GCLA.L Regulatory News (GCLA)

GRUPO CLARÍN S.A.

2012 ANNUAL REPORT

To the Shareholders of

Grupo Clarín S.A.

We hereby submit for your consideration the Annual Report and Exhibit, the Parent Company Only Balance Sheet, the Parent Company Only Comprehensive Statement of Income, the Parent Company Only Statement of Changes in Shareholders' Equity and the Parent Company Only Statement of Cash Flows and Notes of Grupo Clarín S.A. (hereinafter, "the Company" or "Grupo Clarín") for fiscal year No. 14 ended December 31, 2012 and the Consolidated Financial Statements as of December 31, 2012.

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

2012 MACROECONOMIC ENVIRONMENT

The dynamism that emerging economies were able to sustain in spite the overall slowdown of the developed countries' economies was one of the few positive economic highlights of 2012. The serious social and economic crisis that continues to affect several Euro Zone countries led to considerable deterioration in the block of developed countries, which could not be offset by the modest upturn of the US or Japan's return to growth.

Most industrial emerging countries - led by China and, to a lesser extent, India - proved resilient to such deterioration and were able to continue to grow during the year under review at an above-average rate, thus funneling growth in other emerging countries that provide these industrial economies with agricultural and non-agricultural commodities. All emerging countries recorded lower growth rates compared to 2011.

The world has continued to register growth at two different structural paces, reflecting the operation of the new global accumulation mechanism focused on emerging economies.

The poor performance of the Argentine economy in 2012 is the exception to the rule prevailing in the emerging countries for two reasons. First of all because, unlike its peers, the world did not represent a burden for Argentina. In fact, even though the slowdown of the Brazilian economy did have a negative impact on Argentina's industrial exports, in 2012 the price of its agricultural products in general and the price of soya in particular, were higher on average than those of the previous year and remained high compared to historical levels (largely offsetting the lower volume of the crop harvest).

Secondly, because unlike in other emerging countries and the region as a whole, local economic policies accentuated, instead of mitigating, the effects of the global financial crisis.

The year 2012 stands out as an actual turning point in the performance of the Argentine economy. The change in the ground rules fuelled in the aftermath of last year's presidential elections broadly and significantly damaged economic activity developing a disturbing scenario of stagflation (stagnation plus high inflation).

Not even the strong acceleration in the rate of increase in the money supply - which ended the year with an annual increase of 40%, attributable to increased financing from the Central Bank to the Treasury - was sufficient to revert the halt in economic activity.

Thus, the balance of the Argentine economy at the end of 2012 is at best modest, as a direct result of the policies applied in response to the imbalances created in, and carried over from, the previous years. The most significant negative side effects of the policies implemented in 2012 were decrease in th|e generation of genuine employment, the stagnation of the purchasing power of workers' salaries, the capital depletion of the Central Bank, the decrease in exports and the loss of international reserves. 

The scenario of stagflation is paired with certain additional disturbing conditions under which the economy is operating, such as an accelerated loss of competitiveness, increased primarization and shortage of local and foreign reproductive investments (noticeable mainly in the capital depletion of key strategic sectors).

In terms of key macroeconomic equilibrium, we note a slight improvement in the real generation of foreign currency on the external front, which is mainly attributable to the sudden closing of the economy, an unusual situation that negatively affected several aspects of the real economy. 

This performance is the result of the strong contraction of imports, in general, and intermediate goods and capital, in particular. Consequently, the external surplus for the year was slightly higher than that of the previous year and remained above USD 10 billion for the eleventh consecutive year.

However, this apparent strategic achievement is tainted by two specific facts. One of them is the widening of the trade deficit in the energy sector, estimated in around USD 3.5 billion this year. This phenomenon worsens an historical problem of the Argentine economy, because in order to avoid affecting the country's foreign reserve position, the surplus of the agricultural sector in the coming years must not only cover the structural deficit of the industrial sector, but also that of the energy sector.

The second specific fact is the evolution of the Central Bank's international reserves. The monetary authority has again registered a drop in its foreign currency position of more than USD 3 billion. The achievement of a higher foreign trade surplus and the substantial decrease in capital flight and profit / dividend remittances were not sufficient to cover the use of reserves appropriated to the service of foreign currency sovereign debt and, particularly, the collapse in foreign currency inflows to the financial system. As opposed to most other emerging countries in the region, which were able to accumulate reserves throughout the year, Argentina's decrease in foreign reserves brought this variable to USD 43.1 billion at year-end, its low record since 2007.

The continued deterioration on the fiscal front deepened still further in 2012. Primary spending has again outgrown revenues. The national primary deficit (without counting profit remittances from BCRA and ANSES) exceeded Ps. 35 billion, more than doubling the figure for 2011. The financial deficit (i.e. after payment of interest on public debt) grew in 2012 to over Ps. 80 billion. Both figures are the highest since 2003, in absolute and relative terms.

This fiscal deterioration occurred in spite of record-high tax pressure and is mostly financed with the printing of currency, which fuels the already high inflationary expectations.

Perspectives for the Upcoming Year

Under the new scheme in which the Argentine economy is advancing, its short-term and medium-term performance mostly depends on its ability to generate sufficient foreign currency to cover the external structural deficit of industrial (and now also of its energy) sector and honor interest payments on its indebtedness.  With respect to the latter, the final outcome of the claims brought by holdouts who did not participate in any of the various exchange offers has implications that are difficult to assess as of the date of this report and is an additional source of concern.

Without access to voluntary financing from capital markets, the debt service is directly contingent upon an increase in prices and/or volume of exports and/or the use of reserves.  

The baseline scenario for the Argentine economy in the coming year is supported by three important assumptions. On the external front, the US-dollar supply is expected to increase, mostly as a result of the harvest volume and the resulting agricultural exports. This will be paired with the shorter maturities of sovereign debt in foreign currency, mainly attributable to the no service of the 2012 coupon of the GDP-linked bonds.

Meanwhile, at a regional level, the most relevant highlight is the expected improvement in the performance of Brazil (estimated to grow more than in prior years) and its related positive impact on the Argentine exports (mostly, industrial exports) to that market.  

At the strictly local level, the mid-term congressional elections could cause a more aggressive drive in economic policy, albeit at the risk of worsening carryover imbalances.

In fact and by way of example, inflationary pressures are expected to build up again in line with the recovery of the economic activity, which would continue to hinder the scope of significant improvements in social indicators and the distribution of income of the Argentine people.

In the absence of measures that address the distortions accumulated in the last few years and without an additional supply of US dollars from the agricultural sector, the external restriction would inevitably appear again beyond 2013, compromising the economic performance and endangering the ability to move forward with pending issues as well as the accomplishments achieved so far.

THE YEAR 2012 AND THE MEDIA SECTOR IN ARGENTINA

By the end of the year 2012, the global media industry -undoubtedly one of the most seriously affected by the severe financial crisis of 2009 - recorded the highest growth rate in the last five years, thus consolidating the signs of recovery shown in the aftermath of that crisis.

That performance is mostly accounted for by the dynamism maintained by most emerging economies in spite of the prolonged slowdown of the developed countries' economic activity, and its related direct impact on the positive performance of this industry. By way of example, in the year under analysis the Latin American media industry was the one that experienced (and according to market estimates is expected to continue to experience) the highest growth on a global basis, even above that of its Asian counterparts.

The macroeconomic improvement in these countries takes some pressure off a critical source of concern for this industry, which already faces several challenges arising from the recurring emergence of new technologies and the changes in the media consumption patterns of the new generations.

In contrast, countries such as Spain and Argentina that, for several reasons, failed to improve or had a poorer macroeconomic performance than the previous year have kept or otherwise incorporated an additional problem to the already complex micro-environment of the industry.

The accelerated migration of audiences, content and advertisers towards the digital ecosystem is the main phenomenon that emerges from the review of the media industry performance worldwide during 2012. The fixed and mobile broadband revolution is a key driver of this change.

The truth is that the digitalization process we are undergoing is giving rise to a veritable cultural revolution on a global basis, beyond the boundaries of our industry. The gradual change in the way we carry out our day-to-day activities is leading to a profound transformation of essential aspects of our societies, such as interpersonal relationships and access to information and entertainment content. Digital natives are the key drivers of this cultural change.

The gradual adoption process that involves the initial testing of new technologies that subsequently coexist with older technologies and, ultimately, become the preferred choice over traditional physical alternatives - is a common denominator in the behavior of a considerable portion of today's population worldwide. In the media industry, the multiple devices that enable Internet access and networks of Internet access suppliers are good examples of this.  

All of the above, coupled with this new generation of consumers whose habits and preferences remarkably differ from those of prior generations, still poses an unprecedented 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 economy and the local media industry, the year 2012 was characterized by slow dynamics, in direct contrast to the regional trend. In fact, as mentioned above, the disturbing stagflation environment (stagnation with high inflation) that characterized the economy throughout the year was an additional source of risk for this industry.

Additionally, the government has escalated in its attack against the independent press with the clear purpose of colonizing the media and weakening independent media in general, and Grupo Clarín in particular. Some examples of this are 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 law governing newsprint, the illegal breaking into Cablevisión, the use of publicly-owned media as promotional tools for the government and the expansion of pro-government media.

In this complex environment, the figures corresponding to the main sources of revenue of the industry were excessively modest. In fact, advertising investment increased by 15%, less than half the growth rate of 2011, mostly driven by government advertising expenditure, directed to finance a matrix with a greater share of publicly-owned media. In terms of consumer prices, the increase in the consolidated advertising pie of the several industry segments fell again below the inflation rate (of approximately 25% according to private estimates). This reveals that although advertising increased in nominal terms, the rate of increase was substantially lower than the economy as a whole, thus reducing its relative size.

Unlike most countries in the region, the newspaper segment continued to attract the largest share of advertising in the local market, followed by broadcast TV.

The paid television and Internet segments continued to expand in 2012, even though Argentina's penetration rates are among the highest in the region.

The number of pay television subscribers increased during 2012, but at a slower pace than in the previous year, leveraged by the growing penetration of additional services (incorporation of high-definition signals to the grid and VOD, among others), which permitted a high level of investment in the expansion of network capacity.

Broadband demand continued to accelerate significantly, becoming increasingly ubiquitous. In fact, by year-end, residential fixed broadband Internet access reached a new record high in a fiercely competitive environment noted for the promotional offers of its main market players. At the same time, the mobile broadband segment dynamics, driven by the implementation of combined voice and data subscriptions by cell phone companies, evidenced the complementariness that this technology provides to the market.

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

Lastly, newspaper circulation has continued to show its downward structural trend, similarly to the rest of the world. Average newspaper circulation in the metropolitan area (City of Buenos Aires and its surroundings) (source: Newspaper and Magazine Circulation Verification Institute, IVC, adjusted by the Company to account for newspapers in the City of Buenos Aires for which circulation is not verified) was 571,800 copies (Mondays through Sundays) - a 3.5% decrease compared to the previous year. On Sundays, average circulation was 1,077,900 copies, a 1.8% rise relative to 2011. In contrast, it is worth noting the increasing number of visits to social networks and websites with content development, mostly news sites with the newspaper on top of the rankings. As a logical consequence, the increased number of readers of digital newspapers reveals that the demand for content remains strong, unlike preference for paper format newspapers, though distributed among a broader variety of technological platforms.

Regulatory framework and conditions for the journalistic and media activity during 2012

In addition to the above and to the comments under Note 11 to the Parent Company Only Financial Statements, during 2012 private media in general and Grupo Clarín in particular continued to face an escalating level of harassment. Such harassment was executed through the official and para-official apparatus, with the clear intention of damaging the media's reputation and directly and indirectly limiting its journalistic activities.

In the framework of this escalation, the government reinforced certain actions that threaten and distort the full effectiveness of freedom of speech and information, such as the exponential increase and discriminatory allocation of official advertising used to create and sustain pro-government media, as well as the use of such advertising to condition the press. In 2012, the government spent more than Ps. 1.9 billion in official advertising, a 43% rise compared to 2011. Nine media groups closely related to the government were the recipients of 80% of said resources.Further, the government continued to use public funds and media on a discretionary basis to generate content and programs related to political propaganda; with several obstacles and discriminatory conduct in the access to public information and an aggressive campaign to destroy non-partisan media by compromising their economic sustainability and credibility. 

