Safe Harbour
This presentation contains statements that constitute forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. These statements appear in
a number of places in this presentation and include statements regarding the intent, belief or
current expectations of the customer base, estimates regarding future growth in the different
business lines and the global business, market share, financial results and other aspects of the
activities and situation relating to the Company .
Such forward looking statements are not guarantees of future performance and involve risks
and uncertainties, and actual results may differ materially from those in the forward looking
statements as a result of various factors.
Analysts are cautioned not to place undue reliance on those forward looking statements,
which speak only as of the date of this presentation. Telefónica undertakes no obligation to
release publicly the results of any revisions to these forward looking statements which may
be made to reflect events and circumstances after the date of this presentation, including,
without limitation, changes in Telefónica´s business or acquisition strategy or to reflect the
occurrence of unanticipated events. Analysts and investors are encouraged to consult the
Company´s Annual Report on Form 20-F as well as periodic filings made on Form 6-K,
which are on file with the United States Securities and Exchange Commission.
Investor Conference
March 2001, Rio de Janeiro.
To create consumer habits through
multiplatform contents and leading brands
for Telefonica’s clients in the Spanish and
Portuguese speaking world.
Investor Conference
March 2001, Rio de Janeiro.
WHY TELEFONICA IN MEDIA? : TELECOM, MEDIA &
INTERNET ... CONVERGENCE
Telecom

Strong cash generation.

Distribution channels.

Clients data bases.

CRM capacity.
CONTENTS
CONVERGENCE
Convergence of these industries ensures the leading position
of players focused in an integrated relationship with clients
Investor Conference
March 2001, Rio de Janeiro.
SINCE 1997, TELEFONICA MEDIA HAS INVESTED
ALONG THE WHOLE VALUE CHAIN OF MEDIA
47,4%
100%
22,74%
20%
100%
51%
100%
100%
Telefónica
Sport
70%
48,6%
100%
100%
5%
40%
Telefónica
Sport
100%
25%
30%
100%
100%
100%
100%
50%
100%
T
1997
Investor Conference
March 2001, Rio de Janeiro.
v
I
1998-1999
2000
TELEFONICA MEDIA: SELECTED COMPANIES
I) Free-to-air-TV & Radio
(Spain)

Number one channel in terms of TV-advertising in 2000.

The most attractive audiences for advertisers (best commercial profile)

Successful turnaround track record of management team.

Outstanding profitability and high growth.

Excellent non-advertising growth potential (i.e.:New Media, theme channels, events, etc.).

Telefe has been the number one player over the last ten years in Argentina.

Excellent brand recognition.

Potential for cross-fertilization with Antena 3.

Number 2 radio company in Spanish market.

Consolidation play on Spanish market.

Re-structuring plans of new management recently in place.
(Argentina)
(Spain)
Investor Conference
March 2001, Rio de Janeiro.
TELEFONICA MEDIA: MAIN COMPANIES
II) Contents
(Netherlands)

Leading content provider with some of the most succesful TV formats worldwide.

Potential leverage of Endemol content through traditional and new media networks of

Telefónica (Europe - UMTS).

Attractive content for convergence as demonstrated by Big Brother success.

UMTS applicable content under development.
III) Pay TV & Distribution
(Spain)

Significant current market share of around 38%.

Currently with over 650.000 subscribers.

Good access to leading Spanish movies and key agreements with majors.

Developing a wide range of interactive services.

Leading provider of satellite sevices in fastest growing DTH markets in Europe and Latam.

Potential for new services (i.e. mobile, broadband, DAB).

Core part of Via Digital business. Leading position with Spanish and international clients.
(Spain)
(Spain)
Investor Conference
March 2001, Rio de Janeiro.
TELEFONICA HAS DEVOTED SUBSTANTIAL RESOURCES
TO ACHIEVE THIS POSITION
(a)
962
Investments
€ million
974
409
319
313
8,102
138
4,988
Endemol
As % of
total:
62%
Telefe & Azul
12%
Vía Digital
Antena 3
5%
4%
Telefonica
(b)
Sport
4%
Onda Cero
2%
Pearson/
others (c)
TOTAL
12%
(a) Investments: cash plus equity
(b) Includes Telefonica Sport, GMAF, Audiovisual Sport, Euroleague and Torneos y Competencias
(c) Includes Art Media, Hispasat, Interocio Games, Lola Films, Media Park, Pearson, Patagonik, Rodven, ST Hilo,
Telefonica Servicios Audiovisuales and TMIC
Investor Conference
March 2001, Rio de Janeiro.
STRATEGY: CAPTURE SINERGIES AS AN INTEGRATED
GROUP
MANAGEMENT

TARGETS
Highly professional management
teams to improve companies’
results and implement a growth
strategy.
CORPORATE UNIT




ACTIONS
IN PLACE


Well defined business plans and
operational control processes.
New management team in Argentina
and Onda Cero.
Top executives appointed.
Control process coordinated by the
Corporate Unit.
Investor Conference
March 2001, Rio de Janeiro.

