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

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

Why Were Here Today PresentChallengesA Recovery?PastFutureLinked to Advertising

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

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

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

IM Leads in Every Category(1) Includes promotion, interactive, direct marketing, product exposure$2,392$1,516$347$2,527$1,971$910$424National BroadcastCableSpot TVOutdoorPrintOther (1)Radio($000s)

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

Blue Chip Clients COMMUNICATION/ ENTERTAINMENTTECHNOLOGYQSRPHARMACEUTICALRETAILPACKAGED GOODSFINANCIAL

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Print is an Important MediumA dedicated team of 15 top print professionalsSix senior negotiators100+ account assignmentsNegotiate on an ongoing basis1000+ titles (national and regional)All categoriesAll publishing companiesContinuous contact with key publishers

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Print BillingsSource: Advertising Age Agency Report 4/22/02

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Print Remains a Viable & Vital MediumTrue power of magazines stems from the relationship each magazine has with its readersMagazine 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

P R I N T > Present

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

Print RecoveryIn 2002, 239 new consumer magazines launchedIn 2003, the MPA indicates that 700+ new consumer magazines are in reviewTotal overall magazine circulation has held its own Ad pages in December grew 10.7% following Novembers 6.9% increaseSource: MEDIAWEEK, Feb. 3, 2003 / Source: New York Times, Jan. 14, 2003 / Source: National Directory of Magazines 2002

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

Print Stable ShareStable share mix for last 5 years2,000,0004,000,0006,000,0008,000,00010,000,00012,000,00014,000,000Q198Q298Q398Q498Q199Q299Q399Q499Q100Q200Q300Q400Q101Q201Q301Q401Q102Q202Q302Q402Q103Q203Q303National NewspapersNewspapersMagazinesQ403

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

Continuing ChallengesDeclining newsstand salesWeak direct mail performanceStagnant subscription pricesFlat circulation growthChanging ABC ruleAdvertising recession

P R I N T > Past

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

2002 Advertising IndustryOverall Ad Spending: Considerably GuardedAnother tough year for advertisingAdvertising pages declinedErosion in newspaper circulationPrint ad spending decreasedNew sense of economic pragmatism:Publishing companies shut down publicationsLaunched fewer magazines

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Business Titles Hardest HitSome key titles backslid to pre-1995 ad page levels-40%-39%-38%-37%-36%-35%-34%-33%-32%-31%BusinessWeekForbesFortune Inc.Decline in PagesSource: PIB

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Print Spending+.8%ALL Consumer Magazines2.4%General Consumer/NO Business%change 1-3Q 02 over 1-3Q 01Source: CMR

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Celebrity Magazines Showed VulnerabilityHas Rosie, Queen of Nice become the Queen of Mean? Has thats 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?

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Media Companies Responded By Advertising...Source: CMR(2002 year end spend figures not yet available)

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Media Companies Responded BySelling magazine brand/logo merchandise Better Homes & Gardens garden productsPopular Mechanics toolsHouse Beautiful paintsExpanding sponsorshipsConferences (Business Week CEO Summit)Events (Rolling Stone/Rock & Roll Hall of Fame)Exhibitions (New Yorker Book Festival)Custom PublishingEstimated at $1 billion in revenue (Home Depot 1-2-3 Book Series)

P R I N T > Future

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

Forecasted Predictions Ad spend increase predicted for U.S. in 2003Forecasters 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

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IM Predictions: Measuring Ad Spending TrendsGross Domestic Product (GDP)Consumer Confidence

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

Ad Spending & GDPAd spending continues to closely correlate to the GDPTotal Ad Change YoYGDP Change YoY-15%-10%-5%0%5%10%15%19911992199319941995199619971998199920002001E2002E-1%0%1%2%3%4%5%Correlation = 0.78

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Ad Spending & Consumer Confidence

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Modest TurnaroundContinued modest improvement is expected for the U.S. and worldwide advertising in 2003Gradual improvement in the economyRelative improvement in ad activities

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Modest TurnaroundIf the business titles start rebounding, a cascade effect may resultFinancial advertisers may increase ad spending which may in turn fuel an increase in corporate ad campaigns which could further strengthen an economic recovery

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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 returnNew area driving growth Especially in Spanish-language mediaNewspapers repurpose themselves To capture a younger audienceCombat declining readerships

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

What This Means... Demand for magazines in 2003 is currently estimated to rise 4% over 2002Any revisions to this are likely to be downwards given current economic outlookThe 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

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

SummaryPrint remains a viable & vital mediumDespite the proliferation of media options, Print has held its ownRe-strategizing becomes more important Magazines will continue to expand their revenue stream opportunitiesAd spend increase predicted for this year

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

Make visually betterMake Visually BetterWere number one in print billings.Or , oops we thought you might be getting bored, were #2 in magazines but were number one in newspapers

From 1991 to 2001 there has only been a 1% change in total overall circulation

Ad pages showed their largest gain of the year in December 2002