This discrediting and defamatory strategy was painfully reflected in street banner and graffiti campaigns, banners, balloons, merchandising and clothing, in persecution and public denunciation of journalists, and went so far as to include the financing of soccer hooligans to display banners against the media and the opposition during matches.

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

In addition to the discretionary allocation of official advertising as a tool to exert pressure on the media, private companies were banned from including their advertising slots in independent media. Through the Secretariat of Domestic Trade, the government exerts pressure on advertisers from several sectors and threatens them with penalties if they advertise their products or services on certain media. This modus operandi reached its greatest expression in February - after year-end - with the public announcement that the Secretariat of Domestic Trade had issued an unwritten order that is observed without exceptions by the entire market, whereby supermarkets and home appliance stores were arbitrarily banned from advertising in any media from the City of Buenos Aires and its surroundings. This virtual boycotting against private advertising, paired with the arbitrary exclusion of official advertising from non-partisan media, directly affects the economic sustainability of independent media.

In the audiovisual sector, this offensive against the media (against both, its editorial freedom and its economic sustainability, which guarantees its independence) had as its utmost expression the enactment of the controversial Audiovisual Communication Services Law and its controversial implementing regulations, which clearly exceed the regulatory framework by granting powers to the regulatory agency that are not provided for by the law. Some examples of this are: i) the power to intervene in the affairs of the audiovisual broadcasting services on a discretionary basis: whether by revoking licenses or through simple summary proceedings, and ii) the oversight of the organization and mandatory content of the programming grid of subscription cable TV services, pursuant to which Cablevisión was imposed over 400 penalties throughout 2011 and 2012 that are now suspended by a court injunction.

The law that gave rise to these unconstitutional regulations continues to be challenged before the courts for its infringement of constitutional rights, the granting of broad and discretionary powers over media and content to the Executive Branch, the favoring of official voices, its effects on the sustainability of private media, for promoting the elimination of independent signals and establishing dangerous indirect censorship criteria through the arbitrary granting of licenses and the application of penalties, among other controversial aspects.

With respect to the Company, two court decisions that upheld preliminary injunctions and that provided for the suspension of the main sections of the Broadcasting Law are still effective; including but not limited to Section 161, which provides for the mandatory divestiture within the term of one year in order to conform to the new legal restrictions. In spite of the existence and full effectiveness of said court decisions against the law, the government sought to move forward with the implementation thereof in an authoritarian and overwhelming manner. This ratifies all the warnings about the potential danger of editorial control by an enforcement authority that is not independent.

The government has stretched the interpretation of certain preliminary injunctions issued in favor of Grupo Clarín in order to launch an attack on the group. The government's overblown interpretation was used as a platform to initiate a massive propagandistic and administrative operation to anticipate the end of Grupo Clarín and introduce the acronym "7D", which stands for December 7, the date on which the divestiture provision of the Law was supposed to become effective.

In this context, during the second half of 2012, the Executive Branch embarked on a fierce and unprecedented attack against the Judicial Branch, particularly in connection with the cases relating to the Audiovisual Communication Services Law. 

The several activities, pressures and strategies implemented by the national government to interfere with the decisions of the Judicial Branch include, but are not limited to: several attempted appointments of judges that are in favor of the Broadcasting Law; pressures on and changes in majorities at the Council of the Judiciary; multiple recussations; pressures on and criminal charges against judges and advisors to remove them or cause them to resign; actions that resulted in the virtual fragmentation of the Courts on Civil and Commercial Matters; changes in the substitution system, and pressures on the Supreme Court up to and including customizing the government's request for a per saltum appeal to by-pass the regular process, among many other actions against a Republic's healthy system of checks and balances. 

On December 6, the Federal Commercial and Civil Court of Appeals granted an extension of the term of the injunction issued in favor of the Company until a final judgment is rendered on the case. This was ratified by the Supreme Court of Argentina after rejecting several court filings from the national government. Horacio Alfonso, First Instance judge, declared Sections 45 and 161 of the Broadcasting Law constitutional, without considering the prevailing Freedom of Expression issues or the expert evidence presented in the case.

As mentioned in note 25.d, subsequent to year-end, on April 17, 2013 Chamber I of the Federal Court of Appeals on Civil and Commercial Matters decided to declare the unconstitutionality of some points of Section 45 and Section 48 of the Audiovisual Communication Services Law.

The Court decided that several core points of section 45 and also part of section 48 of the Audiovisual Communication Services Law are unconstitutional and dismissed the claim of unconstitutionality with respect to sections 41 and 161.

In a long ruling, Ricardo Guarinoni, María Susana Najurieta and Francisco de las Carreras highlighted "the right to freedom of speech and information both as an inalienable right of every person and as an essential right for the very same existence of a democratic society."

Regarding section 45, Judge De las Carreras held that the Audiovisual Communication Services Law "imposes an unreasonable limitation on the number of audiovisual communication licenses; establishes certain unjustified incompatibilities among holders of certain licenses; and unfoundedly restricts the reach of the services to an arbitrary percentage of the aggregate population or subscribers". The judges also declared unconstitutional the second paragraph of section 48, which established that the multiple license regime may not be alleged as an acquired right in light of any regulations set forth under this law or which may be created in the future. In declaring the unconstitutionality of those aspects, the judges incorporated the opinions of technical expert witnesses and decided that there was no reason to maintain the unconstitutionality of section 161, which provides for a 1-year term for media groups to conform to the new law because it no longer affects the license regime or the acquired rights. The judges also decided to maintain the limit of up to 10 broadcast radio and television licenses held by the same media group, on the grounds that it is necessary to restrict the use of the radio spectrum. The decision also upheld section 41 regarding the license transfer regime.

Judge Najurieta highlighted "the power of the judges to control the constitutionality of laws" and held that "the media are the vehicle through which ideas and information are disseminated. Freedom of speech would be a mere theoretical declaration without the instruments required to publish ideas, provide information and have access to those ideas and information". "When a journalistic company has financial and technical resources, it can provide, without external influences, information and news reporting services. The combination of a reduction in audience share, a decrease in private advertising and a lack of official advertising leads to economic insecurity, which affects journalistic freedom", held the judges in their ruling.

The Company will file an appeal with the Supreme Court of Argentina in due time and form against the partial dismissal of the claim.

During 2012, the Company and its subsidiaries were also subject to other administrative attacks and maneuvers. The effects of Resolution No. 50 et. seq. issued by the Secretariat of Domestic Trade that arbitrarily and discriminatorily seek to fix Cablevisión S.A.'s monthly basic subscription price were suspended by the Federal Court of the City of Mar del Plata, in response to a motion filed by the Argentine Cable Television Association. Additionally, in connection with an administrative resolution issued by SECOM in 2010, whereby Fibertel's license was revoked, there are preliminary injunctions that suspend the application of the resolution and challenge its legality that are still effective.

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

The government's attempt to gain control of the paper industry has intensified, through several administrative and legislative measures that sought systematically to hinder the management of Papel Prensa (Papel Prensa supplies approximately 95% of the Argentine newspapers and the Company indirectly holds a 49% equity interest in that company). The government has tried to interfere with Papel Prensa's business practices and bring legal and administrative actions against it in a threatening and violent environment. For example, the government filed several motions with the CNV to have Papel Prensa's resolutions declared void for administrative purposes. Several summary proceedings against the Company, its directors and members of the supervisory committee are currently pending before the CNV. Additionally, this agency has recently been granted further discretionary powers under the controversial Capital Markets Law that was recently enacted.

On the legislative front, in 2011 Congress enacted Law No. 26,736, which declared a matter of public interest the production and sale of newsprint, violating several constitutional rights and guarantees. The bill was drafted by the National Government with the clear intent of controlling the production and import of this key input for the press, as pointed out and stated by national and regional journalistic associations, opposition leaders and several business sectors. Among other things, the Law created a registry where all newsprint producers, sellers and buyers shall be registered and set limits and established conditions applicable to Papel Prensa for the production and sale of newsprint. This law also contains a series of temporary clauses, specifically and exclusively addressed to Papel Prensa, whereby Papel Prensa is forced to make investments to meet the total national newsprint demand - excluding from this requirement the other existing company that operates in the country with installed capacity to produce this input. The Law also provides for the capitalization of the funds eventually contributed by the National Government to finance these investments, contravening public order regulations contained in the Argentine Business Associations Law (Law 19,550), in order to dilute the equity interest of Papel Prensa's private shareholders. Said law is still effective and so are the limits on production and import of newsprint and the price per newsprint ton. 

These and other deplorable actions that are not in line with the expected attitude of a democratic government towards the press were part of the challenging scenario in which private and independent media operated in 2012.

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 17,000 people and, as of year-end, reported annual net sales of Ps. 11.319 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 networks Volver and Magazine, among others, sports channels and events (TyC Sports), television series and motion pictures (through Pol-ka, Ideas del Sur and Patagonik 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 focused on Journalism and the mass media. Its activities have contributed to the creation of an important Argentine cultural industry and generate qualified and genuine employment. Its vision and business model focus on investing, producing, informing and entertaining, preserving Argentine values and identity, and preserving business independence in order to ensure journalistic independence.

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

GRUPO CLARÍN AND ITS BUSINESS SEGMENTS IN 2012

In terms of results, Grupo Clarín and its business segments grew again in 2012 in a highly challenging context. During this year the Company consolidated the positive economic and financial performance trends of the previous years.

Net consolidated sales increased by 21.4%, from Ps. 9.325 billion to Ps. 11.319 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 2012, Grupo Clarín's gross consolidated financial indebtedness (including sellers financing, accrued interest and fair value adjustments) was approximately Ps. 3.2 billion, while net consolidated indebtedness was approximately Ps. 1.88 billion, representing a decrease of 0.4% and 19.3%, respectively, compared to the previous year.

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 2012.

CABLE TELEVISION AND INTERNET ACCESS

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

Out of Grupo Clarín's total sales in 2012, the Cable television and Internet access segment was the Company's main revenue driver, with sales of Ps. 7.768 billion, taking into consideration intersegment sales and sales from discontinued operations.

Regarding the geographic availability of Grupo Clarín's services, by the end of 2012, its network reached approximately 7.3 million Argentine households. Grupo Clarín provides services in the City of Buenos Aires and suburban areas, as well as in the provinces of Buenos Aires, Santa Fe, Entre Ríos, Córdoba, Corrientes, Formosa, Misiones, Salta, Chaco, Neuquén and Río Negro. Regionally, Grupo Clarín also operates in Uruguay.

During 2012, the Company completed the sale of Cablevisión's subsidiaries in Paraguay to the Paraguayan company Telefónica Celular del Paraguay S.A. ("Telecel"), a subsidiary of Millicom International Cellular S.A. At the time of the sale, Cablevisión offered paid TV and Internet services in Asunción and Gran Asunción. It had 122,900 paid TV subscribers and 13,700 Fibertel subscribers.

In Argentina, at year-end, it had approximately 3,288,800 paid TV subscribers and 1,504,500 Internet subscribers. 

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

By the end of 2012, 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. Most of the programming agreements include pricing terms denominated in Argentine Pesos generally linked to the number of subscribers.

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

Cablevisión is also offering digital services to its subscribers that include a basic digital package, as well as Premium and High Definition (HD) services. Such products are offered in the City of Buenos Aires and its surrounding areas (the "AMBA Region"), in the province of Buenos Aires, and in the main markets of the provinces (such as, Córdoba, Rosario, Santa Fe, etc.). This service allows to broaden the signal offering and features an on-screen guide. 

Cablevisión has a high definition signal package (HD) as well as the Cablevisión Max HD product, a state-of-the-art digital set-top unit with digital video recorder enabled (DVR). By the end of 2012, Cablevisión had 29 HD signals comprising different genres in order to enhance this product's offering. During 2012, Cablevisión broadcast events using 3D technology for clients that are subscribed to the Premium HD service and have the adequate equipment to support that technology.

