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T h e F U T U R E o f P R I N T

T h e F U T U R E o f P R I N T. PRIMEX 2003: Print Media Executive Conference / Thursday, February 14, 2003 George R. Sansoucy / SVP, Managing Director, IM Print & Convergence / INITIATIVE MEDIA. Why We’re Here Today. Present Challenges A Recovery? Past Future

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T h e F U T U R E o f P R I N T

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  1. T h e F U T U R E o f P R I N T PRIMEX 2003: Print Media Executive Conference / Thursday, February 14, 2003 George R. Sansoucy / SVP, Managing Director, IM Print & Convergence / INITIATIVE MEDIA

  2. Why We’re Here Today • Present • Challenges • A Recovery? • Past • Future • Linked to Advertising

  3. is the largest, most powerful independent media management company in the world

  4. IM Leads in Every Category Other (1) ($000’s) NationalBroadcast Radio $424 $910 $2,392 Print $2,527 $1,971 Spot TV $347 $1,516 Outdoor Cable (1) Includes promotion, interactive, direct marketing, product exposure

  5. Blue Chip Clients PHARMACEUTICAL TECHNOLOGY COMMUNICATION/ENTERTAINMENT RETAIL QSR FINANCIAL PACKAGED GOODS

  6. Print is an Important Medium • A dedicated team of 15 top print professionals • Six senior negotiators • 100+ account assignments • Negotiate on an ongoing basis • 1000+ titles (national and regional) • All categories • All publishing companies • Continuous contact with key publishers

  7. #1 Print Billings Source: Advertising Age “Agency Report” 4/22/02

  8. Print Remains a Viable & Vital Medium • True power of magazines stems from the relationship each magazine has with its readers • Magazine readers continue to spend an average of 45 minutes reading each issue* • Magazines continue to garner the highest consumer involvement vs. TV and the internet** * Source: MRI/Spring 2002 / ** Source: Nov/01 MagNet Study

  9. P R I N T > Present

  10. Print Recovery • In 2002, 239 new consumer magazines launched • In 2003, the MPA indicates that 700+ new consumer magazines are in review • Total overall magazine circulation has held it’s own • Ad pages in December grew 10.7% following November’s 6.9% increase Source: MEDIAWEEK, Feb. 3, 2003 / Source: New York Times, Jan. 14, 2003 / Source: National Directory of Magazines 2002

  11. Print – Stable Share • Stable share mix for last 5 years 14,000,000 12,000,000 National Newspapers 10,000,000 8,000,000 Newspapers 6,000,000 4,000,000 Magazines 2,000,000 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 98 98 98 98 99 99 99 99 00 00 00 00 01 01 01 01 02 02 02 02 03 03 03 03

  12. Continuing Challenges • Declining newsstand sales • Weak direct mail performance • Stagnant subscription prices • Flat circulation growth • Changing ABC rule • Advertising recession

  13. P R I N T > Past

  14. 2002 Advertising Industry Overall Ad Spending: Considerably Guarded • Another tough year for advertising • Advertising pages declined • Erosion in newspaper circulation • Print ad spending decreased • New sense of economic pragmatism: • Publishing companies shut down publications • Launched fewer magazines

  15. Business Titles… Hardest Hit • Some key titles backslid to pre-1995 ad page levels Decline in Pages Business Week Forbes Fortune Inc. -31% -32% -33% -34% -35% -36% -37% -38% -39% -40% Source: PIB

  16. Print Spending %change 1-3Q 02 over 1-3Q 01 ALL Consumer Magazines +.8% General Consumer/NO Business 2.4% Source: CMR

  17. Celebrity Magazines Showed… Vulnerability Has Rosie, ‘Queen of Nice’ become the ‘Queen of Mean’? Has ‘that’s a good thing’ Martha done a ‘bad’ thing by possibly involving herself in insider trading? And what happens when the ‘Queen of Talk’ Oprah stops talking in 2006?

  18. 2000 2001 % Change’01 vs ’00 Hearst $17,897K $34,367K +92% Time, Inc. $22,460K $33,937K +51% Condé Nast $19,763K $31,197K +58% Meredith $3,367K $3,798K +13% Media Companies Responded By… Advertising... (2002 year end spend figures not yet available) Source: CMR

  19. Media Companies Responded By… • Selling magazine brand/logo merchandise • Better Homes & Gardens’ garden products • Popular Mechanics tools • House Beautiful paints • Expanding sponsorships • Conferences (Business Week CEO Summit) • Events (Rolling Stone/Rock & Roll Hall of Fame) • Exhibitions (New Yorker Book Festival) • Custom Publishing • Estimated at $1 billion in revenue (Home Depot 1-2-3 Book Series)

  20. P R I N T > Future

  21. Forecasted Predictions • Ad spend increase predicted for U.S. in 2003 • Forecasters predict a resumption of growth in advertising spending in 2003* • Robert J. Coen, SVP/Forecasting Director, Universal McCann, NY (5%) • John Perriss, Chief Executive, ZenithOptimedia, London (1.9%) • If predictions are realized (5%) they could exceed the U.S.’s ad spend record, achieved in 2000 * Source: The New York Times, Dec. 10, 2002

  22. IM Predictions: Measuring Ad Spending Trends • Gross Domestic Product (GDP) • Consumer Confidence

  23. Ad Spending & GDP • Ad spending continues to closely correlate to the GDP 15% 5% 10% 4% 5% 3% 0% 2% -5% 1% Correlation = 0.78 -10% 0% -15% -1% 1996 1991 1992 1993 1994 1995 1997 1998 1999 2000 2001E 2002E Total Ad Change YoY GDP Change YoY

  24. 15% 50% 40% 10% 30% 20% 5% 10% Year-Over-Year Change in Ad Spending Year-Over-Year Change in Confidence 0% 0% -10% -5% -20% Advertising -30% Confidence -10% -40% -15% -50% 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 Ad Spending & Consumer Confidence

  25. Modest Turnaround • Continued modest improvement is expected for the U.S. and worldwide advertising in 2003 • Gradual improvement in the economy • Relative improvement in ad activities

  26. Modest Turnaround • If the business titles start rebounding, a cascade effect may result… • Financial advertisers may increase ad spending which may in turn fuel an increase in corporate ad campaigns which could further strengthen an economic recovery

  27. What This Means... • Strategies become more important • As budgets tighten, it is very difficult to justify any expenditure if the program is not on strategy and does not deliver significant return • New area driving growth • Especially in Spanish-language media • Newspapers repurpose themselves • To capture a younger audience • Combat declining readerships

  28. What This Means... • Demand for magazines in 2003 is currently estimated to rise 4% over 2002 • Any revisions to this are likely to be downwards given current economic outlook • The need for increased magazine ad revenue will be further underscored by increased out-of-pocket expenses • Postage, circulation, distribution, paper/production • The results: 2003 will continue to be a very competitive and negotiable marketplace…

  29. Summary • Print remains a viable & vital medium • Despite the proliferation of media options, Print has held its own • Re-strategizing becomes more important • Magazines will continue to expand their revenue stream opportunities • Ad spend increase predicted for this year

  30. T h e F U T U R E o f P R I N T PRIMEX 2003: Print Media Executive Conference / Thursday, February 14, 2003 George R. Sansoucy / SVP, Managing Director, IM Print & Convergence / INITIATIVE MEDIA

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