Newspaper Industry

Partners for the Future

ASTECH InterMedia Strategic

Marketing Roundtable

Media Environment Continues to Shift

• Media Companies Not Prepared

• Circulation Continues to Decline

• Print Audience in Decline

• Advertising Share in Decline

• AdStar Focused On Regaining Share

Media Companies Not Prepared

• Lost 13% of daily circulation base since industry peaked in 1984

– Fell from 63.3 million weekday circulation in 1984 to 55.2 million in 2003

• Lost 14% of daily newspapers since 1984

– Fell from 1,688 daily newspapers in 1984 to 1,456 dailies in 2003

• Average weekday audience fell from 65% in 1984 to 55% in 2002

Media Companies not Prepared

• Circulation executives do not have tools

and skill-sets to succeed in this complex

market

• Advertising executives do not have the

tools and research necessary to identify

and develop new revenue

• While newspapers are both print and

electronic publishers, systems to

integrate the two channels are lacking

Advertising Share Trending Down

Newspaper Advertising Share

15%

17%

19%

21%

23%

25%

27%

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

1990 to 2003

Newspaper share fell from 25% in 1990

to 18% last year

Advertising is Shifting Channels

• This year advertising will fall further to

17% share with expectations of continued

slide in core franchise

• The Web is an important player for

classified advertising

• Retail continues major internal

restructuring with less dollars for

traditional newspaper advertising

Operating Margins Trending Up

Newspaper Operating Margins

10%

12%

14%

16%

18%

20%

22%

24%

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

1990 to 2003

Newspaper margins rose from nearly

16% in 1990 to 22% last year

At Adstar, We Help Newspapers Adapt

• Provide resources and services that enable newspapers to quickly adapt to changing demands that the Web brings

• Facilitate classified advertising placement on both the Web and in newspapers.

• Manage related financial transactions

• Know who uses and believes that the newspapers print or Web envirionment is a good marketing resource since we have our own user registration

At AdStar, We Seek Solutions

• Focus on helping clients regain share in this world of shifting media paradigms

• Understand the Web is becoming a core transactional and information medium for both local and national markets

• Are an investor and industry partner focused on identifying solutions that can be implemented to protect the local brand while helping newspapers adapt to the changing competitive environment

At Adstar, We Invest

• We make product investments and

acquire companies offering franchise-

enhancing technologies

• Some technologies that we have

explored or are considering:

– E-Commerce technologies

– Print to online extension for local

advertising

– SMS technologies

At AdStar, We Support Revenue Channels

Newspaper

Revenue

Channels Description

1. Ad Sales Print, online and combination ads

2. Subscriptions Home & office subscriptions for

print & online publications

3. Content Resell and licensing of editorial and

ad content

4. Miscellaneous Historical photos, merchandise, etc.

Changing Media Envirionment

• Media Evolution

– Moving towards convergence between all forms of print and electronic news and information

– Newspaper companies must be prepared to meet the challenges of this evolution

• The underlying business model will continue to be based on advertising revenue

Changing Media Envirionment

• Power of Local Brand

– Among media channels, newspaper garners

the greatest trust

– This trust is a strength and has value

• Cross-Channel Brand Integration

– Newspapers extend local brand onto local

Web sites

– Cross-ownership will extend this a cross-

media brand of newspaper, radio, television,

and the Web

Changing Media Envirionment

• Web offers flexibility

– Development of different editions

– Designed in terms of day-parts

– Designed in terms of user demographics and content affinity

• Web natural replacement for the evening newspaper

– When linked to daily newspaper, offers greater range of possibilities.

• Advertisers will be able to buy targeted day-parts in terms of time, geography, demography, and affinity preference

Cross Channel Marketing

• Web brings opportunity to know

– Who is involved with us

– What their experience is

– How they are using our Web channel

– When they are involved with us

• Whom the reader or user is has importance to

– Advertisers seeking effective media investments

– Marketing managers to drive promotion strategies

Infromation Rich Databases Extend Brand

• Enables cross-selling opportunities for local advertisers

– Tie broad reach of newspaper with targeted capability of web

– Understanding content interest enables both online and direct marketing efforts

• Helps understand relationship between subscribers and users, improving both retention and acquisition circulation programs

Measurement is Critical

• Registration is key to delivering both advertising

revenue and providing tailored content that fits

user demographics and affinity preferences

• Registration enables tying user to local

marketing databases containing

– Enriched household level information

– Survey based information

– Subscriber status and contact information

• Supports measurement and ROI development

Measurement is Critical

• Advertisers are demanding ROI evidence

to help them optimize their own media

investments

• Newspaper marketing professionals need

to measure effectiveness of own

promotional efforts for attracting Web

users and print subscribers

• If it cannot be measured, then it did not

happen

The Future is Ours

• We are here as fellow stakeholders in the

future of the newspaper industry

• Companies like AdStar take measured

risks in the future and are key to helping

newspaper companies adapt to the

changing media landscape

• Your help to understand the kinds fo

technologies that we need to be investing

in that will help you expand the value of

your newspapers’ brand is important

The Future is Ours

• AdStar has access to capital markets when we

find the right investment.

• We continue to assess enabling opportunities

that strengthen and extend the newspaper

franchise in the midst of the torrent of change

that media convergence and cross-channel

marketing creates

• We need to understand how you would evaluate

these products so that as we identify

technologies they can meet the decision test

that you have for product or service adoption