In order to increase its brand value, move forward with innovation and content production to meet client demands and continue with the development of the digital products launched in 2007, during the last quarter of 2012, Cablevisión launched the VOD (Video On Demand) 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). 

As of December 31, 2012 there were approximately 1,099,500 digital set-top units for the Premium service in all of Cablevisión's operational regions (including Uruguay), resulting in a penetration rate of approximately 32.3% of all subscribers to its basic cable service provided through its digital network. Cablevisión also offers Cablevisión Flex, an optional social service of digital paid television with a reduced subscription, to approximately 500,000 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 offers connectivity products specially designed to meet the needs of both residential and corporate users. The products offered comprise high-speed cable modem Internet access through its 750 MHz network under the FiberTel brand and through other broadband technologies.

Fibertel is undoubtedly the broadband service that offers the highest speed in the market, widely and at competitive prices. It continues to offer Fibertel Evolution, a product with 30-mega downstream speed and 3-mega upstream speed. It is the first internet provider in the country to sell a product of the new Wideband generation - a new technology that allows clients to surf the web at substantially higher speeds. Wideband is based on Docsis 3.0 technology. Its main functionalities are the following: browsing with multiple "windows" opened at the same time, real-time streaming, viewing instant high-definition videos uninterruptedly and ability to connect several devices browsing simultaneously to a single modem without sacrificing speed.This service is currently available in the AMBA region, Córdoba, Rosario, La Plata, Santa Fe, Paraná and other cities in the country's provinces.

As of December 31, 2012, Cablevisión had 1,483,000 clients to cable modem Internet access in Argentina through its own networks; 6,600 clients to the dial-up system; 8,400 clients to the ADSL system and 6,500 to other broadband technologies. Even though Cablevisión has these three technologies, its main focus and differentiating feature is cable modem. It has a leading position in that market under the brand Fibertel and is a clear referent in its category.

During 2012, Cablevisión launched Fibertel Zone, the first Argentine WI-FI circuit. This service allows surfing the web for free at the highest speed at bars, restaurants, movie theaters, gyms and parks, among many other spots. The requirements to surf the web at a Fibertel Zone point are a Wi-Fi enabled mobile device and selecting the applicable network.

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 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 the customer relationship. In this regard, it launched "Sucursal Virtual", a website that enables its subscribers to interact with the company to follow procedures that were previously carried out through a telephone call or even in person.

Even though most interactions take place over the phone, subscribers may also contact the customer service by e-mail, fax, chat and the web site.During 2012, in terms of technological innovation, Cablevisión introduced a new tool that allows the company to render customized customer service to subscribers that contact it through social networks, particularly Facebook and Twitter. During 2012, Cablevisión took improvement actions that consolidate the customer service model in order to address client questions with a satisfaction level above the market average. 

In November 2012, Cablevisión successfully completed "Open Project", an initiative that had been launched in March 2009, making a drastic organizational change through the implementation of a new customer management system. The main purpose was implementing a world-class telecommunications system that allowed Cablevisión to improve its capacity to launch new products and services, such as, VoIP, triple-play, VOD (Video on demand), more cable signals and broadband improvements.

Video subscriber turnover rate for the year ended December 31, 2012 was 15.0%, compared to 15.1% recorded in the previous year. During the year 2012, Cablevisión gained 46,700 subscribers (including net new subscriptions from Paraguay during January-September), compared to 132,400 subscribers during the prior year. 

Competition

Cablevisión competes in the cable television segment against other cable television operators and providers of other television services, including direct, satellite and broadcast services. Given the fact that licenses are granted on a non-exclusive basis, Cablevisión's systems have been frequently subject to overlapping of one or multiple competing cable networks; in addition to the satellite service 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 its local subsidiaries and a national state-owned television signal. Additionally, under a project aimed at implementing the Argentine Terrestrial Digital TV System, the National Government handed out digital set-top units among certain sectors of society that allow free access to certain signals.

The Argentine cable television industry has more than 700 operators. The most significant competitors are Telecentro S.A located in the AMBA region and DIRECTV (DTH technology), and Internet video streaming systems (Netflix, Arnet play, Speedy) that compete against Cablevisión nationwide.

The Company can effectively compete against other cable television providers on the basis of a competitive price, a higher number of quality programs and the customer service it renders through its call-center.

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

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

Strategy

The long-term business strategy in the cable TV and Internet access segment involves ongoing investments in updating the networks, seeking to increase value for each customer, by introducing innovative and competitive services and products while staying focused on customer satisfaction. The core elements of the long-term strategy include: an expansion of the cable television and Internet broadband connectivity subscriber base, focusing on maintaining the highest speed in the market and stressing customer service and the brand. This strategy also involves improvements in technology, and broader investments intended to streamline a flexible network architecture serving as a platform for developing additional video Internet and voice services to realize the potential provided by technology convergence.

PRINTING AND PUBLISHING

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

Out of Grupo Clarín's total sales in 2012, the printing and publishing segment accounted for Ps. 2.386 billion, taking into consideration intersegment sales. This segment derives revenues primarily from the sale of advertising, copies of newspapers and magazines and optional products.

Arte Gráfico Editorial Argentino

AGEA publishes Clarín, the flagship Argentine newspaper and one of the most important in terms of circulation in the Spanish-speaking world; Olé, founded in 1996, the first and only sports newspaper of its kind in the Argentine market; Diario La Razón, a pioneer in the free newspaper segment as well as Diario Muy, launched in 2011; regional supplements; Genios, a magazine with a high penetration rate in the schoolchildren's segment. It also publishes Jardín de Genios, aimed at children between 2 and 5 years of age 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.

Through Artes Gráficas Rioplatense S.A. ("AGR"), a controlled subsidiary, the Company is also engaged in color printing, publishing and distribution activities. AGR prints Viva, Clarín's Sunday magazine and the monthly magazine Shop & Co and carries out other production activities for third parties, including book series, telephone directories and flyers.

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. Through its subsidiary and controlled company, Tinta Fresca Ediciones S.A., the Company entered the textbook editorial market.

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, influence, circulation and advertising.

The success of its prestigious editorial line lies in its identification with the needs and emotions of its audience through a plural and independent journalistic style that 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 2012, its daily circulation reached almost 271,000 copies, 1.6 times higher than its closest competitor. On Sundays, over 595,000 copies are sold, which places it among the major Sunday newspapers of the world. Clarín has a 38.7% share of the newspaper market in the City of Buenos Aires and the province of Buenos Aires and a 9.7% share in the provinces. On a national level, it had a 24% market share.

Clarín 365 was launched on October 11, 2010 to build loyalty among readers and to reinforce its close bond with them, as well as to retain circulation. It is a Benefits Program for Clarín subscribers that offers discounts, promotions and benefits in more than 1,600 brands and 4,700 stores nationwide. With an average of 461 new subscriptions per day as of December 31, 2012, the program had almost 219,000 subscribers.

Given its broad circulation and reach to all social classes, Diario Clarín leads the print media market. It is ranked first in terms of advertising revenues and sold advertising space, and also leads all advertising categories (display, special section and classified ads). With advertising sales revenues exceeding Ps. 823 million in 2012, Clarín maintains its advertising leadership both in Display and Classified ads. On-line advertising sales rose by 20% to Ps. 98.7 million, compared to the previous year.

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

Honoring its traditional journalistic excellence, Clarín received again the Rey de España award, the most important recognition to the Spanish-speaking press. As in 2011, Clarín.com won the Rey de España award in the category "best approach over the Internet". This year the price was awarded to a special program on the historical trial referred to as Juicio a las Juntas (the claim brought against the members of the military juntas). A team from Clarín.com led by Pablo Loscri, from Clarín's Arts and Infographics Department, did an impressive job reconstructing each and every instance of the historical trial against the military juntas in a multimedia special site at Clarín.com.

In addition, Clarín received the following awards: Universidad de Buenos Aires: Award to the Education Supplement; Adepa: Award to Revista VIVA, Ana Laura Pérez and Alejandra Gallo; IPYS Transparencia Internacional: Nicolás Pizzi, Omar Lavieri, Nicolás Wiñazki, Rodolfo Lara and  Daniel Santoro were distinguished with honorable mentions for their investigation on the Schoklender case and Madres de Plaza de Mayo; Citi Journalistic Excellence Award to Ezequiel Burgo. In November 2012, a special series on drug trafficking at Villa 1-11-14, a slum located in the Bajo Flores neighborhood, received the second Latin-American Drug Journalism Award, organized by the Latin-American Conference on Drug Policy.

In 2012, Diario Clarín offered outstanding promotions that increased interaction with readers, among them, the edition of the game "El Gran DT". Argentina's most popular game engaged more than two million participants last year. As of year-end, the game had 500,000 unique users, more than 60 million visits, almost 1 billion page views, an average time on site of 11 minutes and visits from over 140 countries.

Diario de Arquitectura has continued to launch high-quality collectibles, such as, "Patrimonio argentino".

During 2012, ARQ launched a series of special editions and products, such as the special edition ARQ 10 AÑOS commemorating the 10th anniversary of the magazine. During the year, Clarín announced the latest winners of the ARQ award, which recognizes the best Argentine architectural work of the last five years on a regional basis and held the award ceremony of the contest Gran Premio Nacional Arq.

During the year, the Company continued to offer its 12 regional newspapers. Keeping its close bond and symmetry with readers, the product yielded considerable profitability and was a good support to the Thursday's edition of Diario Clarín. During the year, the Company made efforts to strengthen the newspaper's position among local audiences (through special editions and instant promotions). The regional newspapers cover 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, while monthly newspapers cover Pilar, Escobar, Zárate and Campana, and Moreno, Rodríguez and Luján. During 2012, the Company completed the second stage of the web project for regional newspapers, including the launch of 8 new sites exclusively devoted to reporting local news in the province of Buenos Aires, in addition to the sites that under operation since 2011.

With respect to sports, in addition to the game El Gran DT, in 2012 special supplements were published in the Sports Supplement covering prominent events, including but not limited to the Rally Dakar; the Davis Cup, and the London Olympic Games. The supplement covered all major sporting events during the year, including hockey, rugby, golf and swimming, with correspondents providing quality information to readers. As usual, soccer has had its preferential spot. Special supplements were published covering the Clausura and Apertura tournaments. 

The Sports Supplement also held its usual annual award ceremony Premios Clarín Deporte. Sergio Maravilla Martínez received the award to the best sportsman of the year. The event was also broadcast by TyC Sports and clarin.com.

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

The highlights were: Grandes Enigmas De La Humanidad; Aventuras De Película 2; Batman; Grandes Fotografos National Geographic; El Gran Libro Clarín De Las Tartas Y Ensaladas; Gran Atlas De La Ciencia NG; Salvemos Nuestra Tierra; El Gran Libro Del Tejido 2012; Grandes Pinturas De La Historia; Grandes Batallas Argentinas; Pastas Y Arroces; El Gran Libro De Los Rolling Stones; El Gran Libro De La Historia Del Automóvil; Batman. El Caballero De La Noche Asciende; Fábulas De Mi País; El Gran Libro Clarín Del Crochet 2012; Británica. Enciclopedia Universal Ilustrada; Corín Tellado; 50 Grandes Restaurantes. Sus Mejores Recetas; El Gran Diccionario De Inglés; El Diario De Nat Geo; Plan Verano; Calendario 2013 and Angry Birds. 

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

Clarín organized the new edition of its renowned Clarín Awards, honoring its strong commitment to the promotion of Argentina's best in the cultural and sports fields. To this effect, the 15th consecutive "Premio Clarín de Novela" ceremony was held, where Fernando Monacelli received the main award for his novel "Sobrevivientes". The novel was published by Clarín-Alfaguara and the author won Ps. 150,000.

Internet

Clarin.com is a news and opinion portal with updates in real time and free access on a 365/24/7 basis, which has been online since 1996. In addition to the full version of the printed newspaper and its archive, Clarin.com features ongoing updates of news produced and published by its own journalists. During 2012, Clarín.com maintained its leadership in the Argentine market and ranked as the most visited Spanish-speaking news site in Latin America, with more than 10,800,000 unique users and 163,000,000 page views, per month (Source: Certifica, Clarín, 2012 January-December average). 

