds, which are managed on a discretionary basis and with little transparency. During 2014, Grupo Clarín received virtually no funds for official advertising and very little from provincial governments. Historically, due to the scale and diversity of Grupo Clarín's revenues, the significance of such funds has always been very limited so as to guarantee its media and journalists the freedom to report news without any conditioning factor.

Grupo Clarín also has business policies in place concerning its advertisers that foster the existence of diverse and multiple sources of advertising investment as another way of guaranteeing the free and independent exercise of journalism.

Media independence also requires responsible relationships between journalism and the Company's own business interests. Business and editorial functions are clearly separated at Grupo Clarín's media. Special emphasis is placed on the fact that journalists are completely detached from the sale of advertising so as to allow for the free exercise of journalism, free of any risk or conditioning factor. In addition, Grupo Clarín's media specifically focus on the distinction between advertising and editorial space.

As mentioned above, the Company has a Code of Ethics in place applicable to its subsidiaries and employees. The code sets forth standards of conduct and procedures that govern and prevent circumstances that may affect the free exercise of their functions and the transparency of their activities.

Information on Sustainability

In line with its Social Corporate Responsibility and Sustainability Policy, Grupo Clarín identifies the material aspects of its activities following international social responsibility standards applicable to the media, particularly, the GRI's guidelines, and in accordance with the expectations of its multiple stakeholders. Grupo Clarín's materiality analysis serves a starting point to define its corporate sustainability goals and strategy, as well as the daily management of its performance.

During 2012, the Company started to prepare its financial statements in accordance with the International Financial Reporting Standards (IFRS), thus changing the manner in which figures are presented. The deconsolidation of some of its minority interests was also reflected in the way of reporting information on sustainability, which made it difficult to perform a comparative analysis as it did before between some of the figures included in this section and the figures eventually reported in previous years through different communication channels.

As to the scope of the information provided in this section, labor indicators include all of Grupo Clarín's subsidiaries, pursuant to the criteria indicated above. Environmental performance refers to production or scale operations in which disclosing this kind of information is material. Similarly, some content-related indicators are exclusively applied to subsidiaries engaged in journalistic or entertainment broadcasting and programming activities. As to other indicators, for instance, those related to certain community engagement programs of Grupo Clarín or its subsidiaries that require comprehensive and detailed impact assessments, the information provided is mostly related to the core of the activities inherent to the Metropolitan Area of Buenos Aires, due to the complexity and extension of the processes involved in reviewing and verifying periodic information.

THE VOICE OF THE PEOPLE

Media sustainability depends, to a large extent, on readers and audiences that are aware of their rights and are determined to demand quality journalistic and entertainment content, and on media that are willing to listen to them.

Grupo Clarín's media foster the interaction with its public and audiences, creating listening and discussion channels and tools. Opinion, criticism, tastes, suggestions and comments are expressed through multiple open spaces for content created by the people and for the free expression of the entire diverse and plural society. At a corporate level, within the framework of a complex environment marked by the escalating attacks against independent media, Grupo Clarín also offered multiple communication and interaction channels to discuss specific institutional issues, such as newsletters and spaces on the Internet and social networks, in order to share the latest updates with accuracy and transparency.

The proliferation of new media and technologies has drastically changed journalism and the way in which the public has access to and produces news and other content. These conditions require an open and rigorous look to determine how to face the challenges marked by the digital era, adjusting the Company's business model to meet readers' and audiences' demands, while guaranteeing the sustainability of its activities, without relegating its leadership position.

Grupo Clarín's media companies have assumed a long-standing commitment to audiences and readers. Grupo Clarín's sustained leadership and its privileged position as the people's preferred choice are attributable to its ability to anticipate trends and its vast knowledge of media consumers, paired with its capacity to understand their needs and meet their requirements.

Some segments of Diario Clarín, such as the traditional section entitled "Letters to the Country" and the readership surveys, are supplemented with initiatives to satisfy the people's need to participate in the process of casting news, such as, the inclusion of readers' comments and other strategies based on the social networks in virtual news platforms.

Over the last years, the Company has launched an increasing number of resources and applications and fostered people's interaction with journalists. Interaction allows readers, listeners and Internet users to provide and share information. 'TN y la gente', an initiative from the news signal TN, is a good example of this, since it allows the audience to send photos or videos captured with personal cameras or mobile devices as an additional way to foster the citizens' involvement in journalism and increase the end-user participation in Grupo Clarín's several media.

Grupo Clarín also intends to give a voice to small communities and to foster the development of local content. Through the program Somos, Cablevisión and ARTEAR have been working together in order to take part in the gradual renewal of TV signals and local news programs in many locations of Argentina. To date, the program has 32 Somos signals and has the aim of adding another 5 during 2015. The program is based on the concepts of access to information and cultural proximity with the people, and introduces state-of-the-art technology and ongoing training to improve local coverage and develop local talents.

"Audiovisuales en la Escuela" is a similar program developed by Cablevisión to facilitate audiovisual tools to public schools with the aim of building content related to the local cultural identity. During 2014, 184 students from 8 schools of Rosario, Santa Fe and Buenos Aires participated in the program and produced audiovisual pieces, which, together with other social programs, were broadcast by the local signals of the Somos program. After the end of the school year, participants may apply for educational practices at their local signals.

In addition, for more than 30 years now and through its support to the Noble Foundation, Grupo Clarín offers free media literacy tools to thousands of children and teachers in order to foster critical thinking on journalism, while empowering people in their roles as consumers and content generators.

SOCIAL AND SUSTAINABILITY COVERAGE

In order to better assess the potential influence of the media on different audiences, Grupo Clarín sets goals to guarantee the quality and diversity of its content. Grupo Clarín's newspapers and news programs have a long-standing and respected reputation for journalistic research and offer comprehensive coverage of news and relevant social and environmental issues. The ability to reflect social diversity - both through the coverage of news and entertainment content - is one of the pillars of its commitment towards the audiences and readers.

Special supplements, experts' and scholars' opinions, on-site news coverage, journalistic talent and the quality of the images and infographics complete the broad variety of issues addressed by Grupo Clarín, including but not limited to health, consumption and development, science, education and preservation. Weekly TV programs, such as, 'TN Ciencia', 'Esta es mi villa' and 'Argentina para armar' broadcast by Todo Noticias, make a valuable contribution to social and scientific issues related to sustainability in a broad sense, and have become leaders and benchmarks in their respective fields.

During 2014, the Company's media continued to develop content related to climate change and the environment.

Radio Mitre, Grupo Clarín's main radio station, combined the 24-hour coverage of these issues with "Planeta Mitre, Compromiso Verde", a series of daily brief radio programs hosted by a journalist specialized in the environment aimed at raising awareness on environmental issues, recycling and what each of us can do to make the world a better place.

Also during this period, Grupo Clarín renewed its commitment to the supplement Gestión Sustentable (Sustainable Management), published together with Diario La Razón, to make readers think 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. Since 2014, the Company started to support the activities of Fundación Temaikén, a national non-profit organization devoted to the preservation of nature and to environmental education.

The Company continued to support and promote blogs that raise awareness on social issues from its web site, clarín.com. For example, "El Otro, el Mismo" is a blog aimed at the inclusion of people with disabilities, developed in association with the Universidad Católica Argentina and social organizations.

In this regard, the Calendario del Compromiso con la Comunidad (Calendar of Commitment to the Community) was published for the ninth consecutive year in Revista Viva, a weekly section sponsored by Clarín, the Noble Foundation and Red Solidaria that provides an overview of the social challenges Argentina currently faces, with an emphasis on the potential positive effect that contributions made by individuals and the organizations of the civil society may have in addressing such challenges.

Acknowledging the importance of reflecting diversity, fostering social justice, protecting the youth, encouraging minority recognition and avoiding discrimination on the basis of race and gender are key actions to create content in the media in a responsible fashion. Over the last years, there has been a gradual but sustained increase in the coverage of social issues by Grupo Clarín's media as recorded by several monitoring actions carried out by third parties, particularly, independent media observatories and universities.

In 2011, the NGO Periodismo Social and Universidad Austral started to prepare reports on the coverage of children-related news on television in Argentina. In that first year, Telenoche, Grupo Clarín's main news program that leads audience ratings, was identified as one of the news programs that spent more time broadcasting news and giving information on children and young people, accounting for 32.4% of total coverage. In addition, the report stated that more than 54% of the information sources were children and their families.

The following edition of the report revealed that the percentage of children as sources of information increased by 60% and that the topic of violence decreased remarkably (16%) to 29% of the total coverage. Consequently, the news program was awarded the best score among privately owned signals. The report also pointed out that 41% of children-related coverage was specifically addressed to girls, while the other 47% was equally addressed to boys and girls, strengthening the news program's commitment to reflecting gender-related issues.

The emphasis placed on these monitoring processes fits within the framework of an initiative launched by the Company in 2009 that included an review of specialized third party analysis, combined with an ambitious training program oriented to audiovisual journalists, focused on achieving journalistic excellence and raising awareness of the particular features of the main social topics in order to give them responsible treatment in the news.

In its early stages, the project included training for journalists that work on news programs broadcast by provincial signals. In a second stage, Grupo Clarín, together with experts in communications and scholars from said organizations, offered in-house workshops for journalists, editors, cameramen and journalistic producers that work at all news programs produced by ARTEAR (TN and Canal Trece), in order to provide them with content development tools and to discuss the main challenges imposed by the several aspects of the coverage of social issues on TV and the editorial values that guide day-to-day decisions. This program was the first of its kind to be implemented in an Argentine signal.

PROMOTING INVOLVEMENT

Nevertheless, when it comes to responsibility and content quality, there is always much to be done in order to identify the potential positive effects that the media may have on a society. In this regard, Grupo Clarín seeks permanently to improve its role in the promotion of the public debate by fostering individual involvement and further describing the social, economic and environmental challenges faced by society with diversity of opinion.

The several media companies that comprise Grupo Clarín also endorse several initiatives that encourage citizens' involvement in democracy and responsible citizen controls on the acts and decisions of their representatives.

Aware of the need to advocate for further respect for republican principles and fundamental human and civil rights, during 2014 the Company continued to foster and raise awareness on the importance of every citizen's right to information and freedom of speech.

In addition, through Diario Clarín, the Company hosted the series of debates entitled: "Democracia y Desarrollo" (Democracy and Development), which addressed issues such as agriculture, transportation, education, Vaca Muerta and the contribution of the industries to development. The series of debates was organized in five meetings open to the community, which were held at the Latin American Art Museum of Buenos Aires during 2014, with the participation of prominent speakers and visitors.

The Company also sought to foster values, such as solidarity and community commitment. Through ARTEAR, in 2014 the Company launched a new edition of "Abanderados de la Argentina Solidaria", an award that recognizes the work-that would otherwise go unnoticed-done by social entrepreneurs and community leaders, by communicating valuable initiatives, that foster social transformation and may be replicated. The initiative is supported by Ashoka and Fundación Navarro Viola and a panel of outstanding people from the social, academic and cultural sectors. In this edition, there were more than 1500 applicants and the prize was granted to Guadalupe Colque, founder and director of H.O.Pe, a foundation that provides comprehensive care to children who suffer from cancer and their families in the province of Salta. The winner received Ps. 100,000 in cash and a brand new automobile to continue her work. There was also a special prize of Ps. 100,000 granted to Matías Najún to continue his work at El Buen Samaritano, a hospice that houses and accompanies homeless people that suffer from terminal illnesses.

During the period, 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 event held to commemorate and raise awareness on the anniversary of the AMIA bombing. This year, as it was the 20th anniversary, it organized at Centro Cultural Recoleta an exhibition that featured 22 photographs taken by press photographers of Diario Clarín about the successive rallies for justice made by relatives of the victims since the year in which the bombing took place. The Company also helped to broadcast the event held to commemorate the anniversary of the Israel Embassy bombing that took place in 1992. The Company was once again a sponsor of the Holocaust Museum of Buenos Aires.

In order to promote other campaigns and fund-raising events and raise awareness about Argentina's main social issues, Grupo Clarín donated advertising space to several NGOs. Among the most notable efforts in this regard were the annual Caritas collection and the Colecta Más por Menos, organized by the Argentine Episcopal Conference and the annual collection of the Food Bank Network, as well as that made by Hospital de Niños Garrahan and Fundación Manos en Acción. It also sponsored Feria de las Naciones, a fair organized by Cooperadora de Acción Social, which provides support to several Argentine public hospitals.

Grupo Clarín also renewed its support for the traditional campaign "Un sol para los chicos", together with ARTEAR and UNICEF. In 2014 the campaign celebrated its 23rd anniversary and raised Ps. 27,152,247 for educational and social programs oriented to children and young people. The campaign is one of UNICEF's main sources of revenues in the country and also seeks to boost individual donations to social causes in Argentina, which still remain at significantly low levels compared to the US and Europe, on a relative basis.

In order to deal with this issue strategically, and to bolster the impact and scale of its investments in public adds campaigns on its media, Grupo Clarín, in partnership with AEDROS, a specialized entity engaged in fostering fundraising for NGO, designed a campaign to foster civic involvement through a sustained and ongoing economic commitment with organizations of the civil society. In its third edition, the campaign Donar Ayuda was largely promoted in audiovisual and electronic media, as well as in newspapers and magazines towards the end of 2014 and early 2015. Individual contributions to NGOs that take their missions seriously are regarded as one of the most effective ways to make a drastic and sustained difference in the lives of many people in need. In addition to conveying this individual commitment message, the campaign also seeks to make a significant contribution to the organizations of the civil society as a whole, which face challenges to their sustainability and independence.

COMMUNITY ENGAGEMENT AND SOCIAL ADVERTISING

Grupo Clarín's impact on and relationship with the community and people goes beyond the boundaries of its editorial coverage. The support to vulnerable communities, the coordination of educational projects, and the organization of campaigns to address social issues or to help areas that were hit by natural disasters, paired with Grupo Clarín's sustained commitment evidenced by several types of donations and knowledge transfer, are just some examples of the numerous initiatives organized and fostered by Grupo Clarín's media companies, either jointly or individually.

In response to the growing communication needs and demands from the organizations of the civil society, Grupo Clarín has a multiple approach program in place that combines raising and spreading active awareness of public and social interest topics, by providing advertising space, design and communication services for the NGOs in order to boost the reach of public adds.

With respect to social advertising, during 2014, Grupo Clarín, through the Noble Foundation and several of its media companies, donated a significant amount of advertising time and space to foster causes related to social, civic and environmental issues, through its own social investment programs or within the framework of strategic alliances with prestigious organizations of the civil society.

Among these programs, the Company supported Consejo Publicitario Argentino, which gathers contributions from media, agencies and advertisers engaged in social advertising. During 2014, the Company focused on campaigns aimed at preventing bullying ("Si no hacés nada sos parte") and the promotion of values (Respetuosa Argentina).

The Company gave continuity to Segundos para Todos, a program organized by Cablevisión, in order to donate free advertising seconds to organizations of the civil society. In 2014, this initiative donated 87,524 advertising seconds to broadcast public adds.

Advertising space donated in 2014 on Grupo Clarín's media.

The estimated impact of these in-kind contributions allocated to public adds accounts for the equivalent to a social investment of approximately Ps. 61.1 million.

Grupo Clarín has also undertaken a sustained and strategic commitment to breaching the digital gap and promoting the responsible use of the Internet. Durante 2014, Cablevisión provided free services to 22,210 schools, hospitals social organizations and other institutions. This commitment differentiates the Company from others, such as telephone companies, which have policies that do not include donating communication services, in spite of their reach and scale. Cablevisión's service contribution accounts for an annual in-kind contribution equivalent to Ps. 89.6 million, and is supplemented by specific programs, such as Cablevisión Flex which offers reduced subscriptions to low income neighborhoods. The program Puente Digital is one of the main pillars of the work done in order to breach the digital gap. The program offers free Internet access to public schools, combined with the integration of new technologies to school teaching. Through this program, the Company seeks to create a multimedia and interactive platform built upon convergence, where TV content will be a tool to supplement the use of Internet at school. This service is also provided to hospitals, health centers and organizations of the civil society. The initiative also embraces the donation of computers through Fundación Equidad when there is an upgrade in the Company's equipment, which also favors the reutilization of these resources.

