REPORT th Quarter Release

AGENDA 1.Setting the Scene 2.SA Print Dashboard 3.Press Dashboard 4.Magazine Dashboard 5.Conclusion

1. SETTING THE SCENE Economic Landscape: Government services sector shrank by 0.8% in the first quarter of 2015, the first time in 11 years, as a result of resignations in response to pension reforms Gross domestic product at market prices increased by 0.7% Q on Q (the latest figures). The main contributors to the growth were in manufacturing (0.8%), finance, real estate & business services (0.6%). Unsurprisingly, mining & quarrying declined by 9.8%, and agriculture forestry & fishing declined by 12.6%. Economic growth for 2016 is estimated at 0.8%. Innovative Local Research: INC have conducted research that reflects the importance of press in general as a credible source of information. This example amongst single copy purchasers looking for financial information.

Local Media inflation: With a tightening economy most marketers are looking at reducing costs and hence any inflation is being scrutinized. The latest figures measured by Media Manager for the period Q reflect the following: Platform% Rate Inflation% Performance InfMIW % Inflation Television FTA TV Pay TV Total Print Dailies Weeklies / WE Community NP Consumer Mags BTB Total Radio “Black format” (?) CIW (?) OOH Cinema +5.7% +2.1% +13.3% +4.1% +4.4% +3.4% +4.0% +3.9% +5.5% +12.1% +21.1% +8.0% +2.0% Not comparable -6.1% -6.2% -9.7% -0.4% -7.7% -5.6% -7.3% -5.7% -8.0% Not Available % +13.3% +11.3% +11.5% +14.8% +4.6% +13.1% +13.5% +22.5% +31.3% +18.5% +2.0% -7.0%

Amazon gets physical! The CEO confirmed that Amazon will be opening 300 – 400 bricks-and-mortar bookstores! Amazon already is a major book publisher. The company offers myriad services for editing, design, formatting and distribution of hardcover and paperback books. However, despite its size, Amazon cannot offer publishers coveted placement in physical bookstores. Those tables you see in a bookstore when you first enter are hot properties in the world of book marketing. Amazon can't compete with that, until it gets its own bookstores. In addition, physical bookstores will help Amazon attract bigger-name authors. Strategically Amazon have moved from not just a "bookstore” to an "everything store” and ultimately will become the "everywhere store."

MEMBERSHIP STATISTICS ABC Members: 30 Jun 15: December 15: Titles -10 Titles Titles -32 Titles

2. SA PRINT DASHBOARD Magazine Comments: 8.3% decline in total magazine circulation Q4 0n Q3 Subscriptions predictably more than press, although free magazines represents the largest percentage Press Comments: Excluding a large Government Title reporting only for Q3, 2.3% decline in total press circulation Q4 on Q3 Losses across the board

3. PRESS DASHBOARD Daily Newspapers Q4 declined by 2.7% over Q3 Decline occurred in all categories, except for Third Party Bulk, more than double Q3, off a small base % Composition Weekly Newspapers Q4 declined by 8.2% compared to Q3, all in single copy sales However, single copy sales still comprises 93% of circulation

3. PRESS DASHBOARD (cont.) Weekend Newspapers: Q4 declined by 3.1% compared to Q3 Whilst single copy sales declined subscriptions increased Free Newspapers Q4 down by 1.5% on Q3 Decline occurred in Non- residential Bulk Local Newspapers Q4 down 1.8% on Q3 98% of circulation derived from single copy sales. % Composition

DAILY PRESS: MOVERS COMMENTS: 3 Newspapers showed minor increases. Cape Times increased by 2.7% The Times declined by 8.3%, The Herald by 6.6% and Isolezwe by 4.8%

WEEKLY PRESS: MOVERS COMMENTS: Mail & Guardian increased by 9.7 % mainly in single Copy Sales and Subscriptions – Travel & Commercial Soccer Laduma decreased by 11.6%, all in copy sales

WEEKEND PRESS: MOVERS COMMENTS: The Southern Cross increased by 3.2%, Weekend Post by 2.7%, all in copy sales Sunday World declined by 9.2%, Weekend Witness by 6.4%, mainly in copy sales

LOCAL PRESS: MOVERS COMMENTS: Grocott’s Mail increased by 14.5%, while Gemsbok increased by 10.3% Tembisan declined by 24%, while Witbank News Friday declined by 11%

FREE PRESS: MOVERS COMMENTS: Tame Times Reiger Park Bulletin declined by 50%. Hammanskraal News declined by 40%. Full Sus increased by 20%. The Eagle increased by 15%.