To further innovate in its ordinary business, Clarín.com took a strong step forward as audiovisual producer, and ventured into the on-line live broadcasting of long-lasting HD events on a broad range of themes. During 2012, the Company completed 15 productions and live-streams. 

The web was not the only way to reach the audience. Through Clarín.com, 729.000* unique users were kept informed from their mobile devices and 750.000** people downloaded the product application choosing Clarin.com as preferred brand accompany them at all times. (*Source: Certifica, Clarín, 2012 January-December average - ** Source: Devices: Nokia, iPhone, iPad, Blackberry, Blackberry Playbook - accumulated downloads as of December 31, 2012).

Clarín.com has also become the news site that experienced the largest growth in social networks in Argentina over the last year, thanks to an innovative approach to news reporting and interaction with the community. In December, Clarín.com had 1,900,000 followers on Facebook and 400,000 on Twitter. Through hard work, it has become the Spanish-speaking news site with the largest number of followers on Facebook in Hispanic Latin America and the second largest worldwide, following The New York Times.

Other Newspapers

La Razón, the first-ever free distribution newspaper, is mainly distributed in the public transportation network of the City of Buenos Aires, including trains, subways and high-ways. La Razón is also distributed at certain bars and among a group of opinion leaders. Building upon the concept that "La Razón is a travelling companion", as it does every summer, the newspaper sent copies throughout the season to Mar del Plata, Pinamar and Villa Gesell. During 2012, La Razón continued to publish Agenda Cultural de la Ciudad de Buenos Aires (Cultural Agenda of the City of Buenos Aires) every Thursday and the monthly supplement Gestión Sustentable (Sustainable Management), a space to think about and divulge the social and environmental responsibility actions carried out by corporations and organizations of civil society.

After thirteen years of existence and with an average daily circulation of 40,000 copies, Olé, the first and only Argentine sports newspaper, continues to consolidate its market positioning. It is the fourth largest newspaper in Buenos Aires in terms of circulation. Since its inception, it has revolutionized reading habits and managed to attract not only sports fans, but also a new generation of young readers, offering advertisers an opportunity to reach a specific market. In addition to launching promotions and organizing tournaments and exhibition games, during 2012, Olé published the Guide to the Clausura Tournament 2012 and the Guide to the Apertura Tournament 2012. After River Plate's return to the first division tournament, Olé published the magazine "¡Volvimos!", which covered the soccer club's path through the National B category and its return to the first division. In December, it published a collectible photographic work entitled "Los mejores momentos de 2012" (The Best of 2012). In April, the National Basketball League's MVP award ceremony was held again, with the cooperation of the Argentine Association of Basketball Clubs. 

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 2012, the newspaper MUY has continued to offer promotions, optional books + music CDs and free collectibles. Through these actions, the editorial offering and the free special supplements; the newspaper reached an average of 20,000 copies sold per issue.

Magazines

AGEA also continued to build upon the achievements attained by the cultural magazine Ñ, reaching average sales of 32,000 copies per issue. During the year, several initiatives were carried out, aimed at engaging readers through the launching of collectible products, the creation and sponsorship of forums comprising different cultural issues and involvement in and sponsorship of major cultural events. "Los mejores cuentos de la literatura universal", "Grandes maestros del blues" and "100 Museos imperdibles de Argentina" are among the most relevant optional and collectible products. Seven special editions were published in 2012.

Revista Pymes has continued to consolidate its growth. In June, the magazine was fully redesigned changing its size and paper to meet the market needs. The first edition of the new format included a DVD entitled "Outstanding interviews with outstanding entrepreneurs". In October, Revista Pymes launched the optional product "Empresas familiares" (Family Businesses).

In 2012, the Company continued to publish the magazine Genios. With children and school in mind, this magazine was created with the aim of integrating content for children, parents, school and society, combining education with entertainment. Since it was launched in March 1998, it has led the children's magazine segment. Its editorial offering is always updated at the beginning of each academic year, presenting new sections, updated school materials and collectible books prepared by experts. During 2012, Genios consolidated its web site genios.com.ar, and launched the magazine "Edición de Oro", together with the Back to School supplement. The editorial product was comprised by Genios magazine, plus "Guía Escolar" and the collectible product "Como escribir Muy Bien". During the year, it also published other collectibles, such as, "Curso Multimedia de Inglés de la BBC" and "Juegos de tablero de Cartoon Network". 

Revista Jardín de Geniosis a monthly publication aimed not only at pre-school children and those attending the first years of primary school, but also at parents and teachers and other adults who deal with children within this age group (3 to 6 years). The main issues and products launched during the period include: the "Disney Junior" collection; the magazine "Edición de Oro", with a backpack for kindergarten; and the optional product "Quiero Saber". In March, Jardín de Genios also launched a new product called "Mis Primeros Pasos" - a book with hands-on and learning activities to help kids in their first learning steps at school, and to learn the numbers and how to read, write, cut and paste. "Mis Primeros Pasos" is a monthly publication that replaces every other issue of Jardín de Genios, published every fifteen days.

During 2012, "Tiki Tiki", a magazine aimed at children aged 7 through 14, continued to strengthen its position. During 2012, Tiki Tiki's Facebook fan page has become an open channel to communicate with and promote content among readers. In addition to special issues that accompany the magazine, Tiki Tiki also published Tikipedia, the first soccer encyclopedia, and the collection Top Siglo XXI "De lo nuevo, lo mejor". 

Revista ELLE - a high-end magazine for women mostly focused on fashion, beauty and news - reaffirmed its leadership in the high-end advertisers segment. In 2012, its circulation reached a monthly average of 30,000 copies. In May and October, the company also published the magazine Elle Decoración.

The bi-monthly magazine Clarín Rural Revista continued to strengthen its position as a management tool for the productive sector with all the solutions and technologies aimed at agricultural businesses. Also in 2012 the company continued to publish the monthly magazine-catalogue, Shop & Co, which includes discount coupons on important brands.

Tinta Fresca

Founded in 2004, Tinta Fresca 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, as a result of leveraging lessons learned, it has managed to expand its exclusive and original focus on textbooks to a considerably diverse editorial offering.

With more than 290 titles, in addition to several textbook series for all school stages, including elementary and secondary education, its editorial offering is currently comprised by a variety of activity books for all levels. Said offering has been enriched with sourcebooks (dictionaries, encyclopedias and grammar books) and an interesting catalogue of children and youth literature. 

In 2012, Tinta Fresca continued to improve its market position. Among many other value-added projects, it strengthened its editorial offering through the launch of the series "Dame la Palabra 1, 2 y 3"; "Atrapaletras"; "Matemática en todas partes 4, 5 y 6" and "Saberes en red de Ciencia Sociales, Ciencia Naturales y Prácticas del Lenguaje 4, 5 y 6". The nine books that comprise this series have several special sections that include computer activities. Tinta Fresca continued to produce books series by launching "El gran libro de la práctica docente" and "Más actividades", seeking to offer additional class-room material for teachers. In terms of lexicography, our encyclopedia base was enlarged during 2010 with the publication of "Enciclopedia Mundo Actual", a book of 2,520 pages and 18 volumes that Diario Clarín has been publishing since 2011.

As an outstanding and special contribution to society, the Company made available at Clarín.com a digital and free version of "Diccionario integral del español de la Argentina", released in April 2011. Users may easily check the full educational and cultural quality content of the dictionary. As a result of the production of collectible materials, newsstands and supermarkets have again been intensively used as sales channels for dictionaries and literature. This substantially contributes to product and content access. 

Artes Gráficas Rioplantense

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

In 2012, AGR retained its leading position in the sector with net sales of Ps. 233 million and more than 12.5 million units sold in the local and foreign market. The company continued to exploit one of its main strengths: its participation in the entire value chain of the printing industry, which enables it to offer comprehensive customer service, including drafting, prepress, variable printing, offset printing, finishing and distribution. 

In addition to the progress made in improvement and control management of its production processes and in order to take care of the environment, AGR installed a new catalytic post-burner for the treatment of gas effluents derived from the rotary press furnaces. During this period, AGR successfully completed the implementation of ISO 14000, an internationally accepted standard that sets forth how to establish an effective Environmental Management System (EMS) to achieve a balance between maintaining profitability and reducing the environmental impact. In addition, AGR installed a vacuum system to remove dust from the trim size system ducts and reduce air-suspended particles.

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.

In 2011, the Company acquired an interest in the capital stock of Cúspide Libros S.A. through AGR. Through this acquisition, it launched Librocity.com, the on-line bookstore of Grupo Clarín, in partnership with the retail bookstore chain Cúspide. The bookstore features a broad and assorted catalogue and an advanced search engine. The site offers several payment methods and payment against delivery.

UNIR S.A. ("Unir") is a company engaged in wholesale mail reception, classification, transportation, distribution and delivery services. As from August 25, 2008, AGEA holds a 93.41% direct controlling interest in Unir. During 2012, Unir's total sales increased by 29%, with revenues of Ps. 78.01 million as of year-end. In December 2012, AGEA had its Quality Management System recertified under ISO 9001.

CIMECO

CIMECO was organized in 1997 with the aim of acquiring equity interests in Argentine and foreign newspapers, seeking to preserve the regional journalism industry, blending experience, synergy and economies of scale, 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 2012, the newspaper received the Mercurio award granted by the Argentine Marketing Association, in recognition for its commitment to building loyalty among readers. All the newspaper's actions were focused on driving the growth of the on-line version, positioning its loyalty program Los Andes Pass, and boosting the sale of optional products. Los Andes newspaper actively participated in all major provincial events and has renewed its agreement with Mendoza's Sports Alliance to be the region's sports news provider. The program Medios en la educación (The Media and Education) reached its 25th anniversary working with the newspaper at school, and closed the year with the contest "The Dearest Teacher". In addition, Los Andes has maintained its strong commitment to the improvement of internal control processes and guidelines, while introducing improvements to products and services for customers.

La Voz del Interior SA 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 59.4% market share in the province of Córdoba. In addition to this, the sectional directories and the sustained growth in the distribution of third party's and in-house editorial products have contributed to gain more contracts with clients.

In terms of advertising, La Voz del Interior S.A.'s products capture 39.7% of the investment in large media, based on the multiple options offered by its print and electronic media. In this last regard, its web sites position the newspaper as a leader in unique visits and page views in the provinces of Argentina.

Papel Prensa

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

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

Ferias y Exposiciones Argentinas

Since 2007, Ferias y Exposiciones Argentinas has been mainly engaged in the organization of Caminos y Sabores, an exhibition intended to foster Argentina's gastronomy and handicrafts and promoting the region's major tourist destinations. During 2012, Ferias y Exposiciones Argentinas held exclusive events for users and owners of agricultural machinery in Caminos y Sabores, as well as in Admite.

Throughout its eight editions, Caminos y Sabores has become one of the fastest growing fairs, while boosting the development of all of its key participants: typical food producers, craftsmen and representatives of tourist destinations. In 2012, the exhibition was held from July 6-9 and attracted over one million visitors who enjoyed walking through the market, and attending cooking demonstrations, speeches and art shows.

Admite was held in 4 editions - Arroz (Rice), Gestión (Management), Agrícola (Agriculture) and Forrajero (Fodder) - with several courses led by prestigious instructors from the agricultural sector and training on technology and machinery. 

In 2007, AGEA entered into an agreement with S.A. La Nación for the organization of Expoagro, a new agro-industrial fair, improving the results that had been obtained until then by Feriagro, and achieving a record-high number of exhibitors. In 2012, the exhibition was held in March in the city of Junín, province of Buenos Aires. It was a success and received more than 100,000 visitors.

BROADCASTING AND PROGRAMMING

Grupo Clarín is also the leading company in the audiovisual broadcasting and programming segment. Through Artear, it holds the license to broadcast 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), Bariloche (Bariloche TV), and Río Negro (Radio Televisión Río Negro). Grupo Clarín also produces and sells some of the most popular cable television signals.