The impact of donated advertising space and free Internet access services may be added to the Noble Foundation's Ps. 4.5 million budget for 2014, and to the amount set aside for other social investment programs in several subsidiaries, which reached Ps. 1.3 million in 2014. Hence, the amounts of cash and in kind contributions allocated to social and community investment programs for the period account for an aggregate contributions with a value equivalent to Ps. 156.6 million. This estimated figure does not include programs developed by smaller subsidiaries, whose internal information gathering systems related to community actions are under development.

In addition to providing financing, resources, capacity and experience in the promotion of socially valuable initiatives, Grupo Clarín also relies upon third parties to secure regular sponsorships and donations within the framework of strategic alliances related to the sponsored initiatives.

FOSTERING EDUCATION AND CULTURE

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

The Company has renewed its support for the 6th Educational Quality Forum, under the motto "Improving education is an urgent priority". The forum is a massive event organized by Educar 2050, an entity that combines the fieldwork related to the instruction of principals of schools attended by low-income children with extensive public policy advocacy activities. It also promoted a campaign developed by the same organization on education topics related to the 2015 presidential elections.

Together with another 40 organizations, it promoted Semana de la Educación, an initiative that seeks to bring education topics to the top of the agenda of the Argentine population.

Among the main alliances to foster education, the Company developed specific initiatives, such as the program Potenciar Comunidades Rurales, with the support of several companies to provide support to local development projects in certain communities under the leadership of Emprendimientos Rurales Los Grobo.

One of the most prominent initiatives resulting from a collective effort is the award "Premio Clarín- Zúrich a la Educación". The sixth edition recognized the best practices in environmental education in primary schools. The first prize was Ps. 190,000 for the winning school to be able to develop the project. Other two schools were distinguished with 'mentions' and received Ps. 55,000 each. The next edition of the award in 2015 will choose the best project on Social Sciences in high schools, in order to underscore the importance and interest of this issue and recognize the capacity to introduce critical thinking and a problem-solving approach to education.

During this period, through the Noble Foundation, the Company continued to donate bibliographical material, and renewed its long-standing support of Escuelas Roberto Noble, named after the founder of Diario Clarín, Roberto Noble.

Noble Foundation's Donations of Educational Material

Again this year, the Company sponsored the annual Maratón de Lectura (Readathon) initiative, organized by Fundación Leer with the participation of over 4.3 million children from 13,250 educational institutions from 2,625 locations. The event received the donation of 20,400 books published by Clarín for reading corners that gifted by lottery among the participating schools and the initiative was promoted through a broad advertising campaign.

Grupo Clarín and its subsidiaries have also renewed their commitment to culture through several sponsorships to important events and entities, such as, Feria del Libro (Book Fair), PROA Foundation, Faena Art Center, Teatro Colón, and Usuahia's Classical Music Festival. The Company also sponsored the 2014 season of Teatro Maipo, the presentations in Argentina of Les Luthiers, and the play "Y un día Nico se fue". It also sponsored the films "El misterio de la felicidad", directed by Daniel Burman, starring Guillermo Francella and Inés Estévez; the remastering in HD of "Tango Feroz" because of the 20th anniversary of its premiere, directed by Marcelo Piñeyro, starring Fernán Mirás, Cecilia Dopazo, Imanol Arias and Leonardo Sbaraglia and the multi-awarded and Oscar nominee "Relatos Salvajes", an anthology of six black comedy and drama short films written and directed by Damián Szifrón, starring Ricardo Darín, Oscar Martínez, Darío Grandinetti, Leonardo Sbaraglia, Erica Rivas, Rita Cortese, among others. In 2014, Clarín once again held the traditional annual ceremony of the "Premio Clarín de Novela" awards. This year the award went to the Colombian writer Daniel Ferreira for his novel "Rebelión de los oficios inútiles" which reflects the armed struggle that took place in Colombia in the 1970s. The novel was published by Clarín-Alfaguara and the author won Ps. 150,000. Grupo Clarín also sponsored a series of concerts organized by Buenos Aires Lírica Foundation and the IV International Ballet Gala as well as Ballet Don Quijote with the special participation of Daniil Simkin, the principal dancer of the American Ballet Theatre of New York, and María Kochetkova, nominated to the best dancer of the world by the Moscow Ballet Academy in 2013.

Through its cable and broadcast TV signals, Grupo Clarín's companies make significant efforts to promote the most relevant cultural, motion picture and sports events and such efforts are an increasing contribution to cultural diversity and local identity. Of particular note are initiatives such as "Volver", the cable TV signal that keeps Argentina's most complete programming archive.

MEDIA LITERACY AND PROTECTION OF YOUNG AUDIENCES

The media play an increasingly important role in society, particularly, in the lives of young people. Through several programs, Grupo Clarín encourages them to develop media access tools through critical thinking and to leverage the opportunities provided by the media and technology to explore their identity, creatively express their ideas and opinions and make their voices heard.

Media literacy is generally defined as the ability to access to, analyze, respond with critical thinking and benefit from, the media. Grupo Clarín's main tool to foster media literacy is its support of "Los medios de comunicación y la educación," (Education and the Media), a pioneer program widely recognized abroad that has been developed for more than 30 years by the Noble Foundation. In 2014, the Noble Foundation was mostly engaged in renewing the program that consists of classroom workshops and special educational content suited to the needs of teachers and students oriented to foster a critical approach to the media and their use as resources that supplement formal education.

The program "La educación y los medios de comunicación"

In order to capitalize on the information gathered at the workshops in connection with cultural consumption patterns of the young, the Noble Foundation launched the contest #sosVOSenlared aimed at boys and girls between 13 and 18 years of age. The pedagogical purpose of this initiative was to promote critical thinking about the way in which young boys and girls construct their identity in social networks and review the opportunities and limitations offered by technology in this process. During the contest, the Noble Foundation provided materials and theoretical contents for teachers and activities for students. The contents provided by the Noble Foundation through blogs and social networks are communication spaces that supplement the workshops. The most popular contents are the classroom activities and the opinion articles about several education issues.

Through the Noble Foundation, Grupo Clarín renewed its presence and coordination of the media space in the "Museo de los Niños" (Children's Museum) and continued to offer visits to printing facilities and Diario Clarín's newsroom. These visits give students and teachers from schools and universities all over the country and the world the chance to experience first-hand the processes involved in news production, the design of publication supporting equipment, the newspaper distribution mechanisms, as well as the environmental approach of the production process. During 2014, 13,963 students and teachers from 260 educational institutions visited the facilities.

These initiatives program are supplemented through other initiatives related to the promotion of responsible content consumption. Within the Cable Television and Internet Access segment, the Company helps to protect vulnerable audiences by providing parents with the tools to make decisions about the content their children are allowed to access.

This includes several parental control options. For cable TV services, the on-screen guide allows parents to easily block content that is not suitable for children by introducing a PIN. The Video On Demand platform includes the identification of adults-only services with access control systems that may be enabled by the subscribers. In terms of protection of audiences in Internet, the Company developed Fibertel Security. With this tool, users may filter the access to certain web sites deemed inappropriate and customize the protection level for each family member, among other things. In addition, adults may restrict the use of Internet by setting specific days and times. Adult users have a password that enables them to turn the control off and freely access the Internet, as well as to change all of the software configuration settings. Every time the operating system is rebooted, the service returns to its active status to prevent an eventual oversight.

These tools are provided with information and criteria on how to use Internet. Cablevisión launched the program "Compás para el uso de Internet" in partnership with UNICEF and Chicos.net. This project, specifically addressed to families and teachers, is intended to provide proposals to teach children and teens about the proactive, responsible and safe use of technology. The topics discussed in this program include digital citizenship, on-line security, data protection, content diversity, respect for information sources and awareness on cyber-bullying and discrimination. The initiative includes the development of an information portal (www.programacompas.com.ar), tools for journalists, relationship with elementary schools and publication of citizenship awareness information through the media. In 2014, on Internet's day, Fibertel held a Technological Festival at the Educational Center of Barracas, aimed at sharing collaborative exploration and construction contents with boys and girls through the use of technology. The festival included different creative workshops about the safe and responsible use of technology for 120 students attending 5th grade of primary school. In addition, in alliance with Disney and Chicos.net, Fibertel developed an investigation about the behaviors and insights of boys and girls over the Internet and the role of adults in Argentina, Mexico and Brazil. The information gathered allows the company to work on strategies aimed at protecting and raising awareness based on sound knowledge. The findings of the investigation were published in February 2015 on the International Safer Internet Day.

The Company also addresses responsibly children's artistic participation in the television and film industry; a category that was embraced by the ILO as a valid form of participation in labor activities by children in these age categories. To such end, special emphasis is placed on compliance with the applicable standards in force, while adhering to internal guidelines that set limited activity schedules, protection and promotion of school education and active involvement of parents and tutors.

Also during 2014, Grupo Clarín's media contributed to the dissemination of the national awareness campaign of Consejo Publicitario Argentino about bullying: a specific form of harassment among peers, usually among boys, girls and teenagers, which takes place especially in social networks. Under the motto "Si no hacés nada, sos parte #nobullying", the campaign was very popular and was largely covered by the media.

EXCELLENCE IN JOURNALISTIC TRAINING

In order to reaffirm the commitment to journalistic excellence, Grupo Clarín also carried out activities aimed at consolidating the training and excellence of current and future communicators.

In this sense, the Company provided support to the Master's 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. Year after year, this renowned training program gathers professionals from Argentina and other Latin American countries, and also offers scholarships linked to outstanding performance.

In this same regard, the Company helped to promote and support the Graduate Program in Digital Journalism organized by Universitat Pompeu Fabra, TN.com.ar and Google. With the current edition of this state-of-the-art program underway, the Company reinforced its commitment to enhancing the quality of professionals in the 2.0 world.

In connection with journalistic training and within the framework of the program Somos, developed by ARTEAR and Cablevisión, during 2014, Grupo Clarín offered five regional training sessions that reached approximately 50 local signals. Training sessions focus on the journalistic and technical training of professionals from regional signals nationwide, in which the company invests to provide state-of-the-art technology as well as top-of-the-line training opportunities to improve local coverage.

OUR PEOPLE

Grupo Clarín's success and leadership are mostly the result of the efforts, talent, professionalism and creativity of its employees. Grupo Clarín's media companies are among the preferred workplaces of most 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 the project of Grupo Clarín.

The Company has its own structure in terms of the age and gender diversity of its employees. With respect to gender, there is a noticeably higher proportion of male employees, mostly on account of the high number of employees required in the technical areas of printing facilities and of the cable TV and Internet access segment. In Argentina, technical specialties are predominantly elected by men, and that pattern is reflected in the payroll of this type of industry. During 2014, the Company held training sessions about diversity, focused on gender and disability. There were also specific round tables to recognize the goals attained and the opportunities to address these issues.

The gender structure in the rest of the business segments of Grupo Clarín is well-balanced considering the total workforce, with a deficit in managerial positions, which are still mainly occupied by men. However, the Company has attained excellent results as far as gender equality is concerned in content-related activities, particularly in the areas related to journalism and audiovisual production, where the workforce is more diverse.

At the same time, the Company seeks to foster hiring young, first-time job seekers and people in the upper age group who contribute their experience. The Professional Development Program, the guided visits to the Zepita facility and to Cablevisión, as well as the program Audiovisuales en la Escuela, are good examples of these initiatives that seek to foster the articulation between formal education and the workforce, by encouraging young people to complete their high-school studies as a necessary condition to get a job. Gestión Compartida, a company which, among other things, provides employee recruitment, selection and training services to the companies of Grupo Clarín and third parties, is engaged in promoting and developing job opportunities for people over 45 years of age, both in its daily work as well as through partnerships with social organizations that share the same focus.

In terms of employee turnover, the Company and its subsidiaries maintain market ratios, particularly in connection with permanent employees. However, the consolidated media turnover ratio usually reflects certain particular features of the industry, which is influenced by factors such as seasonality and involvement of specific technical or artistic employees during certain periods. These employees do not terminate their relationship with the company; instead, they have temporary employment agreements related to special products inherent to the programming activity.

The Company fosters an open dialogue with union representatives facilitating mutual understanding and conflict resolution. Employees freely exercise their right to unionize and are currently represented by several unions related to each of the activities developed by Grupo Clarín and its subsidiaries. Out of Grupo Clarín's total employees 75.1% is covered by collective bargaining agreements.

Taking care of the work environment and conditions, health and job safety and employee training to enhance their professional skills are some of the actions aimed at consolidating the sense of integration and achievement of organizational goals.

The work environment survey is one of the key tools employed to gather opinions on the Company's performance in this regard. The survey is conducted periodically at Grupo Clarín's subsidiaries on a global basis and as a cross-section of the group's companies. This process serves to identify sensitive issues and opportunities for internal improvement. Based on the results of the survey, the Company designs action plans, communication channels and training programs in order to set new goals for the coming year. During 2014, the survey was conducted in the Cable Television and Internet Access segment achieving a record level of responses (98%). In a complex environment for the Company and its employees, the figures achieved in the work environment category remained strong and the figures achieved in the commitment category were above 86% on average. Leadership indicators also maintained high scores. The work environment survey is expected to be conducted in the rest of the business segments during 2015.

In 2014, Grupo Clarín continued to develop its Corporate Volunteer Program, with global actions and other actions inherent to each subsidiary. Under the name "Vos también", the program seeks to develop and consolidate in an inclusive fashion valuable initiatives for employees' solidarity actions that have a positive impact on the community while contributing to the Company's organizational environment. During 2014, the program was implemented in 7 business units, including the corporate areas, and its impact was extended to 12 provinces. According to its main indicators, volunteers devoted 6,501 hours of work, with a global engagement rate of 12.3%. All program actions were carried out in partnership with social organizations to shift the benefits derived from the experience to the civil society. During 2014, the program partnered with 55 NGOs and reached 6,418 people.

Through these initiatives, volunteers had the chance to collaborate with several programs and topics. The main projects carried out during the year were the following: Donación de Sangre, a project that seeks to foster solidarity in the area of health; Vos también Jugás, a project oriented to infants; Socios por un día, a project carried out in partnership with Junior Achievement that seeks to foster entrepreneurship among young people; Give and Gain Week, Construyendo Escuelas, and the project Cuenta Cuentos with Fundación Leer, among others. A cross-cutting action was proposed to all of Grupo Clarín's business units: Fin de año en Familia, a family support program that consists of delivering Christmas gift boxes to low income families. The program Vos También had a very high satisfaction level among participants: 99.08% of the participants found it rewarding or very rewarding and a similar percentage stated that they would participate again.

Grupo Clarín also put special emphasis on multiple internal communication tools, such as the magazine Nuestro Medio, the digital newsletter named Nuestro Resumen and the Corporate Training Program and the Company Climate Management newsletters, as well as internal communication spaces and notice boards. During 2014, Grupo Clarín launched a new version of the Corporate Intranet, a channel to maintain a smooth internal communication among all the employees of the Group. It also incorporated the corporate chat tool, which is a new meeting point among employees, creating a new space to share resources and streamline internal processes. 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

Even though a large number of benefits are common to all employees, each Business Unit grants additional benefits, which may differ based on their respective activities. During the last quarter of 2007, the Company, together with its subsidiaries, began to implement a long-term savings plan for directors and managers, which became effective in January 2008.

In 2014 the Company launched "Nuestros Beneficios", a program aimed at all the employees of Grupo Clarín. It was an unprecedented proposal that combined the efforts of various Business Units to offer benefits and discounts for all the employees and their families, which included clothing, restaurants, education programs, entertainment and tourism. The Company held an event to launch the program and to present an exclusive portal that grants access to all the benefits.

