Report rd Quarter Release - Johannesburg 13 November 2013

General Local Developments: 1.Readership …is there a future? While changes were overdue, the unilateral decision by NAB to withdraw marketer contributions to SAARF with effect 2015 has now jeopardized the establishment survey, ie AMPS….and readership data. Both NAB and SAARF (New) are working on a new structure but sadly the NAB approach seems to be to decide on the future, then seek support. In a recent AMF meeting, concern was raised that media owner research ultimately skews to become a sales aid. For any research initiative to be successful:  Marketers must participate fully…before decisions are made.  The users must also participate fully before decisions are made and surveys should be streamlined to become more future orientated, eg newspaper supplements etc. should fall out of the survey.

2. Target Group Indices Reader Report While the local impact of digital readership remains low there is little doubt that it will grow exponentially the years ahead.. This presentation explores the global trends and hopefully provides some predictions for the local future. Hopefully, this presentation will also provide some insight on an appropriate research methodology to combine and measure title performance across platforms, i.e. print & digital should fall out of the survey.

International Developments: 1. United Kingdom half year Daily Newspaper ABC Results. These results show a similar trend to that seen in South Africa. Specifically:  Very little use of Bulk distribution tactics to enhance circulation, apart from the Financial Times and The Independent.  All titles are down. In particular, The Independent, down almost 20%.  There is no clear pattern in the declines. Red Tops and business titles reflecting the same range.

Canadian Research shows surprising results. It considers the sales figures in the US, UK and Canada from 2000 to The research shows that national dailies' circulation as a percentage of households has fallen in the UK from just under 60% in 2000 to just over 30% in (A similar trend is also clear in the US and Canada). The downward trend for regional dailies over the same period has been much more dramatic, down from a total of 4.5m sales to just over 2m. …”But that's of no real consequence because a newspaper business model based on advertising is no longer viable in all three countries”. In a previous paper, “looking at the 60 years of daily paper sales trends up to 2010”, the authors noted that the business model was undergoing a "fundamental restructuring." This time, they sensibly suggest that "the continued presence of the print product may be an advantage to legacy publications during the transition [to digital]."

Rule Amendments effective 1st July 2013: Amendment to definition of Single Copy Sales: “Sales to the distributor /seller must be on a sale or return basis”

Membership Statistics:

Sector size ranked by average circulation – Quarter :

Overall Economic Perspective Comment: Retail sales increased by 3.4% in the 3 months ended July 2013, compared to The main increase was in Retailers in textiles, clothing, footwear and leather. Real GDP at market prices increased by 2% in Q2 compared with The largest increase was in agriculture, fishing and forestry.

4 Year Total Newspaper Circulation Trend by Quarter: Comment: Total Newspapers increased by 180,000 copies compared to the previous quarter

4 Year Category Trend by Quarter: Daily Newspapers Comment: Circulation has declined annually by 6.5% since 2009, equivalent to 433, 000 copies. However, Q3 only declined by 1.5% (17,000 copies), compared to Q2.

4 Year Trend Analysis by Language Daily Newspapers Comment: English titles have declined by 7.3% annually (363, 000 copies) over the period. Afrikaans titles have declined by 6.2% annually (82,000 copies) over the period. Vernacular titles have increased by 3.1% annually (13,000 copies) over the period.

4 Year Trend Analysis: Coastal vs Inland Daily Newspapers Comment: Inland circulation declined annually by 7.6% (331,000 copies) over the period. However Q3 increased slightly compared to Q2. Coastal circulation declined annually by 4.4% (102,000 copies) over the period.

Titles Showing Largest Decline Daily Newspapers No Publication NameTOTAL CIRCULATION Corresponding Previous Period Variance - Prior Year Previous Quarter Variance - Previous Quarter 1Daily Sun ,44% ,36% 2 Pretoria News ,61% ,13% 3 Citizen, The (Daily) ,88% ,24% 4 Son (Daily) ,47% ,60% 5 Business Day ,32% ,11% 6 Beeld, Daily ,19% ,40%

4 Year Category Trend by Quarter: Weekly Newspapers Comment: Weekly newspapers reflect an erratic performance, but show a slight increase over the period. Q3, however, increased by 6.9% (36,000 copies) compared to Q2.

