Cebrian: “Iberoamerica is the natural target expansion of our activities”. Abril-Martorell: "The efforts we’ve made over these years have put us in a position to take advantage of the recovery cycle"

In his first address to shareholders as Executive Chairman of PRISA, Juan Luis Cebrian emphasized that the Group is in the final stages of negotiations to refinance its debt. Cebrian highlighted the Group’s historical role and its outstanding track record in Latin America since the company’s foundation, and he reviewed the current crisis in Spain and Portugal. He added that the paradigm shift in the media industry worldwide challenges our ideas of how public opinion will be structured in 21st-century democracies. He also announced that he has agreed to the Board's request to extend his mandate until December 2015.

Cebrian was cautiously optimistic about the lower performance signs of the Spanish economy in the last two months. Even so, he referred to the slump in the Spanish advertising market and the significant decline in newspaper circulation, which has prompted a fall of hundreds of millions of euros in turnover in 2012 compared to 2007 figures. El País, for the first time in its history, incurred losses last year. In this context, the Executive Chairman of PRISA regretted the dramatic loss, between 2008 and 2012, of 197 media outlets in Spain, as well as job losses affecting more than 6,400 journalists. He linked these events with severe adjustments made to the Group's costs and expenses, including staff.

Cebrian highlighted the great efforts undertaken in the area of digital development by the Group's companies in education, news and information and Pay-TV. El País, the world’s only newspaper in Spanish, already has over forty thousand readers daily for its print edition in seven countries in Latin America, and more than six million online unique users in the region, representing more than 40% of its online traffic. He also announced that this fall “El País” will launch a digital edition in Portuguese, geared mainly towards the Brazilian market.

In 2013, PRISA’s Latin American Radio stations will account for over sixty percent of revenue and gross profit from total operations in this division. For example, “Radio Caracol in Colombia is in absolute terms more profitable than Spain’s SER network, and trends in the advertising industry in those countries bode well for the near future."

Finally, Cebrian noted that PRISA is in the final stages of a new plan to refinance its debt, already endorsed by more than 70% of its creditors. This includes divestitures affecting audiovisual holdings to ensure the viability of PRISA as an institution, without damaging growth, and in expectation of economic recovery.

Fernando Abril-Martorell

Meanwhile, PRISA’s CEO gave a detailed overview of the key figures from 2012, of recent Group developments, as well as of the market context and the efforts made by the company. He highlighted strategic priorities and looked forward to the future of PRISA. "In recent years”, he stressed, “We have brought down debt by more than 1.7 billion, we have repaid the banks 1.3 billion, we’ve restructured to the tune of more than 800 million, and we have maintained the level of our own funds, and all this despite the negative economic environment in Spain and Portugal, which led to losses of more than 400 million in revenues only in advertising, circulation and promotions in Spain ".

Abril-Martorell detailed the strategic priorities of each of the business units. For print media he laid out four priorities: to ensure the profitability of current businesses, which are undergoing various adjustment processes to both personnel and costs; progress in digital transformation, common to the entire ecosystem of the company; an increase in digital advertising, which is growing fast, more rapidly than the market; and to keep gaining online audiences, which have improved dramatically. Furthermore, it is essential to develop the brand, diversify and internationalize the business.

Regarding radio, he said: "The center of gravity of radio is moving towards Latin America." The strategic priorities are: to continue transforming the operational model in Spain to improve profitability and to reduce and make more variable any costs; and improve its competitive position, especially in music and digital projects. In short, to consolidate and strengthen the position geographically, revalidating the leadership in Colombia and Chile, to expand in Mexico and bring Argentina and USA into profit.

Regarding Santillana, Abril-Martorell said his main goal is to continue implementing a major plan for the expansion of digital learning systems in Mexico, Colombia and Brazil, already half-way through its three-year launch. The culmination of this project, funded organically, will lead to a doubling of EBITDA and EBIT in 2016, with more than 500,000 new students, and will transform the teaching and learning systems for a further 1,200,000 students who already use our content. In Spain the strategic objective is to maintain the highest quality in new content and, thereby, gain market share during the two years of implementation of the new educational model.

PRISA’s CEO stressed that the challenges facing the television sector are many. These include maintaining and, whenever possible, increasing exclusive content on our platform; simplifying our commercial offer in order to better segment it and adjust prices; continuing to innovate technologically through increased penetration of iPlus and  Yomvi as multiplatform VOD products; and maintaining our efforts against piracy.

From a corporate standpoint, Abril-Martorell stressed the objectives of simplifying and reducing structural costs, by sharing services and eventually outsourcing them. The pace of implementation of this strategy will depend on the stabilization of consumer spending in Spain and the degree of financial flexibility permitted by the high level of indebtedness of PRISA, as well as commitments to the banks. In this context, he framed the work commenced several months ago to develop a new proposal to restructure the Group's borrowings which resulted in a plan submitted to creditors on June 14, with the support of all banks, representing 72.9% of the debt, and includes additional liquidity of 80 million.

The CEO concluded by noting that "the objectives - of refinancing- include obtaining additional liquidity for the Group, extending debt maturities to align it with expected business evolution, achieving financial flexibility and maximizing recoverability for creditor banks. In short, to achieve sustainable capital structure over the medium term." The CEO also thanked sincerely all PRISA employees "for their efforts to achieve these operating results, especially in the fourth year of investment cuts, job losses and even salaries in some cases, where it may seem that there is still not yet light at the end of the tunnel”.