In order to build new skills and reinforce existing strengths, employees need motivation and support. During 2013, the Company made further efforts to increase the scope of and improve the performance review program of employees in several job categories. During 2014, the Company worked on the development of a Performance Management system (CEL- Crecimiento de la Efectividad Laboral), a space where bosses establish an ongoing feedback mechanism with their teams, focusing on strengths and opportunities for improvement that arise on a daily basis. It allows them to work on the expectations regarding management performance and behaviors and skills according to the role and function, conducting follow-ups of the proposals for improvement and closing the cycle with an interview to provide feedback.

Training arouses the interest of the company and its employees. Employees receive training to attain results for the Company, and at the same time the Company fosters their growth, enhancing their knowledge and skills. Grupo Clarín invests in training, with two types of programs. On the one hand, the training programs of each Business Unit, focusing on the specific needs of each activity, whereby Grupo Clarín employees and professional staff can update and enhance their knowledge and skills through seminars, courses, graduate studies and master's degrees. On the other hand, Grupo Clarín offers the Corporate Training Program (PCF, for its Spanish acronym), which includes a wide range of training proposals. During the second half of 2014, the Company offered new alternatives to improve the performance of the analysts and middle management of all the companies of Grupo Clarín. During 2014, 331 employees participated in the 19 courses given as part of the Corporate Training Program.

Training management is currently focused on planning new tools and technological developments in order to train employees on how to face the challenges imposed by the changes in the media industry. During this period, the course "Inducción a la Era Digital" was added to the Corporate Training Program. It seeks to shed light on the way in which technology has changed the world of business, generating big opportunities and challenges for the companies. In this sense, another highlight is the Executive Program developed together with Universidad de Palermo: "Negocios del Mundo Digital". Employees of Grupo Clarín and Banco Santander participated in this program.

The purpose of this program was to generate triggers building on premises about the organization and the integration of the digital world into the traditional world, to foster an integrated working environment among the different areas of the company, to provide methodological tools to generate digital thinking, and to achieve an interaction among all the elements seeking to improve the relationship with customers, exploring the available tools to streamline the communication process.

In order to provide training to middle and upper management seeking to foster key managerial competences and skills, in 2014 the Company developed the Management Development Program together with UADE Business School. This program provided knowledge and tools that empowered participants to improve their managerial skills in their area or team and to share their best practices among the top executives of the best companies and, in turn, learn the new trends of the academic world. The Company also organized several training sessions, breakfast and lunch meetings and integration activities among different areas of the Company that work together in order to strengthen internal communication and knowledge. During the period, the Company continued to provide English courses to those employees that need language skills for their work. This year different groups were created to provide group classes in a dynamic and easy fashion so that participants may share their knowledge, grow together and boost their development.

Grupo Clarín and its Business Units offered seminars and training programs about health issues and the prevention of illnesses and accidents, as well as other relevant topics, which supplemented the special campaigns about health issues and medical check-ups. Several initiatives were implemented to promote healthy lifestyle habits: vaccination and blood drives, meditation and yoga workshops, placement of bicycle racks and locker rooms, soccer tournaments, evacuation drills, healthy menus and talks about first aid.

Relationship with the value chain

Grupo Clarín's Social Responsibility management is embedded in the relationship with its value chain. During 2014, the Company continued to explore alternatives of interaction or joint approach to common-interest issues at the various levels of relationship with its suppliers.

Grupo Clarín focused on the implementation of systems and procedures aimed at the application of best practices for purchases, employee hiring, and contracting with suppliers within a framework of supervision and transparency.

During the year and through Gestión Compartida, a subsidiary engaged in managing the relationship with most of the suppliers, the Company initiated a tool redefining process, which, among other things, seeks to require that new suppliers undertake a commitment to the sustainability of their operations. Through this process, the Company expects to develop internal training sessions, introduce and develop its own record of sustainable suppliers and foster sustainability as management strategy oriented to related third parties.

ENVIRONMENT

During 2014, the Company continued to implement measures to identify, plan for and improve production processes in order to optimize results and react to potential impacts.

Progress was made in achieving the period's goals by introducing sustainable methods to obtain and use resources, developing equipment investment policies, raising active awareness on the appropriate use of supplies and technologies and promoting the adoption and certification of environmental standards.

Since 2004, Grupo Clarín has adhered to the United Nations Global Compact that sets forth several environmental protection standards. The Compact requires that companies:

(Principle 7) adopt a preventive approach to environmental challenges;

(Principle 8) take initiatives to foster increased environmental responsibility; and

(Principle 9) foster the development and promotion of environmentally-friendly technologies.

In addition, Grupo Clarín's Social Corporate Responsibility and Sustainability Policy serves as a management guideline and drives the definition of goals for its subsidiaries. This is reflected in the environmental policies adopted by its subsidiaries, such as the one implemented by AGEA in 2012, which combines the improvement of environmental management with ISO 14001 certification and implementation for its production processes; or AGR's FSC certification, which allows that company to guarantee the certification of the chain of custody of the paper used, from its manufacture until the printing process has been completed.

Consumption. Newsprint and Energy

Within the framework of an environmental management policy oriented to eco-efficiency, the Company and its subsidiaries mainly use energy, newsprint, cable and other technology-related elements.

At the printing plants, the Company followed established guidelines to ensure the provision of materials at quality levels compatible with international standards for newsprint, inks and other specific inputs.

Papel Prensa, a subsidiary in which Grupo Clarín owns an indirect minority interest, supplies most of the newsprint used in newspaper printing.

Papel Prensa has put in place production policies based on the procurement of strategic inputs without depleting natural resources. To this end, the paper mill recovers raw materials from the recycling of returned newspapers in order to produce more newsprint and reduce the use of virgin fiber. The type of fiber source (aspens and willows) depends on the availability of materials and economic considerations concerning freight distance minimization, a key economic and environmental issue. However, it should be noted that fresh fiber comes from sustainable plantations. In addition, ongoing research studies are conducted concerning genetic enhancement of tree species and environmental and forestry aspects. Such research is conducted through agreements with universities, research centers and specialists in order to boost productivity, cut costs and guarantee ecosystem sustainability.

Papel Prensa's forestry department conducts its activities with a sustainability strategy in mind to protect biodiversity. Birdlife has experienced a sustained increase as a result of forestry protection actions and a ban on hunting. These conditions encourage the design of several research and development programs, also in conjunction with universities, including the introduction, production and reproduction of certain endangered deer species for their adequate and safe development.

As to the types of inks used at the printing facilities, the diverse variety of printed products requires a varied approach from the perspective of resources. For instance, the use of vegetable-based coldset ink at the Company's main printing facility, accounts for almost 60% of total use of the input. This type of ink, which can be used in bond paper, is environmentally friendlier due to its vegetable components and its efficiency in terms of the amount of ink required to print, which may be 10%-15% lower than other inks. As another way to reduce the environmental impact, the Company streamlines its resources through the selection of printing techniques. For instance, since 2008 AGR has successfully introduced stochastic printing at its premises, significantly reducing the number of inks required for the printing process.

The Company has also specialized and qualified professional teams that work towards the goal of reducing material consumption, identifying and adopting increasingly efficient processes related to the environment. The newspaper size adjustments introduced in previous years continue to reduce the use of newsprint and other materials.

The Cable Television and Internet Access segment is engaged in service activities, which essentially do not require the use of raw materials, as opposed to the industrial processes run by other segments. Nevertheless, given the scale of operations, Grupo Clarín's companies use certain materials produced by their respective value chains, such as the cable for residential services installed during the period, top-set units delivered under loan for use and poles used as part of the distribution network.

Power is the main additional resource used by Grupo Clarín and its subsidiaries. Grupo Clarín uses power from direct and indirect sources. Even though the Company has alternative power generators in place for offices and industrial facilities that require fuel, the main indirect consumption is the electricity provided by the power supply network.

The subsidiaries engaged in printing activities are the heaviest users of power, followed by the business units that use technology in their operations, such as the cable TV and Internet access distribution services and audiovisual programming services. In this area, ARTEAR has policies in place for the ongoing development of innovation resources to reduce the use of electricity at its premises. The main initiatives in this regard include the introduction of cold lighting systems in all new and remodeled TV studios, which allows a fivefold reduction in the power ARTEAR normally used for lighting. In 2014, this concept was applied in the preparation of TN's Mirador studio, used for the program hosted by Nelson Castro.

The Company also renovated its buildings in order to make better use of natural light and installed energy-efficient linings. In line with its goal of staying at the forefront of new technology, ARTEAR continued to invest in equipment manufactured under environmentally friendly standards, in order to meet the need for High-Definition programming and distribution. In addition, the Company continues to monitor the consumption and impact of ARTEAR's outside broadcast units. Since 2012, its fleet is fully composed of Diesel vehicles, which consume less fuel.

At Cablevisión, energy from indirect sources is mainly used for temperature adjustment, workroom ventilation and lighting and for the operation of data transfer networks and equipment. Hence, Cablevisión introduced technologies in its main building to reduce the amount of energy used in lighting (through efficient electrical devices and motion sensors at meeting rooms) air conditioning and smart elevators.

Waste and Emissions

Grupo Clarín's subsidiaries develop most of their activities in urban areas that are not in contact with natural areas and that meet effective urban planning standards.

As to emissions, printing facilities have the most significant impact on the carbon footprint. Therefore, the Company is permanently exploring alternatives to improve processes and efficiency in these areas and to further deepen the analysis and inventory of Co2 emissions generated by the activities developed by the several subsidiaries. The main strategies available to reduce greenhouse gas emissions entail cutting consumption or changing power resources, for instance, by making more intensive use of renewable fuel and bio-energy.

Each subsidiary of Grupo Clarín identifies and manages waste production and disposal.

As part of the treatment of industrial waste from printing processes, the Company's subsidiaries collect and separate certain waste materials, such as ink, oil, grease and solvents, that are sent to third party facilities for their recycling, reuse or safe final disposal. Hazardous waste is subject to a rigorous treatment handled by licensed waste management companies. At the same time, the Company continues to develop strategies to reduce hazardous waste and has made significant progress. Fully reusable aluminum plates are used in the printing process.

In the Cable TV and Internet access segment, waste is separated at origin in order to add social or environmental value, where practicable. With respect to recycling, the Company keeps strict control of the recovery of equipment delivered to subscribers under loans for use, such as top-set units and remote controls, in order to reuse them or ensure its safe final disposal, and also to reduce the consumption of this type of equipment. In this area, the Company's waste management substantially differs from that of other technology companies that are not involved in the final disposal of electronic waste related to equipment delivered to customers.

Special care is given to effluents resulting from the printing facilities' development processes, which are subject to rigorous treatments and measurements before disposal. A water re-usage system was put in place at the Zepita facility. Under its Environmental Management System, the Company seeks to avoid discharging effluents except in exceptional cases. At La Voz del Interior's printing facilities, waste water is subject to treatment and is then reused for irrigation or as part of the production process. The water discharge figures disclosed below are mostly attributable to processed water that can be safely used for irrigation. The Company's office buildings and other facilities only discharge domestic waste water.

Also in terms of recycling, Grupo Clarín continued to reaffirm its contribution to Fundación Garrahan through an office-paper recycling program.

Such arrangement was combined with other programs to reduce the use of paper at the Company's offices, while seeking to streamline printing techniques; in addition to the Company's renewed efforts to raise sustainability awareness among employees.

The Company donates technological equipment to institutions that receive free Internet connection from Fibertel and to other institutions located in highly vulnerable neighborhoods. In addition to making another contribution towards citizenconnectivity and access to technological equipment, the Company seeks to contribute to environmental care by reusing equipment. During 2014, the Company also donated 748 technological equipment units to Fundación Equidad.

Additionally, the Company continued to support and sponsor projects related to the care and protection of green areas by sponsoring and contributing to the preservation of the parks Plazoleta Dr. Roberto Noble in the city of Buenos Aires and Parque de la Ribera located in San Isidro. Through preservation works in both parks, the Company also sought to promote responsibility in the care of public areas by the community and constructively contribute to the defense of the environment.

RISK FACTORS  

As an Argentine multimedia company, Grupo Clarín is exposed to a wide range of risks, related to the country and also to its operations.

The Company relies on a strong internal control system. 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.

The Argentine economy has experienced significant volatility in recent decades, with periods of low or negative growth, high inflation and currency devaluation. 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. The trend was later reversed, with real GDP growth reaching 9.1% in 2010 and 8.6% in 2011. In 2012 real GDP growth declined to 0.9%. While real GDP grew by 2.9% in 2013, towards the fourth quarter of 2013 the economy already showed signs of decline (based on data published by the National Institute of Statistics and Census -INDEC-). In 2014, real GPD showed no growth for the first time since 2002.

Sustainable economic growth depends on a variety of factors, including international demand for Argentine export commodities and their prevailing prices, stability and competitiveness of the Peso against foreign currencies, confidence of consumers and local and foreign investors and a low rate of inflation.

The Argentine economy might be adversely affected by the following factors:

- exchange rate volatility and depletion of Central Bank international reserves;

- increase in current inflation affecting competitiveness and economic growth;

- recession, low economic growth or economic uncertainties affecting Argentina's main trading partners;

- insufficient levels of investment;

- poor development of the Argentine credit market and limited ability to obtain financing from international markets;

- a reduction of the payment capacity of the Argentine public sector and the possibilities of procuring international financing;

- increase in current public expenditure affecting fiscal accounts;

- possible reduction or reversal in the trade balance due to significant decrease in agricultural prices in general and soy in particular or adverse climatic conditions affecting the production of agricultural commodities;

- government imposed restrictions on imports or exports;

- wage, price and foreign exchange controls;

- political and social tensions;

- continued instability of the financial systems of the main developed economies;

- abrupt changes in the monetary and fiscal policies of the main economies worldwide; and

- reversal of capital flows due to domestic and international uncertainty.

A downturn in economic activity is likely to result in increased subscriber churn and bad debt, subscriber losses 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. Measures adopted by the Argentine government that impact upon the economy, including those measures related to monetary policy, inflation, interest rates, price controls, exchange controls and taxes, have affected and could continue to affect Argentine companies like ours. We have also been the target of legislation passed to regulate the Media Industry and capital markets, which has also affected our activities in recent years. See "Legislation and Regulation of the Media Industry" and "Capital Markets Regulations."

a. Inflation

Argentina has confronted inflationary pressures since 2007, evidenced by significantly higher fuel, energy and food prices, among other indicators. According to inflation data published by the INDEC, from 2010 to 2014, the Argentine consumer price index increased 10.9%, 9.5%, 10.8%, 10.9% and 23.9%, respectively; and the wholesale price index increased 14.6%, 12.7%, 13.1%, 14.7% and 28.3%, respectively. However, since 2007, the INDEC has experienced a process of institutional and methodological reforms that have given rise to controversy with respect to the reliability of the information that it produces. In December 2013 the Argentine Government announced the implementation of a new methodology for the calculation of price indexes, designed in cooperation with International Monetary Fund ("IMF") experts. The IMF had stated in previous reports that their staff used alternative measures of inflation for macroeconomic surveillance, including data produced by private sources, which had shown inflation rates considerably higher than those published by the INDEC since 2007. In a meeting held on February 1, 2013, the Executive Board of the IMF issued a declaration of censure in connection with Argentina's failure to make sufficient progress to adopt remedial measures to address the inaccuracy of inflation and GDP data.

The new methodology announced in 2013 was applied to the calculation of price indexes starting in January 2014. Even though it brought inflation statistics closer to those estimated by private sources, there is still a material difference between official inflation data and private estimates. According to figures published by members of Congress from opposition parties based on private sources, the average inflation estimate was 24.5% for 2012, 27.1% for 2013 and 35.8% for 2014.

Since 2007, inflation in Argentina has contributed to a material increase in our operating costs, in particular labor costs, and negatively impacted our results of operations and financial condition. There can be no assurance that inflation rates will not escalate in the future, or of what effects the measures adopted or that may be adopted in the future by the Government to control inflation may have.

