GRUPO CLARÍN S.A. Annual Report and Consolidated Financial Statements For the year ended December 31, 2016, presented on a comparative basis GRUPO CLARÍN S.A. 2016 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. 18 ended December 31, 2016 and the Consolidated Financial Statements as of December 31, 2016. The main subsidiaries in which Grupo Clarín S.A. has a direct or indirect controlling interest are: Arte Gráfico Editorial Argentino S.A. (AGEA), Artes Gráficas Rioplatense S.A. (AGR), Compañía Inversora en Medios de Comunicación S.A. (CIMECO), Cablevisión S.A. (Cablevisión), Primera Red Interactiva de Medios Argentinos S.A. (PRIMA), Compañía de Medios Digitales S.A. (CMD), Arte Radiotelevisivo Argentino S.A. (ARTEAR), GC Gestión Compartida S.A., Inversora de Eventos S.A. (IESA) and Radio Mitre S.A., among others. 2016 MACROECONOMIC ENVIRONMENT The Argentine economy closed the year 2016 with advances in its normalization process but it also exhibited the costs associated with the measures implemented by the current Administration. This was coupled with an external scenario that was less favorable than that of previous years. As a result, the goals set by the economic policy were only partially met in the first year of the current Administration. A brief overview of the events that took place on the economic front shows that the period was conditioned by the decision to normalize at an early stage certain strategic fronts. Consequently, the current Administration’s decision to rapidly lift foreign currency restrictions and eliminate the export taxes on agricultural goods and mining in December 2015, laid the ground for certain recovery of the country’s external competitiveness. In turn, the settlement of the claims with almost all of the holdouts that had not participated in any of the previous debt restructurings offered by Argentina, gave the country access to the international capital markets. The country still has to face the challenge of gradually unwinding its fiscal imbalance. The current Administration also made progress in the reduction of the energy and transportation subsidies (which in 2015 represented more than 3 percentage points of the GDP) through the partial reversion of the delay in the adjustment to the price of these utilities. The impact on prices as a result of the unification of the exchange rate and the adjustment to the price of utilities was significant and brought about a reduction in the level of consumption, activity and employment. Inflation accelerated until reaching over 45% year-on-year by mid-year and ended the year with a 35%-40% rise in the different provinces despite the anti-inflationary trend of the Central Bank’s monetary policy, the partial adjustment to the prices of public utilities and the lower slide of the Ps./USD exchange rate. It should be noted that even though the annual measurement showed a significant acceleration against the average 28% recorded in 2015, the rates of the last months of 2016 reflect a clear progress made in the disinflationary process. On the other hand, the contraction of economic activity already recorded in the last quarter of 2015 worsened and caused the GDP to shrink during the year by slightly more than 2%. The overall decline in GDP aggregates such as private consumption and gross domestic investment show how challenging the efforts to unwind the economy are. In this complex environment, the country's primary fiscal deficit closed the year around 4.6% of GDP (excluding the revenues collected from the Central Bank / ANSES and the interest payments on the country's sovereign debt). Said figure includes the extraordinary fiscal revenues generated by the tax amnesty regime (which provides for the disclosure of previously unreported assets) accounting for 1.3% of 1 the Product, which offset the lower revenue collection as a result of the drop in certain taxes for approximately the same amount, and also as a result of the recession and the higher expenses from subsidies and other social items. The above-mentioned suggests that in view of its magnitude, the unwinding of many of the imbalances brewed in the preceding years will take more time than expected. The following should be taken into consideration: In the first place, choosing external indebtedness as the main source of financing to bridge the fiscal gap involves risks amid a less favorable international scenario, and also entails side effects such as the circumstantial appreciation of currency. On the external front, it should be noted that this indebtedness delays the adaptation of the economy to its lower real foreign currency generation capacity. Secondly, even though the possibility of leveraging the economy allows the country to limit and spread over time the adjustment of relative prices, the gradual convergence towards a balanced position in public accounts is key to make sustainable progress along a path of disinflation, which may provide some predictability. As history shows, the presence of high and sustained levels of fiscal deficits, whatever its source of financing, always represents a potential source of imbalances for the rest of the economic fundamental variables and threatens any improvements achieved. Perspectives for the Upcoming Year Argentina still has to face significant challenges to turn the economy around, beyond the foundations that the current Administration began to lay in 2016. The forthcoming mid-term elections suggest that public policies will be focused on recovering, as soon as possible, the dynamics of economic activity and the generation of employment, preserving the disinflation process underway. In this sense, according to the latest review conducted by the Central Bank, the baseline scenario for 2017 shows a recovery of the GDP (+3.0%) and a significant inflationary deceleration (from the above-mentioned 35 -40% range to 21%), which even if it exceeds the 12-17% range projected by the Central Bank, in year- on-year terms it would be almost halved compared to the figure observed in 2016. The factors that could mark a reversal of the cycle include: a. The increase in the sown area, which would be reflected in a record-high harvest above 120 million tons, i.e. 10 million tons more than in 2016; b. The recovery of the salaries purchasing power derived from a series of changes made to the income tax regime for full time employees and the very same inflationary deceleration; c. The incorporation of almost 1 million pensioners to a regime for the adjustment of underpaid pensions under a historic reparation law; d. The impetus from the Brazilian economy, which is expected to experience a slight recovery after its stagnation in 2014 and its significant downturn in 2015 and 2016. This domestic scenario, which is expected to be more favorable than that observed in 2016, contrasts with an international scenario that is starting to show additional restrictions on emerging countries similar to Argentina. As a result, the government has suggested that it would seek to make progress in the reduction of both the extremely high fiscal imbalance and the tax pressure and in the improvement of the quality of public spending. Meeting the new projected target for the country's primary fiscal deficit (4.2% of GDP, lower than 4.6% in 2016, though higher than the expected 3.3%) amid an election year will represent a key indicator to assess the consistency in the medium term of the economic program underway. THE YEAR 2016 AND THE MEDIA SECTOR IN ARGENTINA AND THE WORLD The total revenues of the global communication, media and entertainment sector will grow over the next five years at an annual growth rate of 4.4%, according to the Global Entertainment and Media Outlook issued by 2 Price Waterhouse & Co., which analyses the current and projected situation of the main segments of this sector in 54 countries. The high dynamics expected for the consumption of digital media will continue to play a significant role in the evolution of this sector worldwide. Consequently, the businesses related to the digital ecosystem, such as advertising and connectivity, will continue to expand at a rate significantly above average. In this sense, consolidated digital advertising, which currently accounts for almost 30% of the total global advertising pie and which was already higher than that of the TV segment during the year under review, is expected to be the segment with the fastest growth rate worldwide over the next five years, at a rate slightly above 11%. Said Global Entertainment and Media Outlook identifies a series of changes that are reshaping this sector worldwide, among which the following stand out: a. The strong correlation in demographic terms between the relative size of the under-35 population and the growth of spending in this sector. The figures reveal that those countries with the largest under-35 population grow up to three times more rapidly than the oldest countries. Young consumers are the main drivers of this sector’s global growth. b. The growing adoption of the integrated offering packages developed by traditional and by OTT (over the top) service operators. These offerings, which enrich customer experience by allowing consumers to have access to linear on-demand streaming from multiple devices at any time, have had an exponential impact on the demand for broadband, turning Internet infrastructure into a critical resource; c. The emergence of a new and broad variety of “hybrid” companies built upon the disruptive forces derived from digital transformation.