Lead strategic development of
each of the three divisions (freeto-air-TV, contents and pay TV).
Identify and capture economies of
scale among businesses and
markets.
Creation of new units:
> New Media and Broadband.
> Alliances and Music.
> Integration and synergies.
STRATEGY: CREATE VALUE IN TELEFONICA MEDIA’S
THREE BUSINESS LINES
Free-to-air-TV and Radio
Contents
Pay TV & Distribution
Telefónica
Sport
Consolidate as a leading
player in free-to-air-TV
in Spanish speaking
countries
Investor Conference
March 2001, Rio de Janeiro.
Create a leading
Consolidate Telefonica
content manager
Media’s position
in Pay TV
STRATEGY: CREATE VALUE IN TELEFONICA MEDIA’S
THREE BUSINESS LINES
Free-to-air-TV and Radio
Contents
Pay TV & Distribution
Telefónica
Sport
Consolidate as a leading
player in free-to-air-TV
in Spanish speaking
countries
Investor Conference
March 2001, Rio de Janeiro.
Create a leading
Consolidate Telefonica
content manager
Media’s position
in Pay TV
MAIN MANAGEMENT CHALLENGES IN ANTENA 3
Audience and advertising investment share
Audience share
Advertising investment share
Management challenges
Maintain strong audience share in segments
attractive to advertisers


Continue pursuing commercial target audience (under
55 years, from cities with more than 10,000 inhabitants,
middle to upper income brackets).
Ensure a stable audience share throughout the day,
reducing dependence on prime time.
Improve efficiency of fixed cost structure

27.9
22.8
28.3
27.4
22.8
1998
21.5
1999
2000
Production figures (% growth 1997-2000)
122%
Minutes produced
Cost/minute produced
Maximize the level of in-house production, reducing
dependence on majors.
-40%
1997
Investor Conference
March 2001, Rio de Janeiro.
1998
1999
2000
MAIN MANAGEMENT CHALLENGES IN ANTENA 3
(cont’d)
Net sales
696
€ million
Management challenges
Diversify into new media activities


386
Identify new business opportunities to leverage value of
the brand, content and promotional capabilities.
386
Optimise sale of advertising services through different
delivery platforms (TV, cinema, Internet, etc).
1997
Strict control of operating expenses

New businesses
Antena 3 Television
Consolidate as a cash generating company.
468
5%
602
13%
9%
547
600
431
1998
Financial statements
€ million
1999
144
96
2000
179
78
-30
€ million
2000
CAGR 00-04
Sales
696
11%-16%
EBITDA
200
16%-21%
Net Debt (Cash)*:
-78
* as of 31/12/2000
Investor Conference
March 2001, Rio de Janeiro.
-41
-111
-225
1997
1998
Net debt
EBT
1999
2000
MAIN MANAGAGEMENT CHALLENGES IN TELEFE AND
AZUL
Telefe: Advertising sales (€ '000)
+ 33%
Management challenges




4,424
3,337
New management team in place with strong focus on
return and cash generation.
Improvement of the commercial division with the
hiring of executives focused on profitability.
Cost-control policy: renegotiation of contracts with
key artists.
Preliminary results of turnaround on both assets.
TELEFE (€ mill)
2000
CAGR 00-04
Sales
296
8%-13%
EBITDA
-24
Breakeven in 2001
Net Debt (Cash)*:
428
* as of 31/12/2000
Investor Conference
March 2001, Rio de Janeiro.
jan 2000
jan 2001
Telefe: Coproduction costs (€ '000)
13
- 50%
7
2000
2001E
MAIN MAGAGEMENT CHALLENGES IN ONDA CERO
Onda Cero Revenues
(€ millions)
+ 45%
Management challenges

4.8
New management in place with focus in:
3.0

Internal operations: strict cost cutting policy
improvement of advertising sales.
and

External
operations:
national
third
party
alliances (Radio Blanca, Europa FM, Radio Marca)
New programme portfolio with the hiring of solid
talents with a view to increase audience share
consolidating as the 2nd option.

jan-00
Onda Cero Audience
Thousands of people
jan-01
+ 35%
2,530
1,879
€ million
2000
CAGR 00-04
Sales
52
14%-19%
EBITDA
12
Breakeven in 2001
Net Debt (Cash)*:
26
* as of 31/12/2000
Investor Conference
March 2001, Rio de Janeiro.
3rd. survey 99
3rd. survey 2000
REINFORCE PRESENCE IN LATINAMERICA
Main trends

Growth strategy
Attractive growth market:
-

Advertising investment above
Telefonica has presence (Peru, Brasil,
US$ 50,000 mill. in 2000.
Chile).
500 mill. inhabitants.