In the past, inflation has materially undermined the Argentine economy and Argentina's ability to create conditions that would permit growth. High inflation may also (i) undermine the competitiveness of Argentina's manufacturing and service industries producing, inter alia, an increase in unemployment levels and (ii) negatively impact the country's long-term credit markets. There can be no assurance that inflation rates will not continue to escalate in the future or that the measures adopted or that may be adopted by the Argentine government to control inflation will be effective or successful. Inflation remains a challenge for Argentina. Significant inflation could have a material adverse effect on Argentina's economy and in turn could increase our costs of operation, in particular labor costs and access to financing, and may negatively impact our financial condition and results of operations.

b. Foreign Exchange Controls, Devaluation and Central Bank Depletion

During the second half of 2011 and in 2012, the Argentine government increased controls on the incurrence of foreign currency-denominated indebtedness, and the sale and acquisition of foreign currency by local residents. New regulations issued in 2012 subject foreign exchange transactions to prior approval by Argentine tax authorities. Formal and informal foreign exchange controls continued throughout 2013 and remain in place. Although in 2014 individuals who could evidence 'economic capacity' as determined by the Argentine tax authorities were allowed to access the official foreign exchange market to acquire foreign currency primarily for savings, since the enhancement of exchange controls in November 2011 the introduction of government measures have practically closed the foreign exchange market to retail transactions. It is widely reported that the peso/U.S. dollar exchange rate in the unofficial market and in neighboring markets where the peso is traded differs substantially from the official foreign exchange.

During 2013, the Argentine peso devalued from Ps. 4.92 per U.S. dollar as of December 31, 2012 to Ps. 6.52 per U.S. dollar as of December 31, 2013. In early 2014 the devaluation of the Argentine peso accelerated. In the week of January 20 to January 24, the official peso/U.S. dollar exchange rate went from Ps. 6.83 per U.S. dollar to Ps. 8.00. In the following months, devaluation continued albeit at a slower pace, while regulatory and de facto restrictions on access to the official foreign exchange market to pay for imports of goods and services remained in place. As of December 31, 2014, the official peso/U.S. dollar exchange rate was Ps. 8.55 per U.S. dollar.

Government intervention in the foreign currency market to sustain the value of the Argentine peso, increased energy imports and the decline in the international price of gold have resulted in a progressive depletion of Central Bank reserves. In 2013, Central Bank reserves decreased by approximately 29.3% from US$43,290 million as of December 31, 2012 to US$30,600 million as of December 31, 2012. In 2014, Central Bank reserves increased slightly, by 2.6% to US$ 31,408 million as of December 31, 2014, reportedly due to the assistance of the People's Republic of China, implemented through a currency swap program agreement with the Bank of China. Additional exchange controls could have a negative effect on the economy and on private sector companies, including our business. Furthermore, in such event, the imposition of future restrictions on the transfers of funds abroad may impede the transfer of foreign currency on account of dividends to GDS holders.

c. International Trade Restrictions

In 2012, the Argentine government introduced a procedure pursuant to which local authorities must pre-approve the import of products and services to Argentina as a pre-condition to permit such import and the consequent access to the foreign exchange market for the payment of the imported products or services.

On August 22, the World Trade Organization ("WTO") issued a Panel Report relating to complaints brought by the United States, the European Union and Japan, where it concluded that such import pre-approval requirements were inconsistent with the 1994 General Agreement on Tariffs and Trade ("GATT 1994") and recommended that the Dispute Settlement Body request Argentina to bring the inconsistent measures into conformity with its obligations under the GATT 1994. Argentina appealed the Panel Report on September 26, 2014. On January 15, 2015 the WTO Appellate Body issued its report in the case "Argentina - Measures Affecting the Importation of Goods" upholding the Panel Report's main conclusions and recommendations.

Repeated complaints from various countries against import restrictions implemented by Argentina, suspension of export preferences or retaliations by trading partners may have an adverse effect on Argentine exports, affect the trade balance and, consequently, adversely impact Argentina's economy.

Additionally, increased government control over foreign trade has resulted in a shortage of inputs and spare parts and in production disruptions. The continuation of these shortages may affect the growth of the economy and, consequently, could affect our business, financial condition and results of operations.

d. Other forms of government intervention

Expropriations, interventions and other direct involvement by the Argentine government in the economy have had an adverse impact on the level of foreign investment in Argentina, the access of Argentine companies to the international capital markets and Argentina's commercial and diplomatic relations with other countries. The level of government intervention in the economy may continue or increase, which may adversely affect Argentina's economy in the medium and long term and, in turn, our business, results of operations and financial condition.

e. Sovereign litigation

Litigation, as well as claims filed Argentine sovereign debt bondholders and foreign investors with the International Centre for Settlement of Investment Disputes (ICSID) and United Nations Commission on International Trade Law (UNCITRAL) against the Argentine government, have resulted in material judgments and may result in new material judgments against the government, and could result in attachments of or injunctions relating to assets of Argentina that the government intended for other uses.

On November 21, 2012, the United States District Court for the Southern District of New York ordered Argentina to pay US$ 1.33 billion to certain holdout bondholders and curtailing Argentina's ability to pay certain other external indebtedness for so long as payment of the holdout bondholders was pending. Argentina appealed the District Court's November 21 order and requested a stay, which was granted by the Second Circuit Court of Appeals. On March 19, 2013, Argentina submitted a proposed payment plan for holdout bondholders, which was rejected by plaintiffs on April 19, 2013. On August 30, 2013, the Second Circuit Court of Appeals affirmed the District Court's November 21, 2012 order, but stayed its decision pending an appeal to the Supreme Court of the United States.

On June 16, 2014, the U.S. Supreme Court denied Argentina's certiorari petition of the Second Circuit Court of Appeals' ruling affirming the Southern District Court judgment of November 21, 2012. Consequently, Argentina was required to pay 100% of the amounts due to plaintiffs whenever it made its next payment to restructured bondholders. Upon rejection of Argentina's appeal to the Supreme Court, on June 18, 2014 the United States Court of Appeals for the Second Circuit lifted its stay of the District Court's order. On June 23, 2014, Argentina requested the District Court for a new stay to allow for a reasonable period of negotiations to settle the dispute with plaintiffs.

On June 26, 2014, Argentina deposited the amounts due to holders of restructured debt in accounts of the trustee-The Bank of New York Mellon ("BONY")-in the Central Bank of Argentina. On that same date, Judge Griesa of the District Court rejected the request for a stay made by Argentina on June 23, 2014.

On June 27, 2014, Judge Griesa ruled that the aforementioned funds should not be delivered to the holders of restructured debt in the absence of a prior agreement with the holdouts. As of the date of this annual report, the parties have not arrived at an agreement and BONY has invoked the decision of the District Court judge to freeze the funds deposited by Argentina. Argentina asserted that it had complied with its obligation to the holders of the restructured bonds by making the initial deposit, and that the indenture trustee had the obligation to deliver those funds to their beneficiaries.

On September 11, 2014, the Argentine Congress passed Law No. 26,984, which provides for various mechanisms to pay the holders of the restructured bonds. Among other things, the new law authorized the replacement of BONY as trustee and provided for a voluntary exchange of the restructured bonds for new bonds that would have identical financial terms but be governed by Argentine law and subject to Argentine jurisdiction.

On September 29, 2014 the District Court judge declared Argentina in contempt of court but did not impose sanctions on the country. On October 3, 2014, the District Court judge ordered Argentina to reinstate BONY, remove the newly appointed trustee-Nación Fideicomisos-and resolve the dispute with the holdout plaintiffs.

On October 22, 2014, the Second Circuit Court of Appeals dismissed Argentina's appeal with respect to the freezing of the funds deposited with BONY for lack of jurisdiction. On October 28, 2014, the District Court judge rejected a motion filed by plaintiffs to attach the funds deposited by Argentina and frozen at BONY.

At Citibank's request, the District Court judge has authorized the payment of US dollar denominated bonds governed by Argentine law to the extent that payments have become due, deferring a definitive decision on this question. The District Court judge has set a new hearing for March 3, 2015 on the matter. On March 12, 2015, Judge Griesa rejected Citibank's request to make interest payments on US dollar denominated bonds governed by Argentine law, due on March 30, 2015.

As of the date hereof, litigation initiated by bondholders seeking payments from Argentina continues in the United States and in courts in other jurisdictions. As a result, the Argentine government may not have all the necessary financial resources to honor its obligations, implement reforms and foster growth. The lack of access to financial markets could have a material adverse effect on the country's economy, and consequently, our business, financial condition and results of operations.

g. Government expenditure

During the last few years, the Argentine government has substantially increased public expenditure. The Argentine government has sourced part of its funding requirements from the Central Bank and the National Social Security Administration ("ANSES"). For 2012, the government reported the first fiscal deficit since 2009. That trend continued in 2013, with the country's primary deficit more than doubling to approximately Ps.82.2 billion (approximately 2.4% of INDEC nominal GDP), without taking into account transfers from ANSES and the Central Bank. In 2014, the country registered a primary deficit of approximately Ps. 159.7 billion (approximately 3.7% of INDEC nominal GDP), its highest level since 2002. We cannot assure you that the government will not seek to finance its deficit by gaining access to the liquidity available in the local financial institutions.

On March 22, 2012, the Argentine Congress passed Law No. 26,739, which amended the charter of the Central Bank and Law No. 23,298. Law No. 26,739 amends the objectives of the Central Bank (established in its charter) and removes certain provisions previously in force. As amended, the Central Bank Charter provides that reserves may be made available to the government for the repayment of debt or to finance public expenses. This use of Central Bank reserves for expanded purposes may render Argentina more vulnerable to external shocks, affecting the country's capacity to overcome the effects of an external crisis, and fuel inflation as the amount of pesos in circulation increases while reserves decrease. In addition, Law No. 26,739 amends the criteria for compliance with the minimum cash requirement for banks. This amendment could affect financial institutions by forcing them to increase liquidity, with a potential adverse impact on credit supply, and therefore on the growth of the Argentine economy and on our business.

Legislation and Regulation of the Media Industry  

In Argentina, the legal system, including the Constitution, protects the independence of the free press. As a media company, we are vigilant as to the attempts to curtail freedom of speech and the free press that might arise and widely cooperate with journalistic associations and other NGOs that advocate for the protection of these and other fundamental constitutional rights.

Since 2009 the government has conducted an overt policy designed to restrict the activities of the free press. During 2013 and 2014 private media in general and Grupo Clarín in particular continued to face an escalating level of harassment, involving the use of official and para-official means and resources with the clear intention of damaging the private media's reputation and directly and indirectly limiting its journalistic activities.

a. Audiovisual Communication Services Law

In October 2009, the Argentine Congress passed a new Audiovisual Communication Services Law ("LSCA") to replace the general legal framework under which the audiovisual media industry operated in Argentina for approximately three decades. We and others challenged the new LSCA 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 discretionary power to grant licenses and the application of penalties, among other controversial aspects.

On October 29, 2013, the Argentine Supreme Court, in a split decision, upheld the constitutionality of the LSCA in re "Grupo Clarín S.A. and others v. National Executive Branch and others re/ Merely declarative Action". The Company believes that the Sections of the LSCA it had challenged in that litigation not only contradict principles of the Argentine National Constitution, but also those of the American Convention on Human Rights (Pact of San José de Costa Rica), as well as recent precedents of the Inter-American Commission on Human Rights, the Inter-American Court of Human Rights and the Special Rapporteurship for Freedom of Expression of the Organization of American States. The Company will analyze bringing an appeal before international courts to challenge those sections that entail an indirect act of censorship, silence and discriminate critical media, and violate acquired rights. 
In addition, as provided in the Court's ruling, the Company will continue to litigate in local courts all the aspects related to the arbitrary and selective application of the law by the national government.

On October 31, 2013 the Company and some of its subsidiaries were served with Resolution No. 2276/2012 of the LSCA Federal Enforcement Authority ("AFSCA"), providing for an ex-officio proceeding force compliance by the Company and some of its subsidiaries with the requirements and limitations of the LSCA by dispossessing the Company of certain licenses, among other measures.

Faced with the de-facto proceedings that sought to dispossess the Company of its licenses and assets through an ex-officio procedure, on November 4, 2013 the Company submitted to AFSCA and the Supreme Court of Argentina a proposal pursuant to section 161 of the LSCA, which was approved by Grupo Clarín's Board of Directors on November 3, 2013, in an attempt to avoid the forced divestiture of its assets by AFSCA. Shortly after receipt of the proposal, AFSCA issued Resolution No. 1471/2013, whereby it suspended the ex-officio transfer procedure.

The proposal included the necessary disclaimers to safeguard the rights of the Company, including without limitation, the right to bring a claim for economic damages caused to the Company and its subsidiaries as a consequence of their adjustment to conform to the LSCA; the right to challenge the conformity of Sections 41, 45, 48 and 161 of the LSCA to international conventions before the Inter-American Commission on Human Rights, the Inter-American Court of Human Rights and other competent International Courts; and the right to challenge judicially the current composition of AFSCA for not conforming to the provisions of the LSCA and for not being a technical and independent agency protected against undue interferences from the State.

The proposal submitted by the Company consisted in its reorganization into six independent business units, each of which would individually comply with the requirements of the LSCA, according to the following detail:

Unit I would include (a) ARTEAR, owner of the signal of Canal 13 of Buenos Aires and the news signal TN (Todo Noticias). ARTEAR would also maintain its interest in (i) Telecor, holder of the license of Canal 12 of Córdoba and (ii) Bariloche TV, holder of the license of Canal 6 of Bariloche; (b) Radio Mitre, which would maintain the frequencies AM 790 and FM 100 in Buenos Aires, AM 810 and FM 102.9 in Córdoba, and FM 100.3 in Mendoza; and (c) certain assets, liabilities, rights and obligations to be spun off from Cablevisión, which would include 24 local licenses for physical link subscription television services in cities where there is no incompatibility with broadcast TV, and 2 licenses for radio-electric link subscription television services.

Unit II would comprise the surviving Cablevisión, which would continue to carry out the business activities and operations of Cablevisión with all the assets, liabilities, rights and obligations that are not spun off from Cablevisión. Unit II would hold 24 licenses for physical link subscription television services and 10 licenses for radio-electric link subscription television services, including the signal Metro, which is also the local signal of the license exploited in the City of Buenos Aires.

Unit III would include certain assets, rights and obligations to be spun off from Cablevisión, including 22 licenses for physical link subscription television services and 10 licenses for radio-electric link subscription television services.

Unit IV would include (a) IESA, owner of the signals TyC Sports and TyC Max; (b) the signals El 13 Satelital, Magazine, Volver, Quiero Música en mi Idioma and (c) an equity interest in Canal Rural S.A., owner of the signal Canal Rural.

Unit V would consist of (a) one sound frequency modulation broadcasting service for the City of San Miguel de Tucumán-FM 99.5, (b) one sound frequency modulation broadcasting service for the City of San Carlos de Bariloche-FM 92.1, (c) one sound frequency modulation broadcasting service for the City of Santa Fe-FM 99.3, (d) one sound frequency modulation broadcasting service for the City of Bahía Blanca-FM 96.5 and (e) one sound frequency modulation broadcasting service for the City of San Carlos de Bariloche -FM 103.1, owned by Bariloche TV

Finally, Unit VI would hold one broadcast television license for the City of Bahía Blanca, Province of Buenos Aires-LU81 TV Canal 7-and an equity interest in Cuyo Televisión S.A., holder of one broadcast television license in Mendoza-LV83 TV Canal 9 Mendoza.

Units I and II would continue to be structured under publicly traded holding companies with different, independent controlling shareholders. Holders of Class B shares and Global Depositary Shares of Grupo Clarín S.A.-which would maintain ownership of Unit I-would additionally receive a pro rata number of Class B shares or Global Depositary Shares of a new holding company, Cablevisión Holding S.A., which would own Unit II. Units III, IV, V and VI would be divested to independent third parties.

The proposal required the approval of AFSCA, the intervention of other governmental and oversight agencies and the approval of the shareholders at the respective Shareholders' Meetings in order to carry out the restructuring and the transfer of licenses, assets, liabilities and operations to third parties. On February 18, 2014, AFSCA declared the admissibility of said proposal and granted the Company a term of 180 calendar days for its implementation. On February 18, 2014, the Company's Board of Directors decided to call an Extraordinary Shareholders' Meeting to be held on March 20, 2014, in order to consider AFSCA Resolution No. 193/2014 and to instruct the Board of Directors to begin implementation of the proposal.