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

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

Out of Grupo Clarín's total sales in 2012, the broadcasting and programming segment accounted for Ps. 1,449 million, taking into account intersegment sales.

Artear 

Amidst a scenario marked by industry challenges and strong competition, Artear was able to achieve its goals in 2012. Its share of the traditional advertising market of broadcast television reached 29.4%. 2012 has had the highest audience concentration in recent years for the leading signals, with Telefe and El Trece achieving a combined 64%. El Trece ranked second in the broadcast TV audience rating with 9.5 points from 12 p.m. to 12 a.m., Mondays through Sundays. Its professionalism, artistic quality, innovative proposals and technological developments continue to distinguish it as one of the most prominent signals in the market.

In terms of programming, El Trece combined fiction, news and entertainment embracing a varied offering. "Show Match", "Soñando por cantar", "Los Únicos", "Tiempos Compulsivos" and "Condicionados" 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 channels, TN achieved the highest audience share throughout the year across all time slots. On several occasions, it outperformed broadcast stations. 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 its TV 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 and Metro, general interest cable channels, continued to develop their programming criteria through thematic modules and standardized broadcasting. Magazine was the signal with the highest audience in the variety category. El Trece Satelital, the Buenos Aires signal of El Trece, continued to focus on local productions and on including a significant number of in-house national productions in its programming.

During 2012, more investments were made in the development of Artear's web sites. Hours of information, network entertainment, favorite programs and instant news. "tn.com.ar" ranked among the four top on-line news sites and as a leader in social networks. "eltrecetv.com" has become Argentina's most visited broadcast TV web site featuring the most outstanding programs, exclusive coverage, back-stage, contests and live interviews. During the year, it had more than 1.7 million users, in addition to 400,000 followers on Facebook and over 535,000 followers on Twitter. Artear has also reinforced the development of exclusive applications and content for the most widely used mobile devices. 

Additionally in the production section, the most prominent show business and general interest events were broadcast, such as the concerts of Madonna, Lady Gaga, Mamma Mía, Liza Minelli, Luis Miguel, Axel, Hugh Laurie, Carlos Baute and Reik, as well as other shows and events, such as, Cirque du Soleil, Batman Live, Piñón Fijo es mi nombre, La cabra, Quilmes Rock, Pepsi Music and Personal Fest; and a new edition of the traditional UNICEF fund-raising event "Un Sol para los chicos" at the Luna Park stadium.

During 2012, 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. This success is the result of intensive investment in equipment and professional training. El Trece was the first signal to test a high-definition system on September 25, 1998 and has continued to use it uninterruptedly from 2000 through 2009. 

During the period, investments were made to strengthen the implemented workflow processes, as well as to move forward with pending issues. Additionally, a building project was carried out to increase the newsroom size, which became a "spectacular newsroom", as evidenced every day by the images of the news programs broadcast by El Trece and TN. The archive capacity enlargement for the digital system implemented the previous year is one of the most significant acquisitions.

Artear continued to produce fictional content for TV series and motion pictures through Pol-Ka, Ideas del Sur and Patagonik Film Group.

In the case of Pol-ka, "Lobo" and "Los únicos, segunda temporada" - the two series scheduled for the beginning of the year - failed to deliver the expected results. In September, Artear started again to broadcast programs in "series" format with "Sos mi hombre", which achieved a high audience rating. "Condicionados" and "Tiempos compulsivos", both of them in the Company's hallmark category of "single" programs, were broadcast during the year with considerably good acceptance from the public and the critics.

Also during 2012, Artear completed the production of "Violetta" for Disney and, by the end of the year, started to produce the second season. The program has become very popular among children and youth, with high audience levels both in cable and broadcast TV in Argentina and abroad. Even though 2012 was a challenging year, the 2013 outlook is quite promising since "Sos mi hombre" will continue to be broadcast on El Trece, and "Solamente vos" has a large audience, in spite of the typically low audience shares registered in summer.

As for Ideas del Sur, during 2012, the company exceeded the number of production hours and increased advertising sales compared to the previous year. In addition, all of its products achieved good audience levels.

The Company also made significant efforts towards developing activities related to the commercialization, organization and broadcast of sports events through TyC Sports, mainly football and motor racing.

Radio Mitre

In 2012, AM Mitre 790 reaffirmed its track record and consolidated its second place in the ranking of audience share during the entire year, reaching an audience share of 23 points.

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

In the afternoon slot, Radio Mitre consolidated its strong journalistic offering with the incorporation of a new program. In February 2012, Radio Mitre launched "Lanata sin filtro", a program hosted by Jorge Lanata with the participation of Luciana Geuna, Osvaldo Bazán, Nicolas Wiñazki and Adriana Verón that set the agenda with high-impact research and journalistic views."El Club de la tarde", hosted by Ernesto Tenembaum, "La Otra Pata", hosted by Marcelo Zlotogwiazda, and "Lo que queda del día", hosted by Horacio Caride were also part of the programming. 

La 100 consolidates its leadership in the FM radio segment, with an entertaining, smart and innovative proposal based on programs led by famous artists and good music. By year-end, La 100 again led the audience share with growth in almost all of its programs. In 2012, the shows "El Show de la Noticia", hosted by Roberto Pettinato in his ninth season, and "Lalo por hecho", hosted by Lalo Mir and Maju Lozano, stood out once again. In the afternoon slot, La 100 managed to consolidate its position with "Sarasa", hosted by Ronnie Arias, and "Atardecer de Un Día Agitado", hosted by Sergio Lapegüe."Ranking Yenny" hosted by Guillermo López leads the audience segment on Saturday mornings.

To further deepen its bond with listeners, La 100 continued to organize acoustic concerts and on-location broadcasts from its mobile studio, featuring highly-acclaimed national and international artists.

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

During 2012, the presence of Mitre AM 810 was also consolidated in the province of Córdoba as the second radio with the highest audience share. With a permanent staff in the city and its own news service, Mitre AM 810 developed comprehensive coverage of news comprising Córdoba, Argentina and the world. Its programming includes prestigious hosts, such as, Rafael Martínez, Rebeca Bortoletto and Juan Alberto Mateyko.

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 Contenidos de Medios Digitales S.A. ("CMD").

Out of Grupo Clarín's total sales in 2012, this segment accounted for Ps. 364 million, taking into consideration 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. This network seeks to replicate on the Internet the presence and relevance of Grupo Clarín's several offline media.

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

In addition, the Company continued to sell contextual advertising under the brand iAvisos and completed the first year of operation in the Adnetwork business.

The website of Todo Noticias developed by CMD registered amazing audience share growth at year-end. By year-end, TN had 5.6 million unique users, that is, a 47% increase compared to the same month in 2011 and 36.4 million page views, which represents a 40% increase relative to the same month the previous year. Ciudad.com remained the most visited show web site in Argentina, with 5.3 million unique users in December 2012.

CMD S.A. has maintained its 80% equity interest in Interpatagonia S.A., and its 51% interest in Clawi S.A. During the year 2012, Tecnología Digital (TECDIA) S.A. was created, a company in which CMD has a 95% equity interest.

Club Cupón, the on-line discount site that had completed the first month of the year with 23,000 coupons sold, in December exceeded 36,000 coupons. Also in 2012, the Company managed to enter the Brazilian market through Clawi S.A., by means of a strategic alliance with Grupo Abril's Recreio magazine. Thus, with the launch of a version in a different language, Mundo Gaturro became the first on-line entertainment world in Hispanic Latin America. During the period, Mundo Gaturro reached 6,500,000 registered users and approximately 100,000 access passes sold per month. During 2012, the Company also executed an agreement with UNICEF for the development of educational games.

Also during the period, CMD completed its second year of operations in the direct marketing segment through its brand Mr. Sale, achieving sustained growth.

Through its brand Yuisy, CMD launched Token Dancer, a thrilling eye-hand coordination game which, by the end of 2012, had registered 370,000 downloads worldwide and is available for Ipod, Iphone and Ipad at Apple's Appstore. Yuisy's consolidation in the Latin-American videogame industry is attributable to the release of third party's games. The first title released under this modality was ZAP First Jump. These releases are in addition to the popular Rolling Ranch and Halloween Hunter launched in 2011.

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 2012, total sales increased by 36.6% compared to the previous year. The company continues to bolster the services offered, increasingly focusing on a customer-driven approach, as well as on strengthening improvement processes.

GRUPO CLARÍN AND ITS CORPORATE SOCIAL RESPONSIBILITY

OUR COMMITMENT

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

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

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

TRANSPARENCY, STANDARDS AND GUIDELINES

Grupo Clarín seeks to intensify the values and principles that guide the Company's daily work, particularly those concerning labor, sustainable development, and human rights.

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

During 2012, the Company developed it Corporate Social Responsibility and Sustainability Policy, aiming to extend best practices and establish common goals within the organization and its subsidiaries. It also encompasses and promotes the adoption of specific industry related standards among its subsidiaries.

Also in this period, the Company started to prepare its Financial Statements under International Financial Reporting Standard (IFRS) changing the manner in which some figures are presented. This, added to an internal materiality assessment on sustainability issues performed in 2012, resulted in the deconsolidation of some subsidiaries in which the Company holds a minority stake such as Trisa, Impripost, Papel Prensa and Ideas del Sur. Therefore, comparative analysis of some figures in this section with those from previous years cannot be properly stated.

Since 2004, the Company commits to the Global Compact proposed by the United Nations, seeking to systematically embody the 10 principles that serve as a guideline for a sustainable management.

Grupo Clarín also participates in several groups and organizations, which gather other Argentine, Latin-American and global media players and stakeholders to share experiences, identify best practices, and foster cooperation on the specific issues that media companies address as part of their social responsibility strategies. During 2012, through the Noble Foundation, it renewed its presence in the "Grupo de Fundaciones y Empresas", a space to share knowledge and set standards in the field of strategic social investment.

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

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

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

As the previous years, 2012 proved to be a specially challenging year for the press and freedom of expression in Argentina. The Company supported numerous initiatives to create awareness on the subject and demonstrated its sustained commitment to defending and promoting it.

Independence and Transparency

Independence is a value. For journalists and the media, independence is the solid foundation of their work, which enables them to search for the truth, without any conditioning.

Independence is at the core of Grupo Clarín's business, as a guarantee of freedom for its media to fulfill their journalistic role in Argentine democracy. It is at the same time an assumed responsibility, a way of exercising and guaranteeing rights, an outlook on sustainability from the company, a daily commitment.

Independence requires transparency. That is why the information about Grupo Clarín, its media, shareholders, activities, revenues and investments is public and is readily available in its website, in the Argentine Securities Commission and in multiple and several communication channels with the public, audiences and readers. This is not the case with the majority of the other Argentine media, which does not make available to the public their financial statements, the sources of their income, and many times even fail to reveal who their owners are.

Independence from the Government

One of the media's sources of income is advertising. Presently, most media in Argentina are either state-owned or a significant portion of their income directly depends on the increasing government advertising expenditure. Those are adverse conditions that can often pose a threat for journalistic independence, freedom of speech, access to information and plurality of voices, all vital conditions for a sustainable and democratic society.

Grupo Clarín receives virtually no funds for official advertising from the National Government and very little from Provincial Governments. So much so, that in 2012 official advertising from all jurisdictions accounted for only 1% of its revenues. Historically, given the scale and diversity of Grupo Clarín's revenues, the weight of those funds has always been kept at very low figures, in order to guarantee the freedom of its media and journalists to report without any conditioning.

Business Independence

Grupo Clarín pays special attention to guaranteeing its economic independence by pursuing a sustainable business model with diversified sources of income, where advertising is only one of the ways of sustaining its businesses. Among its activities, it also publishes and sells editorial products, produces and sells programming and cable television and Internet services. Additionally, it makes available to the public information about its revenue structure on a quarterly basis. The following table, also included in the Company's 4Q & 2012 Earnings Release, shows the sales breakdown by source of revenue as a total figure and by business segment for the period.