Titles Showing Largest Growth Weekly Newspapers No Publication Name TOTAL CIRCULATION Corresponding Previous Period Variance - Prior Year Previous Quarter Variance - Previous Quarter 1 Motorsport World ,51% ,85% 2 Auto Week ,36% ,36% 3 The Zimbabwean ,15% 78359,05%

Titles Showing Largest Decline Weekly Newspapers No Publication Name TOTAL CIRCULATION Corresponding Previous Period Variance - Prior Year Previous Quarter Variance - Previous Quarter 1Ilanga ,82% ,02% 2 Soccer Laduma ,15% ,55% 3 Mail & Guardian ,86% ,60%

4 Year Category Trend by Quarter: Weekend Newspapers Comment: Circulation has declined annually by 4.4% (436,000 copies) over the period. Q3, however, declined by 2.1 % (40,000 copies) compared to Q2.

4 Year Trend Analysis by Language: Weekend Newspapers Comment: English titles have declined annually by 5.4% (367,000 copies) over the period. Afrikaans titles have declined by annually by 6.3% (155,000 copies) over the period. Vernacular titles have grown annually by 15% (86,000 copies) over the period

Titles Showing Largest Growth Weekend Newspapers No Publication Name TOTAL CIRCULATION Corresponding Previous Period Variance - Prior Year Previous Quarter Variance - Previous Quarter 1 Isolezwe ngoMgqibelo ,63% ,38%

Titles Showing Largest Decline Weekend Newspapers No Publication Name TOTAL CIRCULATION Corresponding Previous Period Variance - Prior Year Previous Quarter Variance - Previous Quarter 1Ilanga Langesonto ,80% ,22% 2 Sunday World ,26% ,45% 3 Rapport ,92% ,75% 4 Volksblad – Saturday ,62% ,39% 5 Sondag ,13% ,05%

4 Year Category Trend by Quarter: Local Newspapers Comment: Local Newspapers have declined by 3% (64,000 copies) over the period. Q3 reflected a similar decline (15,000 copies) compared to Q2.

Titles Showing Largest Growth Local Newspapers No Publication Name TOTAL CIRCULATION Corresponding Previous Period Variance - Prior Year Previous Quarter Variance - Previous Quarter 1 Streeknuus ,47% ,60% 2 Stellalander ,29% ,02% 3 Lowvelder, The / Laevelder, Die ( Tuesday) % ,63% 4 Polokwane Observer ,79% 64292,02% 5Tembisan ,69% 95141,36%

Titles Showing Largest Decline Local Newspapers No Publication Name TOTAL CIRCULATION Corresponding Previous Period Variance - Prior Year Previous Quarter Variance - Previous Quarter 1Limpopo Informant ,47% ,28% 2Umlozi ,48% ,05% 3Brits Pos ,87% ,79% 4Bosvelder ,61% ,89% 5The Mail ,41% ,30%

4 Year Category Trend by Quarter: Hybrid Newspapers Comment: Circulation has increased annually by 4.4% (26,000 copies) over the period. Q3, remained static compared to Q2.

4 Year Category Trend by Quarter: Free Newspapers Comment: Distribution has increased annually by 5.5% (1,203,000 copies) over the period, although only increasing by 3.4% ( copies) in Q3, compared to Q2 mainly the result of new members.

New Members / Removals Free Newspapers

Titles Showing Largest Growth Free Newspapers No Publication Name TOTAL CIRCULATION Corresponding Previous Period Variance - Prior Year Previous Quarter Variance - Previous Quarter 1 Zululand North Watch ,91% ,91% 2 Theewaterkloof Gazette (Formerly Kontreinuus Gaz.) ,30% ,77% 3 Alex Pioneer ,47% ,21% 4 Kalahari Buletin (Formerly Kuruman Bulletin) ,30% ,58%

Titles Showing Largest Decline Free Newspapers No Publication Name TOTAL CIRCULATION Corresponding Previous Period Variance - Prior Year Previous Quarter Variance - Previous Quarter 1 Alex News ,61% ,00% 2 Noordwes Gazette ,29% ,82% 3 Cosmos Gazette ,01% ,07% 4 Drakenstein Gazette ,51% ,00%

4 Year Magazine Circulation by Quarter Comment: Total magazines decreased by 0.7% (136,000 copies) over the previous quarter. Consumer magazines decreased by 1.4% (87,000 copies) over the previous quarter.