On August 19, 2014, the Company, ARTEAR, Radio Mitre and Cablevisión informed AFSCA of their completion of all actions necessary on their side to implement the proposal, under the terms of Resolution No. 193/2014. The entities also requested that AFSCA consider the explanations provided in response to AFSCA's previous observations, and compel the other intervening authorities to take the necessary action to enable the final completion of the proposal.

AFSCA issued new, additional requests and requirements, which were all duly and timely responded by the Company. On October 9, 2014, AFSCA notified the Company, ARTEAR, Radio Mitre and Cablevisión of the issuance of Resolution No. 1121/2014, whereby that agency decided to (i) reject the reorganization proposed by the Company, the reorganization proposed by Cablevisión, the formation of the foreign trusts required for the implementation of such reorganizations and the transfers proposed by the Company, ARTEAR, Radio Mitre and Cablevisión and to resume the ex-officio transfer procedures.

On 31 October 2014, the Federal Civil and Commercial Court No. 1 granted an interim injunction whereby it ordered the Argentine government and AFSCA to "abstain from performing, directly or through third parties, any action in connection with the ex officio transfer procedure." On December 9, 2014 the court confirmed the injunction for a term of six months, all subject to a bond of Ps. 1,000,000, which was timely posted. Chamber No. 1 of the National Court of Appeals on Federal Civil and Commercial Matters confirmed the injunction issued by the first instance judge. Accordingly, the implementation of the proposal or the application of the ex-officio divestiture procedure are again subject to litigation, with an uncertain result.

Given AFSCA's arbitrary and discriminatory decisions, on March 5, 2015, the Company broadened the scope of the claim filed in re "GRUPO CLARÍN v. NATIONAL GOVERNMENT on Incidental Procedure" (File 7,263/2012)", and requested the judge to: (i) declare that AFSCA's enforcement of Sections 45, 48 and 161 of the LSCA on the claimants through AFSCA Resolution No. 1,121/14 is unconstitutional and infringes the right to freedom of the press, property, equality before the law, due process, defense in court and the principle of reasonableness with which those powers must necessarily be exercised, and that, if necessary, each and every resolution related to this unconstitutional enforcement, in particular AFSCA Resolution No. 1,121/14, is illegitimate and null and void; (ii) order claimants to comply with the legitimate legal obligation to conform to the LSCA, voluntarily applying the criteria adopted by AFSCA on other proposals and to order AFSCA to refrain from discriminating against the claimants in the consideration of their proposal to conform to the license regime provided under Section 45 of Law No. 26,522 and to comply with the conditions established in Recital 74 of the Supreme Court's decision in re "Grupo Clarín and Other v. National Government on Incidental Procedure" for the application of Law No. 26,522; and, (iii) order the National Government to carry out each and every act required to implement the proposal submitted by the claimants that were identified in the Proposal. As of the date of these financial statements, the Company and its legal advisors cannot provide assurance about the effects that this situation may have on the Company and its Proposal. Notwithstanding the foregoing, the Task Force Created to Implement the Proposal continues to carry out the actions required to implement the Proposal as filed.

Even if the proposal submitted by the Company and its affiliates is finally approved, its implementation may entail a strong reduction of the Company's operating income and its profitability in the Cable Television and Internet Access segment and/or a strong reduction of its operating income and profitability of the Broadcasting and Programming segment, depending on the choices made by the Company. The above-mentioned considerations and the limits to the growth of Grupo Clarín imposed by the LSCA, inconsistent with world trends and in breach of legitimately acquired property rights, will have an impact on the equity value of Grupo Clarín.

Potential changes in the implementation of the proposal, additional limitations to those contemplated thereunder and/or a forced divestiture process may give rise to different results and, eventually, adverse consequences. As of the date of these financial statements the Company cannot provide assurance about the results of that process.

The decision rendered by the Supreme Court of Argentina on October 29, 2013 expressly states the claimant companies' right to claim economic damages caused to the Company and its subsidiaries as a consequence of the adjustment to conform to the LSCA, and the Company has expressly reserved its right to bring judicial actions to claim for those damages.

The situation described above generates uncertainties about the business of the Company and its subsidiaries that could materially affect the recoverability of the Company's relevant assets, its business, results of operations and financial condition.

b. New Telecommunication Services Law

On December 16, 2014 Congress passed Law No. 27,078 under the name "Digital Argentina Act", whereby Congress partially repealed the existing National Telecommunications Law No. 19,798 and subjected the effectiveness of Decree No. 764/00 (which had deregulated the telecommunications market) to the issuance of four new regulations relating to the License Regime, Interconnection, Universal Services and Radioelectric Spectrum.

The new law maintains the single country-wide license scheme and the independent registration of the services to be rendered, but telecommunication services are renamed "Information and Communication Technologies" (TIC). Notwithstanding their new denomination, TIC licenses (now called "Digital Argentina Single Licenses") still cover all telecommunication services, and the scope of the licenses granted originally to the Company's subsidiaries and merged companies remains unaltered.

The most significant change to the former National Telecommunications regime was the creation of a new public service under the name "Public and Strategic Infrastructure Use and Access Service for and among Providers." By characterizing this activity as a public service, providers (including audiovisual communication service providers) may be required to grant other TIC service providers access to network elements, related resources or services for such other TIC service providers to render their own services. Networks and infrastructure owners, such as the Company and its subsidiaries, may be required to grant network access to competitors that have not made investments in their own infrastructure.

The regulations required to implement the new Digital Argentina Act have not been issued. Therefore, the Company cannot yet assess the economic and operational impact of the creation of this new public service. The new oversight authority (AFTIC) that is to enforce the law has not been created either, and therefore the Argentine government has not yet taken any steps to implement the new law.

Enforcement of the Digital Argentina Act (particularly taking into account how the Argentine government has interpreted and applied other laws that govern the Company's business) could have a material adverse effect on the Company's business, financial condition and results of operations.

c. Other government action relating to the Company and the media industry

In addition to the government's drive to implement the LSCA, the Argentine government has also sought to revoke the authorization granted unanimously by the National Antitrust Commission in 2007 to the transaction whereby the Company indirectly acquired 60% of Cablevisión and Cablevisión acquired all or part of the equity interests of certain of our subsidiaries.

The Argentine government has also taken measures to revoke the license under which Cablevisión renders internet services and to set the price of its pay-television service according to a pricing formula. Such measures, which we have challenged in court, if upheld would materially adversely affect our business. We have obtained preliminary injunctions that have enjoined the government's 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.

Other government or para-official actions against the Company and media in general include:

- an exponential increase and discriminatory allocation of official advertising used to create and sustain pro-government media, as well as the use of such advertising to condition the press;

- the use of public funds and media on a discretionary basis to generate content and shows that display political propaganda, while creating hurdles and discriminating against certain media in the access to public information;

- an aggressive campaign to destroy non-partisan media by compromising their economic sustainability and credibility;

- abuse of bureaucratic controls or controls by public agencies in the form of administrative persecutions, groundless arbitrary resolutions, disproportionate tax controls and recurring audits;

- banning private companies from including their advertising slots in independent media;

- blockades to printing facilities to prevent the distribution of certain newspapers and magazines;

- government interference and regulation of the newsprint industry, including a series of temporary clauses, specifically and exclusively addressed to our affiliate 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 newsprint;

We cannot assure that government action against independent media and against the Company in particular will not continue or intensify. Increased government action against the Company could materially affect our business, results of operations and financial condition.

Capital Markets Regulations

On November 29, 2012 Congress passed Capital Markets Law No. 26,831 (the "Capital Markets Law"), which was enacted by the Executive on December 27, 2012, published on December 28, 2012 and became effective on January 28, 2013. The Capital Markets Law provides for a comprehensive amendment of the public offering regime, previously governed by Law No. 17,811 and, among other things, enhances the National Government's oversight powers over publicly traded companies.

On July 29, 2013, the National Government issued Decree No. 1023/2013 to regulate partially the Capital Markets Law. Among other provisions, the Decree regulates Section 20 of said Law, pursuant to which the CNV may appoint an overseer with veto rights over the decisions made by the boards of directors of entities subject to the public offering regime, or otherwise remove the boards from such entities for up to 180 days until all deficiencies found by the CNV are solved, without prior judicial authorization or control. The Decree also vests with the CNV the power to appoint the administrators or co-administrators that will hold office after a board of directors of an issuer is removed. The Company is of the view that the Decree amends the Law it seeks to regulate and, therefore, is not a valid implementing regulation.

On July 12, 2013, a few days prior to the issuance of the Decree, the Company was served notice of Resolution No. 17,131, dated July 11, 2013, whereby the CNV declared that the administrative effects of the decisions adopted at the Annual Ordinary General Shareholders' Meeting held on April 25, 2013 were irregular and ineffective. The CNV's Resolution was based on allegations that were completely false and irrelevant. These allegations, as well as the conduct of the representatives of ANSES (a shareholder of the Company) and of the CNV at the meeting, prompted certain directors of the Company-and later the Board itself-to press criminal charges against ANSES and CNV representatives (Messrs. Reposo, Kicillof, Moreno, Vanoli, Fardi and Helman) for making false statements and arguments with the sole intent of discrediting the Board of Directors and caricature the Company's management with the ultimate purpose of creating pretexts to permit an intervention of the Company without judicial control, pursuant to the new powers vested on the CNV by the Capital Markets Law.

The Company gave the CNV written notice that what the events registered at the Shareholders' Meeting could not be considered in any way as an acknowledgment of the legitimacy of the powers vested on the CNV by the Capital Markets Law, and reserved its rights to file the pertinent legal actions to challenge the constitutionality of that law.

On August 20, 2013, at the request of Mr. Rubén Mario Szwarc, a shareholder of the Company, the Company was served notice of the decision rendered by Chamber A of the National Court of Appeals on Commercial Matters, whereby that Chamber decided, among other things, to enjoin the enforcement of Section 20, subsection a), second part, paragraphs I and II (or 1 and 2) of the Capital Markets Law and of all laws, rules or administrative acts issued or that may be issued pursuant to such legal provisions, with respect to Grupo Clarín S.A., until the courts decide on the merits of Mr. Szwarc's claim.

On October 11, 2013 Chamber 5 of the National Court of Appeals on Federal Administrative Matters issued an injunction in re "Grupo Clarín S.A. v. CNV - Resol No. 17,131/13 (File 737/13)" File No. 29,563/2013, suspending the effects of Resolution No. 17,131/2013 until the courts reach a decision on the merits. On November 11, 2014, the same court extended the injunction for an additional six months.

On March 21, 2014 the Company was served notice of a claim filed by ANSES, seeking to challenge and to render void the decisions adopted at the Shareholders' Meeting of the Company held on 25 April 2013 and the decisions adopted by the Board of Directors at its meeting of 26 April 2013. As of 31 December 2014 the term for the Company to respond to the claim was under suspension.

In spite of these judicial measures that have afforded the Company temporary protection against arbitrary and discriminatory action taken by the Government against us as part of its long-standing campaign, we cannot assure that these injunctions and measures will remain in place, that the courts will not uphold the constitutionality of Section 20 of the Capital Markets Law, or that the CNV will not attempt to apply that provision against the Company, effectively removing the Board of Directors for up to 180 days and replacing it with CNV-appointed administrators or co-administrators.

Direct intervention of our management by the CNV could materially affect our business, results of operations and financial condition.

Sector Development and Competition

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.

However, the media industry and certain maturing markets to which our services are catered, are dynamic and constantly undergo 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 our analysis of industry trends is not accurate or if we are not able to adapt readily our operations.

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 LSCA and pursuant to our proposal to conform to it, we may 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. While we have been able to access the official foreign exchange market to make debt payments to date, we cannot exclude that a further tightening of foreign exchange controls could adversely affect our ability to make payments on our debt on a timely basis.

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. However, the implementation of our proposal to conform our operations to the LSCA may require prepayment of certain of our indebtedness. We cannot assure that we will be able successfully to access the market in order to prepay such indebtedness under terms that will not affect our financial condition adversely.

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.

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. Pursuant to the By-laws, the Board of Directors is comprised by ten permanent directors and ten alternate directors who are elected at the Ordinary Shareholders' Meeting on an annual basis. Four of them (two permanent and two alternate members) are required to be independent directors, appointed in accordance with the requirements provided under the CNV rules.

Members of the Board of Directors

Grupo Clarín's Board of Directors is comprised by the following members, appointed at the Annual Ordinary Shareholders' Meeting and Special Meeting per Class of Shares, held on April 29, 2014:

Jorge Carlos Rendo Chairman

Alejandro Alberto Urricelqui Vice Chairman

Pablo César Casey Director

Saturnino Lorenzo Herrero Mitjans Director

Hector Mario Aranda Director

Ignacio R. Driollet Director

Lorenzo Calcagno Independent Director

Alberto César José Menzani Independent Director

Luis María Blaquier Director

Jorge Ignacio Oría1 Director

Martín Gonzalo Etchevers Alternate Director

Hernán Pablo Verdaguer Alternate Director

Juan Ignacio Giglio Alternate Director

Francisco Iván Acevedo Alternate Director

Sebastián Bardengo Alternate Director

Horacio Eduardo Quiros Alternate Director

Carlos Rebay Alternate Director

Luis Germán Fernández Alternate Director

Sebastián Salaber Alternate Director

Francisco Saravia Alternate Director

*1. During the year, Jorge Oría requested leaves of absence. During those periods he was replaced by the Alternate Director Sebastián Salaber.

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 Ordinary 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 provided under CNV rules.

Supervisory Committee

Grupo Clarín's Supervisory Committee is comprised by the following members, appointed at the Annual Ordinary Shareholders' Meeting and Special Meeting per Class of Shares, held on April 29, 2014:

Raúl Antonio Morán1 Permanent Member

Carlos A. P. Di Candia1 Permanent Member

Pablo San Martín1 Permanent Member

Hugo Ernesto López1 Alternate Member

Rubén Suárez1 Alternate Member

Miguel Ángel Mazzei1 Alternate Member

1 Independent members of the Supervisory Committee

Audit Committee

The Audit Committee is comprised as follows:

Alberto César José Menzani Chairman

Lorenzo Calcagno Vice Chairman

Alejandro Alberto Urricelqui Permanent Member

Pablo César Casey Alternate Member

Carlos Rebay Alternate Member

Luis Germán Fernández Alternate Member

Grupo Clarín organizes its activities under an executive structure comprising: External Relations Department; Corporate Finance Department; Corporate Control Department; Corporate Strategy Department; Audiovisual Content Department; Corporate Human Resources Department; Corporate Affairs Department; Digital Content Department.

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, among other factors.

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 policies for 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.

All of Grupo Clarín's subsidiaries have compensation arrangements with all of their 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, prevailing market salaries and performance. The annual 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 20 to the Consolidated Financial Statements, on January 1, 2008 Grupo Clarín began to implement a long-term savings plan for certain executives of Grupo Clarín and its subsidiaries. Executives who adhere to such plan will contribute regularly a limited 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. This long-term benefit has a strong withholding component and is considered as an integral part of the employee's total compensation for comparative purposes with prevailing market salaries. During 2013, certain changes were made to the savings system, although its operation mechanism and the main characteristics with regard to the obligations undertaken by the company were essentially maintained.

The parameters used in fixing compensations are in line with customary market practices followed by companies of the scale of Grupo Clarín. To this end, the Company assesses the relative weight of the several positions within the company, as well as the performance of the employee that holds the position. In order to assess positions and compare salaries in different markets, the Company uses the services and reports of prestigious HR companies at the national and international level.

Annual Shareholders' Meeting

Grupo Clarín held its Annual Ordinary Shareholders' Meeting on April 29, 2014. On this occasion, the shareholders reviewed and approved the accounting records for fiscal year No. 15 ended on December 31, 2013 and the performance and compensation of the members of the Board of Directors and the Supervisory Committee. Among other things, they elected the permanent members and alternate members of the Board of Directors and the Supervisory Committee for the year 2014. In addition, the shareholders approved the distribution of cash dividends in the amount of Ps. 240,000,000, payable in two installments, the first one for Ps. 80,000,000 payable within 30 days following the date of the Shareholders' Meeting and the second one for Ps. 160,000,000 payable on or before December 31, 2014.

