The FUTURE of PRINT PRIMEX 2003 Print Media

The FUTURE of PRINT PRIMEX 2003: Print Media Executive Conference / Thursday, February 14, 2003 George R. Sansoucy / SVP, Managing Director, IM Print & Convergence / INITIATIVE MEDIA 1

Why We’re Here Today n Present n Challenges n A Recovery? n Past n Future n Linked to Advertising The FUTURE of PRINT 2

is the largest, most powerful independent media management company in the world The FUTURE of PRINT 3

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

Blue Chip Clients PHARMACEUTICAL TECHNOLOGY FINANCIAL COMMUNICATION/ ENTERTAINMENT PACKAGED GOODS The FUTURE of PRINT RETAIL QSR 5

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

Print Billings #1 Source: Advertising Age “Agency Report” 4/22/02 The FUTURE of PRINT 7

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

P R I N T > Present 9

Print Recovery n In 2002, 239 new consumer magazines launched n In 2003, the MPA indicates that 700+ new consumer magazines are in review n Total overall magazine circulation has held it’s own n 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 The FUTURE of PRINT 10

Print – Stable Share n Stable share mix for last 5 years 14, 000 12, 000 National Newspapers 10, 000 8, 000 6, 000 Newspapers 4, 000 2, 000 Magazines Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 98 98 99 99 00 00 01 01 02 02 03 03 The FUTURE of PRINT 11

Continuing Challenges n Declining newsstand sales n Weak direct mail performance n Stagnant subscription prices n Flat circulation growth n Changing ABC rule n Advertising recession The FUTURE of PRINT 12

P R I N T > Past 13

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

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

Print Spending %change 1 -3 Q 02 over 1 -3 Q 01 ALL Consumer Magazines +. 8% General Consumer/NO Business 2. 4% Source: CMR The FUTURE of PRINT 16

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? The FUTURE of PRINT 17

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

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

P R I N T > Future 20

Forecasted Predictions n Ad spend increase predicted for U. S. in 2003 n n Forecasters predict a resumption of growth in advertising spending in 2003* Robert J. Coen, SVP/Forecasting Director, Universal Mc. Cann, NY (5%) John Perriss, Chief Executive, Zenith. Optimedia, 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 The FUTURE of PRINT 21

IM Predictions: Measuring Ad Spending Trends n Gross Domestic Product (GDP) n Consumer The FUTURE of PRINT Confidence 22

Ad Spending & GDP n 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% 2002 E 2001 E 2000 1999 1998 The FUTURE of PRINT 1997 1996 1995 1994 1993 1992 1991 Total Ad Change Yo. Y GDP Change Yo. Y 23

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

Modest Turnaround n Continued modest improvement is expected for the U. S. and worldwide advertising in 2003 n Gradual improvement in the economy n Relative improvement in ad activities The FUTURE of PRINT 25

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

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

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

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

The FUTURE of PRINT PRIMEX 2003: Print Media Executive Conference / Thursday, February 14, 2003 George R. Sansoucy / SVP, Managing Director, IM Print & Convergence / INITIATIVE MEDIA 30