October 27, 2020

The company created by Telemadrid and Caja Madrid lost 57 million

The company created by Telemadrid and Caja Madrid lost 57 million


Thesociety Madrid Audiovisual Sport(MDA) created in 2007 by Telemadrid and Caja Madrid to exploit the audiovisual rights of the football teams of Madrid's first division lost was a failure and lost more than57 millionof euros, according to a recent report of the Chamber of Accounts of the Community of Madrid, to which Europa Press has had access.

The constitution of theMDA societyThe aim was to broadcast the matches of these clubs in open. However, the operating rules of the market, existing before its constitution, did not allow to satisfy that need with the first signed contracts, since the official parties did not arrive to emit. Only as of 2010, a match could be broadcast simultaneously with another chain, which was due to a new acquisition.

The creation of MDA was based on aBusiness plan prepared by Caja Madrid, noting positions found in the Council session, despite which said Plan was approved. Simultaneously to its constitution, MDA signed four fundamental contracts with Atlético de Madrid and Getafe, since Real Madrid did not want to be.

With each of the clubs he signed acontract for official matches(270 million euros together for the two clubs) and another for the friendly matches and advertising rights (36 million).

At the time of signing these contracts, although there was no binding legal rule, "the criteria of the authorities ofDefense of the Competitionand they were not taken into account, "the Chamber of Accounts has highlighted.

By not reaching any agreement with other operators to be able to exploit the acquired rights,MDAcould have resolved the signed contracts and sought contractual rebalancing.

But, according to the inspecting entity, instead it sold said rights to another operator (January 20, 2010), "without any benefit for MDA, but assuming theriskof both operations. "

In this same contract, MDA acquired to said operator rights for the retransmission of a league match per season in concurrence with another chain (linked to the aforementioned operator), for which a price of85 million. These matches were sold by MDA to Telemadrid for the same price.

After a sanctioning process, the contracts were declared contrary to theLaw on the Defense of Competition, by exceeding the duration of three seasons, resolving contracts in advance. In fiscal year 2012, once all the acquired parties were issued, the operator interrupted payments due to Madrid Deporte Audiovisual.

After different judicial processes, this operation involved the loss of25.5 million eurosfor MDA, "that did not get paid".

The company also lost money by not recovering 8 million of all the advances to the clubs, which would have to includeaccrued interestuntil the time of collection, as well as the court costs that were assumed by MDA.

The purchase of friendly matches and advertising rights was a loss forMadrid Audiovisual Sports of 24 millionof euros, "by not commercializing almost all of these friendly matches, or making use of the rights of publicity".

Telemadrid registered contributions to MDA for a total of 17.6 million euros, which constituted a loss in its entirety. In turn, it paid the company 49.3 million for rights of sports broadcasts previously acquired.

Therefore, the Chamber of Accounts of the Community of Madrid notes that the constitution of MDA economically damagedBank of Madridand to Telemadrid, but it benefited the soccer teams, "who obtained financing through the cession of the exploitation of their audiovisual rights, as well as the aforementioned operator, who was able to broadcast the official matches, leaving a good part of their unpaid amount".

Economic and financial situation of Telemadrid

The report of the Chamber of Accounts also analyzes the economic-financial situation of the exercises2008 to 2015. Thus, they point out that the constant deterioration of the results and of the patrimonial situation of the entity and its companies as a consequence of the decrease of the advertising investment, the contraction of the expense to which they are subjectedPublic administrationsand the difficulty of resorting to external indebtedness by public entities, led the group in 2012 to begin a process of adapting the business structure to the current situation of the audiovisual market.

This process was based on an advisory report prepared by a temporary union of consulting firms, which was assumed asViability planof the group, approved by the Board of Directors of the public entity on November 28, 2012.

This Viability Plan proposed an organizational change of the group, based on the outsourcing of multiple services and the consequent reduction of the workforce, which led to the approval of aEmployment Regulation File (ERE).

All this was carried out with high financial support from the Community of Madrid, which undertook to borrow to meet the commitments for amortization of the financial debt of the entity, as well as to make extraordinary contributions necessary to finance the ERE.

As of 2012, the economic-financial situation"It improved considerably", the Chamber of Accounts has highlighted. At the end of the fiscal period, both the net equity and the results presented positive amounts, while the financial indebtedness was reduced "significantly".

The main source of funding for the Radio Televisión Madrid group is the contributions of the Community. In fact, in these years received a billion euros from the regional government distributed in 606 million in program contracts, 90 to compensate losses, 27.4 to pay compensation and 283 to amortize debt.

The reduction of personnel expenses was articulated through an ERE, approved on January 5, 2013, without the agreement of the workers' representatives. It consisted in the extinction of829 jobsand compensation of 20 days of salary per year of service, with a cap of 12 months, alleging budgetary insufficiency as a cause for collective dismissal.

After the demands presented by the workers, and the appeal lodged by the company, the Supreme Courtdeclared not adjustedto right the decision of collective dismissal, for the lack of proportionality of the measure, which did not entail the reinstatement of the dismissed workers (except for specially protected groups), but the increase in compensation.

The total expense originated by the ERE was 69.5 million euros, supported mainly in the profit and loss account for the year 2013, but which was delayed in several years. This expense basically included the compensations paid, as well as the salaries of processing and less relevant expenses, such as the omission of the granting of the period of notice.

This expenditure would be somewhat lower if one takes into account that there are pending provisions to be applied in theExercise 2018, amounting to 1.3 million euros.

After the ERE, the group's personnel expenses were reduced by 66 percent, from 62.5 million in the year 2012 (last before the ERE) to 21 million in the year 2015, after discounting the expenses of that year intended for the ERE.

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