Industry deregulation.

Absence of a global main player due to the
high number of family owned companies.
Higher
segmentation
sophisticated audience.
Investor Conference
March 2001, Rio de Janeiro.
Create alliances in those markets with high
entry barriers (Brasil, Mexico).


Acquire assets in those markets where
and
a
more

In an selective way, acquire presence in
other
markets
through
(Colombia, Uruguay).
acquisitions
REPLICATE SUCCESSFUL DIVERSIFICATION MODELS IN
OTHER MARKETS
Successful model in Spain
Free-to-air-TV
Argentina
T v I
Children
Megatrix Argentina
Peru
Chile
Cinema advertising
Artists’ management
Events
Direct marketing
New Media
Investor Conference
March 2001, Rio de Janeiro.
Brasil
FA MA
FAMA Argentina
Mexico
Battres Argentina
Colombia
STRATEGY: CREATE VALUE IN TELEFONICA MEDIA’S
THREE BUSINESS LINES
Free-to-air-TV and Radio
Contents
Pay TV & Distribution
Telefónica
Sport
Consolidate as a leading
player in free-to-air-TV
in Spanish speaking
countries
Investor Conference
March 2001, Rio de Janeiro.
Create a leading
Consolidate Telefonica
content manager
Media’s position
in Pay TV
MAIN MAGAGEMENT CHALLENGES IN ENDEMOL
Management challenges




Maximise synergies with Telefonica
Leverage Endemol as main content provider of
Grupo Telefonica.
Monitor and transfer creative skills among the
companies.

Reinforce management and pursue new
projects
Enhance coordination with Telefonica Media and
Telefonica.
Optimise e-business resources to pursue new
projects.
€ million
Sales
March 2001, Rio de Janeiro.
2000
Leverage European footprint
Vehicle to explore alliances with European
media players.
CAGR 00-04
519
31%-36%
EBITDA
88
29%-34%
Net Debt (Cash)*:
-4
* as of 31/12/2000
Investor Conference

Consolidate leading position in a
convergence context
Support Endemol’s growth strategy of
entering into new markets (Latam, USA)
through acquisition of leading local players or
through organic growth in a convergence and
interactive context.
STRATEGY: CREATE VALUE IN TELEFONICA MEDIA’S
THREE BUSINESS LINES
Free-to-air-TV and Radio
Pay TV & Distribution
Contents
SPORT
Consolidate as a leading
player in free-to-air-TV
in Spanish speaking
countries
Investor Conference
March 2001, Rio de Janeiro.
Create a leading
Consolidate Telefonica
content manager
Media’s position
in Pay TV
MAIN MAGAGEMENT CHALLENGES IN VIA DIGITAL
Number of subscribers and average fee per subscriber (€)
Number of subscribers
Management challenges
Average fee per subscriber 30
1,000



Non recourse bank financing, already in
place, to compete in a highly competitive market
with low operating margins and high fixed costs.
Improve market position and financial risk via
strategic international alliances.
Focus on short and medium term results:
 Increase number of subscribers and their
average fee on a profitability basis.
 Increase revenues of interactive TV and
t-commerce.
€ million
Sales
2000
227
EBITDA
Net Debt (Cash)*:
-287
24
750
633
650
20
290
10
2
75
0
0
1997
1998
1999
2000
jan 2001
New sources of revenues
iTV, t-commerce
5%
20%
CAGR 00-04
31%-36%
Monthly fee, PPV
95%
80%
Breakeven in 2003
842
* as of 31/12/2000
Investor Conference
March 2001, Rio de Janeiro.
30
450
500
250
30
27
2000
2005P
STRATEGY IN PAY TV AND DISTRIBUTION
Consolidate Telefonica Media’s position in Pay TV
Thematic channels packager


Contents distribution channel


Technical infraestructure
Investor Conference
March 2001, Rio de Janeiro.
Strategic defense asset for Telefonica Media in the DTH and
ADSL platform (full positioning of Telefonica Media in
UMTS, DTH, ADSL, TDT and Broadcasting).
Powerful distribution channel integrated with Telefónica (i.e.
package of ADSL and Via Digital).
Consolidate TSA as the thematic channel packager within
Telefonica.
Examine synergies and economies of scale that might
potentially arise from close cooperation with other European
DTH platforms.
IN THE NEW MEDIA ARENA WE ARE WELL
POSITIONED TO CAPTURE VALUE
Cash Flow
Growth
New Media
Traditional media