4 Year Category Trend by Quarter: Consumer Magazines Comment: Circulation declined annually by 1% (290,000 copies) over the period, although performance over the past year has been particularly disappointing, declining by 12% (825,000 copies).

New Members / Removals Consumer Magazines

Titles Showing Largest Growth Consumer Magazines No Publication Name TOTAL CIRCULATION Corresponding Previous Period Variance - Prior Year Previous Quarter Variance - Previous Quarter 1 Kuier Combo (Annual) ,21% 2 The Expatriate SA (Annual) ,51% 3 SA Career Focus (Six Monthly) ,27% 4 HQ Pony ,60% ,40% 5 Cars in Action ,29% No Submission

Titles Showing Largest Decline Consumer Magazines No Publication Name TOTAL CIRCULATION Corresponding Previous Period Variance - Prior Year Previous Quarter Variance - Previous Quarter 1 Prestige ,32% ,41% 2 Tech-Smart Magazine ,92% ,96% 3 Real Magazine ,34% ,62% 4 The Red Bulletin ,87% No Submission 5 SA India ,53% ,10% 6 Compleat Golfer ,52% ,39%

4 Year Category Trend by Quarter: Consumer Magazines - Home Comment: Circulation increased annually by 8.2% (202,000 copies) over the period. Q3 increased by 32,000 copies compared to Q2.

4 Year Category Trend by Quarter: Consumer Magazines - Sport and Hobby Comment: Circulation has remained static over the period, increasing briefly over the latter half of 2012.

4 Year Category Trend by Quarter: Consumer Magazines - Travel Comment: Circulation increased annually by 10.4% (106,000 copies) over the period, although reflecting a considerable fluctuation between 2011 and 2012, resulting from erratic annual titles Q3 increased by 9% (30,000 copies) compared to Q2.

4 Year Category Trend by Quarter: Consumer Magazines – Woman’s General Comment: This category has fluctuated considerably. Circulation declined by 1.9% annually (126,000 copies) over the period, although Q3 decreased by 4.3% (64,000 copies) compared to Q2.

4 Year Category Trend by Quarter: Business to Business Magazines Comment: Circulation has decreased annually by 2.2% (117,000 copies) over the period..

New Members / Removals Business to Business Magazines

Titles Showing Largest Growth Business to Business Magazines No Publication Name TOTAL CIRCULATION Corresponding Previous Period Variance - Prior Year Previous Quarter Variance - Previous Quarter 1 To Build (Annual) ,75% 2 Business Brief (Six Monthly) ,53% 3 African Mines Handbook (Annual) ,70% 4 South African Business (Annual) ,81%

Titles Showing Largest Decline Business to Business Magazines No Publication Name TOTAL CIRCULATION Corresponding Previous Period Variance - Prior Year Previous Quarter Variance - Previous Quarter 1 Sustain (Annual) ,45% 2 Technology in Architecture & Design (Six Monthly) ,81% 3 Business In Durban (Annual) ,77% 4 SA Mining ,13% ,60% 5 MIMS Guide to OTC Products (Annual) ,01% 6 My Office (formerly Shop-SA) ,80% ,69%

4 Year Category Trend by Quarter: B2B Magazines – Hospitality, Catering and Tourism Comment: Circulation declined annually by 11.6% (53,000 copies) over the period, although has remained static over the last 3 quarters.

4 Year Category Trend by Quarter: Custom Magazines Comment: Circulation increased annually by 2.8% (1.331,000 copies) over the period. However, Q3 decreased by 1.2% (146, 000 copies) compared to Q2.

