GRUPO CLARIN S.A. • 2010 Annual Report • Financial Statements as of December 31, 2010 presented on a comparative basis (English translation of the Financial Statements and Reports originally issued in Spanish) GRUPO CLARÍN S.A. 2010 ANNUAL REPORT To the Shareholders of Grupo Clarín S.A. We hereby submit for your consideration the Annual Report and Exhibit, the Balance Sheet, the Statement of Income, the Statement of Changes in Shareholders’ Equity and the Statement of Cash Flows, Notes and Exhibits of Grupo Clarín S.A. (hereinafter, “the Company” or “Grupo Clarín”) for fiscal year No. 12 ended December 31, 2010 and the Consolidated Financial Statements as of December 31, 2010. 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), 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. 2010 Macroeconomic Environment Like most other emerging countries, the Argentine economy went through a recovery period in 2010. Such performance was driven by the conditions prevailing in the external arena, along with the expansionist bias of the economic policy and the favorable weather conditions for the agricultural sector on the domestic front. However, unlike other emerging countries, the strong expansion of the local productive activity was paired with an inflationary upsurge that prevented the country from fully capitalizing on the proceeds from such growth and from improving their distribution. In 2010, the Argentine economy experienced growth with inflation and currency appreciation. This fact, coupled with the currency board strategy implemented in order to moderate the inflationary impact of the strong drive generated by public policies, resulted in an unprecedented slowdown of all three pillars that supported the recovery process after the 2001-2002 crisis. In addition to these two conditioning factors, the Argentine economy is operating under certain disturbing factors, such as, increased primarization, strong distortion in relative prices and a shortage of reproductive investments (noticeable mainly in the capital depletion of key strategic sectors). Therefore, in spite of its growth cycle (of approximately 70% since 2002), Argentina has yet to show any predictability in its medium-term performance or clear progress in its development. Poverty, which has remained almost unchanged since early 2007 and which, according to private estimates, still affects 9 million Argentine people, clearly reflects the latter. According to private sources, Argentina’s real GDP is estimated to have increased by approximately 8% (recovering by far the three percentage points lost in 2009). Inflation is estimated to have risen to 25% - a record high in the last eight years - and approximately ten points above 2009. Consequently, in 2010 the Argentine economy generated more than 3.5 percentage points per point of growth (this ratio is substantially higher than that of its neighboring countries). The three pillars that supported the economic recovery after the 2001-2002 crisis deteriorated in the year under analysis. The nominal exchange rate, which operates as an inflation buffer together with the virtually frozen utility tariff rates, did depreciate with respect to the US dollar throughout the year, but at a substantially lower rate than the price increases (less than 5% vs. 25%). In addition to generating an accelerated loss of competitiveness, this rapid adjustment of the real exchange rate, paired with the economic activity, exacerbated the increase in the value of imports. In 2010, imports increased by 46%, doubling the increase in exports. These dynamics deteriorated the balance of trade surplus, which showed a significant decrease of almost 30% (from USD16.9 billion to USD12 billion in absolute values). The year-on-year decrease in capital flight from the private sector (30% compared to 2009, but still above USD10 billion/year) partially offset the genuine generation of foreign currency. Thus, deterioration on the fiscal front was more significant than on the external front. Without counting revenue distributions received from the BCRA and revenues of the ANSES derived from the ownership government-issued securities, in 2010 the national public sector recorded a primary deficit, that is, a deficit before payment of interest on its indebtedness. Notably, this result occurred in spite of the application of tax pressure that, in consolidated terms (national, provincial and municipal level), already represents an historical record high (~32% of GDP).. Perspectives for the Upcoming Year The world currently offers Argentina, as a net exporter of food products, with an undisputable opportunity. The current terms for exchange are the best in the last fifty years and are expected to continue to be favorable in the coming years. Leveraged by this extraordinary external scenario, in 2011 the Argentine economy could again grow well above its historical average, albeit at a lower rate than in 2010. In contrast with the lower expected rate of GDP growth, inflation is expected to exceed the rate registered in 2010. The agricultural sector and the car industry are bound to continue to be the main pillars of growth. In fact, even though the crop harvest volume in general and the soybean harvest volume in particular are expected to be lower than in 2010 due to the effect of La Niña, the high prices of agricultural commodities would more than offset such fall, contributing to renewed growth in the value of exports in the coming year. This would certainly lead to an increased current account surplus and to higher fiscal revenues from export duties. The automobile industry is also expected to grow, driven by the strong demand from Brazil. The upcoming presidential elections suggest that the current economic policy stimulus could be maintained or even intensify. Naturally, this strategy stresses inflationary pressures on an economy that already shows inertial price acceleration and lacks fiscal surplus to minimize the likelihood of spiralization. Thus, the projected inflation rate for the year (market consensus expects a floor of 27%), in addition to operating as a limiting factor to the sustainability of GDP growth, could continue to add tension to the struggle over distribution of income. Finally, it is worth noting that the accelerated loss of competitiveness with respect to the rest of the world experienced in 2010 seems, far from slowing down, appears to be bound to increase this year, as a consequence of the projected soft slide in the exchange rate. In summary, even though the local economic activity is ready to continue its expansive cycle, prevailing uncertainties condition the economy’s growth potential because they represent a burden that inhibits the perspectives for the recovery of reproductive investments and employment. As a consequence of its adverse effects, high inflation would continue to hinder significant improvements in social indicators and in the distribution of income among the Argentine people. THE YEAR 2010 AND THE MEDIA SECTOR IN ARGENTINA Undoubtedly, the global media industry was one of the most affected industries by the severe financial crisis of 2009. However, it showed certain signs of recovery in 2010. Naturally, such recovery was far from homogeneous among countries, companies and segments. However, the recovery experienced by virtually all developed countries throughout 2010 had a tranquilizing effect on this industry, which already faces several challenges arising from the ongoing emergence of new technologies and the changes in the new generations’ media consumption patterns. 2010 was a year of recovery and genuine growth for the economy and the local media industry. In fact, economic activity and consumption are estimated to have increased between 8% and 9%, largely offsetting the setback suffered in 2009. However, this strong expansion of local productive activity was accompanied by an inflationary upsurge that prevented the country from fully capitalizing on the fruits of growth and improving their distribution. Even so, the re-emergence of aggregate demand along with certain specific events, such as the Argentine Bicentennial celebrations and the Soccer World Cup held in South Africa, paved the way for a macroeconomic environment favorable to the industry. A good example of this is the good performance of the industry's main sources of financing. In fact, advertising investment, which was by far the most affected by the 2009 slowdown due to its high sensitivity to the economic cycle, increased by more than 20% compared to 2009 (though slightly below the 25% annual inflation rate estimated by the private sector). Such performance was influenced by the government's advertising spending, oriented to finance a matrix with a greater share of publicly-owned media. Unlike most countries in the region, newspapers continued to attract the largest share of advertising in the local market, followed by broadcast TV. The paid television and Internet segments, whose growth curves – though flattened – had not shown much correlation with the economic cycle in 2009, expanded again in 2010 in accordance with their potential, even