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 Corporate Law, Grupo Clarín may lawfully pay and make declarations of dividends only out of the retained earnings stated in the Company's annual Financial Statements prepared in accordance with Argentine GAAP and CNV regulations and approved at the 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.

Set-up of reserves

Pursuant to the Argentine Corporate Law and CNV 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.

Code of Corporate Governance

In addition to the aforementioned and in conformity with the CNV's decisions concerning the filing of the report about compliance with the Code of Corporate Governance (Resolution No. 606/12), Grupo Clarín prepared the report for the year under analysis, which is attached as an exhibit to this annual report.

BUSINESS PROJECTIONS AND PLANNING

As mentioned above and in light of the decision rendered by the Supreme Court of Justice, on November 3, 2013 the Board of Directors approved a voluntary proposal to conform to the LSCA that was filed with AFSCA on November 4, 2013 and declared formally admissible by that agency on February 18, 2014.

The implementation of the proposal submitted by the Company required the approval of AFSCA, the intervention of other governmental and oversight agencies and the approval of the shareholders at the respective Shareholders' Meetings in order to carry out the restructuring and the transfer of licenses, assets, liabilities and operations to third parties.

After approving the above-mentioned Proposal at their respective Shareholders' Meetings, the Company and its subsidiaries devoted considerable effort to the implementation in due time and form of the Proposal that had been declared formally admissible by AFSCA. They also made a filing with AFSCA in order to inform and certify that they had duly completed all actions required of those companies and necessary to implement the Proposal in the terms in which it had been approved pursuant to Resolution No. 193/AFSCA/2014.

The Company understands that it has executed the Proposal that was declared formally admissible pursuant to Resolution No. 193, fully in accordance with the commitment undertaken by the Company and in compliance with the applicable regulatory framework, and considers that Resolution No. 1,121/AFSCA/2014, whereby AFSCA rejected the corporate reorganizations and transfers under the Proposal and ordered the initiation of an ex-officio divestiture procedure with respect to the Company and its subsidiaries, is evidently arbitrary and inappropriate and infringes the constitutional guarantees of due process and defense in court. The procedure to approve such Resolution had serious irregularities and gross and malicious errors relating to the interpretation and application of effective legislation, inevitably rendering such Resolution null and void. For those reasons, the affected companies requested the Resolution's nullification before an administrative court and will resort to all available judicial remedies to have such Resolution declared null and void in order to satisfactorily implement the Proposal to which they have committed. In this respect, it should be mentioned that the Ex-Officio Forced Divestiture Procedure has been suspended by the court for a period of six (6) months.

Implementation of the Proposal that was declared formally admissible will entail significant changes to the Company's structure, generating an uncertain scenario about the future development of the business.

Implementation of this proposal may entail a strong reduction of its operating income and its profitability in the Cable Television and Internet Access segment and/or a strong reduction of its operating income and profitability of the Broadcasting and Programming segment. The above-mentioned considerations and the limits to the growth of Grupo Clarín imposed by this law, against world trends and against legitimately acquired rights, will surely have an impact on the potential value of Grupo Clarín. The process required to implement the proposal and the results generated as a consequence thereof will depend on the outcome of the claims brought and/or to be brought requesting the nullification of the ex-officio divestiture procedure ordered by AFSCA.

Potential changes in the implementation of the Proposal that was declared formally admissible, additional limitations to those contemplated thereunder and/or a forced divestiture process may give rise to different results and, eventually, adverse consequences. As of the date of these financial statements and given the current uncertainties regarding the effective evolution of the conforming process of the Company and its subsidiaries, the existing restrictions imposed by the regulatory framework and the conditions in which these processes will be effectively carried out, the Company cannot provide assurance about the results of that process.

It should be noted that the decision rendered by the Supreme Court of Argentina on October 29, 2013 expressly states the claimant companies' right to claim economic damages caused to the Company and its subsidiaries as a consequence of the adjustment to conform to the law. Accordingly, under the proposal submitted to AFSCA on November 4, 2013 the Company expressly reserved its right to bring judicial actions to claim for those damages.

In connection with the changes made to the regulatory framework applicable to telecommunication services, the implementing regulations for Law No. 27,078 are still pending. Therefore, the economic and operational impact that the creation of this public service may have on the subsidiaries that are within the scope of this law cannot be ascertained. The government has taken no action to apply the new law because the AFTIC has yet to be organized.

However, the Company seeks to reinforce and enhance its products and services through the activities developed by Grupo Clarín and its business units, preserving their quality and fostering ongoing innovation. Grupo Clarín intends to continue to focus on optimizing the productivity and efficiency levels in all of its operating areas, seeking to develop and to apply the best practices related to each of these processes. At a corporate level, activities will be focused 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 renews its sustained commitment to regulatory compliance, while reinforcing once again its commitment towards its readers, audiences and the country. In its daily work, Grupo Clarín seeks to assume with strength and responsibility the role that 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, because these are pillars that extol the quality of democracy and the welfare of Argentine society as a whole.

SUPPLEMENTARY FINANCIAL INFORMATION

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

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 decreased by Ps. 41.6 million compared to the previous year, from (positive) Ps. 165.4 million to (positive) Ps. 123.9 million. This decrease is basically evidenced in the decrease in Company funds (the items Cash and Banks and certain Current Investments) in the amount of Ps 122.3 million, net of a net increase in balances with related parties and the placement of forward instruments.

With respect to non-current items, the most significant variation was recorded under Investments in unconsolidated affiliates, mainly as a consequence of: (i) the net increase generated by 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., (ii) the increase generated by new contributions made to certain subsidiaries, mainly Arte Gráfico Editorial Argentino S.A., and (iii) the decrease generated by the collection of dividends of certain subsidiaries, mainly the companies through which the Company indirectly controls Cablevisión S.A. and Arte Radiotelevisivo Argentino S.A.

The Statement of Operations as of December 31, 2014 recorded a net income of Ps. 804.1 million. Such income is basically derived from the income generated by the investments in subsidiaries which amounted to Ps. 731.2 million, which includes the income generated by the investment in the subsidiary Inversora de Eventos S.A., classified as Net Income from Discontinued Operations during this year.

Grupo Clarín S.A. is still controlled by GC Dominio S.A., which holds 64.2% of its voting rights. Balances and transactions with related parties are detailed in Note 16 to the Consolidated Financial Statements.

PROPOSAL OF THE BOARD OF DIRECTORS

Net income for the year ended on December 31, 2014 was Ps. 804,101,687.

In light of the situation outlined in this Annual Report in connection with the proposal to conform to the LSCA, the dividend distribution proposal presented by the Boards of Directors of each of Grupo Clarín's subsidiaries, the financial position of certain subsidiaries which are expected to require in 2015 contributions to be made using a substantial portion of the dividends receivable mentioned above, and the expected future cash flows from operating and financing activities, the Board of Directors considers that it would not be prudent to propose any dividend distribution. Hence, the Board of Directors proposes to the Shareholders' Meeting that such net income of Ps. 804,101,687 be appropriated to the Optional Reserve to give financial aid to its subsidiaries and the LSCA.

The Legal Reserve has already reached the limit established by Law No. 19,550 and CNV resolutions and, therefore, the Company is not required to appropriate net income to the legal reserve.

Below is a summary of the main criteria on which the above appropriation of net income for the year to the optional reserve mentioned above proposed by the Board of Directors is based:

- as mentioned above in this Annual Report and as exhaustively described in the Company's financial statements, the circumstances that gave rise to the setting up of this reserve are still prevailing. Therefore, the Board of Directors proposes to the Shareholders that, given the uncertainties related to the LSCA, the eventual implications of the implementing regulations of the Digital Argentina Act, and the contributions that are expected to be required by some subsidiaries for the reasonable management of their businesses, among other issues, it would be prudent and reasonable to appropriate net income for the year to the optional reserve.

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 IFRS, 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

Vice Chairman

Grupo Clarín

EXHIBIT I - REPORT ON THE DEGREE OF COMPLIANCE WITH THE CODE OF CORPORATE GOVERNANCE

(Information required by CNV RESOLUTION No. 606/12)

PRINCIPLE I. REVEAL THE RELATIONSHIP BETWEEN THE ISSUER AND THE ECONOMIC GROUP IT LEADS AND/OR BELONGS TO AND ITS RELATED PARTIES

The corporate governance framework shall:

Recommendation I.1. Ensure disclosure by the Board of Directors of the policies applicable to the relationship between the Issuer and the economic group it leads and/or belongs to and its related parties.

Answer whether or not:

The Issuer has an internal rule or policy governing the authorization of transactions between related parties pursuant to Section 73 of Law No. 17,811, operations carried out with shareholders and members of the Board of Directors, first-line managers and statutory auditors and/or members of the supervisory committee within the economic group it leads and/or belongs to. Specify the main guidelines of the internal rule or policy.

Full compliance.

The Company has a policy on transactions with related parties in place, in accordance with effective regulations.

Recommendation I.2. Ensure that policies and procedures are in place to prevent conflicts of interests.

Answer whether or not:

The Issuer has, notwithstanding the effective regulations, clear and specific policies and procedures to identify, handle and solve potential conflicts of interests arising from the relationship between members of the Board of Directors, first-line managers and statutory auditors and/or members of the supervisory committee and the Issuer or its related parties. Describe the relevant aspects of such policies and procedures.

Full compliance.

The Company has a Code of Ethics and Conduct in place, which, among other things, seeks to avoid potential conflicts between the Company's interests and the personal interests of its directors and employees and their respective direct relatives. The code describes objective scenarios where a conflict of interest may arise and provides a non-exhaustive list of examples that standardize conflicts.

Recommendation I.3. Prevent the misuse of privileged information.

Answer whether or not:

The Issuer has, notwithstanding the effective regulations, achievable policies and procedures to prevent the misuse of privileged information by members of the Board of Directors, first-line managers, statutory auditors and/or members of the supervisory committee, controlling shareholders or shareholders that exert significant influence on the Company, professionals involved and the other persons listed in Sections 7 and 33 of Decree No. 677/01. Describe the relevant aspects of such policies and procedures.

Full compliance.

The Code of Ethics and Conduct referred to in Item I.2. deals with the handling of confidential information by the Company's officers, where confidential information is understood as all such information that has not become publicly known and that may be important for an investor to make a buy, sell or hold decision concerning any of the Company's securities. The Code prohibits the use of such information by the Company's officers for their own benefit or for the benefit of a third party. The Company also has mechanisms in place to restrict the access to and internal distribution of information that supplement the measures implemented to prevent the use or disclosure of confidential information.

PRINCIPLE II. LAY THE FOUNDATIONS FOR THE ISSUER TO HAVE A STRONG MANAGEMENT AND SUPERVISION

The corporate governance framework shall:

Recommendation II.1. Ensure that Issuer's management and supervision and its strategic orientation are under the charge of the Board of Directors.

Answer whether or not:

II.1.1. The Board of Directors is in charge of approving:

II.1.1.1. The Company's strategic or business plan, as well as the management goals and annual budgets;

Full compliance.

The Company's Board of Directors reviews the business plan on an annual basis. That plan includes management goals and their respective budgets.

II.1.1.2. The investment policy (in financial assets and capital expenditures) and the financing policy;

Full compliance.

The investment and financing policy is an integral part of the Company's business plan as described in Item II.1.1.1.

II.1.1.3. The corporate governance policy (compliance with the Corporate Governance Code);

Full compliance.

As established by the effective regulations, the Board of Directors has approved the content of the report on the degree of compliance with the Corporate Governance Code, as a separate exhibit to the Annual Report.

II.1.1.4. The policy on selection, assessment and compensation of Top Management;

Partial compliance.

The policy on selection, assessment on performance and compensation of top management is under the responsibility of members of the Company's Board of Directors. The policy is implemented by the Human Resources Department.

II.1.1.5. The policy on allocation of responsibilities among first-line managers;

Partial compliance.

The Company has a policy in place that sets forth transaction authorization ranges and procedures by transaction amount and transaction type that may be implemented by first-line managers in handling the transactions under their responsibility. This policy is under the responsibility of members of the Company's Board of Directors and is implemented by the Control Department.

II.1.1.6. The oversight of first-line managers' succession planning;

Partial compliance.

Top Management succession planning is under the responsibility of members of the Company's Board of Directors. Succession plans are implemented by the Human Resources Department.

II.1.1.7. The Corporate Social Responsibility policy;

Partial compliance.

The Corporate Social Responsibility policy, see Item VI.2, is under the responsibility of members of the Company's Board of Directors. The policy is implemented by the Social Corporate Responsibility Department.

II.1.1.8. The policies on comprehensive risk and internal control management and fraud prevention;

Partial compliance.

The Company has a comprehensive internal control policy in place that deals with issues related to internal control, management control, fraud prevention and risk management. This policy is under the responsibility of members of the Company's Board of Directors and is implemented by the Control Department.

II.1.1.9. The policy on ongoing training for members of the Board of Directors and first-line managers.

Partial compliance.

The training policy is under the responsibility of members of the Company's Board of Directors and is implemented by the Human Resources Department.

II.1.2. If deemed relevant, add any other policy applied by the Board of Directors that has not been mentioned before, detailing its significant aspects.

The Company has other policies in place that are related to and supplement the above mentioned ones, such as: Procurement and Contracting, Register of Proxies, Register of Signatures, Information Security and Insurance.

II.1.3. The Issuer has a policy in place to ensure the availability of the information necessary for the Board of Directors to make decisions and a direct channel to make inquiries to line managers in a symmetric and fair way for all of its members (external and independent executives), with sufficient time ahead to adequately analyze its content. Specify.

Full compliance.

The Company's information flow procedures allow all of the Board members to receive relevant information on the issues submitted to their consideration, with sufficient time ahead to allow for a comprehensive analysis that facilitates the decision-making process. Top Management is also available to answer any question the directors may have in that regard.

II.1.4. The issues submitted to the consideration of the Board of Directors are supported by an analysis of the risks inherent to the decisions that may be adopted, taking into account the enterprise risk level the Issuer has defined as acceptable. Specify.

Full compliance.

Any decision submitted to the Board's consideration is supported by the relevant background, including the potential associated risks.

Recommendation II.2. Ensure the effective Control of Issuer's Management

Answer whether or not:

The Board of Directors is in charge of verifying:

II.2.1 Compliance with the annual budget and the business plan;

Full compliance.

The Board of Directors verifies compliance with the Company's annual budget and business plan.

II.2.2. Top Management performance and their compliance with their respective goals (expected level of profits versus actual profits, financial rating, accounting reporting quality, market share, etc.).

Full compliance.

The Board of Directors verifies compliance with the above items, through the fulfillment of the annual budget. Moreover, the Audit Committee assesses the financial reporting reliability. See Item II.2.1

Describe the relevant aspects of Issuer's Management Control policy, detailing the methods employed by the Board of Directors and the monitoring frequency.

A monthly report is prepared comparing the month's actual results and the year-to-date results against the budgeted results. This report also provides an explanation of the differences between budgeted and actual data, taking into account the changes between the expected activities and the actually executed activities. The Board of Directors regularly reviews this information.

Recommendation II.3. Disclose the Board of Directors' performance assessment process and its related impact.

Answer whether or not:

II.3.1. Each member of the Board of Directors complies with the By-Laws and, where applicable, with the Board of Directors' Rules of Operation. Specify the main guidelines of these rules. Specify the degree of compliance with the By-Laws and the Rules of Operation.

Full compliance.

All members of the Board of Directors comply with the effective regulations of the Argentine Business Associations Law No. 19,550, the Argentine Securities Commission (CNV) and the Buenos Aires Stock Exchange (BCBA), as well as with all the provisions of the Company's By-laws.