Free TV
Pay TV
Broadband
Radio
Events
Brand promotion
Internet




New channels
Interactive advertising
Technological standards
Transmission, distribution
streaming
 Digital content management
Telephone
Investor Conference
March 2001, Rio de Janeiro.
iTV
... BASED ON A COMMUNITIES MANAGEMENT MODEL
PCs
PDA’s
Fridges
Thematic
channel
iTV
TV
Radio COMMUNITIES
Consoles
Website
Telephone
Cinema
ADSL
(Telef. España)
Teletext
Promotional platforms
Broadband
Platforms
Communities / Brands
Children
Young
Women Travel Music Cinema News
Investor Conference
March 2001, Rio de Janeiro.
Games
Sports
Others:
Health /
Education
THE STRATEGIC BUSINESS PLAN PROJECTS AN
IMPROVEMENT OF ALL ASSETS
Companies’ EBITDA(a) (2000P - 2004E)
€ million
Free TV
Antena 3
Telefe
Azul TV
Stake
2000
CAGR
2000E - 2004E
47,4%
100%
100%
200
-24
-27
16%-21%
Breakeven in 2001
Breakeven in 2002
138
100%
-12
Breakeven in 2001
830
100%
15
409
63
8
27
140
49%
25%
100%
24%
-287
30
19
72
Investment
318
974
Radio
Onda Cero
Contents
Endemol
29%-34%
Pay TV & related companies
Via Digital
Media Park
TSA
Hispasat
Aggregated of the other
(a) Represents 100% of companies’ EBITDA
The EBITDA of Telefonica Media is not the sum of the EBITDAs of the companies above, since some of them do not
consolidate through global consolidation.
Investor Conference
March 2001, Rio de Janeiro.
Breakeven in 2003
13%-18%
21%-26%
11%-16%
CAPTURE SYNERGIES WITH TELEFONICA
AND TELEFONICA MEDIA (I)
Main player in a global market
Convergence among divisions
Media assets integrator
Independent assets operator
EXAMPLES
Investor Conference
March 2001, Rio de Janeiro.
Synergies with global operators
Synergies with Telefonica
Synergies with Telefonica Media
“Per se” value
CAPTURE SYNERGIES WITH TELEFONICA
AND TELEFONICA MEDIA (II)
Main player in a global market
Convergence among divisions
Media assets integrator
Independent assets operator
EXAMPLES
Investor Conference
March 2001, Rio de Janeiro.
Synergies with global operators
Synergies with Telefonica
Synergies with Telefonica Media
“Per se” value
MEDIA IN TELEFONICA : TELECOM, MEDIA & INTERNET ...
CONVERGENCE
Telecom
CONTENTS
CONVERGENCE
Integrated management of these industries
maximises value for clients
Investor Conference
March 2001, Rio de Janeiro.
CAPTURE SYNERGIES WITH TELEFONICA
AND TELEFONICA MEDIA (III)
Main player in a global market
Convergence among divisions
Media assets integrator
Independent assets operator
EXAMPLES
Investor Conference
March 2001, Rio de Janeiro.
Synergies with global operators
Synergies with Telefonica
Synergies with Telefonica Media
“Per se” value
CAPTURE SYNERGIES WITH TELEFONICA
AND TELEFONICA MEDIA (IV)
Main player in a global market
Convergence among divisions
Media assets integrator
Independent assets operator
Investor Conference
March 2001, Rio de Janeiro.
Synergies with global operators
Synergies with Telefonica
Synergies with Telefonica Media
“Per se” value
TELEFONICA MEDIA’S STRATEGY AND CHALLENGES
IN THE SHORT AND MEDIUM TERM
Value creation in the short term





Strategy
Focus on operations’ management and consolidate
“turnaround” of Telefe, Azul and Onda Cero.

Synergies with other divisions of Telefonica.

Promote synergies in advertising sales, based on the
know how of Antena 3.
Enhance customer relationship management.

Active management of Via Digital, reinforcing
customer growth and migration to interactivity.

Create solid brands, supported by successful and
integrated management of the assets.
Develop an educational project.



Investor Conference
March 2001, Rio de Janeiro.
Brand and content consolidation focused on the
development of new businesses.
Asset acquisition in those markets where Telefonica
has presence (Perú, Brasil, Chile) and creation of
alliances in those markets with high entry barriers
(Brasil, Mexico).
Development of new business models based on the
potential growth of broadband.
Alliances with key players.
Ongoing reassesment of our investment in order to
maximise value and divest from non-core assets.
To create consumer habits through
multiplatform contents and leading brands
for Telefonica’s clients in the Spanish and
Portuguese speaking world.
Investor Conference
March 2001, Rio de Janeiro.
Investor Conference
March 2001, Rio de Janeiro.
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Estrategia y Oportunidades para Telefónica Media