Sales Breakdown By Source Of Revenue - December 2012

With respect to its advertisers, the Group's media have business policies that promote diversity and multiplicity of advertising investment sources. Therefore, none of the advertisers that advertise their products in Grupo Clarín's media accounts, individually, for more than 1% of the Group's revenues, another way of guaranteeing its independence and freedom to report.

Media independence also needs responsible relations between journalism and the company's own business interests. Grupo Clarín's media have policies aimed at separating business functions from editorial functions. Particular emphasis is placed on the fact that journalists must not be in charge of or related to advertising sales, in order to allow for the free exercise of their profession, free from any risk and conditioning. Also in each of its media a clear distinction is made between advertising spaces and editorial spaces.

As mentioned previously, the Company also has a Code of Ethics applicable to its subsidiaries and employees. It establishes standards of conduct which regulate and prevent situations that may affect the free fulfillment of their duties and transparency of their activities.

PEOPLE'S VOICES

Media sustainability depends profoundly on readers and audiences aware of their rights and ready to demand quality journalistic and entertainment contents, and also on media ready to listen to them.

Grupo Clarín's media promote interaction with their publics and audiences, creating spaces and tools aimed at listening and fostering communication. Opinions, critics, tastes, suggestions and comments are received through multiple open spaces for contents created by people for the free expression of society, embracing its diversity and plurality.

At a Corporate level, amidst the challenging environment created by the ongoing harassment by the government since 2008, Grupo Clarín also offers multiple and specific communication channels, such as web based tools and social networks, to share the latest updates with accuracy and transparency.

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

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

Clarín's newspaper segments such as "El juicio final", "Cartas al país" and daily readers' surveys, all traditional means of engaging readers, are complemented by more recent initiatives to accompany peoples' needs to participate in the news process, such as the introduction of readers comments and social media strategies within the online news platforms.

Over the last few years, the Company has launched a growing number of new blogs, and generated greater interaction not only with journalists, but also between our users. Interactivity opens space for informative content deriving from readers, listeners and web users. 'TN y la gente' is a web-based tool developed by the Company's news channel, where audiences send photos or video footage captured from personal and mobile cameras, as another way of introducing citizen journalism and increasing end-user participation in our media.

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

On the other hand, for almost 30 years now Grupo Clarín, through the Noble Foundation, has been offering free media literacy tools aimed at promoting a critical view on journalism and empowering at the same time people in their role of consumers and also creators of contents.

SOCIAL AND SUSTAINABILITY COVERAGE

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

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

During 2012, the Company´s media paid special attention to issues related to climate change and the environment.

Radio Mitre, its main broadcasting radio station, combined 24 hour coverage of these issues and continued to air "Planeta Mitre, Compromiso Verde" a series of daily brief radio programs by an environment specialized journalist aimed at raising awareness on environmental issues, recycling and what each of us can do to make the world a better place. 

Since 2011, the newspaper La Razón has been publishing the monthly supplement Gestión Sustentable (Sustainable Management) 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. During the year, the supplement received the prestigious award Gota en el Mar, in the category Environment and Sustainability.

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

The Company also continued to draw attention to weblogs that create social awareness within Clarín.com. An example of this is "El Otro, el Mismo", a blog developed in association with Universidad Católica Argentina and social organizations engaged in fostering the inclusion of people with disabilities. Moreover, the "Calendario del Compromiso con la Comunidad" (Calendar of Commitment to the Community) continued to be published in Revista Viva for the seventh consecutive year.

Recognizing the importance of reflecting diversity, promoting social justice, protecting youth, encouraging minority recognition and preventing racial and gender discrimination is key in responsible content creation in the media. During the last few years, third party, academic and the company's own monitoring processes have all registered a gradual, yet sustained increase in social topics coverage.

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

In 2012, the second edition of the report showed that the percentage related to children as sources increased to 60% and that violence as a subject decreased noticeably (16%) from 2011 to 29% of the total coverage, giving the newscast the best score among private channels. Also, the report emphasized that 41% of the coverage related to children was specifically devoted to girls, while another 47% was dedicated to boys and girls alike, reaffirming the newscast commitment to portraying gender issues.

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

During 2012, the Company, along with communication experts and academics from the mentioned institutions, organized 6 in-house workshops for journalists, editors, cameramen and producers working in all the newscasts produced by Artear (TN and Canal Trece) in order to provide them with content-creation-related-tools and to discuss the main challenges of the different aspects of television coverage of social issues and the editorial values that guide everyday decisions. The experience was very enriching for the professionals participating in the program as well as for the University and Organization representatives.

PROMOTING INVOLVEMENT

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

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

Aware of the need to advocate for a wider respect for the principles of democracy and fundamental human and civil rights, during 2012, the Company continued to promote and create awareness, for example, on the importance of every citizen's right in the matter of access to information, and of the significance of freedom of expression.

Also the Company set out once more to promote values such as solidarity and community involvement., Through Artear, it launched yet another edition of "Abanderados de la Argentina Solidaria", an award that recognizes the otherwise silent labor of social entrepreneurs and community leaders, by divulging valuable and replicable initiatives that advance social transformation. The initiative is supported by Ashoka and a remarkable panel comprised by outstanding people from the social, academic and cultural sectors. In 2012, the award was granted to Javier Ureta, president of Cascos Verdes, an organization dedicated to the inclusion of people with disabilities in the province and the city of Buenos Aires

In May, Genios magazine launched "Mision Positiva", its second institutional campaign that sought to promote values such as friendship, fellowship, tolerance, peace, solidarity and environmental care. The initiative included publishing a teachers´ guide with games, and activities for the classroom to encourage children's involvement.

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

In order to promote other campaigns and collection efforts and raise awareness about the country's main social topics Grupo Clarín has donated advertising space to several NGOs, Among the most remarkable efforts in this regard were the Colecta Más por Menos, the annual Caritas collection organized by the Argentine Episcopal Conference and the annual collection of the Food Bank Network,

Grupo Clarín also provided renewed support to the traditional campaign "Un sol para los chicos", together with Artear and UNICEF. The campaign reached in 2012 its 21th edition, and raised Ps 14.309.929 for education and other social programs for children and the youth. It is one of the key sources of income for UNICEF in the country, and it also promotes the increase of individual donations which is still noticeably lower in Argentina and Latin America compared to the US and Europe .

In order to deal strategically with this issue and seeking to bolster the impact of its investment in terms of solidarity campaigns on its media, during 2012 Grupo Clarín decided to conduct research on the limited level of individual contributions to organizations of the civil society. In partnership with AEDROS, an entity specifically engaged in fundraising in the country and with the support of a top consulting company, a nationwide research was conducted that revealed the status and the reasons for the lack of a sustained commitment with a cause in terms of individual money donations. The research findings were published in Diario Clarín and were a significant contribution to the civil society, which is dealing with increasing challenges to its sustainability as a whole.

In addition, with the support of Rapp Argentina, a campaign was designed to deal with this problem that was broadly promoted in audiovisual and electronic media, as well as in newspapers and magazines. The campaign sought to foster civic involvement through a sustained and ongoing economic commitment, as the most effective way to make profound changes in the lives of many people in need. The Company plans to measure the impact of this initiative and set goals for the continuity of this project in 2013.

COMMUNITY ENGAGEMENT AND SOCIAL ADVERTISING

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

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

In terms of social advertising, during 2011, through the Noble Foundation and several of its media companies, Grupo Clarín contributed with advertising time and space to promote social, civic and environment related causes, through its own programs or within strategic alliances with renowned NGOs.

Advertising space donated in 2012

Radio 412.8 thousand seconds

Broadcast and Cable Television 601.5 thousand seconds

Pages in Newspapers and Magazines 88.4 pages

The impact made by these contributions represents an investment of approximately Ps. 36.9 million

During 2012 the Company strived to further contribute to the improvement of social advertising and communication skills in civil society organizations. One of the ways to engage this issue involved increasing the scale and impact of "Segundos para Todos", an advertising contest for NGOs organized by Cablevisión, which combined broadcasting spots with coaching sessions in Buenos Aires, Córdoba, Santa Fe, Salta and Neuquén. During 2012, the company continued to invest in the TV program "Segundos para todos TV", that reflected their outreach to the community and focused on public interest topics.

An additional issue in which Grupo Clarín has a sustained and strategic commitment is in reducing the digital divide and promoting digital inclusion. This is addressed by raising awareness through news coverage and TV programs in different media outlets. Also during 2012, Cablevisión extended its free cable TV and Internet access connections program to a growing number of schools, hospitals and other institutions, reaching 20.362 by the end of the year. This represents an annual contribution of approximately Ps 42.2 million, and is completed with specific programs such as a "social fee" for low income neighborhoods.

The impact of the mentioned donation of advertising space and connectivity services can be added to the Ps 2.9 million budget by the Noble Foundation for the 2012 period, and the amount dedicated to other social investment programs in several subsidiaries reaching Ps 6.8 million, all of which collectively represents an investment of Ps. 89.4 million. Nevertheless, a detailed total figure cannot be yet estimated in full at a corporate level since information collection systems are being set in place to be able to provide the community investment related to the smaller companies.

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

FOSTERING EDUCATION AND CULTURE

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

For the ninth consecutive year the Company successfully organized "Digamos Presente", an initiative focused on equal access to education and rural education, in partnership with APAER, Red Solidaria, Cimientos Foundation, and with the support of Arcor and Telecom

The Company has also renewed its support to the 3rd Educational Quality Forum, a massive event organized by Educar 2050. In this same regard, Grupo Clarín and Cablevisión have renewed their support to the prestigious annual and nationwide research carried out by the Observatorio de la Deuda Social Argentina (Observatory of the Argentine Social Debt) of the Pontificia Universidad Católica Argentina.

Among the main alliances are specific initiatives such as the program "Potenciar Comunidades Rurales" (Empowering Rural Communities) carried out with the support of several companies to support local development projects in certain communities with the leadership of Emprendimientos Rurales Los Grobo.

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

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

Noble Foundations' educational donations

2012 2011 2010

Books 48.900 53,406 63,542

Magazines 6.660 6,625 4,160

Booklets 500 260 550

Again this year, the Company sponsored the annual Maratón de Lectura (Reading Marathon) initiative, organized by Fundación Leer with the participation of 4.000.000 children from 13.051 different schools. The event received the donation of books published by Clarín and the initiative was promoted through a wide range 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, Arte BA, the Meraviglie dalle Marche exhibition, 600 years of Italian art at the National Museum of Decorative Arts, Teatro Colón, Usuahia's Festival of classical music and the 22nd season of Vamos a la Música which this year introduced "El Cascanueces y las princesas encantadas" at Centro Cultural Konex.

The Company also supported the presentations of Iñaki Urlezaga and Trío Argentino, as well as the launch of Teatro Maipo's season presenting "El último tour" by Eleonora Casano and the play "Master Class" with Norma Aleandro as leading actress, and the films "Dos más dos" with the performance of Adrián Suar, Julieta Díaz, Carla Peterson and Juan Minujín and "La suerte en tus manos" featuring Valeria Bertuccelli and Jorge Drexler under the direction of Daniel Burman.

As it does traditionally, in 2012 Clarín held the annual award "Premio Clarín de Novela" and supported the exhibition "María Elena Walsh en casa de doña Disparate" at Victoria Ocampo's residence in San Isidro.

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

MEDIA LITERACY AND PROTECTION OF YOUNG AUDIENCES

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

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

"Education and the Media" Program

2012 2011 2010

Teachers' workshops: 125 100 169

Students' workshops: 534 525 581

These programs are supplemented through other initiatives regarding the promotion of responsible content consumption. Through the Noble Foundation, Grupo Clarín renewed the presence and coordination of the media section at the "Museo de los Niños" (Children's Museum), and continued to promote visits to its printing facilities. During 2012, 14.438 people (mainly students) and 234 institutions had the opportunity to see firsthand what goes on behind the news production and distribution process.

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

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

EXCELLENCE IN JOURNALISM

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

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

In this sense, the Company sponsored the achievements (both at the institutional level and through journalistic content) of the Graduate Course in Scientific, Medical and Environmental Communication. This program is organized by the University Pompeu Fabra in Barcelona, together with the Leloir Institute and the cable station Todo Noticias (TN). Another highlight in this area was the launch during 2011 and renewal in 2012 of the Graduate Program in Digital Journalism organized by the University Pompeu Fabra and TN.com.ar.

