Telefonica Media Announced That It Has Been Authorized by the Government for the Acquisition of the Main Audiovisual Media Group in Argentina.

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BUENOS AIRES, Argentina--(BUSINESS WIRE)--May 19, 2000

The authorization comprises Telefe, Radio Continental, 8 channels

corresponding to provinces and the share increase in Azul

Television up to the 50% of its capital and in other three

provincial TV broadcasting stations.

Therefore, Telefonica Media turns into one of the main

audiovisual area worldwide companies with a stock

capitalization exceeding 1.8 billion dollars.

Telefonica Media has received the authorization from the Argentinean Competence Defense National Commission depending on the Argentinean Ministry of Economy's Competence Defense Secretariat, for the acquisition of the AC Inversora S.A. (controlling company of the 50% of Azul Television and 3 channels) and Atlantida Comunicaciones - AtCo- (Telefe, Radio Continental and 8 provincial channels); this information was informed today at a press conference by Jose Antonio Rios, Executive President of Telefonica Media together with Carlos Fernandez Prida, President of Telefonica Argentina.

The decision of the Commission, which was supported by a Resolution of the State Secretariat, points out that the transference of the ownership of these corporations to Telefonica Media complies with the provisions of the Argentinean legislation, "since it does not diminish, restrict or distort competence so as to prejudice the general economic interest."

The President of Telefonica Media, Jose Antonio Rios, has positively appreciated the authorization of the Argentinean Government and has pointed out that "the integration of Telefe and the other audiovisual media referred to by the authorization of the Argentinean Government with Telefonica Media is a step forward in the configuration of Telefonica Media as one of the main worldwide companies in the content and audiovisual services field. Telefonica Media also wishes to complete its presence in Latin America throughout the next three years, in order to be present in ten countries of the continent, including the U.S.A. Spanish-speaking market."

During the press conference, Rios and Fernandez Prida were accompanied by Antonio Barreto, Vice President of Telefonica Media; Eduardo Alonso, General Director acting for the Presidency of Telefonica Media; Alfonso Pajuelo, Financial Director, and Alejandro DiCapua, Corporate Director of Telefonica Media in Argentina.

Telefonica Media, a company which consolidates and manages Telefonica S.A. shares in the communication media, closed its 1999 year with an important capitalization, with a final capital balance as at December 31, 1999 of 1.8343 billion dollars. Therefore, Telefonica Media turns into one of the biggest worldwide companies in the production, holding and broadcasting of contents and audiovisual services field within the Spanish and Portuguese speaking region, with more than 530 million potential customers linked by a same language. Telefonica Media is present in every audiovisual area value chain, granting it a great flexibility for the distribution and broadcasting of contents among its different companies. Telefonica Media has experienced a significant growth as from the beginning of this year, going from 10 to 21 companies, as a consequence of the reallocation of assets and investments made in the last quarter of 1999.

Telefonica Media share in the Argentinean audiovisual market through the above mentioned corporation is reached with the ownership of the 100% of Television Federal, Telefe, which is leader in audience and is strongly positioned as a content producer, distributing both in Argentina as well as in other Latin America countries.

Television Federal corporation also has eight air television channels broadcasting in several provinces of the country. Cordoba, Rosario, Santa Fe, Mar de Plata, Bahia Blanca, Neuquen, Tucuman and Salta. All these channels which are leaders in their broadcasting areas, constitute the highest television stations group operating in Argentina.

Telefonica Media is the owner of the 50% in Telearte ("Azul Television") senior channel of Federal Capital and the Great Buenos Aires private television, having operating corporations in Mar de Plata, Resistencia and Parana. Azul Television has produced an innovation on the Argentinean television model, being pioneers in the remote education through this communication means.

Finally, the presence of Telefonica Media in the Argentinean audiovisual area is completed through the ownership of the 100% of Radio Continental ("Radio Continental"), the Argentinean broadcasting ranked in the third place for AM and the first one in FM radio broadcasting. Radio Continental trades it programming to a network comprised by the most important broadcasting companies located at the Argentinean provinces.

In this first stage, Messrs. Antonio Barreto and Alejandro DiCapua are in charge of the General Management and Deputy Management, respectively, of AtCo.

Finally, Telefonica Media does not dismiss the possibility of making new investments in the country.

TELEFONICA MEDIA

The development of the synergies among the different companies comprising Telefonica Media and Telefonica Media with Telefonica S.A. group provides a key competitive strength, since it will allow new distribution ways (TDT - land digital television, wide band Satellite and XDSL - great bandwidth technology for the connection to residential customers and small companies through the phone cable, among others), new products (EPG - a program electronic directory, electronic newspapers and educational programs, among others), new business models (programming, advertisement, interactivity, TVcommerce), new distribution platforms and new marketing ways. Finally, Telefonica Media is the vehicle allowing Telefonica S.A. group to take a privileged position in the content area, both audiovisual and interactive, from which it shall be able to operate as the first provider of communication and/or entertainment integral services at Latin America for its customers. Telefonica Media is present in the Latin American audiovisual markets through four activity lines: television, radio, production (contents) and systems and services.

Television

Added to the incorporation of important TV assets in Argentina, Telefonica Media has in Spain stock shares in Antena 3 (air channel) and in Via Digital (satellite digital cable TV).

Antena 3 closed the 1999 year with exploitation benefits ranging 153.6 million dollars, which exceeded the balance sheet of the prior year by 35.2%, in which the exploitation result was 113.58 million dollars. Antena 3 net consolidated benefit corresponding to 1999 amounted to 113.55 million dollars, 58.92 above the previous year.