New Members / Removals Custom Magazines

Titles Showing Largest Growth Custom Magazines No Publication Name TOTAL CIRCULATION Corresponding Previous Period Variance - Prior Year Previous Quarter Variance - Previous Quarter 1 TAXtalk (Six Monthly) ,42% 2 Foschini Balanced Life ,26% ,76% 3Sawubona ,73% ,00% 4 onRoute (formerly G Tribe) (Annual) ,15%

Titles Showing Largest Decline Custom Magazines No Publication Name TOTAL CIRCULATION Corresponding Previous Period Variance - Prior Year Previous Quarter Variance - Previous Quarter 1 Supersport Diary (Annual) ,82% 2 Geen & Richards Club (Annual) ,79% 3 JD Group Club Magazines (A) ,10% ,63% 4J S E (Annual) ,99% 5 JD Group Club Magazines (B) ,32% ,93%

4 Year Category Trend by Quarter: Custom Magazines – Entertainment Comment: Circulation increased annually by 9.4% (941,000 copies) over the period. However Q3 decreased by 5.6% (173,000 copies) compared to Q2.

4 Year Category Trend by Quarter: Custom Magazines – Retail Comment: Circulation increased annually by 0.5% (133,000 copies) over the period, although remaining static over the last 3 quarters.

4 Year Category Trend by Quarter: Free Magazines Comment: Circulation declined annually by 16%, over the period. Q3 increased by 27% (133,000 copies) compared to Q2.

Observations: General: The future of our sister currency, “readership”, remains uncertain, as other platforms drive their research needs. If print is to retain an effective readership measure then all print participants must either agree and effect change, or become affected by change in-line with the ambitions of other platforms. What is clear is that marketer / user participation is key throughout the process, as selected “tame” participants brought on board after the fact, won’t legitimize the currency. Representative participation is essential. On a positive note membership is growing albeit in the free newspaper category. Specifically:  The Daily Newspaper category decline is slowing…in line with foreign trends.  Quarter on quarter we note that several titles have recorded slight growth.  Digital circulation, off a small base, has grown 85%.  Sadly bulk deal driven distribution has grown by 116%.  In Weekly Newspapers, Ilanga’s decline remains concerning as this is derived from single copy sales.

Weekend Newspapers.  Decline has halved quarter on quarter. Vernacular growth over period is up by 15%, which has to be good news.  Isolezwe grew 7.6% year on year. But the performance of Ilanga, Sunday World and Rapport prompt concern.  Looking at the shifts in the circulation composition we see:  A 37% drop in Travel & Commercial subs, and a 93% drop in PMIE copies !  Digital sales grew by 98%, off a small base. Local Newspapers are in a slight decline while the hybrid category is stable. The Free Newspaper category continues to grow organically as well as through new entrants. The Zululand North Watch performance is particularly impressive at +83%.

Magazines.  Overall, the Consumer Magazine category performance has been disappointing. Within the detail, however, we note that several titles have performed extremely well. This demonstrates the increasing discernibility of readers to select and reject titles that do not meet their expectations.  Specifically:  Finweek dropped 36% while Succeed grew by 7%.  In the Celebrity category we saw growth in Heat magazine, up 2.9%, while People dropped 8%.  Bona grew in the Family category, up a significant 25%.  In the Home category, the innovative Kuier combo offering grew +357%.  The Male category was disappointing with FHM dropping 26% and even Stuff fell by 24%.  In the Motoring category, Car delivered a solid +7.5% growth, while others like Topgear fell 28%. Interestingly, the home grown Topcar was stable.

 In Travel, the founding consumer title, Getaway dropped 16% while Weg / Go, now 75% larger dropped just under 3%.  In the Woman’s Interest category, which has become, in my opinion, a key category indicator, we see the performance range. Cosmopolitan fell 25% while Woman & Home jumped 23%. Real fell 44% and Fitness grew 16%. Business to Business - continues to decline, although some growth has been noted in several categories, e.g. Building. In Custom Magazines we’ve seen the category drop very slightly. This result hides strong growth from titles such as Sawubona (+42%). Several retail titles have almost halved their circulation year on year. So in summary, the economy is no better, but it’s clear that we’re getting better at surviving! Those titles delivering growth are well placed to weather the storms ahead; pre, during and post the elections and soccer event next year. Finally, print media owners need to watch their readership currency as it would be naive (in the extreme) to expect another platform to worry about it.

Thank you.

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