OUR PEOPLE

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

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

TotalEmployees 2012 2011 2010

15156* 17,200 16,277

Distribution of Company 2012 2011 2010

Employees by Category

Management 209* 248 280

Middle management 2220* 2,403 2,132

Junior management,

administration and commercial 4905* 2,513 3,706

Qualified technical personnel 5955* 6,988 6,782

Journalists 1187* 1,357 N/A*

Others 680* 3, 691 3,377

*Note: 2012 figures reflect variations in the scope of Companies included in this annual report. Therefore, comparative analysis with previous years cannot be properly shown. Refer to section "Transparency, Standards and Guidelines" for further detail.

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

Employees by sex 2012 2011 2010

Men 11,654* 13,375 12,698

Women 3,502* 3,825 3,579

Employees by groups of age 2012 2011 2010

31-50 9,466* 9,464 9,464

>51 1,840* 1,938 1,938

*Note: 2012 figures reflect variations in the scope of Companies included in this annual report. Therefore, comparative analysis with previous years cannot be properly shown. Refer to section "Transparency, Standards and Guidelines" for further detail.

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

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

One of the key ways of obtaining feedback on the Company's performance is via the global staff survey, carried out every two years. During 2012, the survey was carried out in all of the Company's subsidiaries, reaching a record level of response of 92%, in comparison with 88% registered in 2010 and 81% in 2008. Amidst the complex environment for the company and its employees related to the harassment by the Government, it is worth noting that figures for climate remained strong and that those related to commitment reached average levels of almost 70%. The same happened with leadership indicators, which maintained their levels with high scores.

In 2012, the Company continued to develop the in-house Volunteer Program of Grupo Clarín and its subsidiaries. Named "Vos también" (You Too), the program included the design and implementation of several actions to engage volunteers with the community. The program was implemented in 9 business units, including the corporate area, with impact on 12 provinces in Argentina and in two countries (Paraguay and Uruguay). According to its main indicators, volunteers dedicated 6901 hours of work (5629 during working hours), with a global engagement rate of 6,94%, representing 1180 volunteers with a satisfaction rate of 97,6%. Work was done in association with over one hundred social organizations that have partnered the several initiatives which helped 7543 people.

"Vos También" Volunteer Program in 2012

Volunteers

2012 1180*

2011 1446

Social Organizations Involved

2012 100

2011 35

Direct Beneficiaries

2012 7543

2011 6594

Working and non-working hours

2012 5629 1272

2011 3354 2019

Employee Involvement

2012 13.35%*

2011 6.94%

*In 2012, one of Grupo Clarín`s main Companies in terms of workforce, could not participate in one of the programs activities due to an illegal breaking into its facilities, impacting in the final involvement figure.

Through these initiatives, volunteers had the chance to make contributions in several areas, such as training on the use of on-line platforms, radio workshops (such as, "Voces solidarias", a program sponsored by Radio Mitre to help the Argentine library for the blind), toy-collecting efforts, job placement support and advice, blood donation efforts, social inclusion recreational events, articulations between formal education and the workforce, professional support to Social Organizations, and volunteer social project management, among others. The program had a high satisfaction level among participants: 99.25% of the participants found it rewarding or very rewarding and a similar percentage stated that they would participate again.

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

Benefits and career development

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

During 2012, corporate and business units' human resources departments have continued to implement different programs to identify internal talent for career development. Also, Grupo Clarín's and Cablevision's Young Professionals Program was renewed, creating opportunities for professionals that are taking their first steps in their career paths.

In order to develop new skills and build up existing strengths, people need encouragement and support. In addition to increasing the number and variety of training options, during 2012, the Company continued efforts to extend and enhance the employee performance appraisal program in different categories.

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

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

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

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

ENVIRONMENT

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

During 2012, the Company continued to take steps towards the measurement, planning and improvement of manufacturing processes to optimize results and address possible impacts. Progress was made in achieving the period's goals by introducing sustainable methods to obtain and use resources; implementing policies for investment in equipment and raising awareness for the adequate use of technology.

It is worth mentioning that AGEA, the company that manages the largest printing plant, developed during the period an Environmental Policy and invested in the first stages towards obtaining the ISO 14001 certification.

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

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

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

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

The present report reflects the global impact of the different subsidiaries where the Group has controlling stakes, while indicating some specific effects with regards to the nature of the different business activities. Based on a materiality assessment and changes in the manner in which information is consolidated starting in 2012, the usual comparative analysis is not available.

Consumption. Newsprint and Energy

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

In addition to the FSC certification obtained by AGR in 2010, during the last period, the Company engaged in planning significant environmental investments and put in place the initial stage towards obtaining the ISO 14001 certification at AGEA's printing plant.

In terms of types of inks used, although different printed products require different resources, as an example, the main printing plant usage of vegetable oil based coldset ink reaches almost 60%. Vegetable oil based coldest is environmentally friendlier than other types of ink and allows reducing ink usage by approximately 10/15%. This can also be achieved by printing techniques; at the Company's printing sites the stochastic printing style introduced in 2008 continues to be applied as a way of optimizing ink usage.

2012 2011 2010

Paper 85,202 Tn 112,290 Tn 111,656 Tn

Ink 1,269 Tn 2,735 Tn 2,412 Tn

Aluminum plates 244 Tn 236 Tn 272 Tn

Company qualified teams continuously strive to reduce consumption by identifying and adopting increasingly eco-efficient processes. The introduction of adjustments on the dimensions of newspapers made in previous years continues to shows its benefits in the use of paper and other materials.

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

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

Direct and Indirect energy consumption by primary source:

2012 2011 2010

Electricity 216,991 GJ* 431,326 MWh 419.563 MWh

Natural Gas 31,891 GJ* 25,825,636 m3 29.898426 m3

Gasoline 11,823 GJ* 29,399 GJ 24.676 GJ

Gasoil 44,111 GJ* 64,509 GJ 76.043 GJ

LP Gas 492 GJ* 2,449 GJ 2563 GJ

*Note: 2012 figures reflect variations in the scope of Companies included in this annual report. Therefore, comparative analysis with previous years cannot be properly shown. Refer to section "Transparency, Standards and Guidelines" for further detail.

Energy consumption is significant in the printing activities and, to a lesser extent, in the business units which operate with technology, such as cable television and Internet services, broadcasting, etc. In this area, some initiatives developed by Artear include the introduction of cold lighting in all new and renovated television studios, in order to reduce 5 times or more the regular energy consumption.

In addition to the 2011 goal of replacing all of Artear's live unit news vehicles for low consumption vehicles, during 2012, building improvements were carried out in underground facilities to take advantage of natural light. This, together with the installation of energy efficient cladding resulted in a 2820 GJ saving. During this period, the company focused on a multiple stage scheme to replace other lighting materials and continued to invest in equipment -manufactured within environmentally friendly parameters- in order to meet the needs of the generation and distribution of content in High Definition.

Through Papel Prensa, a subsidiary in which the Company owns a minority stake and that provides newsprint for over 95% of Argentine Newspapers, Grupo Clarín participates in the production of newsprint, which is then used as a raw material by some of its other subsidiaries. This allows a comprehensive view of product's life cycles.

Papel Prensa has implemented production policies based on the procurement of strategic inputs without contributing to the depletion of natural resources. To this end, the paper mill recovers raw materials from the recycling of returned newspapers, to generate more newsprint, thus reducing the use ofvirgin fiber. The type of fiber source (Poplar, and Willow) depends upon the availability of materials, as well as economic considerations such as the minimization of transport distances and costs, which is a relevant economic and environmental consideration. Nevertheless, it is important to mention that fresh fiber comes entirely from sustainable plantations. This means that no native forests are involved or endangered. This is combined with continuing research on Salicaceae, related to their genetic improvement and also to ecologic and silvicultural aspects, done by means of agreements made with universities, research centers and experts, with the objective of increasing productivity, reducing costs and assuring the sustainability of the ecosystem.

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

Emissions and discharges

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

In terms of emissions, the main contributors to the Company's carbon footprint are print sites.

2012* - Total direct and indirect greenhouse gas emissions by weight

Direct Emissions 5,764 Tn

Indirect Emission 27,569 Tn

*Note: 2012 figures reflect variations in the scope of Companies included in this annual report. Therefore, comparative analysis with previous years cannot be properly shown. Refer to section "Transparency, Standards and Guidelines" for further detail.

The Company is constantly exploring alternatives to improve processes and efficiency in these areas, and to continue to enhance the analysis and inventory of Co2 emissions generated by Grupo Clarín's activities. The primary strategies available to reduce greenhouse gas emissions are reducing the consumption or changing the energy sources, for example, by increasing the use of renewable forms of fuel and bioenergy.

Each one of Grupo Clarín`s subsidiaries identifies and manages waste production and disposal.

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

Hazardous waste is carefully handled and handed over to authorized waste management companies. The Company continues to carry out strategies to reduce the amount of this type of waste, with significant success. In 2011 the reduction reached 21%.

2012* Total weight of waste by type

Urban or non-hazardous waste 4,264 Tn*

Hazardous waste 437.4 Tn*

*Note: 2012 figures reflect variations in the scope of Companies included in this annual report. Therefore, comparative analysis with previous years cannot be properly shown. Refer to section "Transparency, Standards and Guidelines" for further detail.

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

2012 Total Water Discharge in Printing Facilities 1560 m3

In sites such as La Voz del Interior and AGEA the water is treated and then reused in irrigation or as part of the production process. During this period, the Company reached the goal of generating zero discharges at AGEA's printing plant, also reducing water usage.

Besides printing plants, the Company`s office buildings and other facilities only produce discharge of domestic sewage.

Water usage, recycling and discharges are significant in the paper mill. As stated in Papel Prensa's website, since the beginning of its activity, changes have been introduced into water circuits, and new equipment has been added in order to make it possible for water to be used again, so that the more than 100 cubic metres of fresh water per ton of paper required in the past, have at present been reduced to less than 30 cubic metres, which means a condition comparable to the leading world industries of the same type. The water which is made use of is taken from the Baradero river into which also flow the outcoming effluents. These undergo a first mechanic sedimentation treatment, and then a second treatment consisting of airing ponds where effluents are deprived of their organic matter down to the limited values allowed by the present legal regulations.

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

The Company continued to support projects related to the care and protection of green areas by sponsoring and contributing to the preservation of the parks Plazoleta Dr. Roberto Noble 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.

BUSINESS PROJECTIONS AND PLANNING

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

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

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

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

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

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

RISKS FACTORS

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

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. Although the trend was later reversed, with real GDP growth reaching 9.2% in 2010 and 8.9% in 2011, real GDP growth declined again in 2012 to 1.9%(all figures according to information published by the National Institute of Statistics and Census - INDEC -).

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:

- increase in current inflation affecting competitiveness and economic growth;

- insufficient levels of investment;

- exchange rate volatility;

- 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;

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

- government imposed restrictions on imports or exports;

- wage and price 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. The Argentine government's actions impacting the economy, including those in connection with inflation, interest rates, price control, exchange control and taxes, have affected and could continue to affect Argentine companies like ours.

Inflation for 2012 stood at 10.8% according to information published by the INDEC and may continue to rise. Private estimates of inflation rates largely exceed those published by the INDEC. According to figures published by members of Congress from opposition parties, the average private inflation estimate was 25.6% for 2012.

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 Argentina's competitiveness abroad 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 may negatively impact our financial condition and results of operations.

During the second half of 2011 and in 2012, the Argentine government increased controls on the incurrence of foreign currency-denominated indebtedness, the sale of foreign currency and the acquisition of foreign assets by local residents. New regulations issued in 2012 subject foreign exchange transactions to prior approval by Argentine tax authorities. Since the enhancement of exchange controls in November 2011, and the introduction of measures that 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. Additional 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.

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. 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.

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.

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. 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.