During the first quarter of year 2000, Antena 3 has kept the leadership as an air private TV channel in Spain, with an audience share of 22.3% during March. Once more, Antena 3 confirms its leadership among the audience of less than 65 years old (83% of the total universe), with a share of 23.1%. The income increase combined with the rationalization of the expenditure contributed to obtaining these results, placing Antena 3 on top of the European private TV profitability.

Operations income corresponding to the first quarter of year 2000 has increased up to 135.6 million euros, with an interannual growth ranging 21.5% as a consequence of the higher income related to advertisement and the incorporation of Movierecord's (advertisement in cinemas) income during this year.

Antena 3 economic consolidation since the time Telefonica started its operation is the outcome due to several reasons. The development of new activity areas with a powerful pattern towards the generation of value added such as the production of contents, interactive TV, telesales, database exploitation (Club Megatrix), events organization and advertisement production. In this area, there was a progress towards the diversification of the traditional business, with the acquisition of the advertisement leading distributor for cinemas - Movierecord.

Antena 3 kept the audience leadership among the private chains in the air TV segment, obtaining an audience average share of 22.8%. Besides, Antena 3 is the absolute leader in the most preferred audience profile of advertisers: medium and high class individuals of less than 55 years residing in populations of more than 10,000 inhabitants.

Via Digital started its activity in the satellite cable TV segment in September 1997 and since that time it keeps a line of constant growth. Via Digital distributes 65 TV channels, 30 audio channels and interactive services. As at December 31, 1999, it had more than 450,000 subscribers. Via Digital programming was reinforced during the previous year with the acquisition of the broadcasting rights of important sport events, such as Champions League in the pay per view mode in the 1999-2000 and 2002-2003 seasons; 2002 Football Worldwide Championship which shall take place in Korea and Japan and the Spanish Football League and King Cup up to 2008-2009 season. In this way, Via Digital turned during 1999 into the Spanish cable TV operator offering more football events to its subscribers.

On the other hand, the acquisition of movies broadcasting rights to big U.S.A. distribution companies and Spanish producers allows Via Digital to have a very attractive cinema billboard, in which the titles having prizes in the big cinema shows are available.

During 1999, Via Digital included in its programming: interactive services for bank dealings, tickets acquisition, Stock Exchange and weather information, which finally led to the interactive advertisement, a new advertisement way which shall generate important resources in the short and medium term.

Telefonica Media succeeded in acquiring important assets of the TV area in Argentina. One of them, Television Federal S.A. ("Telefe") is the main TV chain characterized by its high capacity in the production of contents both for television and cinema, with which it has obtained the highest TV audience share in the country. An important part of Telefe's productions are traded in almost 50 countries of Latin America, U.S.A., Europe and Asia. Telefe also has air TV channels located in the provinces of Argentina. Telefe signal reaches more than 12 million houses in Argentina (a third of the total population) through its air signal, its affiliated companies and cable TV systems.

Canal Azul, Telearte S.A. is another Argentinean TV asset which Telefonica Media incorporated to its assets when acquiring 50% of the shares of the above mentioned company. Canal Azul is the air TV channel ranked in the third place within Argentina, which also broadcasts in Federal Capital and the Great Buenos Aires. On the other hand, the company owns three broadcasting station in the provinces of the country.

Radio

Telefonica Media keeps an important presence in the Spanish and Argentinean radio market. In Spain, this presence is reached through Unniprex S.A. ("Onda Cero") and Cadena Voz de Radiodifusion S.A., both acquired during 1999. These two companies operate in the radial market through a coverage network comprised by 219 owned or associated broadcasting stations, broadcasting the programming of Onda Cero Radio, Europa FM, Onda Melodia, Onda Cero Radio Internacional, Radio Voz and Onda Rambla chains.

Onda Cero Radio was ranked in 1999 as the third Spanish conventional radio chain regarding income share and the fourth one regarding audience share. In Argentina, Telefonica Media acquired Radio Continental AM and FM chains. Continental is the third Argentinean radio in AM and the first one in FM.

Production (Contents)

Telefonica Media is present in the content production area through the activities carried out by Antena 3, Via Digital, Telefe, Canal Azul and Televisoras del Interior. This activity is achieved in the production of thematic channels, generation of programs and contents formats, creation of interactive contents and holding and use or audiovisual rights.

The presence of Telefonica Media in this audiovisual sector activity are is made through its participation in several corporations in Spain: ST-Hilo, devoted to the production and transmission of specialized audio channels: GMAF, a corporation through which it participates with a 40% in Audiovisual Sport, an entity having several football competitions exploitation rights, among which the Spanish Football League is worthwhile mentioning. Within the football broadcasting rights exploitation, those related to the company Torneos y Competencias, the owner of the Argentinean Football League broadcasting rights are included, in which Telefonica Media has a stock share of 20%; Lolafilms, one of the two main Spanish cinema producers; a minor share in Pearson PLC, the European multimedia area leading company. At the end of 1999, Telefonica Media associated with Disney and Grupo Clarin with the Argentinean producer Patagonik Film Group, a content provider for all the Latin American market. Telefonica Media has means of its own for the supply of content to the different audiovisual broadcasting and distribution windows integrated in the group.

Audiovisual systems and services

Telefonica Media addresses its audiovisual systems and services supply activity through the corporation Telefonica Servicios Audiovisuales (TSA), in which it is the only stockholder and through its participation in the company Hispasat, the managing company of the satellite communication system having the same name. TSA focuses its activity in three business areas: audiovisual services (Digital TV technical platforms, contribution and distribution networks, business TV, etc.), audiovisual systems (design, engineering, integration and commissioning of teleports, technical platforms, mobile units) and production services.

TSA has started an expansion process addressed to the markets of Argentina, Peru and Brazil, as the starting point of its future spreading throughout Latin America.

TSA is prepared to provide broadcasting services for the Land Digital Television.

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