II.3.2. The Board of Directors reports the results of its management activities based on the goals set at the beginning of the year so that shareholders may assess the degree of compliance with such goals, which entail financial as well as non-financial aspects. The Board of Directors also presents a diagnosis of the degree of compliance with the policies referred to in Recommendation II, Items II.1.1 and II.1.2.

Specify the main aspects of the assessment made at the General Shareholders' Meeting on the Board of Directors' degree of compliance with the goals set and the policies referred to in Recommendation II, Items II.1.1 and II.1.2, indicating the date of the meeting in which the assessment was presented.

Partial compliance.

Pursuant to the Argentine Business Associations Law No. 19,550, the Company discloses the results of its management activities in the Annual Report, which is approved by the shareholders at the Annual Regular Shareholders' Meeting. Since the Board of Directors considers that the assessment of its own management activities is embedded in the Company's performance assessment, such assessment is not disclosed separately. Said disclosure does not include the diagnosis of the degree of compliance with the policies referred to in Items II.1.1 and II.1.2.

Recommendation II.4. That external and independent members account for a significant portion of the members of the Issuer's Board of Directors.

Answer whether or not:

II.4.1. The proportion of the Board of Directors' external and independent executive members (independent members as defined by the CNV's regulations) bears a relationship with the Issuer's capital structure. Specify.

Full compliance.

The Company's Board of Directors is comprised by members who are also managers of the Company, non-independent directors without executive responsibilities and independent directors. The distribution of directors bears relationship with the Company's capital structure, as provided by the effective legislation and the By-Laws.

II.4.2. During the current year, at a General Shareholders' Meeting, the shareholders agreed to a policy aimed at maintaining at least 20% of independent members in the total number of Board of Directors' members. Describe the relevant aspects of such policy and of any other shareholders' agreement to understand how and for how long the members of the Board are appointed. Indicate if the independence of the Board members was challenged at any time during the year and if there was any abstention as a result of a conflict of interest.

Partial compliance.

The Company has not implemented a policy in that regard. At present, independent directors account for 20% of the total number of the Board members. During the year, there were no abstentions as a result of a conflict of interest or any objections questioning directors' independence.

Recommendation II.5. Require that the Issuer implement rules and procedures for the selection and proposal of members of the Board of Directors and first-line managers.

Answer whether or not:

II.5.1. The Issuer has an Appointments Committee in place:

II.5.1.1. comprised by at least three members of the Board of Directors, most of them independent directors;

II.5.1.2. presided over by an independent member of the Board of Directors;

II.5.1.3. comprised by members with proven expertise and experience in human capital policies;

II.5.1.4. which holds at least two meetings per year;

II.5.1.5. which decisions in connection with the selection of Board members are not necessarily binding but rather consultative at General Shareholders' Meetings.

II.5.2. If there is an Appointments Committee in place, answer whether or not:

II.5.2.1. it verifies the annual review and assessment of its rules of operation and suggests amendments for the Board of Director's approval;

II.5.2.2. it proposes the development of criteria (qualification, experience, professional reputation and ethics, among others) for the selection of new members of the Board of Directors and first-line managers;

II.5.2.3. it identifies potential candidates to the Board of Directors to be proposed by the Committee at the General Shareholders' Meeting;

II.5.2.4. it proposes the Board of Directors' members that should be part of the several Board of Director's committees, based on their respective backgrounds;

II.5.2.5. it deems advisable that the positions of Board of Directors' Chairman and General Manager be held by different persons;

II.5.2.6. it ensures that the resumes of the Board members and the first-line managers are available at the Issuer's website, specifying the Board members' term of office;

II.5.2.7. it verifies that a Board member and first-line manager succession plan is in place.

II.5.3. If deemed relevant, add any policy implemented by the Issuer's Appointments Committee that has not been mentioned in the above item.

Non-compliance

The Company does not have an Appointments Committee in place. Notwithstanding the fact that, pursuant to the Argentine Business Associations Law No. 19,550, the above mentioned functions concerning the appointment of Board members shall be exclusively carried out at the Shareholders' Meeting, for the time being the Company does not see a need for implementing said Committee.

Recommendation II.6 Assess the convenience of the Board members and/or statutory auditors and/or members of the supervisory committee performing functions at several Issuers.

Answer whether or not:

The Issuer sets limits on Board members and/or statutory auditors and/or members of the supervisory committee in connection with the performance of functions at entities other than the economic group the Issuer leads and/or belongs to. Specify said limit and whether it was violated or not at any time during the year.

Non-compliance

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 that 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 reappointed. The Board does not deem it necessary to set that limit in light of the current circumstances.

Recommendation II.7. Ensure the training and development of the Issuer's Board members and first-line managers.

Answer whether or not:

II.7.1. The Issuer has ongoing Training Programs in place addressed to Board members and first-line managers that are related to the Issuer's current needs, and include training on their respective roles and responsibilities, comprehensive enterprise risk management, know-how on the business and its regulations, corporate governance dynamics and corporate social responsibility, as well as international accounting standards, auditing and internal control standards and capital market regulations for members of the Audit Committee. Describe the programs developed during the year and the degree of compliance.

Full compliance.

The Company has complied with the management training programs covering the recommended issues. These programs were delivered at prestigious local and foreign universities and the implementation thereof is under the responsibility of the Human Resources Department. These are supplemented with in-house training programs delivered at the Company. Furthermore, every year the Company organizes information and discussion sessions to deal with the issues that concern senior management. These sessions are led by prestigious local and international specialists in the field. The members of the Audit Committee receive specific training on their incumbent issues, such as, accounting, auditing and regulatory standards, delivered by the most prestigious auditing firms in the market.

II.7.2. The Issuer employs other means not specified in Item II.7.1 to encourage members of the Board of Directors and first-line managers to pursue ongoing training supplementing their education level in order to add value to the Issuer. Specify how.

Non-compliance

The Company considers that the actions mentioned in Item II.7.1 are sufficient to engage directors and managers in the training process.

PRINCIPLE III. SUPPORT AN EFFECTIVE ENTERPRISE RISK IDENTIFICATION, MEASUREMENT, MANAGEMENT AND DISCLOSURE POLICY

The corporate governance framework shall:

Recommendation III. The Board of Directors shall have a comprehensive enterprise risk management policy in place and monitor its adequate implementation.

Answer whether or not:

III.1. The Issuer has comprehensive enterprise risk management policies (risk of compliance with strategic goals, operating risks, financial risks, accounting reporting risks and regulatory risks, among others). Describe the relevant aspects of such policies.

Partial compliance.

The general policy referred to in Item II.1.1.8 seeks to cover risks inherent to: (i) operational effectiveness and efficiency, (ii) financial reporting reliability, (iii) asset protection, and (iv) regulatory compliance. The Control Department is in charge of verifying that the established policies are followed and that the necessary actions are taken to correct potential deviations. The Company employs the following tools: (i) the policy governing the authorization of transactions referred to in Item II.1.1.5, (ii) the monthly management reports referred to in Item II.2, (iii) external audits, (iv) the auditing function referred to in Item IV.2, and (v) other policies referred to in Item II.1.2. The Company takes into account the COSO model to design its control system.

III.2. There is a Risk Management Committee at the core of the Board of Directors or Senior Management. Report on the existence of manuals of procedures, specifying the main risk factors specific to the Issuer or its business and the implemented mitigation actions. In the absence of such Committee, describe the oversight role performed by the Audit Committee concerning risk management. Specify the interaction level between the Board of Directors or its Committees with Issuer's Senior Management in terms of comprehensive enterprise risk management.

Partial compliance.

The Control Department prepares a monthly management report to monitor the Company's operational risks. The Audit Committee carries out the following tasks on that report: (i) analyzing the methodology used by the Control Department to prepare the above mentioned reports; (ii) discussing with the Control Department the process to identify and assess risks, mitigate them and implement solutions; (iii) considering to which extent the risks are adequately reported according to applicable legal and accounting standards; and (iv) reporting on monitoring completion in its annual report. In particular, that Committee assesses the risks of misstatements in the financial statements and other information made available to third parties.

III.3. There is an independent function within Issuer's Senior Management that implements the comprehensive enterprise risk management policies (function of the Risk Management Officer or its equivalent). Specify.

Partial compliance.

See Item III.2.

III.4. The comprehensive enterprise risk management policies are updated on an ongoing basis, according to related widely used recommendations and methodologies. Specify which (Enterprise Risk Management, according to the COSO conceptual framework - Committee of sponsoring organizations of the Treadway Commission - ISO 31.000, IRAM 17.551, Section 404 of the Sarbanes-Oxley Act, others).

Partial compliance.

See Item III.1.

III.5. The Board of Directors reports the results of the risk management supervisory activities carried out jointly with Senior Management in the financial statements and the Annual Report. Specify the main aspects of the disclosures.

Partial compliance.

In reviewing the financial statements, the Board of Directors supervises the note on financial risk management.

PRINCIPLE IV. SAFEGUARD FINANCIAL INFORMATION INTEGRITY THROUGH INDEPENDENT AUDITS

The corporate governance framework shall:

Recommendation IV. Ensure the independence and transparency of the functions entrusted to the Audit Committee and the External Auditor.

Answer whether or not:

IV.1. In selecting the members of the Audit Committee, the Board of Directors assesses the convenience of appointing an independent member as Chairman, taking into consideration that most members must be independent.

Full compliance

The Chairman of the Company's Audit Committee appointed by the members of that Committee on May 7, 2014 is an independent member.

IV.2. There is an internal audit function that reports to the Audit Committee or the Board of Directors' Chairman and that is responsible for assessing the internal control system. Specify whether or not the Audit Committee or the Board of Directors perform an annual assessment on the performance of the Internal Audit Department and the degree of independence in the conduct of its professional practice; which means assessing whether the professionals in charge of that function are independent from other operating areas and whether they meet the independent requirements concerning controlling shareholders or related parties exerting significant influence on the Issuer. Also specify if the Internal Audit function carries out its activities in accordance with international auditing standards issued by the Institute of Internal Auditors (IIA).

Partial compliance.

The Internal Audit function reports to the Company's CEO and the Audit Committee and is responsible for assessing the Company's internal control systems. This function is independent from the Company's operations. The Audit Committee conducts an annual performance review of the Internal Audit function, which is reflected in its annual report. The members of the Internal Audit Department are Company's employees and perform their respective functions taking into account the guidelines set forth in the international auditing standards.

IV.3. The members of the Audit Committee annually review the know-how, independence and performance of the External Auditors appointed at the Shareholders' Meeting. Describe the relevant aspects of the procedures used to perform the assessment.

Full compliance.

The Audit Committee periodically evaluates external auditors in terms of independence, know-how and performance, among other issues. To this end, the Audit Committee reviews the following: (i) the auditors' professional and personal suitability (considering the experience and background of the partner in charge of the audit, analysis of the work methodology employed, the auditing firm's independence and quality control practices, the affidavits required by effective regulations; (ii) contracted services; (iii) audit plan; (iv) auditor's reports and internal control recommendations; and (v) discussion with Company's key officers concerning the above mentioned items.

IV.4. The Issuer has a policy in place on the rotation of Supervisory Committee members and/or the External Auditor, and specifically in the case of the latter, whether such rotation includes the external auditing firm or its individual members only.

Partial compliance.

In the Board of Directors' view, it is not necessary to have a specific policy in place providing for the rotation of Supervisory Committee members. Given the fact that the requirements concerning the rotation of external auditors have been established by the CNV under Resolution No. 622/2013, the existence of a specific policy in this respect is not deemed necessary.

PRINCIPLE V. RESPECT SHAREHOLDER RIGHTS

The corporate governance framework shall:

Recommendation V.1. Ensure that shareholders have access to Issuer's information.

Answer whether or not:

V.1.1. The Board of Directors holds periodical informational meetings with the shareholders upon the presentation of the interim financial statements. Specify the number and frequency of the meetings held during the year.

Full compliance.

The Company communicates with its investors through its executives in charge of market relations and through regular informational meetings and conferences, in order to present the quarterly financial statements. 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.

V.1.2. The Issuer has mechanisms in place to keep investors informed and a special area dedicated to answering their questions. It also has a web site accessible to shareholders and other investors that serves as a channel to communicate with each other. Specify.

Full compliance.

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.

Recommendation V.2. Foster shareholders' active involvement.

Answer whether or not:

V.2.1. The Board of Directors takes actions that foster the involvement of all shareholders at General Shareholders' Meetings. Specify which, distinguishing actions required by law from the Issuer's voluntary actions.

Full compliance.

The Company encourages the participation of all 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 also 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.

V.2.2. The General Shareholders' Meeting has rules of operation in place to ensure that the information is available to all shareholders with sufficient anticipation to make decisions. Describe the main guidelines of such rules.

Partial compliance.

The Company does not have rules of operations concerning the General Shareholders' Meeting. However, it ensures that the information is available to shareholders with sufficient anticipation to make decisions as stated in Item V.1.

V.2.3. The mechanisms implemented by the Issuer are applicable in order for minority shareholders to raise issues to be discussed at the General Shareholders' Meeting, in accordance with effective regulations. Specify the outcomes.

Full compliance.

The Company conforms to the effective regulations in connection with the minority shareholders' ability to raise issues for discussion at the General Shareholders' Meeting. Therefore, the issues raised by the shareholders present at the meeting are registered in the respective minutes, pursuant to the applicable mechanisms.

V.2.4. The Issuer has policies in place to encourage the involvement of major shareholders, such as, institutional investors. Specify.

Full compliance.

See Item V.2.1

V.2.5. At Shareholders' Meetings where candidates to members of the Board of Directors are discussed, the following are disclosed prior to voting: (i) the position of each candidate as to the adoption or not of a Corporate Governance Code; and (ii) the rationale for such position.

Non-compliance.

The members of the Board of Directors have not stated their respective positions as to the adoption or not of a Corporate Governance Code. Notwithstanding the foregoing, the Company is committed to the highest standards of ethics and transparency in its corporate governance structure. As mentioned under II.1.1.3 and as provided under current laws, the Board of Directors has approved the content of the report on the degree of compliance with the Corporate Governance Code, as a separate exhibit to the Annual Report.

Recommendation V.3. Ensure the one-share-one-vote principle.

Answer whether or not:

The Issuer has a policy in place that fosters the one-share-one-vote principle. Describe the changes in the breakdown of outstanding shares per class over the last three years.

Full compliance.

Pursuant to Section 216 of the Argentine Business Associations Law No. 19,550, the Company may not issue shares with privileged voting rights after the authorization of the initial public offering of its shares. The Company strictly complies with the effective regulations.

Recommendation V.4. Establish mechanisms to protect all shareholders from takeovers.

Answer whether or not:

The Issuer abides by the mandatory tender offer rules. Otherwise, specify if there are other alternative statutory mechanisms, such as, the tag-along rights or others.

Partial compliance

As contemplated in the Company's By-laws, the Company opted out of the mandatory tender offer rules (as established by Decree No. 677/01). Section 90 of Capital Markets Law No. 26,831 provides that: "The tender offer rules regulated in this chapter and the residual interest regime regulated in the following chapter comprise all listed companies, including those which under the previous regime may have opted out of its application".

Notwithstanding the foregoing, the By-laws set forth mechanisms to protect the minority shareholders' interests against certain scenarios involving the acquisition of the Company's shares.

Recommendation V.5. Encourage the dispersed ownership of the Issuer's shares.

Answer whether or not:

Ownership of at least 20% of the Issuer's common shares is dispersed. Otherwise, indicate if the Issuer has a policy in place to increase dispersed ownership in the market. Specify dispersed ownership as a % of the Company's share capital and its evolution over the last three years.

Full compliance.

Ownership of more than 20% of the Company's shares is dispersed. Such dispersed ownership has not changed significantly over the last three years.

Recommendation V.6. Ensure that a transparent dividend policy is in place.

Answer whether or not:

V.6.1. The Issuer has a dividend distribution policy stated in its By-Laws and approved at the Shareholders' Meeting setting forth the conditions to distribute dividends in cash or in kind. If such policy is in place, specify the criteria, frequency and conditions to be met for dividend payment.