During the first quarter of 2011, a team from the International Monetary Fund (the "IMF") started to work in conjunction with the INDEC. Notwithstanding the foregoing, reports published by the IMF state that their staff has called on Argentina to adopt remedial measures to address the quality of official data. In a meeting held on February 1, 2013, the Executive Board of the IMF found that Argentina's progress in implementing remedial measures has not been sufficient and, as a result, the IMF issued a declaration of censure against Argentina and called on Argentina to adopt remedial measures to address the inaccuracy of inflation and GDP data without further delay, and in any event, no later than September 29, 2013. If Argentina were not to comply with the remedial measures required by the IMF, the IMF could increase its sanctions towards Argentina. The effects of these measures could derive in further financial and economic hazards for Argentina, including lack of IMF financing.

During the last few years, the Argentine government has substantially increased public expenditure. For 2012, the government reported the first fiscal deficit since 2009. The Argentine government has sourced part of its funding requirements from the Central Bank and to the ANSES. 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, shields journalistic activities from regulation to protect the independence of the free press. As a media company, we are vigilant as to the menaces that might arise in this respect and widely cooperate with journalistic associations and other NGOs that advocate for the protection of fundamental constitutional rights such as freedom of speech and freedom of the press.

However, during 2012 private media in general and Grupo Clarín in particular continued to face an escalating level of harassment, executed through the official and para-official apparatus with the clear intention of damaging the media's reputation and directly and indirectly limiting its journalistic activities.

In October 2009, the Argentine Congress passed a new Audiovisual Communication Services Law that is intended to replace the general legal framework under which the audiovisual media industry operated in Argentina for approximately three decades. We and others challenged the new Audiovisual Communication Services Law 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.

Since its enactment in October 2009, several courts enjoined the application of the statute in its entirety in certain cases, or of certain of its provisions, in other cases. Some of these rulings have been reversed by the Supreme Court of Argentina and a court of appeals, but injunctions that suspend specific sections of the law are still in effect. On 17 April 2013, the Federal Court of Appeals on Civil and Commercial Matters rendered a decision on the merits regarding the constitutionality of the Audiovisual Communication Services Law, declaring that certain sections of the law are constitutional, but that certain restrictions to ownership of multiple broadcast, cable television licenses and signals are contrary to the Argentine Constitution. Both the National Government and the Company have filed extraordinary appeals against the court of appeal's decision, which should now be considered by the Supreme Court.

Faced with the possibility of an adverse decision, the National government has embarked on a fierce and unprecedented attack against the Judicial Branch, particularly in connection with the cases relating to the Audiovisual Communication Services Law. The several activities, pressures and strategies implemented by the national government to interfere with the decisions of the Judicial Branch include, but are not limited to: several attempted appointments of judges that are in favor of the Broadcasting Law; pressures on and changes in majorities at the Council of the Judiciary (the body responsible for the appointment and removal of judges; multiple recussations of judges sitting in procedures involving the Audiovisual Communication Services Law; pressures on and criminal charges against judges and advisors to remove them or cause them to resign; actions that resulted in the virtual fragmentation of the Courts on Civil and Commercial Matters; changes in the substitution system, and pressures on the Supreme Court up to and including customizing the government's request for special appeal (per saltum) that would allow the government to by-pass the regular process, among many other actions against the republican system of checks and balances.

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

Since 2009, among other measures, the Argentine government has 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 of 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 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.

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 Audiovisual Communication Services Law we may be forced to divest or cease to broadcast certain signals.

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

Liquidity and Funding

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

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

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

Executive Committee

Day-to-day business decisions of Grupo Clarín are made by an Executive Committee formed by three members of the Board of Directors. Héctor Horacio Magnetto; José Antonio Aranda; Lucio Rafael Pagliaro.

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 26, 2012: 

Héctor Horacio Magnetto Chairman

José Antonio Aranda Vice Chairman

Lucio Rafael Pagliaro Director

Alejandro Alberto Urricelqui Director

Jorge Carlos Rendo Director

Pablo César Casey Director

Ralph Booth II Director

Luis María Blaquier Director

Lorenzo Calcagno Independent Director

Alberto César José Menzani Independent Director

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

Audit Committee

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

Lorenzo Calcagno Independent Director

Alberto César José Menzani Independent Director

Alejandro Alberto Urricelqui Director

Supervisory Committee

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 26, 2012: 

Raúl Antonio Morán Independent Permanent Member

Carlos A. P. Di Candia Independent Permanent Member

Pablo San Martín Independent Permanent Member

Hugo Ernesto López Independent Alternate Member

Rubén Suárez Independent Alternate Member

Martín Guillermo Ríos 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, etc. The professional experience and background of the main managers are disclosed to the general public upon their appointment.

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

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

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

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

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

Stock Information and Shareholder Structure

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

London Stock Exchange (LSE) - Ticker: GCLA

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

GCLA (BCBA)

Price per share, December 31, 2012

Ps. 8.50

GCLA (LSE)

Price per GDS, December 31, 2012

US$ 2.50

Total Shares 287.418.584

Total GDS 143.709.292

Shareholder Structure

71% Controlling Shareholders

20% Free float

9 % GS Unidos, LLC

Annual Shareholders' Meeting

Grupo Clarín held its Annual Ordinary Shareholders' Meeting on April 26, 2012. On this occasion, the shareholders reviewed and approved the accounting records for fiscal year No. 13 ended on December 31, 2011 and the performance and compensation of the members of the Board of Directors, the Supervisory Committee and the Audit Committee. Among other things, they reelected the permanent members and alternate members of the Board of Directors and said committees for the year 2012. The Company distributed dividends for an aggregate amount of Ps. 135 million, representing 46.97% of its nominal capital and Ps. 0.4697 per share. 

Dividend Policy

Grupo Clarín does not have a formal dividend policy governing the amount and payment of dividends or other distributions. According to its By-laws and the Argentine 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 Annual Ordinary Shareholders' Meeting. In such case, dividends must be paid on a pro rata basis to all holders of shares of common stock as of the relevant record date.

Code of Corporate Governance 

In addition to the aforementioned and in conformity with the CNV's decisions concerning the filing of the report on 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.

Supplementary Financial Information

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

SETTING UP OF RESERVES

Pursuant to the Argentine Coporate 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.

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. 22.3 million compared to the previous year, from (negative) Ps. 46.3 million to (negative) Ps. 68.6 million. This decrease is basically evidenced in the decrease in Company funds (the items Cash and Banks and Other Current Investments) in the amount of Ps 19.8 million, paired with a net decrease in receivables and liabilities, mainly between related parties.

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

The Statement of Operations as of December 31, 2012 recorded a net income of Ps. 482.3 million. Such income is basically derived from earnings of Ps. 511 million resulting from equity investments in affiliates and subsidiaries.

Grupo Clarín S.A. is still controlled by GC Dominio S.A., which holds 64.2% of its voting rights. Balances and transactions with related parties are detailed in Note 8 to the Parent Company Only Financial Statements.

PROPOSAL OF THE BOARD OF DIRECTORS

Net income for the year ended on December 31, 2012 was Ps. 482,310,720. The Board of Directors proposed to the Annual Ordinary Shareholders' Meeting that such income be distributed as follows:

To the Legal Reserve: Ps. 24,057,630

To absorb the Accumulated Deficit: Ps. 1,158,122

To the Optional Reserve to give financial aid to its subsidiaries and the Broadcasting Law: Ps. 457,094,968

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

- Legal reserve: the legal reserve was calculated pursuant to Section 70 of Law No. 19,550 and CNV resolutions, considering 5% of the net income for the year, minus previous years' adjustments and accumulated losses until it reaches 20% of the capital stock, plus the balance of the Capital Stock Adjustment account.

-Accumulated deficit:To absorb the difference arising from presenting the annual financial statements under the International Financial Reporting Standards (IFRS) for the first time.

- Optional Reserve to give financial aid to subsidiaries and the Broadcasting Law:  Even though net income for the year will become liquid if the subsidiaries distribute the related cash dividends, this year there are other issues to be considered that, under a prudent management, make it advisable to allocate said income to an optional reserve only to deal with the potential implications of such other issues. As mentioned throughout this annual report, the outlook for the Company and its main subsidiaries is expected to be uncertain due to the discretionary allocation of official advertising in detriment of independent media, the fact that private companies were banned from including their advertising slots in independent media, and the eventual impact of an adverse and final judgment on the Broadcasting Law case, among other uncertainties described in this Annual Report, coupled with the existing financial commitments. Therefore, the Board of Directors proposes to the Shareholders that the remaining net income for the year be allocated to set up this optional reserve.

Subsequently to the end of the period, on April 25, 2013, Grupo Clarín held its General Annual Ordinary Shareholders Meeting. On that occasion, the shareholders considered and approved the 2012 Financial Statements and other related documentation and the performance and compensation of Directors, Supervisory Committee and Audit Committee. Also, they elected members of the Board of Directors and mentioned committees for fiscal year 2013, along with an external auditor.

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

Chief Financial Officer

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 to 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 Company executives who are also members of its 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 Company executives who are also part of its 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 Company executives who are also members of its Board of Directors. The policy is 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 Company executives who are also members of its 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 Company executives who are also members of its 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.

If these policies are in place, please provide a brief overview of their main aspects.

Partial compliance.

The training policy is under the responsibility of Company executives who are also members of its Board of Directors. The policy 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 are 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 potential 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 interests.

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 interests 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.

Non-compliance

In the Board's view, the Chairman of the Audit Committee does not necessarily have to be an independent director to secure compliance with the goals pursued by such committee, since effective legislation and the Company's By-laws require a majority of independent directors, even if the Chairman of the Committee is not. Therefore, the independent directors may make all relevant decisions of such committee. Notwithstanding this, the Board of Directors will assess the convenience of appointing an independent director as chairman of the Audit Committee.

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 Shareholder's 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 Decree No. 677/01); (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 turnover of the Supervisory Committee's members and/or the External Auditor, making a difference as to whether such turnover 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 concerning the turnover of the Supervisory Committee's members. In line with the leading international practices, the Board of Directors does not require the turnover of the external audit firms. The Company adheres to the internal policy of its financial statements external auditors concerning the turnover of the partner in charge of the audit.

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.

Not applicable. At the time of appointing the current members of the Board, General Resolution No. 606/12 was not effective; therefore, no mention was made about the candidates' position as to the adoption of a Corporate Governance Code. The Board of Directors will assess this recommendation and its implementation at the next General Shareholders' Meeting.

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

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. The distribution of cash dividends was approved at the Shareholders' Meeting held on April 26, 2012.

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 if:

VI.1. The Issuer has an updated public website which provides relevant information on 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).

Non-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, 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, with special emphasis on the Global Reporting Initiative (GRI) parameters. 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 if:

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 if:

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 Shareholder's 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 Shareholder's 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. In spite of the fact that, according to the Argentine Business Associations Law No. 19,550, the above mentioned functions concerning the Board members' fees shall be exclusively carried out at the Shareholders' Meeting, for the time being the Company does not see a need for implementing said Committee.

PRINCIPLE VIII. ENCOURAGE CORPORATE ETHICS

The corporate governance framework shall:

Recommendation VIII. Ensure the Issuer's ethical conduct.

Answer if:

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 Division 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 Auditing 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 Auditing 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 if:

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 since the Code 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

For the year ended December 31, 2012, presented on a comparative basis

GRUPO CLARÍN S.A.

CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2012 PRESENTED ON A COMPARATIVE BASIS

GLOSSARY OF SELECTED TERMS

GRUPO CLARÍN S.A.

CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2012 PRESENTED ON A COMPARATIVE BASIS

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. 872,356,212 and Ps. 765,478,746 for the years ended December 31, 2012 and 2011, respectively.

(2) As of December 31, 2012, it includes approximately Ps. 444 million in connection with the sale of the interests described in Note 12.g.

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

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, 2012 AND 2011

In Argentine Pesos (Ps.)

(1) Broken down as follows: (i) Optional reserve for future dividends of Ps. 300,000,000; (ii) Court-ordered reserve for the distribution of future dividends of Ps. 387,028,756 and (iii) Optional reserve for illiquidity of results of Ps. 694,371,899.

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