4. MAGAZINE DASHBOARD COMMENTS Total Magazine circulation down 8% Q4 on Q3. All 3 sectors declined compared to Q3: Consumer declined by 4.4%, Business to Business by 2.7%, and Custom by 10.6%.

MAGAZINE: % COMPOSITION COMMENTS Consumer Magazines: Single Copy Sales, Subscriptions and Free magazines declined, while sales below 50% increased. Custom Magazines: Single copy sales increased off a small base, while all other categories declined. Business to Business: The composition continues to rely heavily on free distribution. Only PDF Replica editions showed an increase off a small base.

MAGAZINES: MOVERS COMMENTS Tax Talk increased as a result of PDF Replica editions. Leading Venues increased Bulk Non-requested SA Family Practice and African Mines Handbook decreased Free distribution

CONSUMER MAGAZINES - HOME COMMENTS A decrease of 6,8% Q4 on Q3, with declines across the board Estate Living increased by 44%, all in free circulation. Green Home declined by 39%, all free distribution. The Christmas Magazine declined by 19%, all in copy sales.

CONSUMER MAGAZINES - MOTORING COMMENTS Driven Magazine increased by 35%, Caravan and Outdoor Life by 32%, all in free distribution. Super Bike declined by 24%, as a result of reduced back issues.

CONSUMER MAGAZINES – SPORT & HOBBY COMMENTS An overall decline of 12.3 %, Q4 on Q3, mainly copy sales The Bank Angler/Die Oewerhengelaar increased by 15.4%, in both copy sales and free distribution Amakhosi decreased by 33%, Game & Hunt/Wild & Jag by 26%, mainly in copy sales

CONSUMER MAGAZINES - TRAVEL COMMENTS Weg Namibie/ Go Namibia increased by16%, all copy sales Travel Ideas declined by 14%, mainly free distribution

CONSUMER MAGAZINES – Women’s General COMMENTS Elle increased by17%, Rooi Rose by 12.7%, mainly in copy sales Essentials declined by 15%, mainly in copy sales and free distribution Sarie declined by 12.4%, mainly in copy sales

BUSINESS TO BUSINESS MAGAZINES – ARCHITECTURE COMMENTS Category increased by 17%, mainly the result of the two titles increasing free distribution

BUSINESS TO BUSINESS MAGAZINES - MANAGEMENT COMMENTS Category increased by 9.7% Think Sales increased by 47%, mainly free distribution Cape Business News decreased by 33%, also mainly free distribution

CUSTOM MAGAZINES - ENTERTAINMENT COMMENTS M and Magic declined by 25% and 15% respectively

CUSTOM MAGAZINES – LEISURE COMMENTS Category declined by 5% Good Taste increased by 15%, all free circulation Taste increased by 13%, all copy sales Fresh Living/Kook &Kuier declined by 22%, both in copy sales and free distribution

CUSTOM MAGAZINES - RETAIL COMMENTS Category declined by 19.4%, a combination of discontinued titles and reduced distribution Ackermans Club increased by 17% TFG My Kitchen increased by 19%, all in subscriptions Woolworths W decreased by 37%

5. Conclusion The declining economy coupled to the current forex position means that production costs will unfortunately increase. The effect will be that uneconomical circulation will have to be reduced further. On a positive note, however, we are beginning to see innovative local research that shows the real contribution of print to advertiser campaigns. Within the ABC Q4 data there is proof of publisher innovation in all areas. Some of these initiatives have produced positive results while some have failed. Examination of the data will provide some clues contributing to the growth, despite all the odds. Cost cutting alone rarely results in growth…and irresponsible discounting doesn’t help either! Finally, the last AMPS, after almost 40 years, will be released next month. The future research survey is currently being discussed and I would encourage the participation of stakeholders to ensure that the credibility and quality of the reading experience is fully understood, rather than merely average issue readership. Synergy and the impact of multiscreen activity need to be understood and leveraged, if print is going to realise its full potential.