Non-compliance

The Company has not adopted a fixed dividend policy establishing the amount and payment of dividends or other distributions.

V.6.2. The Issuer has documented processes in place to propose the allocation of Issuer's retained earnings to set up legal, statutory or voluntary reserves, to be carried over to the next fiscal year and/or to pay dividends. Detail these processes specifying the minutes of Shareholders' Meetings in which the dividend distribution (in cash or in kind) was approved or not, if not provided for in the By-Laws.

Full compliance.

In the light of the Company's Business Plan, the Board of Directors prepares a retained earnings allocation proposal that is included in the Annual Report. This proposal is then reviewed at the Shareholders' Meeting, according to the Argentine Business Associations Law.

PRINCIPLE VI. KEEP A DIRECT AND RESPONSIBLE BOND WITH THE COMMUNITY

The corporate governance framework shall:

Recommendation VI. Disclose to the community the issues concerning the Issuer and provide a direct communication channel with the company.

Answer whether or not:

VI.1. The Issuer has an updated public website which provides relevant information about the Company (such as, by-laws, economic group, structure of the Board of Directors, financial statements, Annual Report, etc.) and which also gathers users' concerns in general.

Full compliance.

The Company has a website with sufficient and updated information, which may be easily accessed from multiple channels. The available data includes relevant information on the Company (such as, by-laws, economic group, structure of the Board of Directors, annual and quarterly financial statements, Annual Report, etc.). The website includes contact information as well as several forms and mechanisms to gather concerns from the various users.

VI.2. The Issuer issues an annual Statement of Social and Environmental Responsibility, verified by an independent External Auditor. If so, specify the legal and geographical scope or coverage of such statement and where it is available. Specify which standards or initiatives have been adopted to implement the Corporate Social Responsibility policy (Global Reporting Initiative and/or the United Nations Global Compact, ISO 26000, SA 8000, the Millennium Development Goals, the Forética's SGE standard, AA 1000, Ecuador's Principles, among others).

Partial compliance

Even though the Company does not issue a Statement of Social and Environmental Responsibility, within the framework of its Annual Report that is available on its web site, and of the annual report accompanying this report, it annually reports on its performance and the different initiatives in the field it has been developing. Its Corporate Social Responsibility policy encourages its subsidiaries to adopt and certify their activities under several standards, as well as a performance management scheme in accordance with the Global Reporting Initiative (GRI) guidelines. The Company is working on the preparation of a sustainability report under the GRI's guidelines. Since 2004, the Company has also adhered to the United Nations Global Compact.

PRINCIPLE VII. PAY FAIR AND RESPONSIBLE COMPENSATION

The corporate governance framework shall:

Recommendation VII. Set clear policies on the compensation of the Issuer's Board members and first-line managers, with special emphasis on conventional or statutory restrictions, based on whether the Issuer has made a profit or not.

Answer whether or not:

VII.1. The Issuer has a Compensation Committee in place:

VII.1.1. comprised by at least three members of the Board of Directors, most of them independent directors;

VII.1.2. presided over by an independent member of the Board of Directors;

VII.1.3. comprised by members with proven expertise and experience in human capital policies;

VII.1.4. which holds at least two meetings per year;

VII.1.5. which decisions in connection with the compensation of Board's members are not necessarily binding but rather consultative at General Shareholders' Meetings.

VII.2. If there is a Compensation Committee in place, answer whether or not:

VII.2.1. it ensures that the performance of the key employees bears a clear relationship with their fixed and variable compensation, taking into account the risks assumed and the management thereof;

VII.2.2. it supervises that the variable portion of the Board members' and first-line managers' compensation is linked to the Issuer's medium-term and long-term performance;

VII.2.3. it reviews the competitive position of Issuer's policies and practices in terms of compensation and benefits granted by comparable companies and recommends changes, where necessary;

VII.2.4. it defines and communicates the policy on retention, promotion, dismissal and suspension of key employees;

VII.2.5. it informs the guidelines to be followed in determining the retirement plans of the Issuer's Board members and first-line managers;

VII.2.6. it regularly reports to the Board of Directors and the Shareholders' Meeting on the actions carried out and the issues discussed at the meetings held;

VII.2.7. it guarantees the presence of the Compensation Committee's Chairman at the General Shareholders' Meeting where the Board of Directors' fees are approved in order to explain the Issuer's policy concerning the compensation of Board members and first-line managers.

VII.3. If deemed relevant, add any policy implemented by the Issuer's Compensation Committee that has not been mentioned in the above item.

VII.4. If there is no Compensation Committee in place, please explain how the functions described in Item VII.2 are performed within the Board of Directors.

Non-compliance

The Company does not have a Compensation Committee in place. Notwithstanding the fact that, pursuant to the Argentine Business Associations Law No. 19,550, the above mentioned functions concerning the Board members' fees shall be exclusively handled by the shareholders at the Shareholders' Meeting, for the time being the Company does not see a need to implement said Committee.

PRINCIPLE VIII. ENCOURAGE CORPORATE ETHICS

The corporate governance framework shall:

Recommendation VIII. Ensure the Issuer's ethical conduct.

Answer whether or not:

VIII.1. The Issuer has a Code of Corporate Conduct. Specify the main guidelines of the Code and whether or not it is publicly known. Said Code is signed by, at least, the Board members and the first-line managers. Specify if suppliers and clients are encouraged to implement the code.

Full compliance.

As mentioned in Item I.2, the Company has a Code of Ethics and Conduct which deals with issues, such as, conflicts of interests, relations with the personnel, political and governmental relationships, corporate asset protection, disclosure of confidential information, opinion on public issues or disloyalty to the Company. This Code is signed by the Company's key executives, but it is not disclosed to third parties.

VIII.2. The Company has mechanisms in place to report any unlawful or unethical conduct, either in person or by electronic means, securing the highest confidentiality and integrity standards concerning the reported information, as well as information recording and conservation. Specify if the reception and assessment of whistle-blower reports are handled by the Company's employees or by external and independent professionals to further protect the whistle-blowers.

Full compliance.

The Company has a whistle-blower hot line administered by the Internal Audit Department through which whistle-blowers may report unlawful conducts anonymously and the information can be handled confidentially.

VIII.3 The Issuer has policies, processes and systems in place to handle and address the whistle-blower reports mentioned in Item VIII.2. Describe the most relevant aspects of said policies, processes and systems and the degree of involvement of the Audit Committee in addressing whistle-blower reports, particularly those concerning internal control issues for accounting reporting and conducts of the Board members and first-line managers.

Full compliance.

The Company has a protocol to handle the anonymous reporting process. Said protocol embraces aspects related to: confidentiality, data management, notice to the Audit Committee, follow-up to prevent retaliation and adequate communication.

PRINCIPLE IX: EXPAND THE SCOPE OF THE CODE

The corporate governance framework shall:

Recommendation IX. Encourage the inclusion of provisions inherent to good corporate governance practices in the By-Laws

Answer whether or not:

The Board of Directors assesses whether or not the provisions of the Corporate Governance Code should be totally or partially reflected in the By-Laws, including the Board of Directors' general and specific responsibilities. Specify which provisions have been actually included in the By-Laws from the Code's effective date up to the present.

Non-compliance

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.

GRUPO CLARÍN S.A.

CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2014 PRESENTED ON A COMPARATIVE BASIS

GLOSSARY OF SELECTED TERMS

GRUPO CLARÍN S.A.

CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2014 PRESENTED ON A COMPARATIVE BASIS

GRUPO CLARÍN S.A.

CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2014 PRESENTED ON A COMPARATIVE BASIS

In Argentine Pesos (Ps.) - Notes 2.1 and 2.12

Registered office: Piedras 1743, Buenos Aires, Argentina

Main corporate business: Investing and financing

Date of incorporation: July 16, 1999

Date of registration with the Public Registry of Commerce:

- Of the by-laws: August 30, 1999

- Of the latest amendment: October 10, 2007

Registration number with the IGJ: 1,669,733

Expiration of articles of incorporation: August 29, 2098

Information on Parent company:

Name: GC Dominio S.A.

Registered office: Piedras 1743, Buenos Aires, Argentina

Information on the subsidiaries in Note 2.4 to the consolidated financial statements

CAPITAL STRUCTURE

GRUPO CLARÍN S.A.

In Argentine Pesos (Ps.)

(1)Includes amortization of intangible assets and film library, and depreciation of property, plant and equipment in the amount of Ps. 1,438,216,974 and Ps. 1,123,195,741 for the years ended December 31, 2014 and 2013, respectively.

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

GRUPO CLARÍN S.A.

In Argentine Pesos (Ps.)

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

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013

In Argentine Pesos (Ps.)

(1)  Broken down as follows: (i) Optional reserve for future dividends of Ps. 300,000,000; (ii) Judicial reserve for future dividend distribution of Ps. 387,028,756, (iii) Optional reserve for illiquidity of results of Ps. 694,371,899 and (iv) Optional reserve to provide financial aid to subsidiaries and in connection with the Audiovisual Communication Services Law of Ps. 690,176,054.

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

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

INDEX OF THE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. GENERAL INFORMATION

2. BASIS FOR THE PREPARATION AND PRESENTATION OF THE CONSOLIDATED FINANCIAL STATEMENTS.

3. ACCOUNTING ESTIMATES AND JUDGMENTS

4. SEGMENT INFORMATION

5. BREAKDOWN OF THE MAIN ITEMS OF THE BALANCE SHEET

6. BREAKDOWN OF THE MAIN ITEMS OF THE STATEMENT OF COMPREHENSIVE INCOME

7. INCOME TAX

8. PROVISIONS AND OTHER CONTINGENCIES

9. REGULATORY FRAMEWORK

10. CALL OPTIONS

11. FINANCIAL INSTRUMENTS

12. INTERESTS IN SUBSIDIARIES AND AFFILIATES

13. ASSETS HELD-FOR-SALE AND DISCONTINUED OPERATIONS

14. SHAREHOLDERS´ CONTRIBUTIONS AND RESERVES

15. NON-CONTROLLING INTEREST

16. BALANCES AND TRANSACTIONS WITH RELATED PARTIES

17. EARNINGS PER SHARE

18. COVENANTS, SURETIES AND GUARANTEES PROVIDED

19. AWARD OF A BID OF THE CITY OF BUENOS AIRES

20. LONG-TERM SAVINGS PLAN FOR EMPLOYEES

21. OPERATING LEASES

22. DERIVATIVES

23. LAW No. 26,831 CAPITAL MARKETS

24. EXTINCTION OF THE NOTES ISSUED BY AGEA

25. SUBSEQUENT EVENTS

26. APPROVAL OF FINANCIAL STATEMENTS

GRUPO CLARÍN S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED December 31, 2014,

PRESENTED ON A COMPARATIVE BASIS

In Argentine Pesos (Ps.)

NOTE 1 - GENERAL INFORMATION

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 subsidiaries, it is engaged primarily in the following business segments:

- Cable Television and Internet Access, consisting of the largest cable network in Latin America in terms of subscribers, operated by its subsidiary Cablevisión (surviving company after its merger with Multicanal and Teledigital), with operations in Argentina and neighboring countries. This company also provides high-speed Internet access under the brands Fibertel and Flash.

- Printing and Publishing, consisting of national and regional newspapers, a sports daily, magazine publishing, editing and distribution, and commercial printing. Diario Clarín, the flagship national newspaper, is the newspaper with the second largest circulation in the Spanish-speaking world. The sports daily Olé is the only newspaper of its kind in the Argentine market. The newspaper La Razón is the first ever free newspaper in Argentina. The children's magazine Genios is the children's magazine with the highest circulation in Argentina. AGR is its printing company.

- Broadcasting and Programming, consisting of Canal 13, one of the two broadcast television stations with the highest audience share in Argentina, AM (Amplitude Modulation) /FM (Frequency Modulation) radio broadcast stations (Radio Mitre and La 100), and the production of television, film and radio programming content, including cable television signals and organization and broadcasting of sporting events.

- Digital Content and Other, consisting mainly of digital and Internet content, on-line classified ads and horizontal portals as well as its subsidiary GCGC, its shared service center.

NOTE 2 - BASIS FOR THE PREPARATION AND PRESENTATION OF THE CONSOLIDATED FINANCIAL STATEMENTS

2.1 Basis for the preparation and transition to IFRS

Pursuant to General Resolution No. 562 issued on December 29, 2009, entitled "Adoption of International Financial Reporting Standards" and General Resolution No. 576/10, the CNV provided for the application of Technical Resolutions No. 26 and 29 issued by the Argentine Federation of Professional Councils of Economic Sciences (FACPCE, for its Spanish acronym). Since the Company is subject to the public offering regime governed by Law No. 26,831, it is required to apply such standards as from the year beginning January 1st, 2012. The FACPCE issues Adoption Communications for the enforcement of IASB resolutions in Argentina.

These consolidated financial statements of Grupo Clarín for the year ended December 31, 2014, presented on a comparative basis, have been prepared in accordance with IFRS. Certain additional matters were included as required by the Argentine Business Associations Law and/or CNV regulations, including the supplementary information provided under the last paragraph of Section 1, Chapter III, Title IV of General Resolution No. 622/13. That information is included in the Notes to these consolidated financial statements, as provided under IFRS and CNV rules.

In preparing these consolidated financial statements for the year ending December 31, 2014, and for the purposes of presentation to the London Stock Exchange (LSE), the Company has followed accounting policies that are in accordance with IFRS.

These consolidated financial statements have been prepared based on historical cost except for the valuation of financial instruments (see Note 2.21). In general, the historical cost is based on the fair value of the consideration granted in exchange for the assets.

Certain figures reported in the financial statements presented on a comparative basis were reclassified in order to maintain the consistency in the disclosure of the figures corresponding to this year.

The attached consolidated information, is presented in Argentine Pesos (Ps.), the Argentine legal tender, and arises from accounting records kept by Grupo Clarín S.A. and its subsidiaries.

2.2 Standards and Interpretations issued but not adopted to date

The Company has not adopted IFRS or revisions of IFRS issued as per the detail below, since their application is not required for the year ended December 31, 2014:

- IFRS 9 Financial Instruments: issued in November 2009 and amended in October 2010 and July 2014. IFRS 9 introduces new requirements for the classification and measurement of financial assets and liabilities and for their derecognition. This standard is applicable to years beginning on or after January 1st, 2018.

- IFRS 15 "Revenue from contracts with customers": issued in May 2014 and applicable to fiscal years beginning on or after January 1, 2017. This standard specifies how and when revenue will be recognized, as well as the additional information to be disclosed by the Company in the financial statements. It provides a single, principles based five-step model to be applied to all contracts with customers.

2.3. Standards and Interpretations issued and adopted to date

- IFRIC 21 Levies: The interpretation establishes how to account for liabilities to pay levies when those liabilities are within the scope of IAS 37 "Provisions, Contingent Liabilities and Contingent Assets" and when they do not arise from income taxes (IAS 12) or from fines or other penalties imposed for breach of tax legislation. The interpretation clarifies what is the obligating event that triggers the obligation to pay the levy and when an entity should recognize that obligation. This standard is applicable to years beginning on or after January 1, 2014. This standard did not have an impact on the Company's financial statements.

2.4 Basis for Consolidation

These consolidated financial statements incorporate the financial statements of the Company and of the subsidiaries and joint ventures ("Interests in Joint Operations", Note 2.7) controlled by the Company. Control is presumed to exist when the Company has a right to variable returns from its interest in a subsidiary and has the ability to affect those returns through its power over the subsidiary. This power is presumed to exist when evidenced by the votes, be it that the Company has the majority of voting rights or potential rights currently exercised. The subsidiaries are consolidated from the date on which the Company assumes control over them and are excluded from consolidation on the date control ceases. Additionally, these consolidated financial statements incorporate the companies mentioned in 2.4.1.

For consolidation purposes, the intercompany transactions and the balances between the Company and the consolidated companies have been eliminated. Unrealized income has also been eliminated.

Below is a detail of the most relevant consolidated subsidiaries, together with the interest percentages held directly or indirectly in each subsidiary's capital stock and votes, as of each date indicated below: